A Closer Look at Why Innovation in the Energy Industry is a Win for Inclusivity
Open innovation in the oil and gas Iindustry Is a win for innovation and inclusivity.
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The science, technology, engineering, and math (STEM) fields have long suffered from a lack of gender and racial diversity. Relative to their presence in the overall U.S. workforce, Black and Hispanic workers are underrepresented in STEM jobs. Across the world, less than a third (29.3%) of employees in scientific research and development are women. And pay gaps reinforce these disparities: white women with careers in STEM are paid less than their white male co-workers, while Black women earn only about 87% of white women’s salary and about 62% of white men’s salary.
These inequities are especially evident in the oil and gas industry. Only about 8% of the energy sector’s workforce is Black and, according to a 2017 report, Black workers earn 23% less than white workers in comparable roles. The industry has fewer women as well: A report from Boston Consulting Group on gender diversity in the energy sector found that oil and gas has one of the lowest shares of female employees (22%) of any major industry. Oil and gas is facing not only a moral obligation to make changes, but a financial one as well: Without diversity, the industry will have a harder time innovating and driving market growth.
Taking Steps Toward Diversity
Industry leaders are aware of the need to diversify their company ranks. In June of this year, Dennis Kennedy, founder of the National Diversity Council, launched the Energy Diversity and Inclusion Council. This new organization provides training sessions and other consulting services for oil and gas companies around diversity and inclusion.
Major associations in the energy industry, like the AAPG, SPE, and EAGE, have created collectives for women in oil and gas where they can network, discuss ongoing issues and raise the profile of other females in the industry. Other independent organizations have been set up as well, like Pink Petro, an online community for women in energy that aims to fix the industry’s systemic gender gap. Pink Petro also organizes conferences, runs its own careers site and even offers mentorship programs.
But these efforts alone will not be enough to bring more diversity and inclusion into the oil and gas industry: It will require a culture shift. The study from Boston Consulting Group on women in O&G discovered that not only is there a gender imbalance in the industry, but it transcends seniority, geography, and business segments. This consistency implies the powerful, global scope of the industry’s current culture, and its ability to override the influence of regional forces.
In order to create lasting change in the O&G industry, companies will have to make deep, systemic changes.
The Potential of Open Innovation
For the oil and gas industry, effectively addressing its lack of diversity and inclusion could mean adopting new ways of doing things. Open innovation, for example, could help break down the typical barriers to entry, so that fresh voices and talent have more equitable opportunities.
When companies use open innovation, they are pulling talent from outside their organization to help them achieve strategic goals. With this model, organizations share intellectual property with outside talent who, in turn, use their expertise and creativity to upgrade products, services or processes.
In the oil and gas industry, open innovation could help companies in not only innovating their existing operations and services, but also bring in new, more diverse talent without the typical barriers to entry. In fact, the mining industry has already started to experiment with this model: In 2017, the International Mineral Innovation Institute issued an open innovation challenge aimed at creating new employment opportunities for Indigenous peoples in the minerals sector and improving access for young women in mining by connecting with them early in the talent pipeline.
Studio X has a similar mission and plans to bring more diversity and new perspectives to energy exploration. The studio supports entrepreneurs and startups trying to enter energy exploration and connects them with a larger, distributed team of global talent. Here, individuals can collaborate on creating solutions for the industry’s existing bottlenecks, like inefficiencies in analyzing data and removing personal bias from exploration decisions. With Studio X and its open innovation model, Shell and other O&G companies will be able to locate talent blindly and create more diverse talent pipelines.
Like most other STEM industries, the energy sector has realized its lack of diversity and inclusion and is taking steps to reduce the imbalances in its workforce. But because the culture of the oil and gas industry is so strong, companies will have to make radical changes. One option that they should consider? Adding open innovation to the equation.