Design Thinking for Innovation - University of Virginia

May-June 2020

Final Assignment – Reflection: Learning Launch

Challenge  I am the Chief Financial Officer of an onshore oil & gas production company in Brazil.  In  the oil & gas industry, innovation has traditionally focused on discovering and  maximizing reserves, but they have led to today’s supply glut and low oil and gas prices.  In the current environment, incremental improvements in productivity will not be  enough. In that context, I was challenged by our CEO to put together a team to promote  digital transformation in such a century old industry as “a path for creating value by  streamlining operations that promote access to energy that’s safe for the environment  and that will strengthen the company’s economic performance”.  The main goals set by  our CEO were to, within the next 3 years: (i) improve productivity by 40%, measured by  the number of employees per active well; (ii) reduce the number of recordable spills by  80%; (iii) reduce our lifting costs per barrel by 25%. These goals came from benchmarks  obtained from a sample of USA & Canada based exploration and production companies.    Selection  We put together a team with experienced employees with different backgrounds:  finance, petroleum engineering, process safety, IT, pumpers and mechanics. Some of  those individuals already had some familiarity with design thinking, but we had to  explain the main concepts to the whole group to put everyone on the same page. We  started by discussing What Is/ What If/ What Wows and after a few sections we realized  that a lot of good ideas quickly emerged and we were ready to try the learning launch  tool, which is an experiment conducted in real life quickly and inexpensively meant to  test an idea and prototype. This Learning Launch was our way of testing What Works.    Application  To properly apply the Learning Launch tool, we established some guiding principles: (1)  Set tight boundaries: since this is a learning launch and not a pilot, it is important to plan  for it to end and we set concrete limits on key variables, such as time, geography and  number of variables to measure; (2) Work in fast feedback cycles; (3) Make it feel real.   For our first learning launch, we focused on testing some Digital Oilfield tools. Digital  Oilfield encompasses a wide range of innovations such as fleet management and  predictive maintenance. These innovations are a result of the maturing of enabling  technologies such as low-cost sensors, big data analytics and cloud computing. The  Digital Oilfield is not a technology play but the combination of several technologies in  innovative ways to utilize technology to drive productivity. In particular, we wanted to  test solutions that could automate field data collection, organization and basic analytics.  This way we expected to free up time from the operations teams, which spent about  40% of their time just collecting data and checking for on-site spills from the hundreds  of well in our fields. Everyday each one of them would visit each well, but if we had

reliable data collected automatically, we would change the pumpers routine to a more  productive “dispatch mode”, where the pumpers would be dispatched to solve  problems already detected and pre-analyzed automatically.    We chose one of our 17 oil fields to run a prototype, a field which was close to our  headquarter and where a successful test would have a positive and significant impact in  the organization. We defined the key parameters we wanted to measure in each type  of well and selected the sensors. We also created a simple telecommunications  backbone to collect and transmit the data to our central offices. This first learning launch  which lasted about two weeks allowed us to figure out what worked well and what  needed to be redesigned. Our team went through a one-day assessment where we  invited the key stakeholders in the process and discussed some modifications required  to make it right. Some of the key takeaways were: (i) in order to be able to truly rely on  Digital Oilfield solutions resulting in a reduction of personnel going around the field to  collect data and check that everything was ok, we needed to be able to actually see what  was going on in the well sites, and: (ii) we needed the telecommunications system to be  extremely reliable, since we could not afford the risk of not noticing  early on an oil spill  or a high production well going offline for a long time. We also realized we needed to  work on the employee’s feelings about the change and their preparation for the new  operating model to come.    We then launched a second prototype which addressed the key issues identified in the  first test and let it run for about a month. After that we collected the data and made a  presentation to the CEO and to the senior managerial staff in the Company, which  approved the launch of a broader scale initiative to implement the Digital Oilfield in all  the Company’s fields.       Insight   By applying the learning launch tool, we created an experimentation environment  where it was ok to dream of a completely different operating model and where the  process of design-prototype-test-reassess-test again allowed people to get rid of the  fears involved in failing at a challenge outside of their comfort zones. Without the fear  of damaging one’s reputation for failing and by applying the technique of fail often/ fail  fast (and cheap) we achieved a huge success in addressing the key strategic goals set by  our CEO. Another critical insight came from the realization that managing people’s  concerns regarding change are as important as the technical aspects. A lot of resistance  (and also some internal sabotage) initially came from people’s fear of not being capable  to adapt to a new operating model. We needed to invest a lot in training and coaching  to help some employees migrate from a physically intense/ repetitive tasks model to a  more analytical/ technical role. Only when these people realized that the Company  would invest in preparing them for a new operating model (meaning they would not  lose their jobs) did they really embrace the change.

Approach  This was one of our first design thinking initiatives in the Company and although some  team members had some theoretical knowledge of the tools, future launch designs  should incorporate some learnings from previous experiences. For instance, we should  be more careful in assembling the launch team incorporating some members with  experience in people management and communications, to make sure we properly  address human aspects of change management and do not let the group be dominated  by engineering and finance types. We should also spend more time early on in the  project aligning concepts and educating all member of the team with basic conceptual  knowledge of the Design Thinking for Innovation toolkit.

