International Journal of Mechanical Engineering and Technology (IJMET) Volume 10, Issue 04, April 2019, pp. 107–125, Article ID: IJMET_10_04_013 Available online at http://www.iaeme.com/ijmet/issues.asp?JType=IJMET&VType=10&IType=4 ISSN Print: 0976-6340 and ISSN Online: 0976-6359 © IAEME Publication Scopus Indexed FRAME WORK ANALYSIS (STAGE 1): CREATING A FRAME WORK TO ENHANCE THE ADOPTION OF INNOVATIVE DRILLING TECHNOLOGIES IN UPSTREAM UAE OIL AND GAS Sylesh Nechully Research Scholar, UPES, Dehradun Dr. S.K. Pokhriyal Professor and Head - Energy Management, School of Business - UPES, Dehradun Dr. Saju Eapen Thomas Dept. Chair – Marketing, City University College Ajman, UAE Dr. Santhosh Koyadan Executive Coach and Leadership Development Professional, UAE ABSTRACT The Researcher has already proposed a “Frame Work” with relevant upstream variables in the paper titled “Identifying the Relevant Variables Affecting the Adoption of Innovative Drilling Technologies in Upstream UAE Oil and Gas”. This paper serves to Validate/Test the findings/Frame work of the researcher. Content Analysis is performed in the first stage of Frame Work analysis. The Findings/Frame Work of the First stage goes as an input to the second stage of Frame Work Analysis. The researcher used NVIVO 12 for data analysis due to the “Effort and Time factor” involved in the manual Frame work analysis. The points to be noted in the results of data analysis are (1) Two new variables emerged - “Central Innovation Office” and “Age” (2) Some Variables got eliminated – “Efforts” + Associated Variables, “User Satisfaction and Trust” + Associated Variables, “Familiarity”, “Innovator Support”, “Environmental Benefits”, “Environmental Benefits”, “Trade up or Buy” and “Brand Loyalty”. Key words: Drilling Technologies, Frame Work, Innovation, Qualitative Data Analysis, Upstream Oil and Gas, Coding http://www.iaeme.com/IJMET/index.asp 107 editor@iaeme.com Frame Work Analysis (Stage 1): Creating a Frame Work to Enhance the Adoption of Innovative Drilling Technologies in Upstream UAE Oil and Gas Cite this Article: Sylesh Nechully, Dr. S.K. Pokhriyal, Dr. Saju Eapen Thomas, Dr. Santhosh Koyadan, Frame Work Analysis (Stage 1): Creating a Frame Work to Enhance the Adoption of Innovative Drilling Technologies in Upstream UAE Oil and Gas, International Journal of Mechanical Engineering and Technology 10(4), 2019, pp. 107–125. http://www.iaeme.com/IJMET/issues.asp?JType=IJMET&VType=10&IType=4 1. INTRODUCTION The researcher intends to propose a Frame Work to enhance the adoption of Innovative Drilling Technologies in Upstream UAE Oil and Gas. Already the researcher has proposed a Preliminary Frame Work in the paper titled ―Identifying the Relevant Variables Affecting the Adoption of Innovative Drilling Technologies in Upstream UAE Oil and Gas‖. This paper describes the First Stage of Frame Work Analysis, where the already proposed frame work gets tested/validated. If the Researcher does not have a well-defined conceptual lens/preliminary frame work, the first stage of frame work analysis – familiarization stage, helps to draft a well-defined ―conceptual lens/preliminary frame work‖ which gets tested or validated in the subsequent stages. 2. METHODOLOGY The Research Method employed for drafting the Frame work is ―Frame Work Analysis‖. Starting with a Conceptual Lens/Preliminary Frame Work – Frame Work Analysis has got Four stages of Validations (If the researcher has a well-defined Conceptual Lens/Preliminary Frame Work or else first stage is for creating a well-defined frame work followed by three stages of validations). The First two stages of Data Analysis are done by Content Analysis and Last two stages done by Grounded Theory. The justification for using Frame Work Analysis and the Research Design is already described in the paper titled ―Choosing Grounded Theory and Frame Work Analysis as the Appropriate Qualitative Methods for Research‖. 3. USING NVIVO 12 The Interview transcripts are cleaned, formatted and imported for data analysis. The interview answers from various transcripts are consolidated under each heading/questions for easy analysis using ―AUTO CODE‖ function. The ―MIND MAP‖ function can be used to create tentative nodes structure – If the conceptual lens/preliminary frame work is known. Once these answers from various transcripts are consolidated under each questions/headings, the coding is done. In NVIVO, the relevant portions of text coded are put into containers called ―NODES‖. Either the Nodes will be Pre-labeled or are labeled as or when the codes are generated. The Insights or Useful observations emerged during the process of coding are noted down under ―MEMOS‖. In due course of data analysis – these Memos are connected together to unravel or validate the patterns of relationships of codes generated. 4. QUALITATIVE DATA ANALYSIS 4.1. Variables Affecting Innovation Opportunity ―The Innovation Director of one of Enco’s branches explained to us that it is still very hard for her innovation team to make the voice of innovation heard throughout the branch. This attitude probably results from the lack of a strong mandate from top management. The tone is always set by the top‖ (Meige, 2015) - The text confirms the need for favorable attitude from the top management towards innovation. Without a favorable attitude from the top, the http://www.iaeme.com/IJMET/index.asp 108 editor@iaeme.com Sylesh Nechully, Dr. S.K. Pokhriyal, Dr. Saju Eapen Thomas, Dr. Santhosh Koyadan employees will not be motivated to search for innovation opportunities. They should have a feeling that they will be heard and recognized for good suggestions. ―It was recommended that oil and gas service companies can facilitate employee creativity and innovation by promoting and investing in transformational leadership training of their managerial staff as well as instituting enabling innovative organizational culture‖ (Odetunde and Ufodiama, 2017) – To motivate employees to search for innovation opportunities, there should be a culture of innovation and a visionary leadership who can analyze and realize the importance of that opportunity. An organization should be well prepared or ready with the right culture and leadership to promote innovation with in organization. 4.2. Variables Affecting Organizational Readiness ―The evolution of the oil and gas sector from one dominated by large, generalist companies to one featuring specialists in narrower aspects of the operating environment will require companies to establish new ways to collaborate ways that leverage the specific skill sets of each organization‖ (Biscardin, Morrison and Branson, 2017). The shift in Oil and Gas from an industry dominated by ―Generalist‖ to ―Specialist‖ companies requires organizations to establish new ways or to enhance innovativeness. They should have a curiosity and orientation towards innovation. Only a company with an orientation or inclination towards innovation will channelize resources for innovation. ―Generally, the super majors already have profitability and capital efficiency hard wired into their corporate DNA. Other Firms – such as national oil companies (NOCs) in the Middle East, which tend to emphasize production volume targets – will have to adapt. For such companies, a new focus on cost efficiency and profitability will require significant shift in corporate culture and outlook and ultimately a realignment of company portfolios‖ (Biscardin, Morrison and Branson, 2017) – explains the need to change the culture of NOCs to transform it from ―Production Volume Target Specific‖ to ―Capital efficiency and Profitability Focused‖. An organization cannot adopt innovation if it does not have a culture of innovation. An organization with a culture of innovation always seeks opportunities for improvements. It is always eager to explore ways to enhance efficiency. Resources are allocated and internal changes are made accordingly to embrace innovation. Organizational Innovativeness and Culture enhances the Organizational Readiness. 4.3. Variables Affecting Technology Finalization “Innovate or die” has become a clarion call for corporations large and small, regardless of industry. Whether creating new products, new internal processes or entirely new ways of doing business, companies must consistently innovate to survive in today’s business climate. For companies within the oil and gas industry specifically, this couldn’t be truer (Thomson, 2017) – The text conveys the importance of having a favorable attitude towards innovation. If an organization is not willing to purse innovation, it will die eventually. A positive attitude is required to scan the market for appropriate technologies. ―The next generation of Russian oil and gas will need major investment in technology and capability. In other words, the industry needs to renew itself - to modernize‖ (BP, 2017) – The energy market is becoming very competitive. So to maintain its position, oil and gas has to embrace latest technologies. But this requires skilled man power, infrastructure etc.. Organizations should be thoroughly prepared to embrace innovation. This readiness encourages the employees to search for appropriate technologies. http://www.iaeme.com/IJMET/index.asp 109 editor@iaeme.com Frame Work Analysis (Stage 1): Creating a Frame Work to Enhance the Adoption of Innovative Drilling Technologies in Upstream UAE Oil and Gas 4.4. Variables Affecting Contract Finalization ―Our top priority now, just like for anyone else, will be to use the advanced technologies to ensure the fullest extraction of hydrocarbons while using better tools for preliminary studies of regions and areas where oil might be discovered in the future‖ (BCG, 2016) – The text points out the need to adopt innovative technologies in oil and gas to enhance the extraction of hydrocarbons. For this, the organization should have a favorable attitude towards innovation. A favorable attitude towards innovation speeds up the procurement process and finalization of contract. ―The ability to continually monitor all infrastructure, prioritizing threats and defenses, requires both agility and an organizational readiness to redirect technology and people to areas where they are needed most‖ (BCG, 2016) – Organizational readiness is required to adopt innovative technologies. Organizational readiness in terms of culture of innovation, allocation of budgets and competency enhancements speeds up the innovation process. 4.5. Variables Affecting Implementation The end users and organization should have favorable attitude towards innovation. Otherwise procedural changes/infrastructure changes cannot be made. The cooperation of the end user to make necessary adjustments to the innovation is not possible without a positive attitude towards innovation. This point of view is clearly supported by the text ―In an increasingly complex energy market, the industry is facing new challenges transitioning to more renewable sources. This often requires innovative technologies for regulating, generating and storing energy. In order to meet demand, oil and gas companies need to focus on areas within their own business models where they can embrace innovation to increase efficiencies‖ (Rigzone, 2017) – In the complex energy market, oil and gas will have to compete with alternative sources of energy to gain the market share in the future or to retain its market share. So Oil and gas will have to implement innovative technologies to remain competitive. Without a favorable attitude towards innovation – it is not possible. ―Paul’s presentation on the essential elements of digital transformation focused on the non-technical challenges of organizational readiness and aligning strategy to reality. Companies are finding pockets of success in asset failure prediction, process optimization, and product quality; but problems persist when it comes to execution and scale‖ (Prahladrao, 2018) – Emphasizes the need for Organizational readiness to succeed in the implementation of innovation. In most of the companies – due to the lack of resources, the digital transformation is implemented only on a small scale. Organizations should be ready with necessary manpower and infrastructure for large scale implementation. 4.6. Variables Affecting Utilization Intention to use affects the technology utilization in Oil and Gas – very evident from ―The current oil price, reduced capital spend and uncertainty has proved to be a catalyst for offshore asset owners to challenge conventional methods of maintaining their ageing infrastructure‖ (Arnaud, 2019) – Oil and Gas Intends to use innovative technologies/methods instead of conventional methods to maintain their ageing infrastructure. Where, how and by whom of technology usage is influenced by the Intention to use. If you do not have a positive attitude towards a technology it will not be utilized in the plant. ―The group experienced a positive response to its innovative and high-performance methods of delivering critical repairs and maintenance‖ (Arnaud, 2019) The positive attitude towards innovative methods will motivate end users to utilize it in the organization. http://www.iaeme.com/IJMET/index.asp 110 editor@iaeme.com Sylesh Nechully, Dr. S.K. Pokhriyal, Dr. Saju Eapen Thomas, Dr. Santhosh Koyadan ―While many executives recognize the need to be able to lead their companies through digital transformation, IT personnel actually feel they lack the skill set, technology and band width to create the data centric foundation required for that digital change and future innovation‖ (OG Daily, 2017). – When the Oil and Gas wanted to embrace digital technologies (but unfortunately) the companies were not ready in terms of skill set and infrastructure. Readiness in terms of Infrastructure and Skill Sets are very important for utilization of innovation. 4.7. Variables Affecting Future Usage ―The incentives for doing so are even greater today as oil and gas sector players push into more remote, extreme areas, try to squeeze more out of existing wells, and face competition from cleaner alternative energy sources increases amidst growing political pressure to reduce greenhouse gas (GHG) emissions‖ (Burger, 2019) – The oil and gas intends to use innovative technologies to extract hydrocarbons from extremely remote areas, to produce more from existing wells and to compete with alternative sources of energy. So the intention to use influences the further technology usage. Whenever the intention changes, technology usage also changes. If the oil and gas decides to use technologies for a different purpose – the technologies that will be used also changes. ―Applying and developing a new generation of oil and gas industry digital ICT offers industry participants an opportunity to increase production, reduce costs and mitigate climate and environmental risks‖ (Burger, 2019) – What type of technologies to be purchased or whether to continue using the same technology decides the future technology usage decisions. 4.8. Variables Affecting Attitude The affordability of an innovation creates a favorable attitude towards innovation. If the innovation is not affordable – way beyond the budgets of oil and gas companies – it creates a mental block in the minds of decision makers – ―The barriers to digitization include the usual suspects: high investments of time and personnel and slow-to-appear returns‖ (Clark and Anvar, 2017) The perceived usefulness enhances the favorable attitude towards innovation. Usefulness can be in the form of reduced operating costs, increased efficiency and revenue generation as inferred from the text ―Since these technologies are readily available and have proved their value in the form of reduced operating costs, increased efficiency, and revenue generation, oil companies should move quickly to embrace digital‖ (Choudhry, Mohammad and Tan, 2016) Oil and Gas always prefer to implement proven technologies. It should be either proven in other industries or during field trials it should have given satisfactory results. Oil and Gas is going behind Digitalization because it has already proved its credibility by giving ―executives unprecedented, granular views into operations, increase agility, and support better strategic decision making‖ (Choudhry, Mohammad and Tan, 2016). 4.9. Variables Affecting Organizational Innovativeness Ability to learn new things enhances the organizational innovativeness. If an organization cannot learn new things, how can it have that innovation orientation – clearly inferred from the statement – ―Innovation is today essentially an activity that consists in examining a multitude of knowledge components that are available in the outside world, to analyze them, to select a few and to combine them with elegance and effectiveness to answer the needs of customers‖ (Meige, 2015). Organizations need the ability to analyze the innovations available in the market to select the appropriate one(s). http://www.iaeme.com/IJMET/index.asp 111 editor@iaeme.com Frame Work Analysis (Stage 1): Creating a Frame Work to Enhance the Adoption of Innovative Drilling Technologies in Upstream UAE Oil and Gas ―In some cases, technology will be acquired through partnerships. GE has announced an array of agreements with large and small oil companies to implement digital devices, databases, and sensors that could predict equipment breakdowns before they occur and expand exploration and production efficiency in deep sea and offshore oil platforms‖ (Biscardin, Morrison and Branson, 2017) – Partnership with other companies helps GE to acquire information about the latest technologies. If relevant, partnerships can be formed to develop the mutually beneficial innovation as a partnership venture. The information about the latest technologies enhances the innovativeness of organizations. ―The verdict is clear: innovation requires creating a cognitive relation between a multitude of very distant knowledge domains at an ever increasing pace. In the digital era, access to the best state of knowledge and the best talents has never been easier. When searching for the proverbial needle in the haystack, the speed of the search is increasing, as well as the number and size of the haystacks‖ (Meige, 2015) – Any innovation to be adopted requires the presence of some minimum basic conditions in the organization or plant. These conditions are called facilitating conditions. It may be the infrastructure, skilled man power or budgets. ―The mere fact that an alternative was chosen in the past increases the likelihood that it will be re-chosen in the future‖ (Arad, 2012) – The history of purchasing patterns locks the organization to certain vendors or technologies. Organizations become biased to certain technologies or vendors which limit their exposure to other innovations. 4.10. Variables Affecting Organizational Culture ―Beliefs, values and norms‖ (Sayyadi, 2018) – contribute to the formation of customs in an organization. Customs are deep rooted accepted ways of doing or executing things in an organization. ―How employees understand problems and appropriately react to them‖ – Refers to Organizational climate – How employees perceive the organizational environment? So ―Organizational culture therefore reflected in shared assumptions, symbols, (beliefs, values and norms – Customs) that specify (how employees understand problems and appropriately react to them – Organizational Climate)‖ (Sayyadi, 2018) – Organizational Culture is affected by Customs and Organizational Climate. Organizational culture refers to ―how things exist in an organization‖. 4.11. Variables Affecting Intention To Use ―Digitization — the collection, analysis, and utilization of huge amounts of data — can bring substantial operational improvements to the field through the use of sensors, analytics, robotics, and control systems. To be sure, digitization is nothing new, but the oil and gas industry has yet to broadly embrace its implementation on an end-to-end basis‖ (Clark and Anvar, 2017) – Digitization is the current trend in the oil and gas and there is optimism regarding this trend. Many a time, what happens is that the optimism for a technology gets exaggerated. There is ―over expectation from the innovation’‖ and this over expectation encourages end users to use the innovation. If these exaggerations are not met, the end users get disillusioned and lead to premature abandonment. ―The melding of operational technology with information technology calls for a common set of standards that meets stringent operational rules‖ (Clark and Anvar, 2017) – support the view that innovation has to comply with the statutory regulations and industry standards. ―Decisions in Oil and Gas Industry determine the direction and course of billions of dollars every year. The complexity of a decision can range from simple – to drill or not to drill – to elaborate. The difference between a good decision and a bad one can be the difference between success and disaster, profit and loss or even life and death‖ (Coopersmith, Dean and http://www.iaeme.com/IJMET/index.asp 112 editor@iaeme.com Sylesh Nechully, Dr. S.K. Pokhriyal, Dr. Saju Eapen Thomas, Dr. Santhosh Koyadan McVean, 2001) – The decisions in oil and gas has to take into account the ground realities. As inferred from the text – decisions can make the difference in oil and gas. It is always encouraged to take a bottom up approach in oil and gas as involving end users enhance the commitment from the end users. ―Many of these companies now face older, legacy equipment that frequently needs repairs, making it increasingly complex to manage parts inventory‖ (Syncron, 2019) – The text conveys the importance of aftersales support in oil and gas. The history of aftersales support and expectations of aftersales support affects the intention to use. The resistance to change affects the usage of innovative technologies – can be rightly inferred from the text ―The exploration and production, or upstream, sector has been particularly slow to adopt‖ (Clark and Anvar, 2017) – The upstream has been very slow to adopt latest technologies. Upstream was happy with the existing technologies till 2014 – the beginning of down turn. ―But more companies are giving digitization another look now that the industry is struggling with a particularly painful downturn. Their future, and the industry’s, will depend in large part on how quickly they can rewire their operations to create a complete ecosystem that will set digital’s power free‖ (Clark and Anvar, 2017) – The innovation should be customized to meet the specific application of the plant and it has to be compatible with the existing infrastructure or with minor modifications to the existing infrastructure. Organizations have to search for customized innovations compatible with their systems. 4.12. Variables Affecting Substitution/Re-Purchase/New Purchase Decisions ―If oil and gas companies want to remain successful, it is about time to focus on more types of innovation than product and process innovation and learn how to reinvent themselves‖ (Deloitte, 2017) – The text clearly states the need for oil and gas to reinvent themselves especially during the times of down turn. They need to reassess their technologies and processes and should check whether it is suitable for them in the changed scenario. Technological advances at times are so fast that the technologies become obsolete very soon. There are no sufficient time gaps between the generations of the same technologies – which creates intergenerational competition – ―The R&D department receives a request from the Marketing or Strategy department, an R&D team begins working on the request, and then before they reach the objective, the specifications of the request change!‖ (Meige, 2015) . The alternatives available in the market affect the innovation purchase decisions. Sometimes ―disruptive innovations‖ emerge which create altogether different alternatives. Technological advances create both incremental and disruptive alternatives. ―The next step in preparation of innovative decisions is the development of the multilevel system of alternative solutions‖ (Andronova and Osinovskaya, 2017). Technological advances and alternatives are closely related – so the researcher merges these two variables to Technological advances and Alternatives. 4.13. Variables Affecting Hype Cycles ―A recent price rebound has increased optimism slightly‖ (Choudhry, Mohammad and Tan, 2016) – The general optimism prevailing in any industry encourages companies to experiment with technologies and processes. The general optimism in the industry encourages companies to have an optimistic outlook towards innovative technologies – which sometimes creates hypes around certain technologies. ―Efforts are under way to contain costs by reducing head count, postponing projects, and cutting spending‖ (Choudhry, Mohammad and Tan, 2016) – The trend in the industry is to ―reduce head count and cutting spending‖. Technologies which http://www.iaeme.com/IJMET/index.asp 113 editor@iaeme.com Frame Work Analysis (Stage 1): Creating a Frame Work to Enhance the Adoption of Innovative Drilling Technologies in Upstream UAE Oil and Gas can help to achieve this objective are adopted. Many a time – the industry trends create hypes around certain technologies which help to comply with the trends. 4.14. Variables Affecting Resistance To Change ―Until recently, an even bigger barrier was organizational inertia. There was little incentive to go through the effort and expense of a digital transformation when prices were high and profits were flowing‖ (Biscardin, Morrison and Branson, 2017) – When the price were high, the oil and gas never cared to change their existing systems even when the latest technologies which performed far better than the existing ones were available in the market. They were complacent with the existing systems. Their only concern was to find more oil. ―In fact, the sector’s current uncertainties‖ (Biscardin, Morrison and Branson, 2017)– The oil and gas market is very risky and uncertain. Nobody can predict what will happen in the future for oil and gas. So the oil and gas companies should be prepared to face the worst. These uncertainties emphasize the need for oil and gas companies to develop the ―selfefficacy‖ to develop the capabilities even to survive in the worst case scenarios – ―make it imperative for companies of all sizes to identify the capabilities that are critical to profitable growth, and even survival, and allocate capital accordingly‖ (Biscardin, Morrison and Branson, 2017). 4.15. Sources of Information Sources for information are Partnerships, Oil and Gas blogs, News Sites, Corporate Blogs, Conferences and Tradeshows. 4.16. Variables Affecting Aftersales Support After sales support determines the fate of usage of innovation. It also affects the innovation decisions. ―Call centers have realized the demand, and have experts on-hand to support the industry. There are several service options that can increase efficiency without adding extra costs. Not only that, but the services available to the oil and gas industry can also improve employee morale, improve workplace safety, and improve customer satisfaction. Here are just a few of the service options available: After Hours Telephone Answering Service, Work Alone Service, Emergency Response Service, and Virtual Receptionist‖ (Stericycle, 2014). After sales support for one innovation influences the future innovation decisions regarding the same brand. Aftersales support includes both Services and Tech Support. These supports can be given through Call Centers - After Hours Telephone Answering Service, Work Alone Service, Emergency Response Service and Virtual Receptionist. 4.17. Variables Affecting Purchasing Patterns History and Frequency of Purchases and Familiarity affect the purchasing patterns in an organization. ―Decision’s frequency influences the extent of rationality and politicization in the decision-making process‖ (Nooraie, 2012) – The history and frequency of past decisions orients organizations towards a particular line of buying. These ―orientation traps‖ occurs unconsciously. 4.18. Variables Affecting Absorptive Capacity In a competitive energy market – an organization should be open to everything. Otherwise it is doomed to become a failure. If it is not open to the latest developments in the market, it cannot learn new things and change - ―Among the companies that we have met in various http://www.iaeme.com/IJMET/index.asp 114 editor@iaeme.com Sylesh Nechully, Dr. S.K. Pokhriyal, Dr. Saju Eapen Thomas, Dr. Santhosh Koyadan industrial sectors, Enco is a very interesting case. Over the past few years, among numerous initiatives to improve the company’s innovation performance‖ (Meige, 2015). ―Enco created a Scientific Directorate at the corporate level and an Innovation Directorate in the its Marketing & Services branch. Enco has also reorganized its entire R&D organization‖ (Meige, 2015) – A good R&D takes initiatives to experiment with the latest technologies and practices in an organization. An active R&D enhances the learning capacity of an organization. An organization should always gauge the capabilities of the R&D in terms of competency, adequacy of the manpower, infrastructure, budgets etc. ―An innovative CEO will be prepared to take any risk to find new ways of improving the operations of the organization. Innovative CEO’s are more likely to adopt novel technologies that have not been tried in similar circumstances in anticipation of a positive outcome‖ (Hameed and Counsell, 2012) – CEO Innovativeness can create the difference. A visionary CEO, who likes to experiment with innovation, is a blessing for any organization. He will be always on the lookout for improvements and enhances the learning capacity of an organization. The competition in the market encourages companies to learn new things. Unfortunately in oil and gas there is no competition. It is an Oligopolistic market where the oil producing countries have formed OPEC and gets huge profit margins by sharing the market and deciding on the prices. There are no incentives to learn new things –―OPEC works on the same rule as followed by oligopoly market structure and hence clearly indicates its relation to each other and is best example of oligopoly market style. In Oligopoly market, firms or producers get together to share a market and decide on prices. Because of an uncompetitive market structure, they enjoy heavy profit by raising the prices or lowering the prices to attract more customers resulting in entry barriers to this market‖ (Essays, 2018). But the Energy market as such is expected to become more competitive due to the advances in alternative sources of energy. So the competition forces oil and gas companies to remain competitive – ―Despite its size and scope, Enco is under pressure from a number of recent trends, including the rise of China, new sources of energy‖ (Meige, 2015). 4.19. Variables Affecting Affordability The Market price of the innovation, switching costs and budget availability plays an important role in the affordability of innovation – ―With supply chain complexities skyrocketing, companies are facing challenges in delivering projects within a specified budget, the client realized the need to leverage a cost benefit analysis engagement to gauge the impact of each cost factor on the overall business growth. Additionally, by analyzing the market cost, the client wanted to better understand the demand for commodity prices and determine the price that the end-users were willing to pay for their products‖ (Business Wire, 2018) – Emphasizes the need for sufficient budgets to afford the Cost of innovation. The budgets should be greater than the market price. There is one aspect which is usually ignored while searching for innovation and finalizing budgets – Switching cost. Switching cost is the expenses incurred to substitute an existing technology with a latest one – ―companies are investing a great amount in finding out other alternatives such as solar energy and making them as efficient as oil and gas. A disadvantage of this is that the switching and maintenance cost is very high when dealing with these alternatives. This makes them unattractive for consumers‖ (Sadikn, 2013) – The text mentions not only about switching cost but maintenance cost as well. So all these costs should be factored into while assessing the affordability of an innovation. http://www.iaeme.com/IJMET/index.asp 115 editor@iaeme.com Frame Work Analysis (Stage 1): Creating a Frame Work to Enhance the Adoption of Innovative Drilling Technologies in Upstream UAE Oil and Gas 4.20. Variables Affecting Usefulness ―Whether applied to the short-term or long-term picture, digitization has the center stage. Profitability increases on every front as costs are taken out through intelligent maintenance, workflow automation, better labor utilization, and increased standardization and simplification of designs, processes, and equipment‖ (Clark and Anvar, 2017) – The text points out that the digitization as an innovation enhances profitability by automating the work flows and facilitating better utilization of labors. The researcher can clearly infer that - Any innovation which saves cost and enhances profitability is welcomed in oil and gas especially during this down turn. ―Having fewer people, sometimes none, on dangerous drilling platforms obviously keeps more employees out of harm’s way. And the analytics applied to seismic probes for new reserves can foster more effective, less expensive exploration, with drones and ―wearable‖ technology (sophisticated data entry and display devices) keeping a watchful eye out to avert, or at least minimize, work errors and other accidents‖ (Clark and Anvar, 2017) – supports the view that any innovation which enhances the safety of workers by reducing the number of mistakes or errors are very much preferred in oil and gas. Safety is accorded the top most priority. The margin for errors is very small in oil and gas or the results will be very catastrophic. Any innovation which reduces the duration of processes is something which will be favorably looked at by oil and gas companies. Digitization can accelerate cash recovery and lower operating costs. ―Years of limited technology innovation have left upstream companies with a long cash recovery cycle. In many cases, the time from production to payment can be as long as four months. In other industries, that sort of delay would be a death knell‖ (Clark and Anvar, 2017). Putting digital to work in this area can speed up the processes enormously while ensuring accuracy. Digitization reduces the duration of payment cycle and is preferred by the oil and gas. Time is money and any time saved is money saved. ―In the oil and gas business, that means smart elements such as sensors, measuring devices, and actuators embedded in drills, wellheads, vessels, and other field equipment that constantly exchange data. Wireless networking connects these elements and sends their data to servers for processing, storage, and analytics. Millions of smart elements ―working‖ around the clock produce almost unimaginable flows of information‖ (Clark and Anvar, 2017) Huge amount of relevant information is generated, processed and stored by Oil and Gas companies. The plant information is confidential – which cannot to revealed to outsiders. But connecting the devices to internet exposes the whole infrastructure to cyber-attacks – which can be very harmful for the whole plant. So the innovative technologies implemented in the plant should not compromise the security aspects of the plant. Anything which adds an extra layer of security is always embraced. For an end user – he might be particularly interested in a technology if it enhances his job performance, if it makes his life easy in the plant. Anything which helps in the performance enhancement of individuals is always preferred by the end user - ―Countless industrial operations can be improved with the much discussed Internet of Things. Production rigs can be largely, if not fully, automated; the flow of crude and its composition can be constantly monitored; and the process of finding new reserves can become far less hit-or-miss. In a control room, personnel see and interact with virtual representations of the field and all of its components‖ (Clark and Anvar, 2017) – As inferred from the paragraph, the innovation helps to display and monitor all the parameters in the control room, thereby making the life of engineers and technicians easy. Otherwise, they have to go out to the field and make these individual readings. Automation makes the life of end users comfortable in the field. http://www.iaeme.com/IJMET/index.asp 116 editor@iaeme.com Sylesh Nechully, Dr. S.K. Pokhriyal, Dr. Saju Eapen Thomas, Dr. Santhosh Koyadan 4.21. Variables Influencing Facilitating Conditions ―Enco has created Innovation Offices in several of its branches. An Enco innovation team, composed of just a few individuals, plays the role of internal consultant: the team members benchmark existing innovation practices and make the results available to other entities (countries and business functions) within the branch‖ (Meige, 2015) – Points to the need for a Central innovation office to oversee the innovation activities in an organization. This innovation team can evaluate the processes and technologies applied in an organization and suggest improvements. These centralized innovation offices should have innovation representatives in various branches to coordinate efforts. Moreover – these innovation offices can promote innovative thoughts by implementing a common platform – like a common website to discuss innovative ideas from the employees. These innovation offices should be placed directly under CEO or Management to bypass the normal hierarchies – if an innovation is found relevant for an organization. ―The goal of this ongoing review is to decide which technologies can be safely outsourced and which ones are core so should remain in-house‖ (Meige, 2015) – Organizational priorities also influence the innovation adoption within the organization. Organizational priorities decide the opportunities to be pursued further. Organizational priorities also decide as to whether the technologies are to be developed in house or outsourced. Organizational strategy to implement innovative technologies is also important. Organization should anticipate the hurdles and should have proper strategies in place to counter the hurdles – ―Above all, what is needed is a strategy that works. Winning companies focus on building integrated capabilities systems that differentiate them in the marketplace, and then scale those systems across their entire organization. They also stop fighting the imperfections in their culture and instead identify and leverage the parts that work in their favor. It’s time to get that strategy working. Right now, in upstream oil and gas, end-to-end digitization is the prize, and it is up for grabs‖ (Meige, 2015). Organizational strategies help to concentrate on strengths and to eliminate or reduce the intensity of weaknesses. These two variables are very closely related concepts. So these two variables are combined to form a single variable – ―Organizational Priorities and Strategies‖ ―Although the super majors have traditionally sought to participate in all environments, even these companies do not have the skills — or corporate culture — to compete in all situations anymore‖ (Meige, 2015) – emphasizes the need for oil companies to have a competent management to provide visionary leadership in the days of down turn. Nobody was expecting oil and gas prices to go below $ 80 per barrel. But when this ultimately happened – many of the oil and gas companies did not know how to tackle the situation as they lacked competent executives at the top to provide the necessary leadership. So a competent management at the top can create all the differences. Competent and dedicated employees are required to operate innovative technologies ―Over the past few years, Enco has made significant progress in expert management. The leaders of Enco, like those in many other companies, felt that experts were the source of the problems. The vast majority of companies define an expert based on the recognition of the superior knowledge an expert holds compared to a non-expert‖ (Meige, 2015) – The paragraph stresses the need for competent employees and to focus on the need to manage them properly. ―The loss of these capabilities could push development project costs up substantially if they are not carefully monitored. Smart IOCs should embrace new digital initiatives‖ (Biscardin, Morrison and Branson, 2017) – Oil and Gas companies will be embracing new digital in their pursuit to lower cost and enhance profitability. But this cannot be done without http://www.iaeme.com/IJMET/index.asp 117 editor@iaeme.com Frame Work Analysis (Stage 1): Creating a Frame Work to Enhance the Adoption of Innovative Drilling Technologies in Upstream UAE Oil and Gas necessary infrastructure to support the innovative technologies. An assessment of the infrastructure requirement also should be done, prior to finalizing the innovation. ―Upstream companies will have to be diligent about containing other expenditure increases, particularly in the supply chain and resource development arenas‖ (Biscardin, Morrison and Branson, 2017) – Clearly hints at the unfavorable market conditions prevailing for oil and gas. The unfavorable market conditions have forced oil and gas companies to go on a cost cutting drive. This cost cutting drive may affect budgets allocation for overall activities. This is one view. Another contradictory view is that Oil and Gas will invest in innovative technologies to enhance the efficiency levels during down turn. The second view prevails. 4.22. Variables Influencing Scientific Credibility The processes of oil and gas are very critical and any failures can be catastrophic. So the scientific credibility of the technologies is important in oil and gas. Oil and gas always prefer to experiment with proven technologies. The results of Field trails enhance the scientific credibility – rightly inferred from ―Field trials began in 2018 and the functionality and reliability of the service proved to be very robust‖ (EPmag, 2011). ―BHA used did not impact the build rate capabilities of the power drive archer system and that any extra fatigue generated through rotating a drill string though a high hole high hole dogleg well bore can could be managed‖ (EPmag, 2011). – End users have some expectations regarding the features of innovation and if an innovation cannot meet these minimum features requirement, it will not be adopted. Reputation matters a lot for adoption of innovation. Oil and Gas companies always prefer to deal with reputed vendors with necessary skill sets. This can be concluded from the statement ―Oil and Gas are looking for companies led by a strong management team with a combination of a good reputation in the industry‖ (EY, 2018) – This logic applies to innovation as well. Reputation enhances the perception of scientific credibility of an innovation. 4.23. Variables Influencing Compliance ―Typically, state and federal statutes, in combination with rules set by state and federal regulatory agencies, create these penalties. The federal and state governments also use requirements for financial assurances from companies – bonding – to help ensure that communities and the environment are protected from operators that fail to comply with regulatory requirements. Beyond these legal requirements, more and more oil and gas companies are proactively setting their own standards and monitoring their compliance‖ (Intermountain Oil and Gas, 2017) - emphasizes the need to comply with standards in oil and gas sector. The statutory regulations are made by the government authorities and these regulations are to be strictly adhered to – violation of which attract penalty depending on the gravity of the violation. The innovation has to comply with these statutory regulations. Some of these standards are set by third party/industry or by the organizations itself. ―That has now changed, with ExxonMobil, Chevron and Occidental Petroleum all signing up to the initiative and committing $100 million each to the scheme’s investment arm, which supports the development, deployment and scale-up of low emissions technology and business models. They join Brazil’s Petrobras and CNPC of China, which have also joined, although Reliance has now left the group‖ (Scott, 2018) – At times the group pressure forces the companies for certain compliances. As inferred from the text - Since Exxon, Chevorn and Occidental Petroleum set aside $ 100 Milion for the development of low emission technology, http://www.iaeme.com/IJMET/index.asp 118 editor@iaeme.com Sylesh Nechully, Dr. S.K. Pokhriyal, Dr. Saju Eapen Thomas, Dr. Santhosh Koyadan Petrobras and CNPC were also forced to do the same due to group pressure. It is done to maintain the membership in an elite class or industry. When the majority in the group is showing commitment towards a good cause, others in the group are forced to follow. 4.24. Variables Influencing Customization and Compatibility Oil and Gas Companies select technologies based on the efficiency level they want to achieve in their operations. Some of the companies are still stuck up in the golden era when the oil was around $ 100 per barrel and they do not want to enhance their efficiency levels. So to enhance efficiency – the companies need to select the right technologies to enhance their operational efficiencies in the plant – ―At one end of the digital spectrum are oil fields in which sensors barely exist and operations are still paper-based. At the other end are companies that are already using unmanned robotic drilling platforms‖ (Clark and Anvar, 2017) – The technology should be fit for specific application(s). ―Companies are shifting from purchasing discrete services to solution-based buying, eliminating disparate interfaces and data along with the risks they bring‖ (Clark and Anvar, 2017) – The technology selected should be suitable for the existing systems or the innovation should not require major infrastructure changes or additions or it should match the proposed changes in the plant or organization. 4.25. Variables Influencing Customs ―Call it a sense of predictability and reliability in a fast changing world. For organizational leaders, the balance of having routines that are stable and predictable while capable of executing change and innovation is a huge challenge. As sociologists will tell you its never a great idea to remove routines or just stop supporting them without a clearly communicated implementation road-map for the new routines is well - not productive. So particularly in new leadership situations - try to understand the formal and informal routines in your organization and whatever you do‖ (Stratoserve, 2011) – Routines are stable, predictable ways of doing things in an organization. Routines get repeated in an organization for executing same or similar tasks. Routines are standard procedures or practices followed in an organization. Customs are particular ways of doing thing in an organization, which are unwritten but accepted and followed by the majority of members in an organization for a long time. To change Customs – the routines of an organization should be changed. Sometimes the customs can become a hurdle in the way of innovation implementation. So the strategy should be to change the customs by changing the routines. Norms represents the beliefs and values of an organization which decide what is wrong and what is right. ―Every organization develops distinct beliefs and patterns over time. Many of these are subconscious or taken for granted. They are demonstrated in beliefs, values, and norms of an organization as seen in rituals, stories, ceremonies and other symbolic forms‖ (Pirayeh, Mahdavi and Nematpour, 2011). The acceptance levels of routines in an organization are decided by the norms. As the time passes by, the routines which gets accepted becomes the customs of an organization. Changing the norms help an organization to change its customs. 4.26. Variables Influencing Organizational Climate Organizational climate refers to the feeling of employees about their working environment. A healthy relationship between the employees in the work place makes a positive feeling towards the work place. An individual always expects support and help from his colleagues. This is evident from the text ―Climate characterized by a strong focus on a) communication and cooperation with actors in the external environment such as vendors, and b) internal http://www.iaeme.com/IJMET/index.asp 119 editor@iaeme.com Frame Work Analysis (Stage 1): Creating a Frame Work to Enhance the Adoption of Innovative Drilling Technologies in Upstream UAE Oil and Gas cooperation and communication with other projects and with the line organization, is perceived as critical to success in large-scale projects in the oil and gas industry‖ (Hannevik, Lone and Bjorklud, 2014). Good work has to be acknowledged and rewarded. A work place where good works are not appreciated creates a bad feeling in the minds of employees. Employees will not feel motivated to deliver their best. This can be inferred from the statements ―Performance appraisal system has positive relationship with organizational climate. Compensation system has positive relationship with organizational climate. Career planning system has positive relationship with organizational climate‖ (Dele, Nanle and Ozima, 2015) Appreciation and rewards elicit commitments from employees. ―If the individual employees are given sufficient freedom to work and exercises authority, it will result in efficiency in operations. The autonomy will lighten the burden of higher level executives‖ (Your Article Library, 2017) – Employees should feel empowered to execute their tasks. If proper authority is not given, then nobody takes responsibility and the task of making a decision is passed on to others and ultimately gets delayed indefinitely. Empowerment in the lower levels reduces the burden on top level executives. Roles of employees should be properly defined. Vague description of job roles creates frustration in the minds of employees. They should be given proper directions regarding the roles they have to perform so that their skill sets can be properly utilized – ―Practices relating to providing a sense of direction or purpose to their jobs-setting of objectives, planning and feedback‖ (Your Article Library, 2017). An employee should be given clear cut directions as to what is expected from him and positive feedbacks should be given for improvements. Since Relationships and Rewards are closely associated to the performance in work place, the researcher merges these two variables in to: ―Working Environment – Rewards and Relationships‖. 4.27. Variables Influencing Decision Styles End user involvement in the decision making process definitely helps the organization in the implementation stage. In fact, the end users can help the procurement to formulate the buying strategy, reconfirm the technical specs and to select the best proposals for the organization. ―users are involved in strategic planning decisions of procurement activities, development of procurement strategy and execution of the proposed strategies throughout the life cycle of the procurement exercise backed with implementation, review and corrective actions‖ (Onchiri and Kwasira, 2016) - Verifies this point. Most of the Oil and Gas organizations have decentralized structure. As inferred from the statement ―Decentralization within oil and gas companies also enables these companies to identify changes in external environments and then helps them to actively and effectively response to these rapid changes. A less emphasis on formalization can also provide a freedom for experts to more innovatively handle their work operations that lead to higher job satisfaction within oil and gas companies. This less emphasis on centralization also creates more appropriate and effective workplaces for developing learning and growth‖ (Sayyadi, 2018) decentralization helps oil and gas to respond to external changes immediately. Decentralized structure gives more opportunities and freedom for employees to self-develop. Decentralization creates better work places for the employees. Decentralization gives authority to particular branches to take appropriate decisions. Channel of communications influence the decision making. Channels of communication are of two types (1) Formal and (2) Informal. In a big typical organization in oil and gas – the communications are mainly through Formal channels. In formal communications – rules are http://www.iaeme.com/IJMET/index.asp 120 editor@iaeme.com Sylesh Nechully, Dr. S.K. Pokhriyal, Dr. Saju Eapen Thomas, Dr. Santhosh Koyadan well established – with Whom and how to communicate. It helps to reach throughout the organization. In case of a problem – there is clarity regarding how it has to be reported and escalated. In big organizations – informal communications can create chaos – ―Formal channels are considered the more effective of channels of communication. With organizations constantly growing in size, formal channels help to bridge the gap in the communication process. It is a readily available means to reach through to every corner of an organization, which would otherwise be difficult. In formal channels, the rules are well laid. For example, a worker communicates with the supervisor, the supervisor with the manager, and so on. Thus, only necessary information gets filtered and sent to the top. An organization can design formal channels to suit its specific needs. This can help monitor organizational activities. It can ensure that problems are solved without too much delay. Formal channels deter a free flow of information. Formality demands that the information flow take a specific route only. This inhibits the natural flow of information‖ (Your article library, 2018). Formal channels delay the decisions as it has to follow a predefined route. Formal communication channels will have many irrelevant links and the information gets filtered or at times gets distorted. Informal communication channels help to bypass the irrelevant links and make speedy decisions Young generation bring in innovative ideas to organization. Their enthusiasm to challenge every established way of doing things can be channelized for the betterment of the company – ―Oil and gas companies need to engage with these recent graduates because they can provide the new ideas that will make the future easier to navigate‖ (Biscardin, Morrison and Branson, 2017). 5. OPEN CODING http://www.iaeme.com/IJMET/index.asp 121 editor@iaeme.com Frame Work Analysis (Stage 1): Creating a Frame Work to Enhance the Adoption of Innovative Drilling Technologies in Upstream UAE Oil and Gas Figure 1 Open Coding 6. 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