It’s a source of great frustration for organisations. Investors, customers, and consultants keep telling big companies to innovate, but when they do come up with promising new techniques or technologies, those advances often go nowhere out in the field.
To end this cycle of frustration for company bosses, any solution has to go beyond designing for usability, as important as that is. R&D departments and other innovators need to figure out ways to overcome bureaucracy and speak directly to users.
That’s harder than it sounds, as we found in a study of the upstream oil industry – the companies that discover and drill for petroleum in the ground. A senior engineer told us that “our operating arms don’t want new technology unless it’s absolutely proven to be beneficial”. Drilling projects already suffer from plenty of uncertainty and risk, and anything going wrong can literally sink millions into the sand.
To better understand how large organisations can overcome such reluctance to use new technology, we undertook a decade long review of 7,000 drilling projects conducted by an oil supermajor. Career histories encompassing more than 30,000 assignments of engineers stretching back to 1979 as well as a series of interviews provided us with an opportunity to understand how individuals interacted with new technology.
While drilling units were concerned about the risks of new technology, the company was clearly keen on innovation. It was spending billions of dollars on R&D every year, generating close to 10,000 patents. Our detailed statistical analysis of drilling projects suggests that, when adopted, advanced technology reduces drilling costs by 15 per cent. That translates to savings of $90 million per year for an average-sized country subsidiary - in an era of lower oil prices, that is a big number.
Perhaps because of the high pay-off, companies tend to use a top-down approach to diffuse innovations across their organisation. They start with a high-level agreement between headquarters and a subsidiary's management. This ensures that any technology decisions are aligned with the company's wider strategic and financial considerations.
They then send experienced engineers out to the field operations and try to win over the units with rational persuasion. Sometimes this works, but too often it doesn’t – and all that R&D money gets minimal returns.
Frontline engineers understand their projects, and those we interviewed did not appreciate being told how to get the most out of their assets. When instructed to use a particular technology, they find reasons why in general they agree, but in their particular situation it won’t work. Our study revealed that a more fruitful approach starts with the users.
The implementation journey of one particular new technology demonstrates why users are so important. Just as the R&D team was getting ready to push for implementation of a technology to reduce water seepage into oil wells, an engineer from one of the drilling subsidiaries happened to be visiting headquarters for unrelated reasons. Somebody on the R&D team took the opportunity to share details about this technology.
The subsidiary’s head of technology had previously argued against using new technology from headquarters, thinking that too much money had been wasted on such efforts in the past. But this new advance captured the imagination of those working on the ground after the engineer returned from his trip, and they decided to simply ignore the head of technology’s directive. They had been frustrated with water seepage and had tried a couple of approaches before to no avail.
What’s most important here is that the experience of the engineer made a difference in how the technology was implemented initially and even more so as further adjustments were made. As a result, they saw a dramatic reduction in water seepage. Their success convinced the boss to get on board and approve the technology throughout the subsidiary.
The key factor here was that this new technology, like most advances, was not simply plug-and-play. To make it work outside the lab, project engineers had to run a series of adjustments and experiments on their specific site. People implementing the technology have a choice: they can cite this adaptation as an excuse for declining or delaying the advance, or they can embrace the challenge and do the work to make the advance succeed.
Why users need to be involved when developing new technology
Users need to be fully engaged in implementing most new technologies. R&D teams are better off starting with them, rather than with the bosses who sign off on budgets. If the team can win over a believer or two, they have a chance of testing whether their beautiful new creation actually does improve things in the real world. And once they find success with one field unit, they have a much stronger case in talking to other units.
If users are at the centre of technology roll-outs and adjustments to real-life conditions, the obvious question is how to find the right ones to approach. Rather than rely on luck, R&D teams can start with the projects most receptive to their pitches.
Two kinds of projects stand out. The first are those that have run out of options using conventional technologies, like the engineer worried about water seepage, their 'pain' at failure might be enough to open them up to trying something new.
The second promising avenue involves projects with users who helped adapt earlier versions of the particular technique or technology. Those users have a better appreciation for what can be accomplished, which the R&D team can use to crack the wall of resistance. If the team develops a digital version of an important analogue control system, for example, it might start with the operational group that had pioneered the old system.
Beyond identifying promising targets, the oil company we studied carried out two initiatives to improve the odds of winning over users and get them involved in the subsequent tweaks necessary for implementation.
First, it took advantage of the fact that many of its engineers had career paths with both operational and research roles. R&D teams made a point of connecting to field engineers with research backgrounds to update them on relevant new developments. Second, the company set up R&D outposts, with researchers rotating in to sit with operations.
While these teams were charged with promoting a particular technology, they also made a point of learning about field engineers’ current operational needs. With that knowledge, and their relationships with the engineers, they often ended up selling a different innovation. The teams explained to us that they sometimes pitch a new technology to numerous operational teams before attracting serious interest.
Rolling out new technology is as much about preferences and perceptions as it is about actual features. Success therefore rests on the ability to connect with the right users.
Finally, field units often excuse their non-compliance by citing the expense of adapting an innovation. New technologies often require not just man-hours but hard capital investment. In the water seepage example, the R&D team helped win over the field engineer’s group by convincing an internal venture fund to put forward the cash for the initial trial.
An even better way, the oil supermajor found, was to bring together projects of different sizes. The R&D team might be eager to get a technological advance tried out in a big project – but the manager isn’t likely to agree to the additional risk. So the R&D team would find a small project elsewhere to use as a guinea pig, and use the big project to fund the first round of implementation.
From the perspective of the big project the costs are small and if things go wrong, the damage limited. And if it succeeds, the big project has proof of concept, giving the manager the confidence to adopt it. For the small project, it offers an opportunity to get access to technology that is otherwise too costly.
Consumer-oriented industries often subsidise new gadgets for their customers, especially their big users. R&D teams rarely have the budget to do that fully, so they have to work creatively to win the hearts and minds of local champions.
When big companies develop promising new technologies, they can’t take their internal users for granted. They will only be adopted if they treat those users as partners to be enticed and won over. That’s true in more and more industries nowadays, as new technologies promise major gains – but only after initial sacrifice.
Read the original version of this article in Harvard Business Review.
Stadler, C., Helfat, C. and Verona, G. (2021) "Transferring knowledge by transferring individuals : innovative technology usage and organizational performance in multi-unit firms", Organization Science.
Christian Stadler is Professor of Strategic Management and author of Open Strategy: Mastering Disruption from Outside the C-Suite (Management on the Cutting Edge).
Constance Helfat is the J Brian Quinn Professor in Technology and Strategy at Dartmouth College.
Gianmario Verona is Professor of Management and Technology at Bocconi University.
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