Abstract
Tullow Oil, a London-based independent oil and gas exploration and production company, regularly wins awards for its innovative approach to problem solving. Its business culture is based on investing in the best people and then trusting them to work together to keep Tullow on the leading edge of the industry. Tullow’s CIO recently challenged his team to develop an approach to devolve control of IT project prioritization to non-IT leaders within the company. This article explains the approach developed and how it is working to keep the business’s IT strategy aligned with Tullow’s entrepreneurial spirit and commitment to collaborative decision making.
Keywords
Introduction
Tullow Oil is a leading independent oil and gas exploration and production group. It has interests in over 150 exploration and production licences, across 26 countries, which are managed as three regional business units: West & North Africa, South & East Africa and Europe, South America and Asia. Tullow is quoted on the London, Ghana and Irish Stock Exchanges and is a constituent of the FTSE 100 Index with an annual turnover of more than £2 Billion. Effective IT investment that aligns with Tullow Oil’s business aims is core to its success. This article discusses the importance to organizations of exploiting relevant experience and expertise of their employees to the full. It begins by discussing the principles that need to be considered in doing so and then demonstrates how this can be achieved practically as the Information Systems team transforms collective business knowledge into effective decision making for IT investment.
Getting the most from your knowledge workers
Long-time business management author Peter Drucker is credited with introducing the phrase ‘the knowledge economy’ into the modern business lexicon back in the 1960s. His extensive writings on the topic explained that knowledge, in the form of expertise or ‘know-how’, would become a dominant force in driving the global economy of the future. This was in contrast to models of business competition which focused on more tangible factors such as exploitable natural resources, labour costs or process improvements as the main drivers of competitive advantage. 1
In the 50 years since, his perspective has proven largely correct as the world has continued its evolution from a global economy dominated by agriculture through the industrial revolution and into the information age. As information has become a more central input to driving the creation of goods and services, and as the barriers to information access have eroded, competitive advantage is more often built on the quality of the decisions and actions people take on the basis of information available.
All of this sounds well and good, but knowledge itself is a notoriously difficult thing to define and even harder to harness. There are many schools of thought as to the exact lines where data turns into information and then information into knowledge. In a business context it can be useful to think of data as the rawest form of input, which is meaningless without context. Usually some form of human intervention is required to organize data into patterns. It is required again to make relationships between different patterns and to other, previously understood pieces of information. These connections provide the data with context, and thus meaning. Once the meaning of a data set becomes understood it is potentially useable.
Human intervention is again required to create value by taking that data along with its meaning and actually put it to use. It is knowing how to take action to create value, or comparatively more value, that gives people and the organizations they work for an advantage. Successful knowledge-driven companies work hard to tap into the collective know-how of their people and empower them to add value to the organization’s bottom line through communication, decisions and actions.
The phrase ‘know-how’ in this context is often used as opposed to simply the word ‘knowledge’ as it more explicitly conveys a sense of action. Creating value in the knowledge economy is not simply the potential to act, but the understanding of how to take action coupled with the confidence and will to do so. The importance of this distinction was laid bare in the 1990s with the repeated failures of huge knowledge management systems. After millions of dollars spent on development, and thousands of hours dedicated to training, most of these systems failed to deliver any measurable value. In most cases, these efforts failed to take into account the human and cultural elements that inspire people to actually change their behaviour in light of new information being available. Whilst these efforts designed incredibly intricate information management or sophisticated collaboration systems, they failed to persuade people to actually use the information provided or share know-how with their colleagues. 2
Effective knowledge management, or the exchange, creation and application of know-how, throughout an organization, is more than pushing information, technology and directives. It is also about developing technology and processes that take into account human behaviour and issues such as language, culture and team chemistry toward the end game of getting people to more frequently share and take action on what is shared. It is hard enough developing systems which are successful at doing this with groups who have relatively homogenous technical, cultural and life experience backgrounds. It becomes even more difficult as you try to facilitate groups of highly skilled workers from different backgrounds, often in different locations, to apply their collective knowledge to decision making. 3
You can be given the information about how to balance the bike, how to pedal forward to keep your momentum, the right pressure to apply to the brakes, etc. but until you experience riding a bike successfully, you are likely to fall down a few times. Because you do not yet ‘know’ what it is like. Once you have gained that experience and you know how to apply balance, speed and pressure, you do not ever forget how. If you need to get somewhere fast, having a bike and having read the information about how to ride is far less valuable than actually having the experience of riding it. That difference can be characterized as ‘know-how’.
But the application of collective knowledge is exactly what is required if we are to embrace the concept of the knowledge worker and the knowledge economy. As pointed out by Drucker, value is created when people apply what they know to direct actions of others or take action themselves. An organization can achieve a competitive advantage by harnessing the collective know-how of a broader group or team to direct the actions of the large facets of the company’s strategy or operations. Simply put, if you have a company full of experts who are all focused on different bits of your business, it is not until you assemble and distil what they have witnessed, what they know and what they think should be done about it that you have a complete picture. Tapping into this collective wisdom and power is the holy grail for the modern corporation trying to compete in a business environment in constant flux and packed with competitors.
Harnessing knowledge and experience for prioritization
Tullow is not unique as it aims to use the know-how of its staff. In an effort to become the leading independent oil company, we are specifically charged with finding a competitive advantage through doing things differently. Further, Tullow has an explicit strategy of embracing the know-how of individuals and of transforming know-how from groups with diverse backgrounds into innovative solutions.
Act with Integrity and Respect. Commitment to Tullow and Each Other. Entrepreneurial Spirit and Initiative. Focus on Results.
The spirit of the entrepreneur is one of our company’s four core value disciplines along with a commitment to support one another in this spirit. It is our founder’s deep belief that the combination of personal integrity, innovative thinking and working together will produce superior results. As our stock growth over the last 10 years has reflected, he seems to have a point. Stated another way, our founder has asked us to apply our collective know-how to problems to develop superior solutions. 4
The Tullow Information Systems team (Tullow IS) has the expressed goal of being the most business-focused IT department in Tullow, a lofty ambition. Accordingly, we have taken numerous steps to dissolve the barriers that any company (whose revenue stream is not directly generated through the sale of IT related goods and services), faces in terms of feeling somehow apart from the rest of the company. And we have the added incentive of our founder’s directive. Managing IT in alignment with Tullow Values necessitates that we bring as many people into the decision-making process as practical and figure out a way of tapping what they know and transforming their collective knowledge into decisions.
The impact of focusing a diverse set of experiences and perspectives on a single problem set is a proven strategy for driving ‘game-changing’ innovation. Tullow leverages this basic principle in every facet of its business and reaps the benefit. Tullow was named Most Innovative UK Company by Management Today for 2012 and is considered an industry leader in many categories. This is not easily done. Just like any other organization we are divided by national cultures, expertise cultures, industry cultures and even language at times. Nowhere is this felt more acutely than in the separation of the language and culture that tends to be used by IT professionals and ‘the rest of the company’. The jargon we create and use as shorthand has the very real consequence of creating an ‘us’ versus ‘them’ perception. This barrier is then an issue that the whole company must come to terms with in order to be productive.
In order to bring a diverse set of experiences and perspectives to the table to steer IT investment decisions, we have to work on breaking down barriers. One type of barrier is the feeling that IT is somehow separate from the rest of the company. To do this, Tullow IS has taken several conscious steps, some of which are symbolic and directed at our own behaviour. For instance we have worked hard to remove the phrase ‘the business’ from our lexicon. We correct one another if we say things like, ‘If the business is asking for this system, then we need to give it to them’. The rationale is that we ARE our business. In fact, there is scarcely an initiative within Tullow that does not have some sort of reliance on IT. Besides that we are all shareholders in Tullow. We are Tullow. 5
Other steps are simply practical. For instance, we have created a team of business partners who work to imbed themselves in the planning and strategy discussions of other departments. Their goal is to help that department understand its own IT needs and then work to improve their use of existing systems and development of requirements for new ones. We also look to hire people into our department from other departments and look to hire people who do not necessarily have a computer science background.
Another type of barrier we have to work on is the one that exists when non-IT people get together and debate the value of IT projects. How do we facilitate a meaningful debate that leads to agreement and decisions? This barrier is critical for us at Tullow to break down as we have placed control over our entire project-related CAPEX spend in the hands of a team of executives from nearly a dozen other business units and departments. They literally control what we spend and on what systems and give the green light or red light on every single project. In support of combining ‘know-how’ for the greater good this group is comprised of the likes of our Chief HR Officer, our Head of Finance, our Head of Projects and Engineering, Regional Business Unit Managers, etc. This is where the challenge of assembling that breadth of experience into actual value-led decisions around information technology lies.
Consider the vast perspectives of this group. They are comprised of South Africans, Irish, Scottish, American and English nationals from a wide variety of disciplines. Some are dyed-in-the-wool oil and gas professionals and others are newcomers to the industry. What is more, their understanding of IT is generally isolated to the areas where they have direct experience. For instance, as we debate the value of a Geophysical Data Management programme, how do you keep the Chief HR Officer interested and give him or her enough of a foothold in the conversation to add value to the decision-making process? And yet another thing to consider is the amount of time these people have to focus on the problem set at hand. Because of the nature of the job titles of these executives, this group is also incredibly busy.
Our challenge was to devise a process system that would enable a group of 15 incredibly busy individuals with diverse backgrounds living on different continents to come to decisions about projects where they had little technical expertise. Somehow we had to enable them to apply that experience in a way to responsibly steer the development of our IT environment. And we only have an hour per month with them to do it.
But actually, it turns out that is all we need.
The prioritization system – selecting on value
The process of refining the solution took a lot of debate, trial and error. The genesis was a relatively straightforward project portfolio scoring system that was originally proposed by our Enterprise Architect. The system created a score for the return on investment (ROI) for each IT project and then a score for project risk. This model enabled us to look at the portfolio and compare projects on two key criteria and help us prioritize. But if knowledge and innovation are hard to define and harness, we can just as easily talk about IT-related ROI in the same way. Pinning down definitive ROI for deployment of IT kit is notoriously elusive. The more we looked at this issue the more we realized that chasing a definitive formula for IT project ROI was going to confuse things.
IT in our business has two purposes – speed things up and bridge physical distance. We do not sell IT products and services; we do not change people’s daily lives with new IT-driven lifestyle choices. Our lives are dedicated to supporting people who spend a ton of time staring at geologic information looking for clues to indicate likely presence of oil and gas deep underground. That said, nothing happens in Tullow, not a single process, not a single decision that does not somehow rely on IT. Speed is quintessential in today’s business and in particular, the speed with which you get the right information to the right expert or group of experts so they can take action, no matter where they are in the world.
Accordingly, the problem with pinning down the actual ROI for an IT project becomes a problem of how to measure the relative value of speeding up an HR process versus speeding up decision making for our Corporate Planning team. The problem is that if the company has not defined any baselines in either area, how do you know what value will be created by speeding either of them up? If you have infinite time, energy and money to execute on multiple IT projects all at the same time it is not an issue. But what happens when you have to choose between doing one first and the other second, or perhaps choosing not to do the second at all? Which IT project will produce more value for the company?
Many companies will embark on a company-wide ROI program to determine the units that will be used, how baselines will be established and the process by which ROI is calculated. In speaking with many companies that had spent 2–3 years chasing this approach, most admitted that their system was flawed simply because definitive ROI for many areas involving IT were difficult to validate. Through our association with CIO Connect (CIO-Connect.com), a networking and idea sharing service for senior IT leadership, we fostered several conversations with organizations outside our industry about their pursuit of a formula for the return of real business value from investment in IT projects. We found that even for companies that were much more dedicated to process and operations metrics than Tullow, they still had trouble measuring the actual dollar returned from many IT investments.
Accordingly, we decided not to try and add specificity into our model where we could not confirm accuracy. Instead we decided to take a step back and see if we could come up with a meaningful scale that was more strategic in view.
We found a potential direction in our corporate strategy documentation. Tullow has named seven strategic priorities that the senior executives feel should shape all decision making in Tullow. These seven priorities have endured over the last few years. Further, in any given year, the Tullow executive will steer the company toward focusing on some of these goals more than others, depending on the position of the company. After reviewing these, it seemed a much more achievable exercise for us to use the priorities as a basis for scoring the relative strategic fit of any project proposed.
We decided to limit any calculations of potential financial return of a project to ensure only that projects are not approved if they are definitely going to lose money. At the business case stage, project sponsors are obliged to show how tangible, measurable savings or increases in revenue will exceed 125 per cent of the project cost. This is the threshold for getting a business case approved for treatment by our project methodology. At that point, however, all discussions around prioritizing execution of that project, or indeed whether it gets done at all, are driven by discussions based on a scoring system based on the company’s strategic priorities and the judgement of the diverse steering group.
Figure 1 below shows the actual sheet we use to create a project’s score for strategic fit. The project sponsor reads through the table in Figure 2 and decides whether the project has a high, medium or low fit with each of the seven priorities. The weighted score is tallied automatically taking into consideration both the alignment of the project with each objective and the relative importance of each priority as assigned by senior management for any given year.
Ranking projects.
Assessing project contribution to strategic priorities.
As we started to use this scoring system for estimating strategic fit, we became encouraged by the results as the ranking seemed to ‘make sense’ against our intuitive sense of the relative criticality of each project to Tullow’s success. We then set out to devise a risk-related score that was similarly high-level to match. We landed on three criteria that captured the essence of how easy or difficult it might be to deliver a project asking for a simple ranking about how complex the project is expected to be, how long it is expected to last and what the overall change impact will be to Tullow as a whole. Figure 3 shows the scoresheet to calculate the relative ease of implementation for any project with the simple table used to help us score each criteria immediately below it.
Scoring project risk.
When you plot these two scores, Strategic Fit and Ease of Implementation, against each other for project on an axis, you get something that looks like Figure 4 below. On this plot we have added a few attributes. The size of the bubble is indicative of relative cost of the project and the colour indicates where the project is in its lifecycle.
The decision foundation – visualizing the portfolio.
This is a nice visualization of our project portfolio because you can get your head around it in just a few minutes. By laying a simple grid over the plot you create a classic 2 x 2 matrix and can begin to say something about the projects that show up in each quadrant. For instance, projects in the lower left corner are relatively hard to implement and are a relatively low strategic fit. Should we be doing those projects at all? For our executive committee, it is easy to focus in on a few projects that may warrant more scrutiny. Projects landing in the upper left-hand corner are easy to implement and a lower strategic fit. Maybe we should do these projects but if they are easy to implement and a relatively low impact to our strategic priorities, maybe we should be outsourcing execution if we can. For projects on the right-hand two quadrants, it seems we should be making those the priority although setting expectations about relative ease of implementation is important for internal resource allocation and timing.
Further, in the above diagram, ‘no shading’ means it is an idea on the drawing table, ‘grey shading’ means there has been a business case reviewed and approved and ‘black shading’ means a Project Brief has been approved and the project is in motion. Adding this layer of colour coding allows for an easier understanding of how subsets of the portfolio fit into the lifecycle of our project methodology shown in Figure 5. Each stage is separated by a formal stage gate review, marked by the ovals and a description of key drivers of each review.
The project review process.
The shading also provides advantages for other types of ‘snapshot analysis’. The filtering shown in Figure 6 below allows the senior executives to focus only on those projects that are actively being developed or are already in motion, removing from view all ‘no shading’ project ideas that have yet to have a business case written for them. This provides a quick understanding of the projects which have already a committed spend and how they stack up in terms of strategic fit, cost and complexity.
Snap shot analysis.
The key benefit here is the delivery of the right level of contextual detail reflecting the entire portfolio, whilst focusing the executive’s attention on where they feel they should spend their time. This broad, snapshot context which can be absorbed in five minutes of study also allows executives to quickly spot things that do not ‘feel’ right. Each executive can bring the understanding they have about particular projects and make a judgement about whether the relative positioning of the project seems correct in terms of the strategic fit. They can even start a dialogue, if they wish, about the relative positioning between their project and other projects that they have some understanding of around that area of the portfolio.
What we did was to simplify the measurement of value, risk, and cost across a prospective portfolio and turn it into an easily digestible picture to compare the relative merits of all projects in those three dimensions.
It succeeded because the non-IT people in the IT Leadership Group have neither the time nor the inclination to look at detail, and a bubble plot of relative project merit paints the proverbial thousand words. (Ron Baillie, Tullow Enterprise Architect)
The hidden benefit, however, is much larger.
Delivering improved capability – achieving change
Because there is not a single company initiative or program that operates without some participation from IT, and because we have focused away from trying to tease out a specific ROI from each project, the executives are basically spending time debating the relative strategic importance of the process improvements and initiatives they intend to introduce. Because IT is simply an accelerator of these initiatives, the real debate in the room is about how Tullow department and business unit leaders intend to make changes in order to better realize Tullow’s overall strategic aims. From that angle the IT projects and their budgets are simply a prop around which this group is focusing its exchange. And by allowing the executives full control over that spend and prioritization, IT gets a seat at the table in the conversation and we get full engagement from our senior executives, across the board, on the direction of our department and the new capabilities we are introducing to Tullow.
As with any system of prioritization, there is a risk of participants ‘gaming’ the system to push their own favourite projects to the top of the list. One of the benefits of putting the justification and approval of projects completely in the hands of senior executives is that they have to justify these projects to one another, not just to IT. Removing IT as the decision maker in favour of this group dynamic naturally introduces a level of transparency, reducing the risk of gaming.
There are several directions open to us for evolving the model, some of which are already in progress. In addition to ease of implementation, strategic fit and cost, senior management at Tullow have discussed using this tool to visualize and manage the impact of change at Tullow. Because of our commitment to new thinking and to agility, the amount of change Tullow staff are asked to absorb is usually high. By changing the size of the bubble to being some measure of the overall change impact felt by any given initiative, the tool can be used to understand how much stress our staff are being asked to undertake in any given year. By re-assigning the values associated with the colour, size or even the shape of the ‘bubble’ or the units associated with either axis there is a wide variety of pictures we can create and, subsequently, conversations we can start.
Take aways
The process is quick, it stimulates an effective dialogue, and it simultaneously puts the role of IT right at the front of the conversation, whilst allowing focus on the technology itself to yield in favour of a more important debate around organizational change and strategy fulfilment.
There are lots of places where we could have got lost: Definitive formulae for ROI – Instead, we rely on our committee’s gut feeling. Why pay people for their experience and then not trust their judgement? Complexity of scoring – Simple is usually more understandable and understanding creates confidence to decide or act. Our system allows people to quickly assess the scoring mechanism as well as the scores themselves, removing the layer of abstraction that a more complicated calculation would provide.
The guiding principles that we follow are relevant to many other decision-making processes concerned with project selection: Simplicity Make sure the level of specificity matches the level of accuracy you can provide. Use attributes that the group can make decisions on. ‘Snap-shot’ decision making. Visualize with data and text detail as backup. Assume they have not read anything … can they still contribute to a decision? Trust their gut Mechanism allows a deep dive into any aspect of the portfolio that does not ‘feel right’. Details can (not always by any means) confound judgement.