Austin Okere, founder and executive vice chairman of Computer Warehouse Group (CWG) Plc, says stakeholders in Nigeria’s oil industry should collaborate on assets and compete on contracts to grow sustainable local companies.
In this interview with TheCable, Okere, who is also the entrepreneur-in-residence at the Ausso Leadership Academy, speaks on innovation and efficiency in the oil and gas industry, local content development, and the new grounds/ markets the ICT company is breaking into.
What are the trends and innovation that will drive efficiency in Nigeria’s oil and gas industry?
Thank you very much. We just finished a session on innovation and efficiency in the oil industry, and throughout the session at the NIPS (Nigeria International Petroleum Summit), the common theme has been collaboration, partnership, and trust. But also, the issue of local content came out very strongly.
Local content is welcome and is good, but local content must be complemented by local competence, local capability, and local capacity.
If you look at the oil industry and the structure of it when it was run by the International Oil Companies (IOCs), a lot of the policy formulation and strategy came from the headquarters in the Hague or Houston.
So that’s why they set a five-year vision and here was where we had our managers that would implement the strategy and follow policy directives.
So the kind of trainings that were given to the managers in the local companies was mainly operational training, technical training or financial training. But there was hardly any leadership development.
Now, it is by leadership that they would be able to grow our local oil companies to become sustainably successful to see a purpose and a vision for taking are the assets that are being sold by international oil companies and being able to manage them successfully and sustainably. And that is the component that we spoke about that seems to be missing.
In fact what I did after my retirement from CWG was to set up an academy called the AUSSO leadership academy.
What we do at the AUSSO leadership academy is to mentor leaders experientially — to become people with an ownership mindset, innovate mindset — people that act with performance and accountability, pace and agility in this changing world.
Another trend driving the industry is cost reduction. If you look at the oil industry, because of the oil price drop, a lot of the international companies have brought down their cost of production per barrel by 60 percent
If we are are not able at our local oil companies to do the same, and they’re bidding for jobs with these international companies, and they’re competing solely on lowest price, then their margins are squeezed and they would die if they are not sustainable over a long period of time with squeezed margin that is not covering your cost.
But for you to bring down your cost and do more with less, you need what we call “efficiency innovation” which comes through research and development (R&D).
What I propose is a form of competition — collaborating and competing.
Can you please expatiate on this?
If you look at artificial intelligence, what it does best is that learns from its mistake. It would never make that mistake ever again.
Secondly, what artificial intelligence does is that once it learns something, it updates all the artificial intelligence nodes in the network so all of them know what has been learnt.
It’s important in our oil and gas industry to have what we call a body of knowledge, especially now that we’re digitising a lot of the data sets and analysing them, so that that body of knowledge is shared by all in the industry so that an accident that happens as a result of safety carelessness will never ever repeat and that will help with 100 percent safety achievement and better process and project delivery.
The other thing is to compete with the assets. What happened in the telecoms industry was that the common assets such as the mast were shared by all telecoms, not everybody building their own mast one beside the other and that brought down the cost and it helped tremendously in bring down the price and speed of roll out.
The oil industry has to collaborate on assets, so that they compete on long-term contracts.But there are also contracts called call off contracts which are short-term contracts. When you have those call off contracts, it’s better that the assets are in a pool so that whoever has excess capacity in the asset can give the other one to use it, rather than everybody holding it in silos and the person that won would go to Europe and Asia looking for an asset that a local operator has here.
These are some of the things that I think that would help us prepare better to take charge of our oil assets and grow sustainable local oil companies.
What services does CWG bring to bear to meet the technological needs of its clients in the oil and gas industry?
CWG has worked very tightly with the oil companies more in the maintenance of technical equipment, especially in the area of information technology.
So apart from the fact that some of them collocate in our data centre, we also provide managed services and personnel to them, on the basis of the personnel working in-house with them as staff so that they can focus on their core business.
But what is interesting is what we call the smart metering. And the smart metering is what we’re partnering the federal government on.
If you look at Sura market for instance, they’re using the smart meter for more efficient measurement of power — where you can measure anything with it — but also using those same devices for providing network to the people that are using those meters, and CWG is showcasing the smart meters here at the NIPS.
What new technology and market, is CWG looking to extend or break into?
Now let me illustrate this with an example. CWG is going more deeply into platforms. Platforms that provide sharing of technical facilities for everybody to use and learn from.
For us to continue with this R&D that provides efficiency, we have to embrace disruptive innovation.
But there are three types of innovation. There is market substituting innovation, which is just making a better product of what you have. There is market efficiency innovation, which is doing more with less, and that is what a lot of the oil majors did in order to bring the pricing down by 60 percent. The biggest innovation is what we call market-creating innovation. Market-creating innovation are the kind of things that provide jobs, that expand the industry. So two companies in the same business will be competing for who will have the most people buying their products but another company would not. It would come with something different and non-consumers would be brought into the market and they will take over that market.
This is precisely what CWG is doing. CWG is investing more in market-creating innovation for the industry, so that we can look at how to have sustainable projects rather than everybody scraping the barrel and competing for a shrinking part.