Why pilots won’t fly

Why can’t new technologies get past the pilot stage in the oil and gas sector? It’s a question that many frustrated technology entrepreneurs ask themselves when operators trial a promising digital solution but then fail to scale it out. 

Swagger

Modernisation and transformation (M&T) is on everyone’s lips. As a result, operators have been inundated with companies that swagger into meetings with a flashy demo that promises transformative efficiency gains and enhanced capital or operational discipline. 

If the technology finds a sponsor, the founder might think they’ve got it made. Until they discover that the operator is trialling a whole range of rival technologies, each one with a different sponsor’s reputation riding on it. 

You might expect there to be winners and losers in this technology steeplechase. Not so. Usually too much time and money has been invested in underperforming technologies for anyone to countenance abandoning them. So they just pile up. This complicates the situation further for innovative digital solutions that really do have transformative potential. 

Perhaps it’s becoming clearer why operators are so wary of companies touting new technologies. Frankly, I don’t blame them. 

The technology chasm

Nearly thirty years ago, Geoffrey Moore wrote an influential book called Crossing the Chasm. It addressed the challenge of marketing new technology to mainstream consumers, and used a simple bell-curve diagram to illustrate the typical rate at which consumers adopt a new technology product over its lifecycle.

The curve rises slowly in the early market stage (where it’s adopted by innovators and early adopters), then rises steeply when it hits the mainstream consumer segment (divided into early majority, late majority and laggards). The technology chasm is a flatline that sits between the early market and late market. For the reasons cited above, that chasm is now wider than ever.

Digital transformation

The technology adoption curve is a much better guide to digital transformation than a conventional business plan, in my experience. In fact, the first question I ask of any technology business where they sit on that curve. Without a minimum viable product (MVP), they’re not even on it. Vapourware doesn’t convince anyone any more, let alone the M&T department of a big operator.

Same product, different requirements

The technology adoption curve suggests that consumers want different things from the same product, at different stages in the product’s lifecycle. I’ve found the same principle applies when you’re introducing a new technology to a large organisation such as an oil and gas operator.

When you’re faced with a potential client, identifying the right innovator in that organisation is key. They tend to be excited by the product’s newness and disruptive potential, so glitches don’t put them off. This makes them a great source of feedback on the MVP.

Typically the innovator is your ‘way in’. You need them to advocate on behalf of your product to the right decision-makers further up the chain of command. On the curve this decision-maker is the early adopter. 

Early adopter

An early adopter is receptive to new ideas but, unlike the innovator, sees the technology in pragmatic terms of value and efficiency. So your presentation will probably need to frame it in those terms. If they commission a pilot, it’s because they have a real problem in mind that is going to require a customised solution from you.

Bagging a pilot is encouraging, but it’s really just an opportunity to demonstrate the benefits that you can bring to the client’s organisation. The main prize, of course, is widescale adoption across the organisation. This is usually the point where you hit the chasm.

Crossing the chasm

In my view, a technology company that is able to cross the chasm has a few essential features: a scalable product with a unique data model (or a solid patent), a track record of delivering benefits to clients along with the data to prove it, and a library of compelling evidence to show that the product ‘does what it says on the tin’. 

You also need a funding structure that is capable of handling hyper-growth on the other side of the chasm. Founders often overlook this because they are so focused on their technology. But that steep upward curve of cash-burning growth destroys more businesses than it saves. This is a topic that I’ll be discussing in a later post, so for now let’s stick to the two key prerequisites for crossing the chasm: scalability and evidence.

Scalability and evidence

Every successful technology needs to prove that it can scale quickly and reliably. Oil and gas operators, in particular, seek robust solutions to big problems that they can roll out globally. Risk is obviously a huge factor in their calculations, so you are going to need a whole library of compelling evidence and accompanying case studies to back up your claims. 

At Silverhorse, which is a big-data business that provides asset management solutions, the client's case study of a pilot at the Karratha Gas Plant delivered transformational results. But the fact that it then scaled out across 90% of the plant with 400 users on 100 mobile devices, while achieving 99% uptime, was even more impressive. Results like that can only be achieved by investing in your technology’s architecture. 

Crossing the chasm also involves developing key relationships within your target operator over time, and steadily building authority in your area of expertise. Don’t underestimate how long and hard this process is, and remember that someone else gets to learn from your mistakes if you fail. Time is the enemy of every technology business. Once you’re in the chasm, it’s nearly impossible to climb out.

Pinball effect

What happens when you’ve crossed the chasm? There are no fireworks, just new routes to market, repeat orders, and a growing number of case studies and endorsements. This gives you the momentum that you need to turn your promising technology and approach into something bigger than the sum of its parts. Hopefully, you’ll build a movement of enthusiastic customers who are ready to evangelise on your behalf and drive exponential growth.

Done right, technology businesses are very well adapted to scaling rapidly, without spiralling overheads. That’s one big reason why I’m so enthusiastic about investing time in them.

Sceptics

In terms of the bell-curve, you’ll eventually hit the peak and follow a downward trajectory towards the late majority customers. They tend to be conservative in outlook and are only willing to invest in technology if the alternative is losing money or compromising safety. As I’ve already argued, that scepticism now applies to the early majority as well. This is especially true of operators who attempted digital transformation in the past, but got their fingers burned. 

The last category is laggards. They are openly averse to innovation and will only adopt technology if it is forced upon them. Think grandparents.

Conclusion

Swagger merchants selling vapourware have muddied the waters for everyone in the digital transformation space. Invariably these businesses haven’t grasped the importance of a basic transformation strategy. That’s why my message to technology businesses is always the same: look at where you are on the curve, and make sure that you’re fully equipped to cross that technology chasm safely, and then handle the hyper-growth that follows. It’s that simple, and that hard.