How to create a culture of innovation
Aramco’s journey to a corporate culture that champions ideas and innovation.
- Patents have soared from a total of just 100 US patents granted to the company by 2010, to 683 patents granted in 2020 alone
- The Company’s innovation ecosystem includes 12 global research centers, initiatives such as the Wa’ed entrepreneurship center and LAB7 innovation center which support local entrepreneurs, and Aramco’s global Venture Capital arm, Aramco Ventures
- More than 9,000 ideas implemented in 2020, generating or saving a total of $400 million
From crude to chemicals and carbon management to reservoir modeling and new generation engine technology, there is no doubting the scale of research underway at the Company.
Aramco’s ecosystem includes a network of global research centers and academic collaborations, along with efforts from subsidiaries, acquisitions, and venture capital finds, and purpose-built innovation and entrepreneurship centers.
And embedded within the Company: a corporate-wide emphasis on ideas embraced by employees.
So how has all this happened? It started with a simple decision to be innovative.
Build a culture
Innovation has always been part of Aramco’s day-to-day activities of producing oil reliably, but it was in 2001 that the Company set out to formally encourage innovation and capture some of the intellectual property (IP) involved.
Alongside a focus on building its patent portfolio, Aramco also began developing an infrastructure to encourage and nurture new ideas.
The Company launched awareness campaigns and asked staff to submit ideas to a dedicated innovation portal. An Innovation Board was set up to measure innovation performance. And processes were put in place to protect ideas through patents, with monetary incentives for inventors.
Innovation in a company isn’t just about technological breakthroughs.
Right from the outset, the Company’s Innovation Board called on employees across the business to identify ways to improve their work — whether it was a plant worker solving a problem by changing a component, or a marketing employee thinking how to improve the reach of social media posts.
“What’s been surprising to us is the acceleration of innovation,” says chief engineer Dr. Jamil J. Al-Bagawi, who is also chairman of the Innovation Board. And that has been boosted in recent years by setting key performance indicators for every department, resulting in an increase in participation from 20 percent of employees in 2018 to more than 60 percent in 2020. In 2020, some 60,000 new ideas were submitted by employees, with more than 9,000 implemented. The implemented ideas saved or generated $400 million.
Invest in talent
For game-changing, patentable ideas, investment in hard-core science and technology is key. In 2011, the Company created the position of chief technology officer, reporting straight to the CEO, embedding research into the organization.
About 75 percent of patents come from the Company’s research centers. In addition to those at Dhahran headquarters — Research & Development Center and EXPEC Advanced Research Center — the company has built a network of 10 global labs; the most recent in Moscow in 2018. They are located near talent hubs to attract the best expertise. Houston has capabilities in oil and gas technologies, for example, while Detroit has a history in automotive R&D, and South Korea has a focus in sustainability technologies.
The Company also works and collaborates with leading academic organizations and research institutions. It has acquired companies such as SABIC, which has a wealth of IP itself, with expertise in chemicals and polymers. And it has a venture capital arm that has supported top companies in fields such as 3D metal printing and sensor development.
Patents are the sign of a healthy research organization, and in tandem with the investment in R&D, came a strengthening of Aramco’s Intellectual Property Management group. Since 2012, a team of specialist patent attorneys has been brought in to capture ideas and secure rights on them.
This led to a five-fold increase in patents between 2015 and 2020, with 683 U.S. patents granted in 2020 — more than any other international oil company — and another 1,183 applications filed. “If you want to show you are a leader in something then you have to have the patents to prove it,” says Steven Morgan, senior intellectual property counsel.
While being crucial for the business by improving internal processes and providing opportunities for external commercialization, patents are also a good way of attracting the best research talent.
Dr. Samantha Horseman, who has been with Aramco since 1997, is one of those talents. Currently working at Wa’ed, the Company’s entrepreneurship center, she has some 60 granted patents with more pending, and several are licensed to other companies. A leader in the field of human-machine interface, her innovations include wearable technology that can help predict accidents, injuries and diseases before they happen, using predictive algorithms and machine learning.
Given her experience of taking ideas to market, Horseman joined an effort to support others to do the same. The result is an end-to-end support framework for entrepreneurs via Wa’ed, which Aramco founded as a wholly owned venture in 2011. Since its founding, Wa’ed has enabled the Kingdom’s start-up culture, with services that support local entrepreneurs with training and start-up funding.
Among the center’s offerings are a three-day Innovation Professional Certification course, an e-factory to develop prototypes, a six-month business incubator program, and the Innovation Ecosystem Society, an accredited professional grouping of 1,500-plus creators, entrepreneurs and investors that has regular meet-ups and provides opportunities for mentorship and partnerships.
All of this is open not just to Aramco employees, but also within Saudi Arabia and the region.
"I believe we’ve really become the talent driver and feedstock of investable companies,” adds Horseman, Wa’ed’s innovation ecosystem lead.
Search for the best
Further to innovating within the kingdom, Aramco actively pursues innovation globally. Aramco Ventures is headquartered in Dhahran, with offices in the US, Europe, and China.
Aramco Ventures consists of three different funds; Saudi Aramco Energy Ventures (SAEV), launched in 2012, is a $500 million corporate venture capital program. Investing in technologies that have a strategic value to Aramco, with an emphasis on sustainable solutions. These technologies range from manufacturing hydrogen fuel cells faster and more cheaply using 3D printing, to optimizing shipping performance using artificial intelligence.
Prosperity7, meanwhile, is Aramco Ventures’ diversified growth venture capital program, investing in start-ups outside the energy sector in China and the U.S. The $1 billion program, launched in 2019,has already invested in technologies in open-source semiconductor design, robotics, cloud storage, fintech, blockchain and AI among others.
Aramco Ventures also manages the Company’s participation in the $1 billion, industry-wide Oil and Gas Climate Initiative (OGCI) investment fund, launched in 2017, which focuses on investments in carbon capture (CCUS), methane emissions reduction, and CO2 emissions reduction.
By bringing new technologies into Aramco’s supply chain and identifying emerging technology that the company can be involved in, Aramco Ventures serves as a global tracker of innovation.
Create new revenue streams
As the innovation ecosystem continues to grow and evolve, Aramco’s next step is to open a new innovation center, LAB7, in October 2021. The name is significant: Well Number 7 was Saudi Arabia’s first commercial oil well. “We believe LAB7 can be another revenue source for the Kingdom,” says Al-Bagawi, chief engineer, “only this time, it will be from ideas, not oil."
Aramco’s new innovation center, LAB 7
The LAB7 building is designed to be home to around 19 projects and up to 300 innovators at any one time, and around 60 percent of them are expected to come from outside Aramco. There is a pipeline of projects already underway at a nearby lab, ready to move in to the state-of-the-art facility when it’s ready.
“Even the way the building operates will be innovative in itself,” adds Al-Bagawi, noting a smart technology that will recognize registered visitors and give them access to the equipment they need, even adjusting the room temperature to the participant’s preferred setting.
Aramco continues to advance a culture of innovation in a transformational journey that began around 20 years ago.