Inventors tumble through our doors occasionally bearing the next great technology that will revolutionize the entire oil and gas industry. Our favorite was a guy from California who was normally in the fur trading business, but who had a downhole steam generator that could heat up oil and make it flow to the wellbore way faster. Switch it on, and this downhole bucket generated steam like an old time locomotive; however, the electricity it consumed in the process made this bad idea a terrible idea.
Over the decades we’ve developed a set of 25 questions we ask when pondering a new tool. We feed the yes/no answers into a simple algorithm and out spits a prediction about the pace at which this technology will be adopted into the oil industry. (Nope, ain’t sending the secret sauce to you, but it uses the physics of a ball being rolled up a hill.) The three outputs are languishing growth, slow grow and booming growth.
Perhaps you might find useful our 25 questions:
Does the new technology easily demonstrate a higher benefit:cost ratio than the old technology?
Is the initial cost of the new technology significantly higher than the initial cost of the old technology?
Does payback time of the new technology equal the customer's payback time requirements?
Is the cost of failure high?
Has the new technology been proven to work by industry leaders?
Are there several immediate applications?
Is the targeted market growing or at least stable?
Will the technology open up new markets?
Does the customer perceive that the job could be done better?
Can the technology be built?
Does the technology meet industry expectations?
Is the technology easy to employ with respect to the capital infrastructure?
Is the technology easy to understand, and does it have adequate engineering support?
Does the commercializing company have the technical know-how to support the product?
Does the commercializing company have the marketing know-how to support the product and can it champion the product?
Does the technology have a customer champion?
Are there several sources for the old technology?
Is the profit margin of the old technology fairly high?
Are competitors with old technology fairly strong?
Will the buying authority within the customer's operation have to change to employ the new technology?
Does the targeted customer base have a history of embracing new technologies?
Are there few regulations restricting this market?
Is the business environment of this market encouraging change?
Is the life of competing technologies short - Does it take very little time to "use up" the old technology?
Is the market well defined and fairly quick to cycle through?
Here’s some factors that guarantee a languishing adoption pace:
The cost of failure is high.
The targeted customer does not have a history of embracing change.
Everything around your new technology has to change before the new tool can be used.
The customer buying authority has to change versus the already accepted technology.
It is hard to explain how the new technology benefits the customer.
These 25 questions and the 5 factors I just listed are not foolproof, but they give a quick and dirty look at how eager customers might be to pay for a new tool.
By the way, the only new technology to EVER earn “booming” growth on our scale? Rotary steerable technology.