April 18, 2023

2: Jim DuBois – “I don’t have ‘f**k you’ money, but I do have, ‘I’d really rather not’ money”

Jim DuBois is a retired oil and gas engineer and portfolio consultant. After roughly 45 years — 20 as an engineer and 25 strategy portfolio — in the industry, he recently put his hat up and has begun to adjust to retirement. Jim has such a wealth of knowledge in both oil and gas and in life — part of why he’s one of my most impact mentors. “If someone had to work 60 hours a week every week, then something was not right. Someone had not delegated properly or something similar.” A few highlights from the episode are discussing the value in working backward to solve problems (everything from what to do with your life to strategy planning for 3 billion dollar companies), why success needs to include the “whole package”, and why models are just tools, not surefire answers.

In this episode

[00:00:00] Teaser clip 

[00:00:25] Podcast Intro

[00:01:06] Jim’s background

[00:01:31] What f “strategy” and “portfolio” mean in oil and gas

[00:02:38] Why the strategy for spending $200 is the same as 200 billion

[00:04:38] F**k you money vs I’d rather not money

[00:08:26] Why people think they don’t have agency

[00:10:54] Addressing problems head on

[00:15:15] Matt’s conversation with Jim about starting Pod2

[00:20:21] Business and life success are tied together 

[00:22:30] How to find your “why” behind your goals

[00:25:08] 2 questions to ask for clarity about what you should do (in life)

[00:27:32] John Howell 

[00:29:59] Jim’s view of work-life balance

[00:37:32] Additional learnings from Jim’s dad

[00:37:59] Importance of tooting your own horn

[00:40:03] How people are misusing portfolio models

[00:46:02] Aligning model learnings to strategy and execution

[00:51:36] Thinking about emissions as another constraint

[00:57:32] What Jim wants to see change in oil and gas over the next 10 years

[00:59:52] How dealing with uncertainty has gotten worse

[01:03:16] C-suite misunderstandings of linear optimization

[01:06:49] Jim’s thoughts on Jaguars (the car, not the animal)

[01:08:21] Why Jim hates French wine

[01:08:59] Success has to be the whole package

[01:12:15] Retiring better than ever

Links & Resources

Jim’s Email: jrjdubois@gmail.com

Jim’s LinkedIn: https://www.linkedin.com/in/jim-dubois-a6543712/ 

World Enough & Time: https://amzn.to/3MJbNlr 

Matt’s Twitter: https://twitter.com/MattMHarriman 

Matt’s LinkedIn: https://www.linkedin.com/in/mattharriman/ 

Pod2 website: https://pod2.co/ Pod2 YouTube: https://www.youtube.com/@pod_2

Integrated Upstream Planning (Matt’s book): https://amzn.to/3n9Obvl



[00:00:00] Matt Harriman: My name is Matt Harriman and this is the Achieve and Enjoy podcast. Today I've got a guest who is one of the most impactful mentors — not sure if he knows that or not — from my career, my perspective on life, and a whole bunch of other stuff. Welcome, Jim Dubois. Thanks for coming on to this conversation with me. 

Jim: Thanks for the compliment already.

[00:00:27] Matt Harriman: Might as well start there. Let’s start with your background. Jim, you worked in strategy and portfolio in the oil and gas industry for 20-something years.

[00:00:41] Jim: After 20 years of being an engineer of various descriptions in various, sometimes management, sometimes not. Sometimes the hedge manager role. After that, I was in the strategy portfolio world for about 25 years. I just retired.

[00:00:56] Matt Harriman: For people that don't know what “strategy” or “portfolio” actually means, what is that work? 

[00:01:04] Jim: Strategy can mean a great deal of things. In our world (oil and gas), we use it to mean getting companies to tell us what they want to achieve numerically.

An example would be, “In X number of years, I want to have this much cash flow; this much in oil and gas; this much production; I want to have spent this much money and made this much profit; these projects done. 

Based on these answers and numbers, our software would do an optimization to find different options for the company to consider. We’ll talk about this a little later, but literally what we were really doing was giving them thinking tools to think about if this was the world, this would be the best decision for you to make. Ultimately a human being would have to make a decision, but they’d know all of their options and potential outcomes. The consulting part largely had to do with getting people to tell us what they knew, but never said out loud. From there, we’d just have to make sure they had an internal agreement on the things that were said. Essentially “ What is this company really about?” and “What do we really want to achieve?” 

[00:02:13] Matt Harriman: What type of companies did you work with? What scale of decisions were being made? 

[00:02:26] Jim: We worked from everything from the largest of the super majors to larger IOCs (International oil companies) and NCs (national oil companies). Our bread and butter though was mid-sized companies in North America. Which eventually spread across the world. We even helped some startups put together a pitch deck for, “This is what I want to achieve, and here's I'm gonna achieve it.”

Clients were everywhere from a company that didn't really even exist to companies that are unbelievably huge. The portfolios themselves had billions and billions and billions of dollars in them. There’s always a debate as to what our contribution was. You could create an artificial straw man who says if you'd made this decision, you would've saved 20 billion. No one ever paid us 20 billion to make that decision. What we were doing was providing thinking tools, and structure to sometimes very large decisions. 

[00:03:30] Matt Harriman: The decision-making process and what should be done is not that different when you're dealing with 200 bucks or 200 billion. What varies is the amount of energy that you put into it.

[00:03:43] Jim: Well, the guy dealing with the 200 bucks is probably putting more energy into it. We found that the smaller the company, the more complex the portfolio because every single thing was important to them. Sometimes those were so complex that they were beyond manageable. Whereas a super major that's maybe worth a billion dollars could be easier to work with. Complexity and difficulty don’t necessarily scale. 

[00:04:13] Matt Harriman: The impact and importance of the work that you've done is interesting. The other interesting part — and one of the main reasons that I wanted you to be the first guest on this show —  is that you always, at least on the surface, seemed like one of the happier people that I worked with. You didn’t seem all that stressed out as I’d expect someone to with all the things you were doing. You didn’t seem to be working nights and weekends (which could have been the point in your career that we overlapped).

I wanna start with your most infamous quote. The first time I heard it (or remember hearing it) was when we were in a frustrating meeting. Management wanted to do something that you and I didn't think was a good idea. You didn’t say anything in the meeting — you just let it go. Afterward, I asked you, “Why didn’t you say anything?”

Your response was, “I don't have fuck you money, but I have I'd really rather not money.

I took that to mean, “I'm not gonna get in their face, but I'm also not gonna do the thing that they wanted to do. That I know is stupid.” I want to hear more about the difference between “fuck you money” and “really rather not money.” 

[00:05:57] Jim: On an extremely practical level, because we've sold the previous company, (Aucerna) and because my parents and my wife's parents were good managers of their money, I had enough that I could have retired in my late fifties if I really wanted to.I wouldn't have had exactly the lifestyle I wanted, but I would've had a reasonable one. 

The point of the story is that made me even more aware than before that I had agency. It was me — a person with choices —  choosing to be in that meeting and choosing to do what I thought was right or wrong. Generally in business, I would not do what I thought was morally wrong, but I would execute a decision I didn't agree with. That's just part of the whole, whole thing. If I’d wanted to have sacrificed my life to be higher in the decision stream, maybe I would've gotten there. Maybe I would've been the one making the decision that you didn't like. But the ultimate thing is that I felt like I had the agency to do or not do whatever I considered right or wrong. 

The bigger story here is that almost everybody — I can picture somebody working their second job to make sure their children get enough medicine — does have more agency than they think they do. They shouldn't ever consider themselves to be a cog in the wheel. You're a person. You have choices. 

I also always had a rule that if I didn't agree with something, I would bring it up one time and I'd make absolutely sure that whatever I was saying was understood. Once it was understood, if it wasn't immoral or illegal, then I was willing to follow along. I didn't feel it was my job to stay completely silent with stuff where I had better information or a different point of view. I also never thought it was my job to just become some screaming maniac over something that wasn't life or death. 

[00:08:01] Matt Harriman: I'm pretty sure in that meeting that we were in, you had already voiced, at other times that you thought whatever was gonna happen was a bad idea or that you disagreed with it. I think that's a level of maturity that is hard to get to for a lot of people.

They understand my opinion and they disagree with it, but they have the decision authority. And that's part of the agreement if I work for you — you get to make those decisions. Why do you think people don't think that they have as much agency as they actually do?

Jim: It boils down probably to a combination of fear and the old story about the elephant in the circus. In the circus story, you start out with a baby elephant chained to the ground. As the elephant grew, it eventually got so strong it could pull the chain. Obviously, you just had to hang the chain from the elephant's neck and they would stay where they were. They were used to it. 

I think most people — including you and me — tell our shining moments. We get so used to “this is the way it’s always worked or I’ve always worked and I will continue to work this way because it’s the path of least resistance.” That's fine as long as you're not immoral or legal unless it is making you unhappy. At which point, you are giving up the life that you want in order to, not cause temporary stress. 

I am extremely, confrontational averse. What I learned to do is to get anything that might be a disagreement or anything else might be uncomfortable out as early as possible in a relationship. If I’m working with a client and I see a problem with this part of the software where the process might not work, I bring it up. It drives the salespeople crazy, but I point out problems we might have down the road. The salespeople say, “Just let him sign.” But I’m not constituted to hold that secret in the back of my mind for the next six months hoping that something doesn't go well. The client and I need to be partners in this. 

[00:10:29] Matt Harriman: That's awesome. I was talking to Leslie yesterday about, a situation that we've got with a client.

We were thinking through it, processing it. What we're dealing with right now is basically exactly that. We intentionally decided a few months ago that we're gonna bring problems to a head as fast as we can and not let the things fester or drag on — something that felt really soul-sucking to both of us in a corporate environment. When you know something sucks, but it's not that bad and nobody disagrees with it. It's just this extremely mediocre product, idea, or whatever, and everybody just goes along with it. Only because it’s easier to reduce a shit thing than it is to tell 10 people, “Hey, we need to stop this. This isn't working.” We’re dealing with some of that now. 

How did you realize that bringing up a problem or an issue earlier lessened the controversy or the confrontational aspect of it?

[00:11:56] Jim: The facts are true, it just may not be the one moment that I realized that. When I first got a management position, I was in my later twenties, but I was still pretty young taking over a department of 10 people. There was somebody else in that department who felt that they should have gotten the job. Looking back, he had a pretty good argument. I've subsequently realized why I handled this situation the way I did. He (the guy who didn’t get the job) became a bit of an obstructionist.

I’m just a twenty-something kid with this big responsibility. My dreams were coming true — I got this job. And then, I spent the next month with a constant stomach ache. I didn’t even want to meet his eye. He’s working for me at this point and it’s absolutely miserable.  

One of the earliest things I think of is, why did we ever get here? Why didn't we just sit down on day one and say, “Hey, I didn't give myself this job. Somebody else gave me this job. Can you work here or not?” I’m willing to back you 100% at the end of the day. I think you're good at what you do. Looking back, I thought, why did I put myself through that? Why didn't I just go ahead and get it out? 

Later on in life when stopped working on the operating end and started working in consulting, it just became obvious that every time I got anxious, it was because I was hoping somebody didn't find out some deep secret that we didn't disclose fully at some point or a doubt that they weren’t fully understanding.

The communication hadn't taken place. We told them what we could do and they heard what they wanted to hear. Better yet, we let them hear what they wanted to hear. We didn't do this on purpose, but it happened. 

I’d never ever told anybody anything that was gonna be a problem coming up. But I did. I’d say, “Hey, if this happens, then it's not going to work the way you think it is.” I've never heard anybody get outraged at that or say “We're done because of that.” It was just, “Okay, that really disappoints me. But, we'll cross that bridge when we come to it. As long as we maintained a partnership with the other party in this thing and said, “Here's what we have to navigate around.” The only times this ever became more of a problem (which happens more than people would think) is when all of a sudden new management comes in and says, “Here's how we're gonna do this.” It’s hard, no, we can't do it that way and we won’t. Other than that, anybody that you built a relationship with (anybody you've worked with in a consulting world), they can handle that as long as you don't make them look bad in their world. As long as they've had all the tools to deal with the problem from the beginning.

[00:14:50] Matt Harriman: A couple of weeks ago Adam Grant said something about communication being direct and kind. That's really what you can fall back on. It's hard to go wrong if you're actually coming from a reasonable, kind place. No matter what the news is, if you have the best intentions, then you should be okay. I've found with consulting, the buyers and the people that I'm working with directly really appreciate that. But the others, involved, but not directly are uncomfortable because they’re not used to it. 

In a lot of big organizations, people don't tell the truth. There's a lot of “happy talk” and washing over (everything is always good). The end of the year comes around and the numbers are 80% of what they should have been. Everyone seems to know this except for the one person who’s going to get fired for it — that’s scary.

You talked about why don't people have the agency or think that they have the agency they do, is because of fear. I think it’s a good time for another story. When I was thinking about starting Pod2, I didn't even know what it was. Right before I was going to take a sabbatical and I was talking to you about what I should do. Option 1 was, I could go take a new job. Option 2 was to wrestle with the unknown and pursue my own thing. It was your response that pushed me over the edge. 

You said, “You are young. You are educated. You are motivated. You are white, in America. You’ll be fine. Given the circumstances, given everything. Whatever you do, you can go try something, and if it doesn't work out, you can go try something else. You can save up. You can get a job again— you're not going to go unemployed. You're not gonna go homeless if your startup doesn't work out.”

It was a level of perspective that I needed to hear —  the final push toward Pod2. I’d gotten over some of the imposter syndrome, entrepreneur misconceptions (that they are superheroes), and a few others, but that was the last chip waiting to fall. And it did. Thanks to you.

How did you get that perspective? How do you think about that? 

Jim: You may not remember the rest of that conversation, but I told you that was, in my opinion, the best advice for you. It wouldn't be the best advice for me. It comes back to my belief that there’s no one-size-fits-all answer for people. 

It was obvious to me that you were not going to be happy until you stepped out and tried this thing. Therefore, you were putting your best life in jeopardy. You were taking a risk by not doing this — of being miserable for the next 30 years — which was then going to seep into your family life, your personal life, and everything else.

On a practical level, you and I are both privileged people. For better or for worse, it is difficult when you're young (I'm not young anymore) and you have all those advantages. It’s difficult for you to end up failing, almost unless you become mentally ill or bittered or something like that. As long as you keep the perspective of, “I took this risk.” I've never seen it turn out badly for anybody. 

That said, your best life, would not have been my best life. I did not have the drive to go out on my own. I worked for a very small company for a long time and enjoyed that, but I got to make believe somebody else was taking care of me.

And he was. He didn't have the full agency to do that either. He could only do what he could do. But it all worked out. I was always pretty good at taking whatever official job I had  — after my first entry-level one — and turning it into the job that I wanted. Because of that, I was never super frustrated. I would find a way to do what I wanted to do. That was me. That was not you. For you, I took a look and said, where's the risk here? Is there a bigger risk that he's going to starve his family or is there a bigger risk that he's going to be a miserable person? All other things true, you and I are privileged and we are the least likely people — because of a lot of things that aren't our fault, or benefit, or credit — to end up in the trash heap (or it’s very hard for us to).

[00:19:56] Matt Harriman: I’m thinking about that conversation and I think that's an important thing to realize. Especially as the advice-giving market is probably bigger now than it's ever been. Especially on the internet. Especially with all the dudes selling PDFs about how to sell people PDFs.

The moral of it is, it all depends on the context. 

Jim: You can't really separate success in the business world, I don't think. Or you can, but it’s hard. Success in the business world comes with success in life itself. It would benefit anyone to take the whole picture into account when you're defining success and when you're striving for it.

One of the things in the success industry that drives me crazy is to find a very specific goal and concentrate on that goal. Take, for example, I’m going to be president of General Electric. A is that a lot of other people will go for that job too. B is that you have gotten yourself into a narrow spot. You’ve put this thing as your goal, but haven’t said why. You haven’t asked any deep questions about where you want to be. You haven’t answered the proverbial, “I’m on my deathbed looking back…” It’s not going to be, “Thank God I was the President of GE.” That’s not what it is.  

Another thing is parents who drive their children to the point (I'm all about high expectations for your kids) of not having a childhood so they will be successful, what’s the end game? What happens then? They become doctors and lawyers; driving their own kids crazy. I was never a permissive parent or anything, but, I think at some point you've gotta think a little more deeply than success.

[00:22:05] Matt Harriman: I've got an answer on this, but first, what questions do you ask yourself, or would you advise somebody to ask themselves to dig a little deeper to discover the why behind the goal they think they have? (read: how to discover what success looks like to you). 

Jim: I think you can play the (you're much closer to having young kids than I am) say something and say “why” game. So for example, I want to start a business. Why? Because I’m tired of my boss or because I want to make a difference in something that I don't see anybody making a difference in. Why? I want to have work-life balance. Work-life balance doesn't mean anything to me. Why do you wanna have work-life balance? What does that mean? Does that mean that you define a relationship with your wife and kids, and with outside interests? Or is the kind of person you wanna be one who’s achieved these things?

And if you achieve all those things, which includes something in your work life, something in your spiritual life (whatever that might be), and something in your home life, that’s the package. I think the question really is “Why?” You tell me what you wanna do and then tell me why. Don't stop at something super superficial or something that puts you in competition with millions of other people that want the same one job. You're gonna drive yourself crazy. One person will get that job and then they're gonna do an interview saying, “All I had to do is believe in myself.” You’ve gotta define what it is you really want to be driving your life. It's not a position, and it's usually not an income level. 

[00:23:42] Matt Harriman: A couple of different directions we could go with this. One is, I think a lot of people have a hard time coming up with an answer to, “What do you want?”

Or I know some people want to be x level person at this company. But I also think there are a lot of people that really just have no idea what they want. I think there are two things for them to do. One is to write it down whatever comes to mind as an option. Test it and improve it over time. But I think these questions about what you want out of life change over time. Do you agree?

Jim: They do. Either because they change or because you learn and mature — probably a combination of the two. You find out that one thing you thought was really great either wasn't that great or wasn't fulfilling. You got close enough to realize the people that got there were sacrificing something that you wanted — a red flag. What were they sacrificing? Why were you uncomfortable about taking that next step? Yeah. 

[00:24:43] Matt Harriman: That was my experience. For a long time, all I wanted was more. More impact. More promotions. More. 

Every time I got another promotion or a raise or whatever it was, it wasn't satisfying. It was quickly apparent to me that it was a ladder that just had no end to it. That’s why when I started the business (Pod2) in October 2019, I knew what I didn't want to do. So I built it first as an anti what I was doing before. Then, COVID hit five months later and I found some questions that helped me get clarity into that endpoint I was looking for. A combination of these two questions resonated the most. The first was, if you had six weeks left to live, what would you do? This helped me figure out: What would I regret on my deathbed? 

The second was, what would I do if I had all the time and money in the world? This one uncovered aspirations that weren’t tied to money and time. What would I want to spend my free time doing if those were a non-issue? For some people that could be art or all kinds of different things. Those two questions together — I've talked to a few people about this and it helped them figure shit out — seem to trigger a lot of useful kinds of thoughts and answers.

Jim: That sounds great. Neither by itself would work because if it was just the six-week one, you'd cut out anything that had to do with getting better at anything. You’d just enjoy things — you can only do that for so long. 

By the way, that's one thing they warn you about in retirement. The first year is known as the “vacation year,” where you do whatever you wanna do. After that, you realize it’s getting boring and you need to go out and achieve something. Something exactly to your taste. But, after about a year, most people find some kind of hobby to occupy them or they just sit and watch tv. But most successfully retired people find something at some point that they want to do to grow and improve. Gets back to what's important to you. Doesn't have to be much to do with work, although some people's work is so satisfying and fulfilling to them that they just want to keep doing what they’re doing. Some people will never retire for a number of reasons. Some because they just can't stop, some because they’re workaholics, some because they need the money, and some because they just enjoy the hell outta it. 

[00:27:07] Matt Harriman: We're trying to build a company and our own work in such a way that we wouldn't want to retire. Obviously, everything changes all the time, so who knows how far that'll go, but I feel like that's a pretty good guiding light for us to make a company that we like the work that we do, we like the people that we work with, and it's sustainable for us. I heard someone say that a lot of startups don’t fail because of money. Obviously, their business sucks, so they run out of juice. But the other big reason is that founders actually hate the work that they’re doing. They run out of gas. Financial success could be either way — they don’t want to do it anymore. 

I remember John Howell saying you’d never worked more than 45 hours in a week in your life. I don’t think that was totally true, but I think what he meant was a compliment. Essentially, I took it to mean, you kept healthy boundaries around your work and other things. 

Jim: I love John to death — my favorite boss ever —  but, I have worked over 45 hours in a week. He would say he worked 80 hours. I don't see that's possible, but I do know he did work a lot of 60-hour weeks. 

Matt Harriman: I know how it's possible, I saw his time sheets. When he was on an international flight, the flight time was 10 hours, and he would work for those 10 hours. Boom, that's 20 hours, right? 

Jim: John is one of my all-time mentors and he would have a completely different perspective on this because he throws himself into everything. As a young man, he was a world-class sailor. He says he stopped sailing (picked it back up in retirement) because he couldn’t work and sail at the same time. Still managed to have a nice home life and be happy, even with all of his hours spent working. He’d be great to have on here. I’ll leave most of his stories for him to share, but I know he has some great stories about realizations he had at certain points in his career where he was going down the wrong path. During those times, people were brave and kind enough to point it out to him by saying, “This is not the way for you or anybody around you.” Taking those observations to heart, he acted.

[00:29:34] Matt Harriman: Interesting, sounds like I need to call him. Back to the 45-hour work week or not. I'm pretty sure that the week Jim made the comment, you were actually working quite a bit because of some project. I know work-life balance has a lot of baggage to that topic, but how did you think about it? More specifically, how did you think about the time that you spent working?

Jim: I have two answers. The first is that, the example that I got from my father. He was successful, came from a blue-collar background, and went to college thanks to the GI Bill after he served in World War II.

After college, he ended up in charge of all construction projects for a cement company — a pretty big deal. Except for one year when he was a consultant between jobs, I don't remember him ever not being home by 5:30. He worked in downtown Dallas and back then, you could get to the Dallas suburbs in half an hour. I'm sure occasionally he was late. He did travel, so he was sometimes out of town. But for the most part, he was home at night for dinner. I don't remember him ever tying himself down with work on the weekend or anything.

My mental image of what it looked like to be a father and a successful person and someone that lived to be 90, who could pass money onto his airs was him. It was never this person spending all their life at the office and having ulcers. To me, that was just how it was supposed to be. And I think a lot of people who grew up in the sixties and seventies get that example. But now, I don’t think he could have held that position he got and held it from pure competence. There’s a political end to corporations these days. You have to be seen in the calls. It's a very American thing. Even in Canada, people don't quite buy into that whole myth. I always thought that was the mental model. It never occurred to me to try to kill myself to become VP or something. 

The second story is quite different. When I was in my late twenties, I managed a department of 10 people. At the time, I was on an upswing in my corporate career and was highly regarded. However, I was diagnosed with a rare form of leukemia and had to spend a quarter of my time either in the hospital or at home preparing to go to the hospital. It was a very stressful period. The unit I had worked for had been sold just before I got sick. As a result, there was no management position available for me and I was placed back in a lower position. There were two lessons I learned from this experience. First, like anyone who experiences a critical illness, I had to confront my own mortality. I was 32 or 33 at the time and had always thought of myself as invincible. But the experience made me reflect on what was truly important in my life.

The second lesson was more interesting. Having been on the corporate ladder and then being stuck back at the bottom, I had a chance to reflect on what I had been doing right and wrong, and how I would handle things differently if given the chance again. I realized that I would never again work long hours just for the sake of being at the office. If something needed to be done, I was willing to do it. But if someone had to work 60 hours a week every week, then something was not right. Someone had not delegated properly or something similar.

This experience gave me a unique opportunity for reflection, something that is often missed as you climb up the corporate ladder. As you move up, you rarely have the chance to stop and look back. I always believed that life was about enjoying time with my family and children and that this was not in conflict with becoming highly competent at something. This experience gave me the chance to reflect on and confirm my beliefs.

[00:33:56] Matt Harriman: Many people have faced the possibility of death — which can bring clarity and positive change. The events of 2020 brought this possibility to the forefront of people's minds, and it made me realize the importance of balancing career success with being a good parent and taking care of family. This also became clear to me when my first daughter was born with a medical condition and spent time in the NICU. Since then, there have been other close calls with death that have kept me aware of its presence.

Reflecting on these experiences has given me perspective on what really matters in life. It's important not to get too caught up in work stress, but it's also not healthy to swing too far in the other direction and give up on trying. Balancing priorities is key to a fulfilling life. Have you ever found yourself swinging too far in either direction?

[00:35:20] Jim: Probably not too much. I always admired my father, who had been in World War II and experienced some pretty heavy stuff. However, he never talked about it until he was 80. Somehow, I developed a philosophy that no soldier should be left on the field. Therefore, I would never leave anyone in the lurch, whether as a consultant or in any other situation. Even if a project wasn't important to me, I would never abandon anyone else. If someone else was going to catch flak for it and I could help them through a bottleneck, I found myself compelled to do so. I was willing to put in an extra hour to earn an extra dollar, and I was also compelled to put in an extra hour to avoid leaving someone else in a bad place. I believe that this philosophy saved me from ever being a complete zero commit.

Matt Harriman: And that was the thing that brought me back. When I was in more of an individual contributor role, the risk of thinking "This stuff doesn't matter" was high. It was difficult to motivate myself to do things. But as I started managing other people, the team became the reason that I put forth the effort. I believe that taking care of people is a good approach. I've told people that on their deathbed, they won't remember whether they made the Q2 2019 target, but they'll remember if they mistreated someone or if they could have done more for somebody. Those are the things that will stick with you. So, yes, I think we landed on similar points. Even though I had a job at that time, I find my work in Pod2 to be more meaningful and passionate than before. What else did you learn and take from your dad?

[00:37:07] Jim: Regarding business matters, the two most significant aspects were probably that he never attempted to haggle for a raise or anything of that sort, but he was very conscientious about performing well. Doing an excellent job was crucial to him. While he enjoyed being able to support his family well, it always appeared that a job well done was much more important than making a quick buck. 

[00:37:34] Matt Harriman: I see it being really tough for people in companies because there are so many people playing politics and self-promotion. I don't think that managers and leaders are aware enough of what's going on. They probably know it, but they still succumb to it and promote people who talk nicely but don't do as good of a job. I know that was something that I really tried to do when I was a frontline manager. If I knew that somebody was really good at their job but wasn't the type to toot their own horn, then I would go try to toot it for them. That sounded awful, but I think there's something to it. I've been thinking about this with the business also. It's not enough to just do good work. There's an aspect of having to tell people about it. 

[00:38:23] Jim: Hopefully, the organization can automatically tell. But if you have faculty doing the same job, it's not clear who did what. Then, it has to be the manager's job. I think that's what you were inferring. The manager's job is to clarify or identify the really great people who can get the job done. There's another aspect. I had several people at various times responsible for work that were wonderful people and tried very hard, but they were completely in the wrong role. They didn't really want to hear that, but ultimately there was some sort of kindness in me saying it. Both of the ones I'm thinking about would have been — I think one of them eventually became what he should have been, which is someone who essentially spent all his time dealing with people. They were people who had technical roles and just got lost in details and technicalities, never could find their way to a solution. But they were wizards, in relationships. This one guy, I remember walking from the Dallas Museum of Art to our building, which was a block and a half, and he made a friend. I'm going, how did you do that? But he would just get lost and sometimes his office looked like a murder scene where he had all these things with strings going from one place to another. It's never going to come to a conclusion.

[00:39:38] Matt Harriman: Raul is someone who reminds me of that person — someone who’s never met a stranger they can’t connect with immediately. It's really cool to see those people because I'm not one of them for sure. Do you want to talk about oil and gas a little bit?

We mentioned at the beginning what your role was. I'll summarize it as helping executives primarily figure out what the company needed to be when it grew up and turning that into some numerical targets they could start to put actionable plans to. And then putting those plans into portfolio optimization to achieve those different targets and learnings. We haven't talked about this in a long time, but what are people doing wrong most often in that space? Like how are they misusing portfolio models or how are they misrepresenting their own strategy and what they want?

Jim: Yeah, so I think portfolio models — really, any model — you create an artificial world that in certain aspects looks like the world you're dealing with. In doing so, both in creating it and in running it, you make a number of assumptions (probably more than you're aware of sometimes). Anywhere from what the future price is going to be, to what the ratio of oil and gas price might be or availability, to what capital is going to be available, and what cost to make a ton of assumptions.

Given those assumptions, you can run the model out and say, under these conditions, what is the best combination of projects to do? By the way, that's not even real because, in the real world, you get to remake some of your decisions every year. But this is like looking at the whole future in one big room — a very useful if you have the right mindset, which is “I'm running an artificial model with a bunch of artificial assumptions.”

In that world, I get this answer. Isn't that interesting? Now I'm going to change a few assumptions. I'm going to run it again. I'm going to see what changed and what doesn't change.

Isn't that interesting? This is never forecasting the future for you. It's never giving you the right answer. It is allowing you to learn how the system that you've approximated your approximation of the system, and hopefully the real system behaves under certain conditions. You're never going to create those same conditions in the real world.

The real world is going to work out differently. It's running these models and then pretending that you just saw the future and this is the answer. I’m not saying I think the models aren’t extremely useful, they are. Only if you have in the mindset exactly what you're doing. One of my favorite quotes for myself is always telling people, “Let's not pretend we know what we can't know.” We ran this out with an assumption of the next 40 years of oil and gas prices — pretending we know something we don't know. Don't keep asking to rerun it until you think you came up with the right price. You haven't. You won't. That said, let's hit a high and a low. Let's see what it’s like in extraordinarily high, extraordinarily low, and immediate prices and see if there are any commonalities. What’s moving in and out? 

It's all about learning from a model and not expecting a model to be the answer. And that requires another process, which is the person that's running the model day-to-day is low enough in the organization that they are learning, but no one's listening to them. That's the problem.

The C-suite can't really be sitting around and running these models either. That's ridiculous. You've got to have someone with clout and a lot of people listening to you to run these models. Even if somebody believes what's happening, they understand what's happening,  they're not trying to constantly boil it down.

[00:43:34] Matt Harriman: I've seen cases like this in other areas, such as field development planning. Sometimes the person running the model analyzing scenarios understands things very deeply, but they get only one slide and two minutes in a one-hour meeting to explain what they're thinking. It doesn't work. 

What you're doing with a portfolio model is you're creating an artificial world. That's something I distinctly remember in a conversation with a company, and I was talking to some folks with the business and some people in IT. We were talking about integrations and how to make an intersite link with a portfolio and connect it to SAP —  how to make data flow through the whole system. At the time, I was parroting some of what you and John would say about what you get out of the portfolio model. The portfolio analysis is not a budget, it is learnings. And the IT guy at the time said, "How the f*** am I supposed to integrate learnings into SAP?" I was like, "Yeah, you don't." That's such a different way of working. I see a lot of companies take a portfolio model, get the outputs from it, and turn those into capital allocation, budget, and targets for each business unit. That seems wrong.

Jim: Someone might use that as their major tool in making those decisions, but that's a different thing. For example, "Okay, I want to have a little bit of pat in case prices go down.” Maybe they don't, and they say, 'I'm all in on this price valve.' I know it's not real, but I'm all in." That's fine. But sometimes we end up talking as if the model was a fully cognizant person making decisions. People either objected to that 100% or they bought into it, and neither is correct. It's a tool that you should be using to add to your own intelligence.

[00:45:37] Matt Harriman: How do you think about aligning those learnings that you get out of portfolio analysis and how they inform the strategy? How do you think about aligning that work and the company strategy with the execution on the ground? 

A little context to that question is the classic issue of the business units; corporate thinks the business units are sandbagging, so corporate adds 10% of production with no more capital and all of that kind of crap. Communication and trust break down. It gets nasty. There's no way that the optimal decisions are being made in that kind of environment. So how should that work? Or how do you advise somebody that's trying to figure that out?

Jim: I think there are two separate issues there, but how should it work? What we always said was your highest strategy should come with insight that came from a portfolio model. Then you work backward into, “What have we decided to do this year?” which is a budgeting thing almost. In order to put ourselves in the best place to enact that strategy, there may have been what's called “business planning in the middle,” which is kind of like a middle ground. And you work backward. 

For instance, what does a guy on the ground need to know this year? Dollars per barrel might be a very interesting number for him to know because that's a goal for him. Dollars per barrel is not a good way to design your portfolio because in a portfolio you have goals for how much profit you want to make. That's going to automatically be created when you have decided what you're gonna do.

$8 per barrel, because you're gonna make barrels, you're gonna make a profit, and it's gonna cost you some money — or you assume as such. There are metrics that are used to make people run short-term plans through a business, that often end up getting kicked up to higher than they deserve because again, it goes back to, what do you really want to do? 

An example is, “I don't really want to keep my dollars per barrel here. I want to make money.” In the corporate world, “I wanna make X money and make sure my investors are getting their return.” Everything else is just details. Those things shouldn't be running the model. Unless, for instance, a very famous geologist once convinced me that production goals were as important as cash flow goals because production goals are real. Nothing is real, but you can have more control over your production goals than you do over your cash flow goals. 

Things that we use in the field, we sell. Your contribution unit is X this year. We need this much cash from you and we can give you this much cash to generate it. Now I can tell you what went into the model, how the model got there, but it doesn't make a difference as long as you take X cash and give me back X cash, and whatever else I promised the world. Happy to tell you how the model got there, but you are not constrained by it. You're constrained by getting the model what it really needed.

[00:48:58] Matt Harriman: I believe that over-constraining business units can suppress creativity, problem-solving, and optimization potential. While it's necessary to have maximum capital, minimum production, and other targets, some companies are taking that next step towards optimizing for NPV, profitability, or cash flow within these constraints, depending on the role of that asset in the portfolio. By guiding the people on what is a better field development plan, they can achieve better results.

It's similar to how a portfolio works. You have your set of constraints and then the thing that you're trying to maximize. By guiding the different pieces within those constraints, you can achieve the best possible outcome.

[00:49:53] Jim: Communication is key. I've seen it go wrong many times when those making longer-term decisions communicate with those executing the short term. They can explain the game, what the goal is, and each person's role. Then, you go off and do your job to the best of your ability. Don't say, "I didn't make what you told me to, but look at all this profit I made." That's not what we needed. A lot of people don't get the information they need. When everyone understands what they're trying to do, we don't need to know better worlds.

As for sandbagging, I always say that if we let one year go by where nobody adjusts anybody else's numbers, we'll quickly find out who's not having a good year statistically. The reality is, if I’m constantly adjusting your numbers, you're not responsible for the numbers anymore.

[00:51:11] Matt Harriman: Let’s save the statistics talk for round two with fajitas, burritos, and scotch. What about emissions and the transition to net zero carbon transition? How should companies approach this?

Jim: I'll stick to my wheelhouse in the portfolio world because this was just starting to come up more and more as I was phasing out.

What you're saying is interesting because I would say, "Well, portfolio-wise, it's actually just another constraint you've added to the model, and you have to know what it is that you're trying to maximize." And I said, "No, I tried that. It doesn't work well." "No, you didn't really try it because you thought there was a complicated step in the middle."

It may be technically complicated, but as far as planning goes, you need to know what your carbon goals are. How much you're going to reduce carbon by, over what time period, and how to determine the goodness of that to maximize something.

Are you going to get carbon emissions to zero or net zero or x, y, z? Are you doing it because you’re a good person (you'll have a hard time with investors at some point)? Or are you going to do it because the government is telling you to do it? 

In which case if the government is telling you to, put that goal on there — might ding your bottom line. But you need to understand how you can minimize the impact on the bottom line. Or are you doing it because you think it's actually going to be required to compete in the stock market in the future?

The last scenario isn’t NPV-related, or it's going to be more difficult to get into the NPV. You have to find a metric that you think will maximize that. The more you reduce your carbon, the better this other thing will be — you have to find that number. It ends up being a simple constraint problem.

Being: I have to describe the carbon behavior of my investments and holdings; describe the cost of reducing those; not describe any benefit that I'm willing to acknowledge; balance the portfolio. 

What people object to is, "Okay, that could let this dirty plant in southwestern Mexico continue because I can’t make it up someplace else." Certainly, it's your decision to shut down the dirty plant, but if your goal is really to reduce carbon emissions, leaving that dirty plant and putting super clean plants somewhere else might be the most cost-effective way to do it. I'll leave it to environmental scientists to determine if that's valid, but portfolio-wise and planning-wise, it might be the best option.

[00:54:35] Matt Harriman: If the forecasts are reasonable, comparing the alternatives could give you a quick answer. I was talking to a client yesterday and they pointed out that when different business units see lower-emission projects being funded and capital allocated toward the lower-funded or lower-emission projects, that incentivizes the higher-emission ones to improve. I find that interesting. 

From a planning perspective, it's another thing to forecast and optimize. The optimization here is around cost, technology, and reduction, as opposed to maximization of production. Carbon intensity sits there next to NPV or the rate of return or another economic or production target metric of choice. Some even quantify their carbon price: here is the dollar amount of NPV that will give up to reduce a metric ton of carbon intensity. From the outside, consulting firms and technology companies talk about it. It seems inflated — it has no impact on the eventual change for workflows.

[00:56:24] Jim: Planning is not a difficult thing to set up.

It's, here's a new constraint. Tell me if there are any benefits that you want to quantify. Doesn't have to be money. Any benefit you want to quantify that's going to drive the model? In your example, when certain units are seeing that lower emission things are getting the green light, that means that somebody is running some numbers in their head as to what they want to achieve. Wouldn't it be nice if they could just communicate that to everybody so that everybody gets on the same page?

[00:57:07] Matt Harriman: I think the example is, we have two projects. One has a slightly higher NPV, but the other has slightly lower emissions. The lower-emission one gets picked, so it then becomes about communicating the reason and process for making that decision. That'll drive the incentives.

What do you want to see change in the industry(oil and gas) over the next 10 years?

Jim: I don't have much hope in the near term for it in the planning world, but I think that plans need to be more sophisticated in terms of the uncertainty and how it's handled. It doesn't have to be handled through Monte Carlo or any particular thing, but it would be great if we could understand the uncertainty, or be able to communicate and discuss it in a more sophisticated way.

Uncertainty is interesting because our brains aren't very good at dealing with it. I think we have to make some assumptions and deal with some uncertainties — acknowledging that we haven’t covered them all, but have so with the ones we can think of. 

This goes back to what I was talking about before, there are people in certain positions that are either fascinated by this or believe that's important. These people very seldom get much of a hearing as they go up into the upper levels. That could change as people move on and retire. Those people on the upper levels that want to pay attention, don't get much of a hearing in the investment community.

But, at every level, no one wants to learn all the subtleties. To me, we end up with these plans where people think that they are promises. It's an inherently uncertain industry. Most of your major projects fail, not by design but by definition. 

When you are creating long-term projects on a commodity price, and you have an uncertain future as to what your commodity is going to be — the appetite for it in the world or the healthiness of it for the world or anything else — there's almost overwhelming uncertainty, which can be a problem too. The language of uncertainty and thinking about it would be an extremely useful thing to get higher in the decision process.

[00:59:27] Matt Harriman: Have you seen that make progress?

Jim: No, I've seen it do whatever the negative of progress is — it's gotten worse in the last 10, maybe 20 years. A classic example was, you go out in the Gulf of Mexico and you drill a well. You'd know what the chances are on the Gulf of Mexico of getting a big, small, medium, and all kinds of other things.

Then we got into what I called “unconventional”, which is now “conventional” in North America (i.e., shale gas). People thought there was no risk in that because you couldn't drill a dry hole. In fact, you're just asking yourself to invest several billion dollars before you know whether it's probable or not.

It's an enormous risk, but it's a different kind of risk. It's a correlated, not an uncorrelated risk. It comes down to the same reason that the banks failed in the great recession. But anyway, people didn’t understand that, if we all die, we all die together. All these projects are worth nothing. Or they extrapolate on six months of production in the next 60 years on six wells. They say, “Okay, let's go drill.” Regardless, people stopped even trying to do risk because, at some level, somebody was convinced that they were now in risk-free manufacturing. 

[01:00:45] Matt Harriman: Are you saying that the Toyota Factory Model that all the big four consultants were selling for millions of dollars was actually BS?

Jim: I’ll be kinder. At least it doesn't consider the complexities involved.

Matt Harriman: That's a nicer way to say it's BS. There are some things to learn from it, but the way that I saw it trying to be implemented was disgusting. The people that have worked offshore, the people that have worked conventional fields and things, they have an understanding of what piece of s is, don’t they?

A lot of people that have only worked onshore, unconventional, maybe they've heard of it — remember it from school — but they haven't applied it. I ask because I haven't really seen anyone new thinking about risk and uncertainty in a mature. Seems like the same people who were doing it 10 years ago are the only ones there.

[01:01:57] Jim: I think that the problem changed enough from the people you're talking about that could do it in a mature way. They were convinced that it was a whole new world. And it's not, but it is a world you have to have enough sophistication to realize it's a different way of applying risk.

Oftentimes, the application would be the same if you're thinking about, "Is this unconventional field likely to be profitable?" as opposed to that unconventional field? It ends up being a statistical problem.

You're drilling so many of them that you will drill to the mean. But the question always was, what was the mean? If you were in the Gulf of Mexico and you had a bunch of numbers, you kind of knew what the mean was, or you could assume what the mean was. You just want to know where you were around the mean. Now you're saying, "Okay, I'm gonna drill so many wells, I'll hit the mean. I know what the mean is."

[01:02:51] Matt Harriman: But a 1% difference on what the mean is could make or break a lot of things. David Fulford says “Hi.” He wanted me to ask you stories about C-suite misuses and misunderstandings of linear optimization.

Jim: I'll let the C-suite off the hook a little bit because David used to ask me questions after the SPE papers that made me uncomfortable too.

By the time you're communicating with the C-Suite, I don't think you say the word "linear optimization." Unless they really, really are super into it, you want to say, "Here's the world that we created. Here's how we can tell you it differs in the real world. Here are some learnings that we got. Here are three different options we're suggesting to you to go forward." 

If the C-Suite really understands linear optimization, then they may very well say, "You know, of your three options. I wanna take number four, to change these assumptions and run it out and tell me to." That would be sweet. If we drop a level below them, there are all kinds of abuses of linear optimization by the people that are actually managing or doing them. It goes back to the things we did before, which is saying that "I am not acknowledging the model of this model. I have this really cool thing that I hit a button and eventually, and maybe very quickly an answer comes out and therefore, it's even better than magic cuz it's magic that somebody understands." David Fulford understands it. I understand it enough to talk about it for 15 minutes, then I’m done.

It's the same magic as the light bulb to me. I basically understand what goes on —  you flip the light switch. The bottom line is, it takes assumptions, variables, and a goal. You enter the right conditions unknowingly, and it finds you the mathematically precise answer to a completely imprecise and made-up question. 

Some people just can't keep that in mind. Just because this is an incredible piece of math, but you fed it a bunch of straw — very useful straw. It considers all the things and just spits out the optimal plan. But it's just not there yet. And I think the workforce will reduce by quite a bit if that technology does come to light. Also a good point for why you want to keep the number of digits that show in your portfolio model pretty low. Round to the nearest hundred million or something. We used to have a difficult time with the programmers. Every time we got rid of it, it showed up somewhere else where we'd get, literally not lying, 10 numbers to the right of the decimal point. It’s a machine. It's not a decision.

[01:06:24] Matt Harriman: Made up intelligently. He also asked about your feelings on Jaguar nowadays.

Jim: I used to be, and I still am, a Jaguar enthusiast (the vehicle) to some extent. 

I had one wonderful car for 10 years or more. Ended up getting another one. The closest thing they could make to take a regular sedan into a sports car — the same engine as the F250 at 5 liters. Great car that would occasionally not start. I always worried whenever I went anywhere. Now I have a very boring little Mercedes sedan.

[01:07:33] Matt Harriman: I have two more questions for you that came from other people I told that I was interviewing you. They are high-level and are from heavy hitters. Rebecca Allison asked you to sing a little song.

Jim: No.

Matt Harriman: Okay. That was the answer I expected.

Jim: I'll sing tonight under the camouflage of people that are paid to sing.

[01:07:56] Matt Harriman: And the last one from Raul. Why do you hate French wine?

Jim: I hate French wine because it's thin and acidic. I used to have this argument with Wayne Sim. I generally don't like French wine because I grew up on California wine and I just never really liked it. I am told, and I am completely convinced it's true, that if I spend enough money, I would change my mind.

I have never had a French red wine in my price point — which is not high —  that I enjoyed more than the same price point for an Italian, American, or South American wine.

[01:08:34] Matt Harriman: I think that was a good foray into the pretentious topics of somewhat expensive cars and wine. Let's bring it back down. This has been awesome.

It's been really good to talk to you, Jim. It's been too long. I want to bring it back around to the idea of enjoying yourself while also striving or attempting to achieve something, whatever your definition of success is.

What would you say to somebody that is struggling with finding their own balance between striving for their version of success and being happy along the way?

Jim: I already gave my answer, but I'll reiterate it. You can't define success and then bolt on balance or also be happy. Your definition of success, in my opinion, has to include the whole package. It would also be very helpful to get them to be in the same package. If you can define your success as something that you have control over — to a large extent none of us have control over life 100% — but achievement and actualization, not getting to a certain position or something else. 

If you can say, I want to be highly competent in this very needed field, I think the rest will take care of itself like we were talking about in another context. That definition also has to be, I want to truly know my children. I want my wife or significant other, anybody that's important to you, to feel like I'm fully present when I'm there. And that there's time for these people, and there’s time for me to be more than just a person going for that one single goal. Being a multifaceted person who can say, “This is actually what I want. I know I said I wanted this, but I kind of want that.” I do have a book to recommend, it’s called World Enough & Time by Christian McEwen. It's 12 chapters, one for each month, about reviewing what it is that you are looking for in life and how you're getting there. My favorite thing is about children and how children's playtime has just decreased so drastically in the last 25 years. It's just a wonderful book.

[01:11:24] Matt Harriman: Yeah. We'll find it and get the link and put it in the show notes and description of the video. If people do want to connect with you are you open to that, or are you gonna become a hermit?

[01:11:50] Jim: After three months of not thinking about work at all, you got me back in it with this podcast. I'd be more than happy to connect. It's interesting when, regardless of what we said before, now whatever I say is truly zero risk. In other words, I have nothing to lose. I'm 100% willing to tell anybody, politely because I'm a polite person, what my opinion of certain questions is — they can take it or leave it. 

I know I’ll very quickly to come outdated, but it’s interesting. The company that we worked for went through many, many changes, to the point that I just didn't want to be there anymore. In those last five years or so, I felt like was at the very height of my powers because I wasn’t afraid anymore to say what I thought. 

If someone wants to fire me, that’s fine. Or some client wants to run off, then that's fine — they wouldn't have been a good client anyway. Nothing ever happened to me that wasn't 100% positive. I became a better employee, a better analyst, and a better everything when I reached the point that I thought, I could say what I wanted. I think I retired better than I ever was. 

Do I love waking up and doing what I want to do? I do 100%. I recommend it to anybody who has the money. But it doesn't mean that I wasn't into the work itself. I enjoyed it to the very end because I got to the point that no one was ever going to ask me a question I didn't know the answer to or couldn’t talk about why I didn't know the answer to. I was very confident there wasn't somebody else going to say, bs everybody knows that. Because they would have said it by then. 

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