The business of innovation

Jacqueline Redmond, Vice President for Technology Strategy

Why is technology so important to Shell and what is the essence of your new technology strategy?

Technology is a critical enabler. It plays a crucial role in overcoming the challenges we face in the new energy future. We rely on technology to set us apart from our competitors. Ultimately, our business success depends on our ability to capitalise on this advantage to offer our customers and partners the best value.

In Shell, we have one single technology strategy that provides a framework detailing the organisation’s efforts in the technology arena that are driving technology development and deployment. As a result, our approach to technology is completely streamlined, accelerates technology development and, more than ever, maximises external focus.

To be explicit, we have a very clear picture of where we want to be leaders but, equally importantly, we recognise those areas where we believe it is best to work with external partners. Consequently, our resources are focused on the most value-adding internal areas as well as on engaging externally in partnerships.

This approach is a significant step change, as it enables all technology requirements, developments and deployments to have a specific value attribute for the business at any point in time. Furthermore, this approach enables us to develop technology solutions at the pace required to respond to the challenges facing our industry. Ultimately, this approach supports our vision to become the most innovative and competitive energy company in the world.

What sort of partner does Shell strive to be?

Shell aims to be a partner that can see longterm goals in working with organisations that can supplement and complement its business, but also one that respects that the other organisation needs to gain from the relationship.

For example, the oil and gas industry requires high-quality seismic data to accurately assess exploration prospects for commercial viability and to monitor producing reservoirs effectively. With this challenge in mind, we recently started to work with Hewlett Packard on sensing technology. Hewlett Packard and Shell will use their complementary knowledge and experience to produce a groundbreaking solution to sense, collect and store geophysical data.

We want Hewlett Packard’s fresh perspective on our seismic imaging technologies while respecting the fact that the company needs to apply the findings in its business.

Certainly, our approach to innovation, which includes a big element for selective partnerships to accelerate and improve our technology, is proving successful and seems to give us the edge.

We leverage third-party knowledge and products wherever it is appropriate. So, in research and development, in addition to our own technology centres, we have numerous collaborations with universities and institutes to get more brainpower behind our projects and accelerate the speed of technology development. This gives us also a set-up for tapping into small-to-medium-sized enterprises and spin-offs.

Sometimes to solve a problem, we need to develop our own technology; sometimes we use our know-how to apply other people’s tools; and sometimes we need to acknowledge that the best solution is to ask another company to solve the problem. However, most of the time, the answer lies between these three points, and that means working together.

We do not claim to know it all, but I believe that we excel in integrating our capabilities and know-how with internal and external ideas to develop the best solutions for our customers.

What is your part in this scheme?

The role of vice president for technology strategy means many different things to different people. What I love about my work is that it takes me off in so many interesting directions. But I am not a scientist, I am a businessperson, and that is important.

Some suggest that the role of vice president for technology strategy is about making decisions about specific technologies. Unfortunately, although useful in the short term or for smaller enterprises, that only provides tactical support in an organisation the size of Shell.

My role is to create a framework that encourages innovation across both up and downstream.

Many companies claim to be innovative or be technology leaders. How do you measure the success of your strategy?

It is true that these claims are easy to make and difficult to demonstrate. Proving the value of technology leadership in winning contracts is tough, as it is just one aspect on which we are judged. But, without the right technologies, we would not be invited to work with most companies.

Some metrics are easily measured. For instance, Shell spends more on research and development than any other energy company – over $1 billion a year. But being a big spender does not guarantee results. The number of patents is another easy measurement, and Shell is consistently applauded as the most innovative energy company on this basis. Again, this measure is no guarantee of success.

The real measure of success is, in my mind, more qualitative. It is the ability to attract the best partners: companies such as Hewlett Packard, Ferrari and IBM.

Positioning and managing innovation are not always about dictating what should be done: a positive enumeration of innovation “rights” and “actions”. It is sometimes about dictating what rules should not be broken.

Inside Shell, it is essential that engagements be made with a clear strategy. In this respect, innovation has to be linked to a clear goal; otherwise it is unlikely to be value adding. Also important is setting expectations concerning calculated risk taking, which certainly varies between different projects.

Finally, when dealing with external parties it is vital that the relationship is built on trust and an understanding of the external capabilities and needs of your partner. Entering into innovation work without a win-win approach and behaviours that deliberately build trust will quickly kill your chances of getting anything meaningful and long term from it.

Why do you work with so many universities?

Working with universities is a major part of our framework. They challenge our thinking. Often we provide a puzzle statement and hope that they come up with an alternative solution. Groupthinking, where a decision-making group’s desire for harmony overrides its ability to see alternatives, is easy to fall into.

The external challenge that universities give us is a great check on this. It is also a fantastic way for us to demonstrate our commitment in key countries and to become acquainted with the next generation of scientists as they complete their postgraduate and postdoctoral work. Naturally, we make the best people attractive offers.

Shell’s business is extremely broad. How do you devise a single strategy for such a massive range of potential new technologies?

We have a vast array of technical challenges. Each one is different, and with a clear “simplification” goal in mind, our technology portfolio is split into three different segments:

• core: serving immediate business needs, evolutionary solutions or building on existing technologies
• firsts: differentiators, revolutionary, breakthrough technologies
• emerging: high-risk, high-reward developments, game changers in 25–30 years.

Core technologies are those where current capabilities are applied in existing business lines. This is evolution rather than revolution. It is about solving today’s challenges quickly and pragmatically. Lubricant development is a good example.

Firsts are about solving problems in today’s business lines with new abilities. Take biofuels as an example. We know how to transport, store and market fuels, and have formed partnerships with companies like Iogen Corporation, which has been featured in Impact magazine (issue 2, 2006 and issue 3, 2004), for its biotechnology expertise. Firsts can also be about applying existing technologies to a new business line. Our work with one of the Hollywood companies behind the Shrek movies falls into this category. We hope this collaboration will improve the visualisation of seismic data.

Emerging technologies are those that will deliver benefits in 20–25 years. For instance, we are dealing with new energy supply systems such as smart grids or storage, e-mobility and geothermal applications, and asking what the business model will look like and how Shell can participate in it.

Will the new strategy make a difference?

The strategy is only useful when decisions are made to give advantage to Shell today and to position it competitively tomorrow.

In the time I have been in my post, I have seen a radical change of mindset. There is a greater appreciation of the need to get the right mix of in-house capabilities and internal and external innovation through partnerships. The examples I mentioned earlier illustrate how, in a competitive environment and with staffing and budgetary constraints, Shell is making the right decisions to position itself competitively for the future.