As the oil and gas industry faces greater and more exacting technical challenges, it becomes more important to be able to innovate rapidly. Whether the objective is to identify a well site, improve production, or react quickly to a crisis, making the right decision can make the difference between success and failure.

The industry has made great strides recently in its effort to expand collaboration with the goal of expediting innovation. InnoCentive is helping the industry toward that goal. Since 2001, the company has been providing tools, methodology, and external networks to facilitate better, faster, and more cost-effective innovation using an open style of innovating that is foreign to most organizations.

Offshore operations have moved from shallow-water to ultra-deepwater regions and harsh environments. As the industry faces greater and more exacting technical challenges in new areas of operation, it becomes more important to innovate rapidly.

The prevailing culture of NIH (Not Invented Here) is more the rule than the exception in the industry, which needs to embrace 21st century approaches to solving pressing business and technology challenges.

Changing culture is never easy, but the dividends can be dramatic: better economics, technological breakthroughs, reduced time to market for new products, and even “on-demand” options for responding in crisis situations.

The need for immediate innovation
Though the wheels of change turn slowly, the oil and gas industry has begun to embrace the open innovation concept to resolve technical problems.

Following the Deepwater Horizon blowout earlier this year, InnoCentive presented an open call to innovators around the world to submit solutions to help with issues surrounding the oil spill.

The learnings were many in the course of this crisis, and the experience and learnings gained will be used to propel the organizations in a better direction in terms of assisting oil and gas companies in the future.

Crisis situations are inherently chaotic, and that was clear in the early days of the incident. BP had no plan in place to engage the world outside the oil and gas industry for solutions to the many challenges that surrounded the crisis. Clearly, it is not ideal to attempt to create a transformational change in the middle of a crisis. However, businesses, government, and other organizations need to examine their policies and standard operating procedures to ensure they do not limit the ability to respond in emergency situations.

Policies should encourage quick and decisive use of open innovation and collaboration in crisis situations and discourage those that fail to use every avenue at their disposal.

Delaying in looking for help is one mistake. Not having a plan in place is another. There has to be a plan for every crisis, and a critical part of that plan has to be an organized means of getting help if it is needed.

The oil and gas industry must reengineer itself to meet the challenges where the stakes and risks are higher than ever. The answer is not to spend more on last century’s model, but for the industry to reinvent itself as open, vibrant, and leading the change.

Open innovation represents not just a powerful tool, but a choice to engage the 21st century in an entirely different way. It is about out-innovating the competition, evolving into new markets, restructuring basic economies, and even having the tools to respond in a crisis situation.

Case in point
Take the Oil Spill Recovery Institute (OSRI) as an example. OSRI was established by Congress in 1990 in response to the 1989 Exxon Valdez oil spill. Its purpose is to identify and develop the best available techniques, equipment, and materials for dealing with oil spills in arctic and sub-arctic marine environments.

Open innovation represents not just a powerful tool, but a choice to engage the 21st century in an entirely different way.

Additionally, the organization was established to complement federal and state damage assessment efforts to determine the long-range effects of these specific types of oil spills on the natural resources of Prince William Sound, including the environment, economy, lifestyle, and wellbeing of the people who are dependent on those resources.

OSRI posted three Challenges on the InnoCentive website, all dealing with oil spill recovery issues.

The first of these Challenges was solved by an oil industry outsider who used his expertise in the concrete industry to come up with the winning idea. John Davis, an InnoCentive Solver from the Central US, was awarded US $20,000 for his creative solution.

This Challenge required a method for separating oil from water on oil-recovery barges after the oil and water had frozen to a viscous mass. Having no background in the oil industry, Davis applied his expertise and proposed using an existing product commonly used in the concrete industry. This tool uses vibration to keep cement in liquid form during mass cement pours. Davis realized that by attaching a long pole and inserting the tool into the oil recovery barges, it would keep the oil from freezing into a viscous state and allow the oil to be pumped easily from the barge.

OSRI found a solution by looking beyond the resources immediately available, which allowed a solution to be brought forward by someone who was not familiar with the oil and gas industry. Providing a well-defined Challenge and offering an incentive helped the organization solve a critical problem.

Reforming innovation
It will not be easy to resolve the many issues that face the oil and gas industry today, and there is no silver bullet. However, success will be achieved much more rapidly if the industry looks outside its perimeter to the expertise of those who have solved sticky problems in other demanding areas.

Open innovation is a new concept, but it is one that already has proven successful. And it has gained the endorsement of those in the oil and gas industry who have seen its benefits.

Re-thinking the way the industry works will take true leadership from the top down.

Fortunately, that already is beginning to happen. John Gibson, former Halliburton and Paradigm executive, has seen the benefit of using InnoCentive and has been a strong proponent of changing the status quo. “The industry needs a real barn burner,” he said. According to Gibson, open innovation could be it.

Companies like InnoCentive bring on-demand tools, methodology, and change management expertise to enable this kind of dramatic change, but change is possible only when it is endorsed from the top with an unshakeable commitment to break the back of NIH.