Innovation and Risk Management: A Case Study of Ranger Oil Company

This report provides a comprehensive analysis of innovation and risk management within the energy sector, specifically focusing on the oil and gas industry. It begins by differentiating between invention and innovation, highlighting the importance of innovation for growth. The report then applies the Pinwheel Framework, developed by Mutual Life Insurance Co., to Ranger Oil Company, examining how the framework addresses factors like business environment knowledge, strategy alignment, and adaptability. Furthermore, the report emphasizes the critical role of systematic risk management in the successful implementation of innovation, discussing strategies for managing strategic, preventable, and external risks. The analysis includes an examination of Ranger Oil's strategic priorities, initiatives, and risk management practices, offering insights into how the company aligns its goals, manages risks, and monitors performance to achieve its objectives. The report concludes by emphasizing the importance of adapting to external factors, such as macro-environmental changes, and the need for innovative risk-management systems to navigate the complexities of the energy sector.

Running head: INNOVATION AND RISK MANAGEMENT
Oil and Gas Management
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Executive Summary
In this report the difference between invention and innovation is described. Invention is a new
process while innovation is improvement of existing products, process and service. The energy
industry implements innovation like automation to achieve growth. In this report, the models of
innovation especially the Pinwheel Framework developed by Mutual Life Insurance Co is
applied to Ranger Oil Company. The critical role played by systematic risk management to
successfully implement innovation is discussed. The management of three types of risks like the
strategy risks, preventable risks and external risks require three different approaches which are
analyzed in the report.

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Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................3
1.1 The difference between Invention and Innovation................................................................3
1.2 The implementation of innovation for the achievement of growth in the energy industry. . .4
2) Models of Innovation..................................................................................................................4
3) The Role of Systematic Risk Management for the successful Implementation of Innovation...9
Conclusion.....................................................................................................................................10
Reference Lists..............................................................................................................................11

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Introduction
Mutual Life Insurance Co developed the Pinwheel Framework to address factors like a
thorough knowledge of business environment, the alignment of strategy throughout the business
process, risks, innovation and adaptability. In the Pinwheel Framework, the economic factors and
customer trends are analyzed by an organization (Lees 2017). The next step that a business
enterprise must undertake is contemplation of the relevance of enterprise strategy. The
aspirations and metrics of an organization often require modification and the CEO and leadership
team of an organization should discuss about the critical initiatives. The additional disruptive and
innovative initiatives are accessed by an organization before the measurement or evaluation of
strategic performance. Ranger Oil –Calgary Canada has branches in the United Kingdom and
America. Ranger Energy service manages risks associated with the complex macro-
environment and is well-built to handle the challenges associated with an upstream industry.
The training of the crews of the organization meets the technical and safety standards to handle
the challenges imposed by the contemporary oilfield. The models of innovation and the Pinwheel
Framework are applied to the Ranger Oil Company and the role of systematic risk management
to implement innovation successfully is discussed.
Discussion
1.1 The difference between Invention and Innovation
Invention is defined as creation of something new, for instance, a product or a process
whereas innovation occurs when a product or process which already exist are improved(Hout
2013 ).A patent can be filed when something new is created by someone and it is called

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invention. Invention fosters economic growth and an inventor is respected by society. Thus
invention does not have a precedent and is associated with novelty. Innovation is not associated
with the discovery of something new; rather, an innovation can add value or enhance the
usefulness of a product or service (Ritala and Huizingh 2014).
1.2 The implementation of innovation for the achievement of growth in the energy industry
It is of paramount importance to implement innovation in the energy industry. The cost of
fossil energy can be controlled with innovation even though mining cost is increased by
exploitation(Boons et al. 2013 ).For instance, companies in the energy sector tried to unlock
supplies of oil and natural gas from shale basins, with help of new technologies like hydraulic
fracturing and horizontal drilling (Small et al. 2014).The energy sector achieves growth in
modern days with the help of complex technological innovation like automation and data
analytics that boost productivity and flexibility of the energy companies(Costa-Campi, García-
Quevedo and Trujillo-Baute 2015 ).Innovation is implemented by energy industry to achieve
growth by adopting three trends- management of complex systems by smart methods, data-
analytics by sophisticated methods and adoption of automation (Strauss, Rupp and Love 2016).

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2) Models of Innovation
Figure: The Pinwheel Framework
Source: (Lees 2017).

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i) For the development of a Framework of Innovation, by a business organization, the
alignment of strategy with risk and reward is of paramount importance.
For the successful implementation of Framework of Innovation, it is important for a
business organization to evaluate its business intelligence. A business organization can do so by
contemplating on the macro environmental factors by using tools like PESTEL analysis.
Another aspect of the business intelligence is to contemplate on the actions that can be
taken by a business organization to influence regulation for improving its brand (Lees 2017).
Ranger Oil Company understands that the contemporary oilfield requires more than a
conventional support. Unlike conventional companies of oilfield service, Ranger Oil has
evaluated business intelligence to adapt to the complexity and financial pressure of the
competitive business environment. The organization has aligned itself to the Framework of
Innovation and has clear understanding of the tremendous change of the upstream operations that
has taken place over the past decade. Ranger oil has also contemplated on the actions to improve
its brand, for instance, the organization has a purpose-built fleet to handle high-spec well service
rigs and trains crews to comply with standards of technology and safety (business-
humanrights.org 2017).
ii) It is important for a business organization to revise and refine the key aspects of the strategy –
The purpose, strategic priorities, vision and aspiration.
Ranger Oil Company is clear about its vision, aspiration and strategic priorities. For
instance, the organization focuses on deploying the latest assets of the industry and top crew
members to deliver a service of superior quality across nations. The vision of Ranger Oil
Company is not only pursuit of operational efficiency and effectiveness, but to do a fair,

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profitable and transparent business for all stakeholders. The entire workforce of the organization
possesses a sense of community, responsibility and accountability.
iii) Clear definition of goals
A clear definition of goals and aspiration of a business organization is of paramount
importance (Lees 2017). Ranger Oil Company aspires to deliver an elite level of service quality
and asset irrespective of the location of the client and provides best services in millout,
maintenance and recompletion. An example of goal of Ranger oil is to deliver zero injuries and
superior HSE performance (business-humanrights.org 2017).
iv)Development of Strategic priorities
A business organization must develop its strategic priorities. The CEO and leaders of a
business organization set up the strategic priorities of an enterprise which lead to the
achievement of goals. The strategic priorities form the foundation based on which the operational
and tactical plans are implemented by a business organization (Lees 2017).
The process of strategy and planning is dynamic. Disruptive innovation is of paramount
importance for strategic agility and cultural change. The management of a business organization
must continuously undertake initiatives which will contribute to the achievement of long term
vision of the business organization. Ranger Oil has clear strategic priorities. Examples of
strategic priorities of Ranger Oil are as follows
1) The organization goes beyond the culture of safety to deploy a management system
which is comprehensive and behavioral-based to ensure protection of communities and crews by
providing operational safety.

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2) Prevention of illness and adoption of prevention measures for environment is a
strategic priority of Ranger Oil Company (business-humanrights.org 2017).
3) Ranger Oil company has a strong customer focus
4) Enhanced Distribution- Ranger Oil Company provides services in Canada, United
States and the United Kingdom.
5) Collaboration and solution development- Ranger Oil Company adopts innovation to
deliver high quality services to customers. For instance, Ranger Oil Company provides complete
support that facilitates in streamlining of time-to-production and helps to bring the well online as
fast as possible. Ranger Oil Services adopts innovation in procedures and equipments to support
clients in completion of the service delivery process, for instance, high-spec service rigs, pipe
racks, power swivels, fast-track millout jobs are provided by Ranger Oil Company (business-
humanrights.org 2017).
v) The critical initiatives of a business organization should be identified
Ranger Oil Company ensures that its critical initiatives are aligned to strategy,
aspirations, purpose and vision. Ranger Oil company considers the investments and initiatives
which are critical to execute strategy, achieve log-term goals and accomplish performance
objectives. The non-financial metrics like market penetration and customer satisfaction are
considered by Ranger Oil Company. The strategic, compliance and operational risks that are
related to the critical initiatives are identified by Ranger Oil Company.
vi) The integration of projects, operating plans and budgets are important for a business
organization

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The performance of a Ranger Oil Company can be monitored and tracked by an
operating plan of three years and a budget of one year. It is important for a business organization
to determine the milestones of key projects, the metrics of financial and non-financial
performance indicators should be determined. A business enterprise should align incentives with
the accomplishment of financial and non-financial performance target (Lees 2017 ). The
identification of prime risk indicators and monitoring of these indicators is essential for a
business organization. The next step is the establishment of ERM practices which are sound
across a business organization. The trajectory of operational plans is then compared with long
term vision and external factors like industry and competitors outlook by the SCD team. The
identification and communication of gaps to the leadership team is the next important step that a
business enterprise must undertake. The partnership between Financial Planning and Analysis
(FP & A) function, the Enterprise Risk Management Function and the CFO plays an important
role in this stage. Scenarios of “base,” “best,” and “stress” scenarios are developed by Ranger
Oil Company to test assumptions, projections and underlying plans (business-humanrights.org
2017).
vii) It is important for a business organization to monitor and evaluate critical initiatives for the
management of risks (Lees 2017). Ranger Oil Company monitors progress against the budget
and operational plan and monitoring is a continuous process for the organization.
viii) The assessment of strategic performance is essential for an organization.
A customized information strategy should be developed by an organization for its
executive leaders and board of directors for the implementation of effective governance. An
organization should inform its board of directors about the risks related to the accomplishment of

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long-term objectives and risks associated with the requirements of reporting. The process of
strategic execution is monitored and evaluated and information related to it must be provided to
the Board of Directors of an organization (Lees 2017). Ranger Oil company separates
performance into two broad actions like external actions and management actions. The
execution of management can be flawless, however when the stock markets and interest rates do
not perform well, the leaders of the organization must be aware of it. Also, market performance
can be strong and it can mask arenas where actions of management are required. The Board of
Directors of Ranger Oil Company ensures to assess strategic initiatives so that these initiatives
serve the best interests of the stockholders and shareholders of the company(business-
humanrights.org 2017).
3) The Role of Systematic Risk Management for the successful Implementation of
Innovation
The preventable risks are the internal risks of an organization and these risks can be
controlled, avoided or eliminated, for instance, risks from employees or risks from unethical
action. Active prevention is the best method of managing this category of risk. The strategies
adopted by a business organization are often associated with superior returns and thus risks
related to these strategies are voluntarily accepted by an organization. Thus it can be
contemplated that strategic risks are very different from preventable risks and these risks are
required to be managed effectively to capture the high returns. A rule based control model can’t
be adopted to manage strategy risks. Instead, an innovative risk-management system should be
adopted by an organization to reduce the probability of occurrence of assumed risks. Innovative
organizations undertake product-development projects which are complex and expensive and
these projects are associated with intrinsic risk factors. Management of these risks at project

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level becomes crucial for successful implementation of innovation (Lam 2014). External risks
are occurring due to macro environmental factors and business organizations must focus to
identify and mitigate impacts of these types of risks. The risk management approach is different
for different categories of risk and is often tailor-made in organizational context (Hopkin
2017).For energy companies, like Ranger Oil, asset management , performance management
production management is an important part of strategy to manage risk(Bergh et al. 2014).The
leaders of energy sector ensures to ingrain awareness of risk in the culture of an organization, the
safe technological standards, rules and regulations are implemented by energy sectors to manage
risk and real-time alerts are provided in case of non-conformance to these standards(Sadgrove
2016).Regular reviews of risk programs are conducted by leaders of the energy sector and energy
leaders use technological innovation like risk dashboard, reporting tools and analytics to manage
operational risks(Lindøe, Baram and Renn 2013).
Conclusion
It can be concluded that invention is a novel process where something new is created.
Invention can be patented while innovation is the improvement of an existing product, process or
service. The energy sectors implements innovation to accomplish growth. Innovation like
automation and data analytical tools are current trends of energy sector. The models of
innovation like the Pinwheel Framework can be applied to an energy sector, like the Ranger Oil
Company. It can be concluded that Risk management plays a critical role to successfully
implement innovation and energy companies manages risks effectively using modern technology
of risk management like risk dashboard. The good practices of the Pinwheel action framework
are aligning strategic initiatives with the vision and aspirations of the organization, the evaluation
of strategic initiatives and the collaboration with subsidiaries and business units. The good