Imagine introducing a disruptively novel, simple, low-cost solution to a problem that plagues an entire industry and then, three years later, seeing it mostly in trials with your largest customers.
How Halliburton has persevered is a case history on how real innovation happens in the B2B world, and why it’s even tougher than you thought for established companies to do it.
The project started in the informal, collaborative way that such tasks often emerge. “I knew a manager in our Completion Tools product service line, and he told me he had a problem,” explained Jason Dykstra, who in 2009 was senior technical advisor for the Sand Control department (he’s advanced to Chief Technical Advisor, and now leads an innovation research department of 11 people).
The problem: Gas or water can seep into functioning wells and drastically reduce their efficacy.
The challenge was to develop a solution to monitor and control that unwanted fluid inflow.
Dykstra took on the challenge, and came up with 20-30 ideas over the next six months, sometimes to the annoyance of the manager, and filed a handful of patents in the process. His approach was disruptive, based on established research in fluidics that suggested complex computer components could be replaced by metal hydraulic gates (i.e. no moving parts). Much of the work was done via computer simulations, and led to a product model that was two feet tall, and would cost $30,000 to build in real life.
The meeting to review the idea didn’t go so well.
“One of the engineers came up to me afterwards and said, ‘Jason, I thought you were so smart, so why can’t you make it smaller?’”
Dykstra locked himself in his office and, six weeks later had shrunk the inflow controller to the size of a credit card. Its cost shrank commensurately and, after another 12 months to establish materials sourcing, manufacturing, delivery, and service operations, was ready to go to market in 2012.
Then the next challenge emerged.
“Ironically, it’s hard for people who are used to more complex technology to get their heads around something simple like a credit card size device with no moving parts,” explained John Fitzpatrick, product and business development manager for Halliburton Sand Control Screens and its EquiFlow inflow control technology line.
“While major oil companies often work more collaboratively with the smaller suppliers, large service companies like ours are held to higher standards for innovation,” he added. That can mean expecting delivery of products that have already been tested, when the real Catch-22 is that a disruptively new product needs real-world field trials.
Fitzpatrick and his team spent 30 months working to educate the marketplace, and now have over 40 installations in seven countries around the world, along with over a half-dozen trials with some of Halliburton’s largest customers. The product was not an overnight success, but is now gaining industry acceptance.
Interestingly, Dykstra had solicited customer input during the development process, but found it to be a double-edged sword. “We got a great understanding of their requirements, but then, a few months later, those needs would change, so sometimes it felt like we were chasing a product instead of building one.”
Today Halliburton’s innovation development approach includes a team housed and funded under Dykstra. Their goal is to deliver systematic, industry-changing products to address the challenges that the various business units face regarding resources…and customer willingness to adopt expedited solutions.
“The farther you’re out on technology, the more value the intellectual property has,” explained Dykstra. “We need to be cutting edge if we want to disrupt our industry.”