Discussion
Mutual Life Insurance Co developed the Pinwheel Framework to address factors like a thorough knowledge of business environment, the alignment of strategy throughout the business process, risks, innovation and adaptability. In the Pinwheel Framework, the economic factors and customer trends are analyzed by an organization (Lees 2017). The next step that a business enterprise must undertake is contemplation of the relevance of enterprise strategy. The aspirations and metrics of an organization often require modification and the CEO and leadership team of an organization should discuss about the critical initiatives. The additional disruptive and innovative initiatives are accessed by an organization before the measurement or evaluation of strategic performance. Ranger Oil –Calgary Canada has branches in the United Kingdom and America. Ranger Energy service manages risks associated with the complex macro- environment and is well-built to handle the challenges associated with an upstream industry. The training of the crews of the organization meets the technical and safety standards to handle the challenges imposed by the contemporary oilfield. The models of innovation and the Pinwheel Framework are applied to the Ranger Oil Company and the role of systematic risk management to implement innovation successfully is discussed.
Invention is defined as creation of something new, for instance, a product or a process whereas innovation occurs when a product or process which already exist are improved(Hout 2013 ).A patent can be filed when something new is created by someone and it is called invention. Invention fosters economic growth and an inventor is respected by society. Thus invention does not have a precedent and is associated with novelty. Innovation is not associated with the discovery of something new; rather, an innovation can add value or enhance the usefulness of a product or service (Ritala and Huizingh 2014).
It is of paramount importance to implement innovation in the energy industry. The cost of fossil energy can be controlled with innovation even though mining cost is increased by exploitation(Boons et al. 2013 ).For instance, companies in the energy sector tried to unlock supplies of oil and natural gas from shale basins, with help of new technologies like hydraulic fracturing and horizontal drilling (Small et al. 2014).The energy sector achieves growth in modern days with the help of complex technological innovation like automation and data analytics that boost productivity and flexibility of the energy companies(Costa-Campi, García-Quevedo and Trujillo-Baute 2015 ).Innovation is implemented by energy industry to achieve growth by adopting three trends- management of complex systems by smart methods, data-analytics by sophisticated methods and adoption of automation (Strauss, Rupp and Love 2016).
i) For the development of a Framework of Innovation, by a business organization, the alignment of strategy with risk and reward is of paramount importance.
For the successful implementation of Framework of Innovation, it is important for a business organization to evaluate its business intelligence. A business organization can do so by contemplating on the macro environmental factors by using tools like PESTEL analysis.
Another aspect of the business intelligence is to contemplate on the actions that can be taken by a business organization to influence regulation for improving its brand (Lees 2017).
Models of Innovation
Ranger Oil Company understands that the contemporary oilfield requires more than a conventional support. Unlike conventional companies of oilfield service, Ranger Oil has evaluated business intelligence to adapt to the complexity and financial pressure of the competitive business environment. The organization has aligned itself to the Framework of Innovation and has clear understanding of the tremendous change of the upstream operations that has taken place over the past decade. Ranger oil has also contemplated on the actions to improve its brand, for instance, the organization has a purpose-built fleet to handle high-spec well service rigs and trains crews to comply with standards of technology and safety (business-humanrights.org 2017).
ii) It is important for a business organization to revise and refine the key aspects of the strategy – The purpose, strategic priorities, vision and aspiration.
Ranger Oil Company is clear about its vision, aspiration and strategic priorities. For instance, the organization focuses on deploying the latest assets of the industry and top crew members to deliver a service of superior quality across nations. The vision of Ranger Oil Company is not only pursuit of operational efficiency and effectiveness, but to do a fair, profitable and transparent business for all stakeholders. The entire workforce of the organization possesses a sense of community, responsibility and accountability.
iii) Clear definition of goals
A clear definition of goals and aspiration of a business organization is of paramount importance (Lees 2017). Ranger Oil Company aspires to deliver an elite level of service quality and asset irrespective of the location of the client and provides best services in millout, maintenance and recompletion. An example of goal of Ranger oil is to deliver zero injuries and superior HSE performance (business-humanrights.org 2017).
iv) Development of Strategic priorities
A business organization must develop its strategic priorities. The CEO and leaders of a business organization set up the strategic priorities of an enterprise which lead to the achievement of goals. The strategic priorities form the foundation based on which the operational and tactical plans are implemented by a business organization (Lees 2017).
The process of strategy and planning is dynamic. Disruptive innovation is of paramount importance for strategic agility and cultural change. The management of a business organization must continuously undertake initiatives which will contribute to the achievement of long term vision of the business organization. Ranger Oil has clear strategic priorities. Examples of strategic priorities of Ranger Oil are as follows
1) The organization goes beyond the culture of safety to deploy a management system which is comprehensive and behavioral-based to ensure protection of communities and crews by providing operational safety.
2) Prevention of illness and adoption of prevention measures for environment is a strategic priority of Ranger Oil Company (business-humanrights.org 2017).
3) Ranger Oil company has a strong customer focus
4) Enhanced Distribution- Ranger Oil Company provides services in Canada, United States and the United Kingdom.
5) Collaboration and solution development- Ranger Oil Company adopts innovation to deliver high quality services to customers. For instance, Ranger Oil Company provides complete support that facilitates in streamlining of time-to-production and helps to bring the well online as fast as possible. Ranger Oil Services adopts innovation in procedures and equipments to support clients in completion of the service delivery process, for instance, high-spec service rigs, pipe racks, power swivels, fast-track millout jobs are provided by Ranger Oil Company (business-humanrights.org 2017).
v) The critical initiatives of a business organization should be identified
Ranger Oil Company ensures that its critical initiatives are aligned to strategy, aspirations, purpose and vision. Ranger Oil company considers the investments and initiatives which are critical to execute strategy, achieve log-term goals and accomplish performance objectives. The non-financial metrics like market penetration and customer satisfaction are considered by Ranger Oil Company. The strategic, compliance and operational risks that are related to the critical initiatives are identified by Ranger Oil Company.
vi) The integration of projects, operating plans and budgets are important for a business organization
The performance of a Ranger Oil Company can be monitored and tracked by an operating plan of three years and a budget of one year. It is important for a business organization to determine the milestones of key projects, the metrics of financial and non-financial performance indicators should be determined. A business enterprise should align incentives with the accomplishment of financial and non-financial performance target (Lees 2017 ). The identification of prime risk indicators and monitoring of these indicators is essential for a business organization. The next step is the establishment of ERM practices which are sound across a business organization. The trajectory of operational plans is then compared with long term vision and external factors like industry and competitors outlook by the SCD team. The identification and communication of gaps to the leadership team is the next important step that a business enterprise must undertake. The partnership between Financial Planning and Analysis (FP & A) function, the Enterprise Risk Management Function and the CFO plays an important role in this stage. Scenarios of “base,” “best,” and “stress” scenarios are developed by Ranger Oil Company to test assumptions, projections and underlying plans (business-humanrights.org 2017).
vii) It is important for a business organization to monitor and evaluate critical initiatives for the management of risks (Lees 2017). Ranger Oil Company monitors progress against the budget and operational plan and monitoring is a continuous process for the organization.
viii) The assessment of strategic performance is essential for an organization.
A customized information strategy should be developed by an organization for its executive leaders and board of directors for the implementation of effective governance. An organization should inform its board of directors about the risks related to the accomplishment of long-term objectives and risks associated with the requirements of reporting. The process of strategic execution is monitored and evaluated and information related to it must be provided to the Board of Directors of an organization (Lees 2017). Ranger Oil company separates performance into two broad actions like external actions and management actions. The execution of management can be flawless, however when the stock markets and interest rates do not perform well, the leaders of the organization must be aware of it. Also, market performance can be strong and it can mask arenas where actions of management are required. The Board of Directors of Ranger Oil Company ensures to assess strategic initiatives so that these initiatives serve the best interests of the stockholders and shareholders of the company(business-humanrights.org 2017).
The preventable risks are the internal risks of an organization and these risks can be controlled, avoided or eliminated, for instance, risks from employees or risks from unethical action. Active prevention is the best method of managing this category of risk. The strategies adopted by a business organization are often associated with superior returns and thus risks related to these strategies are voluntarily accepted by an organization. Thus it can be contemplated that strategic risks are very different from preventable risks and these risks are required to be managed effectively to capture the high returns. A rule based control model can’t be adopted to manage strategy risks. Instead, an innovative risk-management system should be adopted by an organization to reduce the probability of occurrence of assumed risks. Innovative organizations undertake product-development projects which are complex and expensive and these projects are associated with intrinsic risk factors. Management of these risks at project level becomes crucial for successful implementation of innovation (Lam 2014). External risks are occurring due to macro environmental factors and business organizations must focus to identify and mitigate impacts of these types of risks. The risk management approach is different for different categories of risk and is often tailor-made in organizational context (Hopkin 2017).For energy companies, like Ranger Oil, asset management , performance management production management is an important part of strategy to manage risk(Bergh et al. 2014).The leaders of energy sector ensures to ingrain awareness of risk in the culture of an organization, the safe technological standards, rules and regulations are implemented by energy sectors to manage risk and real-time alerts are provided in case of non-conformance to these standards(Sadgrove 2016).Regular reviews of risk programs are conducted by leaders of the energy sector and energy leaders use technological innovation like risk dashboard, reporting tools and analytics to manage operational risks(Lindøe, Baram and Renn 2013).
Conclusion
It can be concluded that invention is a novel process where something new is created. Invention can be patented while innovation is the improvement of an existing product, process or service. The energy sectors implements innovation to accomplish growth. Innovation like automation and data analytical tools are current trends of energy sector. The models of innovation like the Pinwheel Framework can be applied to an energy sector, like the Ranger Oil Company. It can be concluded that Risk management plays a critical role to successfully implement innovation and energy companies manages risks effectively using modern technology of risk management like risk dashboard. The good practices of the Pinwheel action framework are aligning strategic initiatives with the vision and aspirations of the organization, the evaluation of strategic initiatives and the collaboration with subsidiaries and business units. The good practice of Pinwheel Framework is that the CEO and executives of the company work together to implement strategy and engage in the process of Financial Planning and Analysis. However, the gaps can arise between the enterprise level and the subsidiary and business units. The Pinwheel Framework aims to reduce these gaps by adopting proper exchange of information among these two groups- the enterprise level and the subsidiary.
Reference
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