Speaking at the SPE Annual Conference in Denver last month, Kemble Bennet commented the changing demographics of the industry. In 1984 there were some 12,000 petroleum engineering students at faculties across the United States. Today? About 200! This staggering drop in numbers goes way beyond the general decline in activity levels. It is also occurring in what one would have thought was a relatively buoyant industry segment—lord knows what the picture is like for geophysicists!
The only growth sector in the industry is that of what Bennet calls ‘free agents’— independent consultants in other words. Which is a funny kind of ‘growth’ really—more of a corollary of corporate downsizing. Having been such a corollary myself in the not too distant past, I’d like to share some thoughts on this topic with any other ‘free agents’ who might be reading this—and with or those of you who may be ‘freed’ at some future date.
In an ideal world, free agents are a special case of the entrepreneur. They could be at the heart of the new, technology-facilitated distributed work paradigm. They manifest that noble aim of capitalism—something they share with those engaged in other forms of commerce—that they live and die by selling a product or service that someone else wants to buy.
The first problem with the ‘noble entrepreneur’ is that the downsizing process is forcing entrepreneurship onto the free agents. If they had actually chosen of their own free will to engage in an entrepreneurial activity, this would be perhaps a more auspicious start than being kicked out of a corporation. However it originates, entrepreneurship is not to everyone’s taste. Many folks do not have the psychological make-up or luck that is necessary to start out on their own.
Even if you intend to go it alone, other folks who are still in gainful employ often just can’t quite get their heads around the idea of you as a noble entrepreneur. Heck—last week you were a geophysicist! I remember several awkward interchanges as I gave my ‘elevator pitch’ to ex-colleagues. They were more concerned about giving me sympathy than work—seeing me not as an ‘entrepreneur’ but as ‘unemployed’. For some, it seemed like they feared that my very presence was going to jinx them somehow! On reflection, the downsized engineer/wannabe entrepreneur’s main attribute is probably a thick skin rather than acumen.
It is inevitable that free agents and consultants are created at times of downturn—the least propitious time for them to get their own thing together. Why don’t folks jump before they’re pushed and set up their high tech consultancies while the going is good? Of course they often do—the dot com boom was a good example of a collective mania for doing your own thing on a variety of scales—from modest to megalomaniacal. But generally, two things conspire to make a timely exit into consulting a very risky venture—education and security.
It was a great eye opener to me to take a course a few years back in setting up your own business. I finished by regretting that I had not been exposed to the world of commerce before. How could I have gone through like without understanding (well up to a point) a profit and loss statement? Or without knowing that marketing is what makes the world go around? The answer is of course that they just didn’t teach any of this stuff to scientists. Anyhow, to a child of the sixties—commerce was a dirty word anyhow and to be avoided at all costs.
The other factor arguing against setting up as an entrepreneur is that you need to be quite mad to willingly abandon the advantages that gainful employment brings. Forget the regular salary, benefits, pension plan and the rest. Your new business model is a) find out what folks want and b) provide it to them. Any failure in the evaluation of a) or in the execution of b) will immediately impact your ‘bottom line’ and what’s on the dinner table!
This is, if you like, true capitalism—where folks are rewarded for taking risks. Interestingly, in the corporate world, the straightforward risk-reward equation has been distorted out of all recognition in the last few decades. In fact the risk reward spectrum has virtually been inverted. Today, the low reward jobs are often where there is the greatest risk of seeing yourself downsized as your blue collar job goes offshore.
At the top of the corporate food chain, it is sometimes hard to recognize a capitalistic intent at all. Our captains of industry—apart from their extraordinary pay packages (which I don’t begrudge them—in fact I’d like one myself) display a personal risk aversion worthy of a lowly government employee or union man.
Peace of mind!
Of course executives’ stock options and bonuses are incentives to encourage performance. But set against these are: guaranteed pensions beyond the wildest dreams of the free agent, golden handshakes and worst of all, contracts that assure massive severance payments in the event of things going pear-shaped. At the top of the pyramid, the reward for failure is—financial peace of mind!
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