Innovation through collaboration

Effective collaboration is the lifeblood of innovation, says BP’s Ken Douglas. It’s difficult for even the largest companies to be master of all their own developments.

As Director of Technology within BP’s respected Chief Technology Office, Ken Douglas’ role ranges from setting BP’s three-year strategic and architectural direction through to the launch of projects to take early-adopter advantage of sensory, wireless and mobile opportunities. As a result, BP has earned a reputation for being ahead of the technology curve and notched up several notable world firsts. His current focus is around wireless and mobile applications, ‘smart items’ and how business processes can radically change when better connected to the physical world and operating in real time.

“Innovation is about doing something different or new to serve business needs in a way that doesn’t jeopardise the things you wish to remain in place,” he says. “It’s at the core of what we’re trying to achieve here at BP and we’ve got to keep progressing from a technology standpoint.” Indeed, BP’s CEO Lord Browne has enshrined the importance of innovation by establishing it as one of the four core values of the company. “We’re progressive, we’re performance-orientated, we’re green and we’re innovative,” continues Douglas. “IT should be regarded as an integrated set of technologies that can be used to do business differently and in a better way. We have to keep pushing back the bounds of technology and be clever about its use to stay competitive and meet the increasing challenges we face as a company.”

Indeed, BP has something of a reputation for fostering a culture of innovation, not least through its celebrated ‘blue chalk’ meetings. “We use a number of mechanisms that are largely about awareness raising and opportunity identification, and the so-called ‘blue chalks’ are the pinnacle of this,” says Douglas. These are themed meetings that are held two or three times a year and get senior executives away from the day-to-day pressure of running their respective business units to think about the implications of emerging technologies.” As Douglas points out, there is no pressure to make a decision at the end of the meeting, which is unusual. “It is purely to give people the intellectual time and space to think about an idea without vendors making a presentation,” he explains. “The only people present from outside the company are typically from industries that have already become early adopters of an idea. It is not a sales pitch. It is purely a practitioners’ discussion, warts and all.”

The outcome is that the attendees get real insight into how emerging technologies can benefit their respective businesses. One idea to emerge from these meetings was to start leveraging wireless sensor networks to provide real-time information on the state and location of BP’s asset base and supply chain – an area Douglas was convinced had potential. He cites the example of the Loch Rannoch tanker based in the Shetland Islands, off the coast of Scotland, as a successful case study. In the oil and gas industry generally, about 40 percent of unplanned downtime comes from the failure of rotating equipment such as pumps and compressors, of which the Lord Rannoch had a high number. “We wanted to drive this down by learning as much as we could about the equipment by using sensors,” he says. Traditionally, these sensors report back to a computer by means of an interconnecting wire. However, with wiring costing up to US$100 per foot and with literally thousands of feet of cable to run, it becomes an expensive proposition. It’s also problematic because of the need to have a crew present – quite apart from the demands on staff-availability, an offshore platform might not have the space and facilities for extra people.

Instead, BP took a high-tech approach. “We installed 115 self-contained, wireless vibration sensors in the Loch Rannoch in less than 15 hours, using a crew who had never even set foot in that vessel before,” explains Douglas. “We were able to monitor the health and condition of all of that rotating equipment, capture the information and send it back wirelessly. This meant we were able to predict failures before they happened. If we did that consistently for all our pieces of rotating equipment, we could really make a big dent in unplanned downtime and increase plant availability. Because plant availability converts directly into increased production, it’s a very interesting area, both for BP and for all other oil, gas and process industry companies.”

The project won a top internal BP Award for collaboration and was only possible through the combined efforts of Intel, Rockwell, BP Shipping and Crossbow. “It was very much a team effort,” says Douglas.

Another area in which BP has enjoyed considerable success through innovative use of wireless technology is the LPG business, where it has piloted RFID sensors to track the whereabouts and condition of refillable cylinders of gas. “One of the things we discovered is that RFID comes into its own around niche applications – in particular, around asset management and the management of ‘closed’ supply chains,” he explains. Unlike the retail business, which has an open supply chain where cases and pallets are sent out never to be seen again, the LPG business – which uses intermediate bulk containers, gas cylinders, etc. – has a closed supply chain where such items return for refilling and re-use. For a variety of reasons, companies need to be able to tell one uniquely and automatically from another, as Douglas points out.

“Sometimes there are regulatory reasons – we need to demonstrate to the authorities that we are maintaining and inspecting a certain number of gas cylinders from a particular batch. But also, unless you can tell one cylinder from another, it’s really difficult to say which distribution channels are turning cylinders most quickly. Companies have tried in the past by putting ID numbers or barcodes on the side, but ID numbers need manual intervention and barcodes are easily damaged. By embedding an RFID tag into our new gas cylinders – which are made of a composite material – as they come through the refilling plant and are dropped off at distributor sites, we can read the tag and have a complete electronic record of cylinder lifecycle.”

However, despite the undoubted benefits of these and other successful innovations, Douglas is keen to warn against the dangers of implementing technology for technology’s sake. RFID is one such application that he believes is not quite ready for mass implementation. “We have looked at applications in the supply chain for exploration and production and our conclusion was fairly stark: there is a role for RFID to play, but not quite yet. For this particular application we are waiting for the technology to mature and for a larger percentage of the supplier base to adopt RFID before we move any further.”

Indeed, if anything, he sees his work in the CTO’s office as being something of a guardian for the quality and relevancy of technology. “Our role in the CTO team is not simply to throw technology ‘over the wall’,” he says. “There has to be some sort of structure regarding how to determine the relevance of a new technology to the business and what benefits we will realise through its use. We explore many ideas and winnow those down to the ones with the greatest business relevance, looking at whether the technology is mature enough, whether there is a clear business benefit, how it fits with the business, and so on. From the many ideas that are presented to us, maybe 40-50 will be considered seriously. Of those, perhaps less than half will actually get piloted in the field – and the ones that are a success are those that are adopted in the businesses.”

So instead of taking a technology and seeing if it fits a problem, Douglas and his team match a known business opportunity or need with a technology. “Don’t just buy technology for technology’s sake – make sure it fits with your assets,” he advises. “For instance, in terms of sensors, we ask business managers to imagine the answer to a simple question: ‘If you could afford to have an expert standing next to your asset, reporting back to you a summary of information about how it is being utilised and what its condition is, would that information be useful to you?’ The answer is inevitably yes, but they can then go on to explain in what way. And while we can’t necessarily afford to have someone standing there performing that role, we can give them a surrogate technology, matching an appropriate technology to their need. It’s not a panacea, but it’s an idea whose time has come.”

In fact, Douglas believes that being connected is the most important enabler of change. “The vast majority of people in the oil and gas industry don’t sit at desks,” he points out. “Typically those who work in the field are not connected to the office other than by cell phone, and we’re fast coming to a time when it is not acceptable to have people in the 21st century running about with bits of paper. When you have paper in a process you have time delays, the potential for errors in transcribing what’s written on that paper, and you’re limiting the desire of people to record everything that could be important.” He explains how BP is taking a ‘clipboard-to-computer’ approach – replacing the clipboard with something electronic. “You not only gain in efficiency by capturing information electronically – in real-time, in the field – but also move towards the ultimate goal of improving availability by using information to improve the state and condition of your assets. 3G has been a little bit slow to come to market but wireless LAN has taken off at a rate no one could have predicted and now WiMax and similar technologies are coming along. We are using all of these at BP.”

The other area BP is investing time and effort in is the new generation of web-based collaboration tools. “Effective collaboration is the lifeblood of all our operations, and we have been looking at future concepts in advanced collaboration environments that allow our people – both offshore and onshore – to communicate and solve problems much more quickly.”

So are there any particular technologies or technology strategies that he thinks will reach tipping point in 2006? “All of the things we’ve discussed here today mean we’re much better at capturing information now, and the improvements we’ve made in automation, sensory networks and mobile communications will only add to that. Consequently, we’re looking at the application of data analytics (agent-based modelling, predictive analytic models, etc.) that take this information and look for correlations, patterns and predictions to help us improve efficiency in a way that we’ve never been able to do before.

“A lot of people say we suffer from information overload,” he continues. “The reality is we don’t have overload, we have a lack of tools to help us manage the available information. Once we get those tools, we will actually discover even more useful information.”

And what advice does he have for other CTOs looking at technology innovation as a means to improve operations and performance? “The key advice that we have learnt as a CTO team is that it is difficult for even the largest of companies to be master of all their own innovation,” he says. “Considering the speed technology is moving at now, trying to do everything in-house is very difficult, if not impossible.”

As a result, the successful BP approach has been to position itself at the hub of an ecosystem of partners, venture capital companies, academia – even competitors – and that includes links to industries other than its own. “It’s largely by tuning in to that ecosystem and working in partnership that we are able to move things as quickly as we have through idea to proof-of-concept, field trials and production deployment,” he explains. “Don’t feel obliged to build up enormous levels of in-house expertise; instead, build up the right type of people who can obtain a broad network of external contacts and who are able to work your solutions through partnership. The most important thing is to work in collaboration; you can still have IP control, and it is the only way that you can stay abreast of all the opportunities available to you.”

“A lot of people say we suffer from information overload. The reality is we don’t have overload, we have a lack of tools to help us manage the available information. Once we get those tools, we will actually discover even more useful information”

“Our role in the CTO team is not simply to throw technology ‘over the wall’. There has to be some sort of structure regarding how to determine the relevance of a new technology to the business”