The Oil Industry's Kodak Moment ?

科技工作者之家 2021-10-12

    来源:Alan FoumA Kodak moment refers to sudden disruptive change which effectively wipes out an industry. The main example is Eastman Kodak which dominated the photographic film business which was made obsolete by digital photography in around 2000 to 2004. There is currently a great deal of discussion in the media as to if, when and how this type of disruption would apply to hydrocarbons.Bill Fischer discusses this phenomenon in his essay – There are no Kodak Moments( https://www.forbes.com/sites/billfischer/2014/07/04/there-are-no-kodak-moments/?

    sh=261333958fd6 )– His main conclusions were:Not Kodak moments but Kodak decades, a process of creeping disruption. Change normally comes slowly. A new technology is invented; initially it is not practicable or economic, then it evolves until it becomes better than the previous technology and then it takes over. This is what happened to the photo business – people wanted images but were not concerned as to how they were made.Substitution need not be complete to hurt the business of the incumbents. In fact most substitutions are partial, at least at first, but they hurt enough to damage the cash flows of the old technology companies as demand declines. Incumbent technologies would often need to compete on price with profit margins declining quickly.The interests of the key stakeholders in an incumbent technology company may conflict with the long term strategic future. The old technology model used to work well and firms may neglect new technologies to focus on squeezing profits from the old business that they know and love. “giving up an uncertain future or the successful past”Past success is often the biggest inhibitor of future success. Being the successful incumbent in the prior generation of offerings is typically the most telling predictor of future failure in the next. Companies find it very difficult to change from what they are good at. Fear of cannibalising existing streams of cash-flow leads to denial and hesitancy when the early signs of disruption first appear. When the unthinkable happens to firms that are now suddenly vulnerable to disruption, they don't think.Obvious, but needs saying. Substitution is typically an industry phenomenon, not the failure of a single firm. The disruptive forces will hit all of the players in an industry at the same time. As a result, benchmarking your performance against your incumbent peers is probably an excellent way to set an entire industry's leadership up for a big, and bad surprise, all at once.The brand alone is not enough to withstand disruption – Kodak after all was one of the world’s great brands.Inspirational, visionary leadership is needed for change – most companies leadership is notHow is the current state of the O&G industry against this check list?

    Any transition to a new energy system will take time – decades, perhaps generations, due to the large scale incumbent inertia in the energy system. Some companies are preparing more for a transition than others by looking at investing at alternatives or focussing on resources with relatively short term payback, rather than projects such as Arctic oil which are unlikely to start paying back in 15 years.The oil market is finely balanced a surplus of 2-3% can lead to a large price fall and a 1-2% shortfall can lead to a significant price rise. If demand were to decrease due to new technology of whatever type, then the price signals are likely to be quiet rapid. Any such sustained structural price decrease is likely to see the end of large new megaprojects.Management views within oil firms have been focussed on the idea of ever rising demand and a need to find new resources to meet this. A few more visionary executives are looking at the concept of peak demand, but this is predicted for a decade or two in the future by most energy experts. There is no real fear of cannibalising O&G investment by alternative energy projects in the short term. There however a feeling of what competencies and capabilities can a hydrocarbon company contribute to an alternative energy future. Oil and gas management and engineers have a specific set of skills and attitudes which may not be appropriate for the new alternative energy business and the diversification record of oil companies into other industries has not been good.The past model for O&G has been successful, and some firms are focusing on the past model because this is what they understand and are good at. Other firms have an alternative energy division which does compete for resources against other ventures. The companies which have alternative energy divisions tend to be majors or utilities with a consumer facing business and a need to appeal to public attitudes.Brands may matter less than oil executives think. After all petrol, diesel and natural gas are commodities and the consumer may not think too much about which gas station they fill up in. I do not know how well a brand transitions from selling one product to selling another. My feeling is that the brand transition is possible in Asian markets where conglomerates such as Tata, Samsung and Genting are trusted multi product brands. In the West this does not really happen as much.The oil industry has had many inspirational leaders. People who had created new companies, built up existing companies or turned damaged companies around. However fundamentally transforming an organisation and switching it from one industry to another is a very tall orderAssuming that there will be a Kodak moment for hydrocarbons, that is the usage of oil and gas declines, slowly at first and then faster when a new technology reaches wide scale adoption there are several potential scenarios that companies may takeThe tobacco model – maintain the share of a declining market, cutting costs and innovating in efficiency, but basically sticking to what you know and understandA radical change model – run down the traditional operations, develop in the new technology world, while maintaining safety, financial discipline and positive staff engagement in all parts of the business.免责声明北京国际能源专家俱乐部转载上述内容,对文中陈述、观点判断保持中立,不对所包含内容的准确性、可靠性或完整性提供任何明示或暗示的保证。

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来源:beijingenergyclub 北京国际能源专家俱乐部

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