1 OPEN INNOVATION OF SUBSURFACE SOFTWARE SYSTEMS Vidar Hepsø Ph.D Adjunct Professor Center for Integrated Operations NTNU Principal Researcher/Project manager Statoil RD

2 Open innovation Open innovation is the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively. [This paradigm] assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as they look to advance their technology.”

3 "I'd like to take all of our geology, all the data we have that goes back to 1948, and put it into a file and share it with the world," he said. "Then we'll ask the world to tell us where we're going to find the next six million ounces of gold." Rob McEwen saw this as an opportunity to harness some of the best minds in the industry. Perhaps understandably, the in-house geologists were just a little skeptical. (Page 9 Wikinomics) Goldcorp challenge; $ 575,000 was made available as prize for those that came up with the best estimates, models and methods Gold. Corp ended up with110 new prospects of which half were completely new and over 80% of the new prospects held substantial value of gold Gold Corp estimated that they saved 2-3 years of exploration costs Gold corporation -New ’open source’ exploration and prospecting model

4 Norne data sets The Norne data is unique in a global setting since it is very unusual that an oil company releases substantial integrated data-sets in this manner Promote Statoil as an open organisation that is willing to share key business related data Makes Statoil attractive to leading academic partners in the world Educate new subsurface professionals with detailed domain knowledge of company challenges

5 Closed vs. Open Innovation The smart people in the field work for us To profit from R&D we must discover, develop and ship it ourselves If we discover it ourselves, we go to market first If we are the first to commercialize an innovation, we will win If we create the most and best ideas in the industry, we will win We should control our IP so that our competitors don’t profit from our ideas Not all the smart people work for us External R&D can create value; internal R&D is needed to claim a portion of that value We don’t have to originate the research in order to profit from it Building a better business model is better than getting to market first If we make the best use of both internal and external ideas, we will win We should profit from others’ use of our IP and vice versa Source: Chesbrough, H. (2003), Open Innovation: the new imperative for creating and profiting from technology, Harvard Business School Press Closed innovation principlesOpen innovation principles

6 Enterprise value from subsurface software The subsurface software chasm ? Crossing the chasm of subsurface software tools What capabilities are needed? Technology/platforms Business processes Governance models Human skills

7 The Ocean Ecosystem

8 8 Community involvement In API maintenance Open innovation API usage by third parties Low High OpenModerated Courtesy of John Henderson, Boston University Controlled interface -Alternative strategies Ocean MS *net