PROFOUND CHANGE
Alan Murray, PhD P Eng. FASME
IPEIA Conference and Exhibition
Jasper Park Lodge, Alberta
Tuesday 28th February 2023
KEYNOTE
A few thoughts to get started…
Pancho Villa Mexican revolutionary
Tell them.. I said Something!
James Thurber (1894 – 1961)
You can fool too many people, too much of the time.”
“Man is flying too fast for a world that is round. Soon he
will catch up with himself in a great rear end collision
Presentation Overview
What is Profound Change
• My perspective
Some Example Drivers of Profound Change
• Globalization
• Allocation of Capital
• Advances in Technology
• Demographics and the Great Crew Change
• Environmental Change and Sustainability
Final Thoughts for Dealing with Profound Change
What is a Profound Change?
•Change in society, economy or
environment that has potential
generational impact
•Day-to-day impacts at the
individual level even if these
are not always perceptible
One’s Perspective is Very Important!
Where You Stand Depends Upon Where You Sit
Co-Op
Student
Retiree
My Jaundiced view of the world forged from my random walk
Drivers of Change
There have been, and are, many interlocking Drivers of Change!
I am going to focus on FIVE that I hope provoke your interest.
1. Globalisation
2. Capital Allocation
3. Advances in Technology
4. Demographics and the Great Crew Change
5. Environmental Change and Sustainability
Outline: Drivers of Change
Where are we?
1.Globalisation
2. Capital Allocation
3. Advances in Technology
4. Demographics and the Great Crew Change
5. Environmental Change and Sustainability
Population and Energy Use is Growing
•In the next two decades, there will be almost two billion additional people (7 to 9 billion) on
the planet
•95% of population growth will be in developing or underdeveloped countries
•Energy demand will need to increase, but sources of that energy may change
•This will cause an era of revolutionary transitions and considerable turbulence.
Source: Shell Outlook to 2050 (The BP and Exxon Outlooks are similar)
Increasing Global Trade and GDP Increase Energy
Use
Source: UN and DOE EIA 2017
Take Away: Energy use has grown and will continue to grow with economic development
Benefits of Globalization not Equally Distributed
•Big earners and those in the bottom
two-thirds of income levels (on average,
globally) received major gains
•Households in the 75th to 85th
percentile of the global income
distribution were scarcely better off
economically in 2008 than they had
been 20 years before.
•This group, (represented by the dip in
the chart) includes most of the middle
class in industrialized countries.
Canadian Productivity Needs to Increase to be
Competitive
Source: Edelman Trust Barometer 2022
Increasing Global Trade and GDP Increase Energy
Use
Productivity is the real value of output produced by a unit of labor during a certain time (2012=100)
Actual
108.45
Previous
107.75
Highest
126.52
Lowest
67.26
Dates
1981 2022
• OECD Productivity rankings: Canada (18), US (5); We need to Improve!!!
• Productivity is improved by effective allocation of capital, technological advancement, improved competency and managing environmental
constraints.
• Coincidentally, these are the key profound changes we are talking about
Outline : Drivers of Change
Where are we?
1. Globalisation
2. Capital Allocation
3. Advances in Technology
4. Demographics and the Great Crew Change
5. Environmental Change and Sustainability
Allocation of Capital is Changing
•Traditional financial institutions are scrutinized to channel investment towards ESG aligned investments (e.g.,
cyber industry as they have small CO2 footprints; or renewables)
•A Reluctance to fund traditional capital intensive energy sources
•However, the market for energy is huge (current global consumption is approximately 170,000 Terrawatt hours
per annum (worth $10 trillion USD, which is 13% of global trade)
•Alternate financing may become increasingly common (private equity, company self-financing, select sovereign
wealth funds)
•Traditional energy companies will need to reduce environmental impacts to attract capital
Outline : Drivers of Change
Where are we?
1. Globalisation
2. Capital Allocation
3. Advances in Technology
4. Demographics and the Great Crew Change
5. Environmental Change and Sustainability
Will Technology Change Even Faster Going Forward?
The Harwell Dekatron Computer, aka
WITCH, is the world’s oldest (1951)
still working computer. It weighs 2.5
tonnes, and has 828 flashing Dekatron
valves and 12KB of memory.
Source: National Museum of Computing Bletchley
My Grandson’s Android-based tablet
Has Memory storage capacity of
16GB! And weighs 730.28 Grams
Will Materials Continue to Develop?
Source :Mike Ashby
Will Pipe Strength Improve Further?
• Steady Evolution of Pipeline Steel Strength and progression in commercial development
• Need to balance strength with toughness and ductility
• Also led to improvements in fully and semi automatic welding and NDE (Use of Ultrasonics
including phased arrays , and Digital X- Ray)
What about Increasing Power from Aero –Derivative
Engines?
Canada Will Need to be More Technologically
Innovative
Relative to its peers, Canada has consistently spent
less on research and development activities as a share
of GDP. d
On a per-capita basis, Canada produces fewer
patents than its peers
Is this lack of innovation impacting Canada’s productivity?
Global Competitiveness in High Tech Areas
•Canada is trailing other countries in high
technology exports
•High-technology exports—defined as
exports of products with high R&D
intensity
•High–skilled occupations accounted for
most new job creation in the Canadian
economy between 2007 and 2016, and
they’re expected to comprise 76 percent
of projected employment growth over
the next 10 years
Collaboration between Businesses and Governments is essential for success
Outline : Drivers of Change
Where are we?
1. Globalisation
2. Capital Allocation
3. Advances in Technology
4. Demographics and the Great Crew Change
5. Environmental Change and Sustainability
Great Crew Change Leading to Dwindling Experience
Rate of Change of Technology
Skill Shortages Have an Impact
A recent survey of the Oil and Gas sector revealed that more than 75% of the companies in the sector are having difficulty recruiting staff, both
technical and managerial, pushing up labour costs.
36 per cent of oil and gas industry employers surveyed, blame a lack of succession planning for knowledge transfer and skills retention as the
contributing cause of their skills shortages.
Increasing knowledge transfer seems an obvious way of attracting workers, and solving skills shortages.
It is not that easy, the current younger generation of engineers are inclined to move jobs more often than their predecessors. In the United States,
the average job tenure of workers aged 55 to 64 was 10.1 years, which is more than three times the 2.8 years of workers aged 25 to 34 . Ask your
staff where they would place themselves on the Dunning Kruger chart below. You may get a surprise with the Gen Xs and Gen Y replies!
Competent Staff Becomes More Important As
Equipment Ages
•‘The inadequate management of competence has not only contributed to disasters… but also
to fatalities, personal injuries and ill health.’ It is estimated that up to 80% of accidents may
be attributed, at least in part, to the actions or omissions of people’, - UK Health and Safety
Executive
•‘Research results have shown that more than half of aviation, aerospace and aeronautics
mishaps incidents are attributed to human error’, -NASA, USA.
Outline : Drivers of Change
Where are we?
1. Globalisation
2. Capital Allocation
3. Advances in Technology
4. Demographics and the Great Crew Change
5. Environmental Change and Sustainability
Economic Growth is Compound Growth, But So Is
Environmental Impact
•If the planet was consuming at the current rate of
the USA, we would need about 3 earths to sustain
ourselves and about nine earths to absorb the waste
and toxins generated
•A 3% growth rate doubles the economy in 23 years
(typical of developed countries)
•More efficient use of resources will be required to
accommodate growth as well as shift to potentially
lower Energy Return on Investment (EROI)
•Developing countries can double in 7 years (10%
growth)
Outline : Drivers of Change
Where are we?
Final Thoughts on
Dealing with Profound Change
Final Thoughts on Dealing with Profound Change
•The world feels like it is changing faster and more profoundly
than ever before
•What are the things that we can do as individuals and
organizations to anticipate and become more resilient to
change?
•As mentioned, in Canada we need to improve innovation,
competency, and reduce the environmental footprint to
remain competitive
Final Thoughts on Dealing with Profound Change
•Nature may also have a few things to teach us about dealing with profound
change:
•Resilience (or the ability to respond to or bounce back from profound
change) in nature depends on several aspects:
•Plasticity: Ability to change organizational structures or functions quickly to exploit
changing conditions in the environment
•Diversity: Developing a broad mix of competencies, technologies and capital sources
to be able to evaluate several different options for managing the change
•Redundancy: Maintaining duplication of key organizational functions that are
intended to manage major changes that pose an existential threat to the
organization
Final Thoughts on Dealing with Profound Change
Profound change is exciting.
It shouldn’t be feared as it is ultimately what causes
an ecosystem, individual or business to evolve.
Questions?
There are lots of very difficult questions but few easy answers.
I wish you well in your effort to deal with profound change.
Enjoy the Conference!