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In today’s global economy, innovation characterizing worldwide industries remains largely absent in the energy sphere. Reluctance to share intellectual property (IP) and a tendency to stick to tried and tested practices have long stunted investment in innovation, with companies instead opting to follow convention and prioritize privacy over progress. For the Middle East and North Africa region (MENA), the problem is particularly worrisome. In a region where fossil fuels are depleting, energy consumption is rising, and oil prices remain in recovery mode, innovation is a necessity.
While innovation is evident in some areas—such as upstream oil and renewables—it’s time for MENA’s broader energy ecosystem to embrace the value its value. The question is how? The answer is a multipronged approach that fosters out-of-the-box thinking and investor confidence in the face of a stark reality: Innovation is not just desirable, it’s non-negotiable in the quest for a sustainable future.
The call to action is daunting, but by factoring some fundamental points into the region does business, energy companies can chart the course to innovation and, ultimately, greater performance.
Any energy actor must begin with a clear picture of what innovation looks like and the impact it can have. Four factors are key: The novelty and creativity of the product, service or process to be innovated, the financial impact of innovation on the organization, the value-add to customers, and the impact on the national agenda. Failure to consider these can lead to misguided strategies that risk throwing efforts off course.
Ideation is crucial. To optimize the process and ensure that the ideas generated are appropriate and actionable, it’s important that employees are aware of the different categories of innovation. It is helpful to view innovation across a spectrum, with sustainment at one end and disruptive innovation at the other. With the desired innovation level, companies can then incentivize employees to create ideas that fit.
The ability to see bright ideas through to implementation is another crucial point. This requires a willingness to accept failure as part of learning and development. It’s vital to develop a “fail-forward” culture, where employees feel safe to experiment without the fear of judgment or repercussions.
Open collaboration can boost innovation, yet concerns over sharing IP are deeply entrenched in the energy sphere. To encourage a culture of sharing, companies can adopt an approach that allows them to foster innovation while protecting operations-critical IP. A first step is to classify IP into categories: IP required to (1) grow the business, (2) defend the business against infringements and (3) encourage industry-wide innovation. From there, companies can better decipher what to share and what to keep closed.
While explicit knowledge, such as technical data, is important, tacit knowledge—the knowhow unique to every individual—is where the real value lies, especially as it cannot easily be accessed or replicated by competitors. Ways to capture tacit knowledge include online forums, thinking sessions, and gamification.
To encourage stakeholder buy-in, energy companies should develop an approach to research and development that balances outcomes with investment. To do so, companies must first determine investment requirements, which necessitates making a choice between fundamental research. This requires significant resources and funding, however it is the less resource-intensive option of applied research.
From engaging stakeholders and tapping talent, to ideation and sharing IP, the path to a more innovative and collaborative future is clear. Energy entities just need to take the first step.
For a more in depth take on innovation in energy, check out our latest viewpoint: The Future is Innovation.