Experience of a Transformation to a Reliability Culture

Paul A. Monus, Winston P. Ledet, Cody Carlson, Felicjan Rydzak, Jerry Larsgaard, Joe Kubenka, Michelle Henley

OverviewIn tangible product producing organizations, the reliability of the equipment is determined by the culture of the organization and the performance of the organization is determined by the reliability of the equipment. While many organizations would like to have a reliability culture, most people have not had the experience of making the transformation to such a culture. One of the authors can remember when he finally quit smoking 25 years ago. The advice that helped him the most came from the instructor of the 2 hour course that he took on quitting smoking. The instructor said that if we go back to our normal routine in the same places doing the same things we would not be able to quit smoking. He said we had to see this as a change in “who” we are. We had to change from being a smoker to being a non-smoker. This is an identity change. The way we look at reliability is much the same. As an organization, we have to become somebody new if we want to establish a reliability culture in our organization.

Based on the models we have created of manufacturing organizations in the last 25 years, we think the identity change we need in manufacturing organizations is from being a “defect creator” to being a “defect eliminator”. This is based on our research into the reliability of industrial equipment and the conclusion that the root cause of all instances of unreliability is some defect. If the machines we use to produce products never had a defect they would run forever. Of course the laws of physics tell us that all things have defects so we have to focus on eliminating the sources of these defects if we want to improve reliability. The best way to make a difference here is to quit putting defects into the equipment when we build it, install it, operate it, maintain it, or attempt to improve it. Again data from many benchmarks indicate that as much as 85% of the defects that create unreliability are in fact created randomly by poor work habits of the people. We should not, however, make what psychologist call the “fundamental attribution error” which is to blame the people for creating these defects when the work system does not allow them to work in the proper way. So, the people are not the problem, but they are the solution. When everyone is engaged in defect elimination, it creates a culture that focuses attention on the sources of defects and how these sources can be eliminated.

We find that changing a culture is best approached as a project of a special kind. This project needs to support three streams of work simultaneously and should be implemented in three phases. The purpose of the project is to create a reliability culture. The structure of this culture is a socio-technical network of equipment and the people who use the equipment to produce a product that has sufficient value in the market place to return a desired profit margin to the owners while creating meaningful work for the employees, and avoiding harm to people and the environment. The three streams of work are:

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Stream 1. Engage the workers in defect elimination in cross-functional action teams to improve the functional performance of the equipment that is needed to accomplish the business value desired.

Stream 2. Engage leaders at all levels in the organization to provide the time, ideas, and money needed to improve the reliability of the equipment to accomplish the business value desired and aligned to a common vision.

Stream 3. Engage the managers in determining the magnitude of change needed to accomplish the business value desired in a manner aligned to their vision and values.

The three phases for implementing the project are:Phase 1. In the first phase of the change effort, it is important to create the freedom

in the organization to make decisions at all levels. This requires articulation of very clear boundaries and creation of a clear understanding of how the work systems and the business systems are structured now and how those structures have to change. This phase provides experience in decision making by undertaking very small projects to minimize the risk and maximize the experience of working cross-functionally which is needed to create the level 5 leadership process that is required for the second stream of work.

Phase 2. In the second phase, it is important to create a level 5 leadership process that empowers workers to use the understanding created in the first phase to more and more of their regular work. Leadership should become based on expertise instead of hierarchical position in the organization. To accomplish this, the managers must continue to provide clear boundaries. This phase provides the repetitions needed to create new work habits. It is similar to exercising to build up muscles that are needed for the next phase.

Phase 3. In the third phase, the new processes for functioning and leading must be focused on the business vision and driven by the managers to ensure that the magnitude of improvements needed to accomplish the business goals are accomplished. At this point, the project should have a detailed plan of action that is scheduled for several years at a time and managed just as any other capital project except it applies to social capital. This plan should address all of the frequently failing equipment and use these as opportunities to “don’t just fix it, improve it” and to create planning libraries to preserve the improvements. Also at this point, it is wise to apply the defect elimination to the non-tangible aspects of work like purchasing, procedures, conversations, contracts, etc. Defect elimination is easier to learn when dealing with tangible things that conform to the laws of physics but can be applied to other things which do not obey the laws of physics such as attitudes, values, higher energies, etc.

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Background: Modeling ExperienceSo, what do people experience when they make this transformation from a “defect creator” to a “defect eliminator?” First it is useful to articulate what experience is. John Bennett (1956), who studied this question most of his life, says that there are three elements to experience. These three are function, being, and will. Therefore to articulate an experience we must address all three elements with our models.

Function is the simplest one to articulate. In manufacturing organizations, the function that is responsible for reliability is maintenance. Functioning is the element that most of us focus on when we create system dynamics models. It is the behavior we execute in the dimensions of space and time. The questions of functioning in maintenance are, when do we make repairs to the equipment, and where do we execute these repairs . So the considerations here are how long it will take us to do a repair, and where is the best place to make that repair. These are the issues that are addressed by planning and scheduling. Planning mainly deals with the space questions and scheduling deals with the timing issues. From a maintenance perspective, we would like to use planning and scheduling to focus on optimizing the use of maintenance resources, but from an operations perspective, we would like to maximize the uptime of the equipment so we can produce the maximum amount of product. The only way to reconcile these two perspectives is to reduce the number of defects being generated as we interact with the equipment. Thus, defect elimination is the reconciling factor for this dilemma by eliminating some of the maintenance work that is needed to keep the equipment running and consequently maximizing the uptime and production.

Being is the togetherness of the manufacturing organization as it deals with the functioning of the equipment. It relates to how well people work together and how they pursue their goals. In a manufacturing organization from the operations standpoint, being is created through the leadership of the organization to achieve the production goals while preserving the value of the equipment used to produce the product. Another way to say this is that being is formed through the reconciliation of the need for production versus the need for maintenance. These issues are dealt with by setting the priorities for use of resources and time. The considerations here are timing and risk. For example, a piece of equipment will fail if we continue to operate it for one more day. The failure will lead to more damage and thus increase the cost of repair. However, if the equipment is taken out of service now it will cause a late shipment to the customer. If the customer shipment is late the customer’s business might be impaired which is a more significant cost than the extra cost of repair. So the “being” question here is whether we should risk losing the customer in order to reduce the maintenance cost. How you decide this question is determined by who or what we are trying to be – our being.

The third element of experience is the “will” to do things. This dimension we associate with the urgency of the organization to produce its product. If demand is high for the product, then the will is strong to produce more. The way that we incorporated this element into our modeling is through the calculation of the revenue, costs, and profits of the organization. Money is a good measure of value, which generally is the source of will

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in a commercial endeavor. This dimension is best equated with management of the organization. Note that we separate management here from leadership. We agree with John Kotter’s (1990) studies that say leadership is about making changes and management is about maintaining order. Specifically, the role of management in a commercial organization is to decide on the amount of resources we need to accomplish the results that we desire.

Modeling the FunctionThe first model we created to deal with reliability addressed the questions of how to apply the best practices of maintenance that we had discovered in a DuPont benchmark study of manufacturing sites around the world.

Figure 1 Partial view of Dynamic Benchmark model upgraded in AnyLogic

At the 2005 System Dynamics Society conference, we reported on that model and the success we have had at four sites (Ledet et.al 2005). In that presentation, we reported that from a functional perspective, there are three domains of operation depending on the behavior of the people in the organization. The first is the reactive domain where people wait for a failure to happen and then respond by repairing it. The second domain is the planned domain where people use predictive and preventive techniques to remove the defects before a failure occurs. The third domain is the precision domain where people find the sources that create defects and eliminate these before a defect is created or soon after it is created to avoid the big repair jobs altogether.

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The Goal is to Move Up the Operating DomainsThe Goal is to Move Up the Operating Domains

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sFigure 2. An overview of three operating domains and the associated performance levels.

Modeling the BeingThe second element of experience is being. This is a question of how the individuals in an organization come together to create an identity for the organization. This identity can be a “can do” organization that has honed their skills to react quickly to incidents of downtime. In these organizations, they can fix breakdowns in world class time. People are proud of this ability to get the “ox out of the ditch” and relish the opportunity to do that. This identity is ideal for the reactive domain and is the essence of leadership in that domain.

Other organizations want an identity of “order in the work place”. These organizations recognize the value of order and generally have a passion for planning so that the spaces they use are maintained in a high state of order. If the equipment that this organization uses to produce their product has a very predictable pattern of wear and modes of failure, the organization can come together with a philosophy of “plan your work and work your plan”. This is a good identity for organizations where the consequences of failure are so catastrophic that they must avoid failures at all costs, like a nuclear power plant. These facilities are designed to function in a manner where the plant can keep performing while maintenance is happening. This is mostly done through installed spare equipment or redundancy built into the machine itself.

The third identity that organizations take to deal with the normal randomness in the processes that generate defects is to come together as a defect elimination team. These organizations recognize that the processes of designing, building, operating, maintaining, and expanding the equipment are the main sources of defects. They see the role of people in the organization is to master the processes of dealing with the equipment in a disciplined manner to eliminate the randomness of defect generation. They recognize that something like 85% of the defects are produced by imperfections in people’s work habits. They also recognize that many of the defects cannot be eliminated unless people work across functional boundaries to ensure that the solutions they create to eliminate defects does not create more defects in other functions.

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In our 2005 paper, we equated the “being” aspect to leadership and compared different modes of leadership and the impact that had on sustainability. Two of the sites we compared did not sustain the performance after a few years of success at increasing reliability. Two other sites did sustain the performance for 10 years or more.

Figure 3 An overview of four past cases of organizational transformation to reliability culture

However, as time has progressed, these facilities have also begun to lose the performance they had gained in the transformation. This has led us to create a new model using agent based software to model the leadership aspect of organizational change. This has given us a different perspective on the nature of leadership. In the agent based model, we are able to model the effect of each agent on other agents as they perform their roles in the organization. We modeled individual pieces of equipment as well as individual operators, mechanics, supervisors, and engineers. In this manner, we simulated the culture of the organization as a network effect of agents who perform work together. The idea here is that people in these large organizations are not independent agents doing their own thing but are members of various groups that create constraints on what an individual agent can do. These constraints can help avoid errors that generate defects. This becomes a collective intelligence about running a complex set of machinery.

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Figure 4 Simulator based on Agent Based model – mechanics taking leadership on improvements

Figure 5 Simulator based on Agent Based model – overview of simulation results for specific policies

This model is more consistent with current theories of leadership in today’s complex organizations. In these new theories, leadership no longer exists inside the individuals but in-between the individuals. In fact, Ilya Prigogine, in the 1970’s discovered that groups can have attributes that do not exist inside any of the individuals in the group. He was able to apply that idea to sub-atomic particles and all the way up to galaxies. The new theories of leadership are modeled as a relationship between people. We use a simple version of this theory to define a leader as anyone who has followers. In the model, we

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use attention as the variable to carry leadership to other people. So leadership exists in the model based on what the agents pay attention to. The attention of an agent depends on who they interact with and particularly with whom they take actions. These joint actions are modeled as meaningful connections between agents. The more connections that exist, the more work can be done in a meaningful way. This is particularly true when the connections go across functions at the level of the organization where most of the manual work gets done. At the Lima refinery mentioned above, the network of cross-functional connections between the workers at the site was quickly created by workshops that produced cross-functional action teams to improve the performance of the plant equipment. The increase in the density of these connections is shown in figure 6. The connections in the first frame show the functional connections that existed in the normal line organization. The darker lines are the ones created by participation of the individuals on a cross-functional action team that made an improvement in some piece of equipment together. Note that in the first frame, there were 17 groups that represented some function or supervisory group. So these were effectively people working in silos with little connection to people in other functions.

Figure 6 Evolution of cross-functional connections in Lima refinery due to active participation in Action Teams launched from The Manufacturing Game Workshops

In the final frame of Figure 6, the organization looks much more together than they did in the first frame. This togetherness is a measure of the being of the organization. What is not shown in this illustration is the equipment that they improved. A more accurate

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picture would include the equipment as agents as well (Figure 7). This system is called by Fred Emery (1959) a socio-technical network.

Figure 7 An illustration of the idea of socio-technical network

The agent based model is constructed as a socio-technical network. The pieces of equipment are agents and the people have particular sets of equipment that they operate and maintain. As the people make more improvements in the equipment, the reliability of the equipment gets better and the amount of product goes up. Leadership in this model can happen in many ways as any agent can influence other agents, which creates a leadership relationship at that moment. This means that the equipment can create leadership relationships as well. In fact, in a reactive domain of operation, the equipment provides the leadership for the mechanics by breaking down from time to time. While this is not the type of leadership we would prefer, it is leadership never the less and leads to repair of the equipment, which usually is better than losing production from that equipment.

Modeling the WillWill is the most difficult element of experience to define. It is the element that determines how much effort is required to execute an action or how much effort the agent is able and willing to exert to accomplish a task, project, initiative, or other form of action.

To incorporate this dimension in our model, we had to create a process to calibrate the model to a specific site so that we could evaluate the need for reliability. If the demand for product is small, the “will” to have high reliability is low unless the consequences of low reliability would lead to catastrophic events like Three Mile Island, Bhopal, or Chernobyl.

To accomplish this part of the modeling required us to develop a method for collecting data from a site and finding a steady state in the model that matched the data from the particular site. With these highly non-linear models, finding the steady state is more of an art than a science. Based on our knowledge of the model and the normal control

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variables, we were able to create an MS Excel front end that uses the model in short calculation steps and then adjusts the control parameters to guide the model to an appropriate steady state. This sometimes requires some intervention into the calculation to guide the model to a non-trivial steady state.

Once the steady state is achieved, the model can be used to calculate various scenarios or strategies for advancing the organization to a new steady state in a higher stable domain. The value of this use of the model, which we call dynamic benchmarking, is to help people recognize the “will” needed to transform their organization. In our efforts to help people make the transformation to a reliability culture, we find that most people under estimate the amount of improvements required to change an organization to a reliability culture. Our model shows that it is possible to reduce the amount of maintenance work by 70 to 80 percent if all employees are engaged in improving the reliability of the equipment over a two to three year period. We also have demonstrated that level of performance improvement in several facilities. To make this type of change usually requires thousands of small improvement projects.

Most managers think that thousands of improvements will overwhelm their employees. They fail to notice that they in fact are doing 200,000 to 300,000 maintenance work orders per year in these very large facilities and have 8,000 people working at their sites. Using the Dynamic Benchmark model helps the managers to do some stock and flow thinking and not just causal loop thinking. While causal loop thinking can explain what might be happening, it does not convey the magnitude of the effort needed to succeed at a transformation.

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A case study at BP Alaska exploration and production region

Flying about 600 air miles north of Anchorage one arrives at Alaska’s North Slope oil field. The field covers about 1,080 square miles and includes 23 production fields the largest of which is known as Prudhoe Bay field. The Prudhoe Bay field remains the largest oil field in North America and ranks among the 20 largest fields ever discovered. It was discovered in 1968 and came on-stream in 1977. The original estimated amount of oil in place was equal to 25 billion barrels of oil and 45 trillion standard cubic feet (scf) of natural gas. With new technologies it is expected that the recoverable amount of oil will reach 60 percent. Nowadays, net production from Prudhoe Bay area averages approximately 98,000 barrels of oil equivalent per day.

Figure 8 Map of the North Slope

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Across the Prudhoe Bay field, crude oil, produced water, and gas are first moved from about 1,100 wells through flow lines to one of six processing and treating facilities. Following separation, oil is then transported via transit lines to Pump Station 1, where the oil is pumped into Trans Alaska Pipeline south to Valdez. Produced water as well as gas are re-injected into the reservoir where gas is used to maintain the pressure in the reservoir and will be produced in the future once most of the oil is produced.

Figure 9 An overview of the production process on the North Slope

There are about 2,000 BP employees and 8,000 permanent contractor workers taking care of all aspects of the exploration and production processes. There are approximately 1 million tagged pieces of equipment that are involved in producing the product. In this system the main challenges that are faced include the scope of work (something that Senge in his book in 1990 calls complexity of details), an aging oil field as well as aging equipment (adding significantly to dynamic complexity of this system). Even though the current production constitutes only about 7 percent of the average amount produced 30 years ago (at the very beginning of the Prudhoe Bay field for more than a decade about 1.5 million barrels of oil and gas liquids per day were produced) nowadays it requires more resources to run the field. One of painful evidences of these challenges was an oil spill in 2006 when, due to a corroded pipeline, 6,400 bbl were spilled over 1.9 acres.

The Alaska oil spill together with some other incidents and realizations led to development of a set of BP worldwide operating standards called OMS – Operating Management System. BP Alaska region was chosen for wave 1 implementation of OMS which started in 2008. The Local Operating Management System Handbook defines aspirations and the vision for BP Alaska, which says:

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“Our operating vision calls for Alaska SPU to be leaders in oil and gas, to unlock and produce our vast reserves. To be a world class oil and gas operating company requires us to:

Stabilize the operation, and become safe, reliable, and efficient, Engage the workforce in defect elimination, Systematically target improvement in key business focus areas, Move towards a disciplined system for managing operations (OMS), Deliver agreed S&O risk reduction and HSSE outcomes, Reduce complexity and improve how we operate, Improve efficiency to attract the needed investment.

The journey to world class operating

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The Manufacturing Game®(281) 812- 4148

Lowest CostsHighest SafetyHighest Profits

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Rewards: Overtime heroes No Surprises Competitive Business Returns

Short term savings

Defect elimination in all aspects of our work is key to delivering our operating strategy. The operating strategy is designed to achieve the proactive way of operating, which delivers the highest safety, lowest costs, and competitive business returns – resulting in sector leadership.”

Below the experience of this ongoing journey is described with a focus on three elements of experience – function, being, and will.

Creating the FunctionThere is a Russian proverb that says “Paper is patient – you can put anything on it”. Very often there seems to be a significant gap between written plans and strategies and their

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execution. From this perspective, one might wonder, what would it take to make sure that the written BP Alaska operating vision will be achieved and the North Slope facilities will move to the Proactive – Don’t Just Fix it, Improve it – operating domain? Even if one recognizes – on paper – that defect elimination is a means to reduce the number of breakdowns and incidents, which reduces the need for maintenance work and maximizes uptime and production, what does it really take to eliminate defects in the system?

One answer to this question comes in the form of one particular example from the Prudhoe Bay field called the Solutions Without Boundaries (SWB) program led by the CH2MHill contractor company. The biggest project CH2MHill is involved in on the North Slope is Campaign Maintenance. Divided into nine groups – CUI, Fab Shop, Flex, HSE, Integrity, Maintenance, Planning, Project, and Well Support – the CH2MHill workers perform the maintenance function for the Prudhoe Bay field.

About two years ago, they created an internal CH2MHIll Continuous Improvement (CI) department. The CI department started engaging the employees to focus even more than before on improvements of all aspects of the work they perform on the North Slope. Gradually the number of people involved in the SWB program has been growing. Over time. also other CH2MHill projects have joined the program.The SWB program is voluntary. Anyone who has an idea can submit a SWB form, describing the problem, the current state and also proposing an improvement. The form can be delivered to the CH2MHill CI Department or to one of the CI Champions. It is worth mentioning that the CI Champion is not a formal position; currently all the groups have CI Champions, i.e. people that took responsibility for collecting, reviewing the SWB forms, and documenting the improvements.

Every week on Wednesday the collected SWB forms are reviewed by the CI Champions to determine whether the improvement is workable. Sometimes it is necessary to obtain some more information before the improvement might be worked. During that meeting the CI Champions committee also decides on three best ideas. People who contributed these ideas receive a silver SWB coin. Also those who submitted the SWB form with an improvement idea for the first time receive a bronze SWB coin.

Figure 10 Solutions Without Boundaries program coin

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The SWB form constitutes a kind of business case indicating benefits that might be gained in the area of HSE, Quality or Productivity if the proposed improvement is implemented. Most of the propositions require some initial investments. However, with the proper support from the BP Campaign Maintenance Managers there has been no single case when the request for money for improvements was turned down.

Once approved the improvement is worked. The CI Champions keep track of the progress in each group during a weekly Kaizen meeting. To date workers have submitted more than 1,000 ideas for improvement in the SWB program. In 2010 alone, verified cost savings due to improvements delivered via SWB program was $13,472,141. This number does not include all value achieved in the area of personal and process safety and environmental management.

Figure 11 Graph above: Results of the SWB program to date;

Picture on left: Ian Cole and Ben Hamza presenting the use of borescope;Picture in the middle: Travis Jacobson and Chase Griffith presenting yo-yo used with rattle gun;

Picture on right: Mike McLaughlin, Louie Jensen and AJ Gerrits presenting three safety improvements implemented in Fire&Gas department.

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It is the authors’ belief that the organizational change needs to be re-invented in every organization. It is not possible to come with a standard toolbox and solve all the problems the same way it was done before. Social and technical parts make each system unique. The CH2MHill Solutions Without Boundaries program on the North Slope can be surely considered a bright spot, in terms used by Chip Heath and Dan Heath (2010). The way the SWB program works and delivers tangible results in this particular socio-technical system is very insightful. It would be beneficiary to make the SWB the North Slope wide program. However, informing everyone about how the SWB program works is not enough. As Jerry Sternin working on malnutrition problem in Vietnam in 1990 said – “knowledge does not change behavior”. The CH2MHill workers fulfilling their maintenance function across the North Slope and working in most facilities in the Prudhoe Bay field are great propagators of defect elimination as a means for continuous improvement. In a recent opinion poll conducted in the facilities, most of them highly value the work conducted by CH2MHill workers; furthermore, it is indicated that the crews exceed the expectations. However, to make the change happen and become sector leader in operations it is necessary that everyone gets involved and practice defect elimination. As for now most of the SWB program improvements are still missing ‘the voice of the equipment’. BP operators and other contractor workers working across the North Slope can deliver this ‘voice’. With the current limits to the SWB program the improvements that are delivered focus mainly on the issues related to ‘how to become more efficient in reactive work’. Still, this situation should not be criticized. On the contrary, in this initial stage of the journey to a better operating domain every improvement can be perceived as building the capacity to make the change happen. Those involved in the SWB program who are working on improvement reinforce good work habits and also increase efficiency and make more space available for further improvements.

In order to address the limits within which the SWB program operates and to engage the whole community of North Slope workers into defect elimination, an oil field simulator called the CI Game Workshop is used. It is a customized version of The Manufacturing Game®, which is based on the System Dynamics model developed in DuPont. The customization fits the North Slope situation and includes elements of the BP Operating Management System. Last year 21 game facilitators were trained and now every week the workshop is delivered for anyone interested. So far the workshop accommodated representatives of companies working on the North Slope such as ACUREN, AlyeskaPipeline, Amerapex, ASCI, ASRC, BP, CCI, CH2MHILL, ExxonMobil, MISTRAS, Moody International, NMS, Norcon, Purcell Security, SAIC, SLR, and Tern Technologies. Despite such a broad audience, while inviting new workers, some of them claim that this is only CH2MHill training. This reproach clearly indicates the need of individuals coming together to create an identity for the organization – which is a question of ‘being’.

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Creating the BeingAll workers, be it BP employees or contractor workers, flying to the North Slope land at the Deadhorse airport. They take buses to camps and from there they drive to their facilities and shops. However, before the bus drivers will let you go to the camp, they go through a safety report. And so, Ray, a former military officer, now with Purcell Security, before driving to Central Dispatch, MCC and Tarmac, takes you through any incidents that happened during the last hitch, weather conditions, and asks you to stay safe. For more than a year now every time he drove someone from the airport he has repeated BP’s 50–One–50 vision for Alaska region, i.e. a 50 percent reduction in injuries and incidents (personal and process safety); acting and working as one team and building a sustainable Alaska business for 50 years through value creation which is delivered via resource progression; efficiency and productivity improvements throughout our business. One team means the Functions working together to deliver the Alaska Regions short and long term goals. Recently someone quipped that yes, there is ‘one team Alaska’ – one team in one facility and one team in another facility. Also implied was that there is also one team of BP employees and one team of contractor workers. But this is not really the envisioned ‘One Team Alaska.’ This element of the vision touches the question of identity for the organization. Creating this identity has the potential to achieve the other two goals related to safety and sustainability.

This is a big learning people take with them from the CI Game Workshop. When they begin running the oil field simulator they make decisions in their functional silos, i.e. operations, maintenance and business services. Not many people are interested in what the other functions deal with, as they are so busy with their own work. Pretty soon the virtual facilities are running into trouble. The participants experience a safety incident and an environmental incident. The communication between functions begins and things start to get better. Still, communication is not enough to stop reacting to the problems arising one after another. Once the participants start allocating some of their resources to defect elimination and begin limiting the number of defects coming into the system can they sustain improved productivity, safety and environmental management.

Figure 12 Representatives of various companies working on the North Slope participating in the

CI Game Workshop

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On the second day of the workshop Action Teams are launched. The participants are asked to take the learnings with them to the field and acting as a cross-functional team they work on a specific improvement. One of the recent workshops included representatives of Acuren, Mistras, BP, and CUI crew of CH2MHill. All these people are involved in pipeline inspection. One crew is responsible for smart pig (pipeline inspection/cleaning gauge) inspection, the second for follow-up inspection in order to discover corrosion-related wall-thinning, another for scheduling work, and the last for replacing corroded pipeline. As the participants indicated, even though they perform consecutive steps in the work process, the workshop gave them the opportunity to see and talk together about the whole process. There were cases in the past when a crew arrived to a specific location and took the pipeline isolation from a wrong piece. There was no way to double check with the previous crew (e.g., inspectors). The workshop allowed these participants not only to talk to each other but also act together as a cross-functional team and ensure that the situations similar to the one described above will not happen ever again.

This kind of the action team seems to be a good illustration of what “One Team Alaska” means. Four people, working in different departments, for different companies on the North Slope, acting together not only to mitigate one problem but to make sure that a similar problem will not reoccur. An element that should also be included in the above illustration is the equipment the action team decided to work on – in this case a pipeline. From the perspective of ‘being’, i.e. individuals coming together to create an identity for the organization, it has been found while working on the BP Alaska case, that a piece of equipment should be considered as one of the individuals. Equipment has a dynamic nature, which might have a significant impact on the organization’s identity. The Seawater Treatment Plant (STP) is responsible for delivering water to be injected into the reservoir. One part of the process includes operation of a booster pump. A few years back when the pump broke down there was a spare that could take over. Today, significantly more water needs to be injected into the reservoir in order to keep its pressure, so both pumps must run all the time, which makes them quite important ‘individuals’. Another example might be Trans Alaska Pipeline System (TAPS). At the beginning of this year a crew discovered a leak at Pump Station 1 – the facility where TAPS begins. The North Slope oil producers (BP, ConocoPhillips and ExxonMobil) were asked to cut their production down to 5 percent of normal until repairs could be completed. Whatever plans the management teams had for that day were changed by the leaking booster pump discharge pipe. In this case, the pump was a leader with many followers. However, there were also other leaders taking the lead on ramping down production, freeze protection of wells, and even finding bed space for additional resources coming to the North Slope. This example is very much in line with a leadership theory by Hazy, Goldstein, and Lichtenstein (2007) where leadership is not a person but a relationship between people, making it a group process.

Similarly in our agent based model simulation results, on the North Slope, we have observed movement that has a great potential to lead to creation of a new organizational identity. Resembling an illustration of the reinforcing loop – a snowball is rolling, it’s gaining momentum and is increasing its size – the number of activities in the area of

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defect elimination as a means for continuous improvement is growing every week. Working in action teams, the North Slope workers develop and foster new connections between functions. Rather than a structured process, what is observed is an emerging phenomenon. Everyone can tell a story on how they became involved. One can also see differences when visiting shops and facilities. Not long ago there was little receptivity in most of these places. Now one discovers that workers in those shops and facilities are putting in place processes and policies that enable or help them eliminate defects. For example, one facility decided to treat defect elimination as part of their normal work. A defect elimination opportunity is submitted as a Work Request into the Computerized Maintenance Management System. The Maintenance Team Lead (MTL) reviews this request and if necessary gets in touch with the operator who submitted the idea to determine whether the improvement makes business sense and is workable. Upon approval by MTL the Work Request becomes a Work Order and the work is planned by the Maintenance Planner. This process looks pretty much the same for equipment breakdowns. The difference though, is that in this case the piece of the equipment will not just be fixed, but improved! In an emerging way the identity of the BP Alaska region – One Team Alaska and Defect Elimination – is more solid today than it was at the beginning of the journey to a better operating domain.

Figure 13 A new logo on shirts

However, the question of ‘leadership’ as part of ‘being’ is not yet answered. In previous sustained cases (i.e., Lima and Port Arthur refineries), Leadership Forums were created as a safe place to practice collective leadership In BP Alaska a similar forum – CI Forum – was mandated in the Local Operating Management System Handbook but have yet to be started in any facility The forums would have focused on improvements on equipment in a facility and probably would include mainly BP action teams. Beginning in 2009, Continuous Improvement (CI) Celebrations were created to include the entire production area. The twice yearly events involve employees from BP and contractor companies and give the employees an opportunity to showcase their improvement activities. The CI Celebration fulfills one of the roles of Leadership/CI Forum, that of celebrating the successes. However, the part on collective leadership – engaging diverse communities that work across the North Slope in activities that can sustain change, and also entwining leaders and networks of individuals and organizations – is still missing and remains to be discovered.Recently a group of leaders and representatives of various functions and different communities from across the North Slope attended a special Defect Elimination (DE) workshop in order to experience and practice use of WMS (Work Management System)

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as a driver for change. The follow-up session planned for April this year might define the basis for collective leadership.

Creating the WillThe invitation to the Defect Elimination workshop was extend to anyone interested. The target group for the DE Workshop was the management team however. A varied group accepted the invitation and participated and provided an excellent contribution. The group clearly displayed the ‘will’. During discussions it became apparent that the participating Maintenance Team Leads, members of the Reliability Group, Campaign Maintenance team, and some representatives of operations could clearly see urgency for change and how Defect Elimination and proper use of the Work Management System could address the urgency issue, which is to reduce the number of outstanding Work Orders. The Dynamic Benchmark model of the whole Alaska North Slope facilities indicates that they must launch at least 37 improvement projects per week. Each of these projects requires approximately the amount of work needed to complete a work order. This amounts to 1900 improvement projects per year which sounds like a lot. However, the 10,000 people on the slope already do 6,000 work orders per week or 320,000 per year. Therefore, the will to make this transformation is actually less than 1% of extra effort to improve their earnings by 20% in three years through more production than the current trend in production volume indicates and avoid a loss of 50% of these earnings if the current trend of operations is continued without the improvements.

So far on the North Slope the most ‘will’ has been observed in the maintenance function. The ‘will’ is followed by particular actions (e.g. mentioned earlier proper support of Campaign Maintenance Managers for the Solutions Without Boundaries program). The ‘will’ might also be present within other functions but is not that recognizable. What is more the ‘will’ of the other functions might be different than in the maintenance function and may lead to conflicts. The challenge the North Slope is facing is to recognize a common ‘will’. Under the common will it is easier to work out good and acceptable compromises on the side of all functions involved in producing the product.

The plan for 2011 is to conduct a series of dynamic benchmarking studies across the North Slope. The first step will be to collect information from employees and the management team of each operating area. Some of the collected information will be subjective but most will be objective (e.g. number of pieces of equipment, number of upsets, HSE records, number of workers in each function, etc.). All information will be collected in a one-on-one manner. The process of asking the questions and documenting the assumptions and hard data may lead to a person’s realization of the current state of their facility and might also lead to further internal discussions, and common understanding followed by action.

The collected information and data will feed the Dynamic Benchmarking System Dynamics model. The model will output the likely outcome of continuing with the current strategy as well as suggest others and their potential outcomes and thus create the will to implement defect elimination.

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It is envisioned that this endeavor will not only help in creating a common ‘will’ needed to transform the North Slope but also will support and foster further development of organizational identity and a reliability culture. The model data can be updated periodically to validate progress toward these goals and to sustain the will. Hopefully, the results of the effort of thousands of people working across the North Slope will be reported further during future conferences.

ConclusionsThe models mentioned in this paper constitute an invaluable means for storing various experiences gained while working with a number of companies on a transformation to a reliability culture. As indicated in our 2005 International System Dynamics Society Conference paper these experiences encompass cases that managed to sustain the transformation as well as those that did not. We recognized that the leadership process was different in the four case studies investigated at that time. Since then we developed an agent based model in order to investigate the leadership aspect of organizational transformation. Our conclusion from these studies is that leadership should be viewed as a group phenomenon instead of the responsibility of an individual. By this we mean that leadership is something that occurs between individuals and not within individuals. If there are no followers then there are no leaders. Therefore we conclude there must be distributed leadership among all individuals in an organization. Everyone can, and should be, a leader on some subject some of the time. We think a level 5 leadership process (Collins, 2001) can be created by allowing a person with the best experience in a given situation to make the decision. Therefore the leader should have the capability to understand the function, being and will aspect of the decision. The empowerment of people then is to let people make decisions when they have the experience to do it.

These ideas on the leadership aspect of transformation to reliability culture led us to study the change effort in BPXA. Our framework to examine the effort comes from Jantsch (1980). He defined three conditions for change to emerge – system being far from equilibrium, autocatalytic elements and diverse participants. If conditions are right, an organization in a given situation can emerge to a more reliable performance culture.

The Alaska oil spill together with other incidents and realizations led to development of a set of BP worldwide operating standards called OMS – Operating Management System. BP recognized that it was not acceptable to maintain the status quo. This put the organization in a far from equilibrium condition.

The Alaska Leadership Team wisely recognized the situation and created 50–One–50 vision for BP Alaska region:

50 percent reduction in injuries and incidents (personal and process safety); acting and working as one team and building a sustainable Alaska business for 50 years through value creation which is delivered via resource progression; efficiency and productivity improvements throughout our business. One team means the Functions working together to deliver the Alaska Regions short and long term goals.

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This vision creates freedom for many people to become leaders. It also satisfies the second condition for emergent change – diverse participants. Various functions – maintenance, operations, engineering, finance and facilities support (be it BP employees or contractor workers) have started working together to achieve the vision through continuous improvement. Previously we thought that ‘diversity’ came from people representing various functions working together as cross-functional action teams. Our study on leadership led us to believe that another inseparable element of the action teams is the equipment they work on. This constitutes a socio-technical network, which adds to the diversity. Yet another element of the diversity is various methods as means for continuous improvement.

The results of actions to achieve improvement are documented and not only shared across the North Slope but also the entire company. CI Celebrations are a great example where people can share pragmatic information. The pragmatic information, being autocatalytic, satisfies the third condition for emergent change. Pragmatic information is geared to make a certain effect – it changes the receiver. Pragmatic information is composed of two complementary aspects, novelty and confirmation. Pure novelty does not contain any information; it stands for chaos. Pure confirmation does not bring anything new; it stands for stagnation or death. Pragmatic information reaches a maximum when both components are balanced.It appears that the implementation of OMS in BP Alaska creates appropriate conditions for emergent change. The OMS creates a management framework for change to higher reliability to emerge in BPXA assets.

In our studies we used two kinds of dynamic models – a System Dynamics model and an agent based model. We found that SD model is appropriate to capture the ‘function’ aspect of experience. Agent based models on the other hand are more fit for modeling the ‘being’ aspect of experience. To better capture the element of will in our models we are currently working on integrating the System Dynamics model which simulates the technical part of the socio-technical network with the agent based model, which simulates the social part of the socio-technical network. We think that the model on ‘will’ simulates the role of management rather than the role of leadership. We think that the change effort in BPXA will provide us with the experience we need to complete this hybrid model.

Literature

Bennett, John (1956) The Dramatic Universe Volume 1: The Foundations of Natural Philosophy, Chapter 3: The Elements of Experience.

Collins, Jim C. (2001) Good to Great: Why Some Companies Make the Leap... and Others Don't. New York: HarperBusiness.

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Emery, Fred (1959). Characteristics of Socio-Technical Systems. London: Tavistock Institute.

Hazy, James K., Goldstein, Jeffrey A., and Lichtenstein Benyamin B. (2007). Complex Systems Leadership Theory: New Perspectives from Complexity Science on Social and Organizational Effectiveness. Litchfield Park: ISCE Publishing.

Heath, Chip and Heath, Dan (2010). Switch: how to change things when change is hard. New York: Broadway Books.

Jantsch, Erich (1980). The Self-Organizing Universe: Scientific and Human Implications of the Emerging Paradigm of Evolution. New York: Pergamon Press

Kotter, John P. (1990). What Leaders Really Do. Harvard Business Review. May-June.

Ledet, Winston P., Monus, Paul A., Cardella, Tony, Burgess, Warren (2005) Modeling Sustainable Organizational Change – Why Did Change at BP Lima Sustain While the Change at DuPont Faded Away? The 23rd International Conference of the System Dynamics Society, July 17-21, Boston.

Senge, Peter M. (1990). The Fifth Discipline: the Art and Practice of the Learning Organization. New York: Doubleday.

Ilya PrigogineJerry Sternin

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