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ize matters in nature and business; larger is not necessarily better than small. The laws of biology and physics apply to the corporate world. The capability to adapt and act to new conditions separates leading organizations from the rest. The Shale Revolution is affecting oil and gas (O&G) operators and service suppliers. Several examples explore how to improve organizational strategies and survive in the ever-changing global O&G market.
SCIENCE TRUMPS STRATEGIES Changes in physical size alter the shape of any animal. The same is true for organizations. Using geometry rules, the surface area of an object, animal or business, increases by powers of two or with the square of its diameter. Any item's mass or volume, such as a business, increases with the diameter's cube. As the diameter increases from 2 to 3 to 5, the mass grows from 8 to 27 to 125. Mass always grows faster than the surface area of any animal or organization. What does this mean? A company's size, structure, and strategy are all interconnected. When the size of an industry or company changes, different policies, strategies, and organizational structures are required. A "right" or "wrong" size does exist for industries and companies. Unfortunately, the Shale Revolution shifted many O&G operators and contractor firms into the "wrong size" category, thus resulting in many failures.
UNDER THE RADAR The Shale Revolution is a United States (U.S.)-based phenomenon. O&G producers had discovered shale reserves. But, drilling technologies failed to develop the shale geologies cost-effectively. Several small, independent oil companies knew the value of shale reserves. They directed significant R&D 56
efforts to fine-tune a new fractionation solution— hydraulic fractioning or "fracking." It is the key to stimulate O&G flow in shale fields effectively. These small companies lacked the size and resources held by major oil organizations. But, they had plans and flexibility. These innovative companies used hydraulic fracturing to costeffectively produced shale O&G fields. The Shale Revolution transformed global O&G production almost overnight. More importantly, the Shale Revolution occurred because leadership recognized