Tech Strategy for Exxon Mobil

Exxon As Exxon engages in the discovery, extraction, refining and retailing of petroleum, a wide range of technologies are used to help it perform its business and compete. Some of these functions are outsourced to other companies that serve the oil industry, but the base technology for exploration involves a variety of equipment for evaluating whether there is oil in the ground at specific locations -- drills, sonar and other sensory equipment.

Extraction requires highly complex hard technology, driven by software, that can drill into the earth and bring oil to the surface, no matter what the prevailing conditions at the surface are. At the fore of modern technology is software that enables real time monitoring of all data on wellhead conditions, flow through pipelines and the status of mechanical systems. This software seeks to minimize loss, maximize efficiency and to reduce downtime (Elatab, 2012).

Oil reservoirs tend to be pressurized and flammable, so considerable technology is required in order to perform this task safely. Refining technology is the next set of technology, and refineries will through various means of removing impurities from the oil and refining it into its different usable forms. Techniques such as fracking have enabled companies to extract greater amounts of reserves in certain hard to extract areas, such as Prudhoe Bay in Alaska (Elatab, 2012).

There are very few opportunities for an oil and gas company to gain technological competitive advantage, however. Typically, new technologies diffuse quickly through the industry, especially since many individual tasks within the above processes are outsourced to third-party contractors. Usually, there are more opportunities to license a powerful new technology than could be had by making incremental gains over the competition.

Further, many new technologies driving the industry have been developed by smaller, specialist companies that then later market to oil companies -- eliminating the opportunity for sustainable competitive advantage for Exxon or any of its rivals, for that matter. When Exxon does develop proprietary technology, patents are the pathway for protecting such technology. A patent gives the creator of a new technology the exclusive rights to use that technology for a set period of time, typically 17 years in the U.S. (Sherman, 2015).

Patents are typically filed in a number of different countries, but it can be difficult to enforce patent protection in some regimes. However, in Western nations, patent protections are strong, and enforceable. Exxon would then be able to either prohibit the use of the technology by rivals, or it would be able to license that technology to them, which is usually the more profitable avenue for the company. As for technology barriers, there is no evidence that Exxon Mobil has any.

There are few meaningful barriers to the adoption of technology in this world. One is cost, and this is not an issue for Exxon Mobil. The company has $4.6 billion in cash on its balance sheet, a further $35 billion in investments and is the second-most profitable company in the world at $35 billion. Exxon Mobil has all the money it needs to develop new technology, enforce its patents, and acquire the rights to whatever technology it wants to use. It can buy the companies that innovate, and do with fairly effortlessly.

So money isn't a barrier. Another potential barrier is inertia within the organization, where the decision-makers do not see a need to upgrade to new technologies. This is not a problem for Exxon Mobil, as this is a technology-driven industry and the company has a strong orientation towards technological development and the use of technology to ensure competitiveness. The most logical recommendation is not to accept the proposition that the company needs a new recommendation.

Sorry, but Exxon Mobil is doing what it needs to be doing with respect to technology. The company isn't earning $400 billion a year by failing to adopt new technologies. It is a technological leader in its field, has the money to spend and the right managerial mindset for new technology adoption. The business model of the industry is to let smaller.