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Value-add means never leaving ‘well’ enough alone

Peter Coffee Profile picture for user Peter Coffee August 17, 2014
Anyone who says that “My business doesn’t have a ‘social’ interaction with its customers” is taking too narrow a view of a time too long ago, argues's Peter Coffee.

peter-coffeeNo industry has a more global reach, a more geopolitical impact, or a more profound leverage across the rest of the economy than oil and gas -- including exploration, production, refining and product distribution. It follows that this industry, at least as much as any other, should be accelerating its pace of innovation -- and taking full advantage of its opportunities to reduce costs and lessen environmental impacts -- by means of radically improved connection, communication, collaboration and process automation.

Oil and gas provides an especially interesting example of today’s most powerful trends of customer connection, precisely because so many people tend to pigeonhole the business as “B-to-B” -- that is, one of those businesses whose customers are other businesses. True, the oil and gas industry is an enormously diverse ecosystem of specialty service providers in the remotest corners of the world -- but anyone who says, in this or any other context, that “My business doesn’t have a ‘social’ interaction with its customers” is taking too narrow a view of a time too long ago.

It’s clear that litres of petrol at the pump are a consumer product that most people consider completely commoditised, coming out of a nozzle at the end of a long and complex supply chain. Some have trouble seeing the opportunity to be a “customer company” in an environment like this, but there are two key points to be appreciated.

(1) The first crucial insight might be getting away from the idea that a customer is necessarily a person.

A more general notion might be that “the customer” is the focus of delivered value, often a person but not always. For example, in oil field work one might literally say, “You don’t know the difference between a customer and a hole in the ground”: in that business, the oil or gas well (rather than its owner, which might change over the life of the well) might most effectively be viewed as the entity whose “customer journey” needs to be viewed and managed from end to end.

From the moment that a blip on a seismic chart suggests there might be something down there, to the day that a played-out well is safely and cleanly secured, over a dozen different specialty services might be involved. One integrated service provider, which has grown through a series of many acquisitions, recently estimated during an informal conversation that fifteen different business units of that company alone might touch a single well over its lifetime. Ruefully, the other shoe was dropped: “...with each of them having almost no knowledge of what any of the others is doing.”

The arc of a long-term relationship is a powerful idea, whether the relationship is with a person or with some other node of a network of value given and received. If there are a dozen or more different activities being performed over a period of several years, all involving the same network node, then it would be well for all of those activities to share a knowledge of the history of that relationship. Otherwise, what was the point of making acquisitions at all? Where is the “1+1+1=10”?

(2) The second key insight is that “360-degree view of the customer” is no longer a sufficient goal.

In many industries, where IT struggles with a legacy of decades of silos -- compounded by layers of mergers and acquisitions -- it might seem a bold statement to say that every aspect of a customer’s interaction will now be part of a single representation. It may be a challenge, but it’s not nearly enough to stop there.

In oil and gas, one well is part of an entire field of wells producing from a single underground formation. Optimizing the lifetime production of the field is not the sum of the optimizations of the individual wells. This idea quickly generalizes, moreover, to industries like financial services or healthcare, where one middle-aged couple may be functioning as critical “deciders” for service choices on behalf of young children and aging parents. As the well is to the field, so is the individual customer to an extended family or to an influenced group in a social network -- in the sense that everything has a context, and ignoring that context leaves far too much value on the table.

It’s not enough, therefore, to view the customer merely from all sides -- in only a single plane. That’s living in Flatland, which is no place to try to do business.

“The customer” has, at a minimum, a time dimension as well: the well being drilled today, or the person buying an entry-level product or service, is just the entry point into what should be developed to the benefit of both parties as a long-term stream of value (exchanged in both directions).

Connecting devices and people, measuring the data thus collected, thinking about the implications and opportunities, and taking action that’s seen to be responsive and responsible: that’s the cycle that must define the value of modern information systems. If the vision of “the customer” is not truly visionary, even the most modern technology will only be doing old IT: better, faster and cheaper, but not what’s needed today. New investment in old IT? That's money thrown down a well.

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