Bringing New Energy to the Oil and Gas Industry
BY BRITTANY SMITH
PHOTO BY NATALIE CASS
The oil and gas industry has transformed drastically over the past 25 years. With the introduction of new, more efficient technology, the sector has found ways to adapt in an evolving, more environmentally conscious culture. Rich Smalling, MBA ’93, is part of the transformation.
As the CEO of American Innovations, Smalling leads the Austin, Texas-based company in providing compliance solutions to oil and gas companies and pipeline professionals. American Innovations specializes in remote monitoring systems and preventing the corrosion of pipelines.
The Long Island, New York, native has been with American Innovations for 20 years, helping the company emerge from bankruptcy in the early ’90s. Despite his business savvy, Smalling did not begin his career in the business sector. After earning his undergraduate degree from Virginia Tech, Smalling began working for a large chemical company as a plastics engineer in West Virginia. Smalling never worked in a traditional plant engineering role and often interacted with business people. Feeling unfulfilled with the technical side of the business, Smalling decided to make a career change and entered business school.
“Michigan gave me a lot of tools to learn the business side of things: finance, accounting, marketing, corporate strategy, and organizational behavior,” he says. When a family investment group was looking to acquire American Innovations, they turned to Smalling to take the over the reins.
American Innovations initially specialized in providing automated utility meters, but after four years, the company realized it wasn’t going to win in that space. “That was when I realized that every business isn’t going to make the cover of Inc. magazine,” says Smalling. “Life isn’t always ‘up and to the right.’ Luckily, we had patient investors who believed in us and we pivoted to wireless remote monitoring systems in oil and gas.”
These monitoring systems can be found anywhere around the world, from an orange grove in Florida to the top of a cell phone tower in New York to oil and gas pipelines spread across North America. These systems monitor vital information, which ultimately protects energy infrastructure and the people who use it.
“It’s an industrial cell phone. Imagine a smartphone in a box in the middle of nowhere,” explains Smalling. “Instead of sending a person out to monitor the pipelines, you have this phone monitoring 24/7. If anything goes wrong, it calls you or you can call it.” The company also provides rugged handheld computers and software that is used to help protect 90 percent of the long-haul pipelines in the U.S.
For the past five to 10 years, the shift in how these natural resources are obtained has been extraordinary, according to Smalling. “We were running out of natural gas until people discovered horizontal drilling,” he says. “In Texas, we are producing more oil and gas than ever before, and our country is becoming a net exporter of energy.” He added that the technological explosion has also helped his company meet the needs of its customers and the overall sector. Technology is needed to bridge the gap between regulations from the Pipeline & Hazardous Materials Safety Administration and the shortage of technicians needed to manage a growing network of pipelines.
Another shift Smalling has seen is the type of people who are working in the industry. “I see more employees today who want to know they’re making a difference in the world,” Smalling says. “They want to be trusted and engaged. They want more than a paycheck. They want to work in a positive and supportive culture.”
This led Smalling back to Michigan Ross’ Center for Positive Organizations. As a member of the Consortium of Positive Organizations, he and other like-minded leaders support the center and help to enhance diversity among business schools and organizations. “I learned a lot on my own about leading a team,” he says. “I was so excited to discover the center and get exposed to all their great research, teaching, and experience.”
American Innovations wants its people to make a difference in the industry and the community. Smalling has implemented open-book finance, where all employees can see the company’s financial statements and are trained to see how they can affect profits and loss – and how they can earn a share of the profits. He is also in the process of eliminating the performance appraisal and creating a more interactive, employee-driven evaluation and development system. Under his leadership, the company has created a community service officer, a healthy snack program, and a fund that is used to match employee donations and support local charities. He says that not only do these elements promote transparency, they also demonstrate that employees have a stake in the company, too.
“I want our people to act like owners, find their passion, and get better,” he says. “If you don’t understand how the company works, you’re just there – like playing basketball if you don’t know the rules, there’s no clock and no scoreboard. I want everyone to be actively involved in our business.”
With all the changes Smalling has seen as CEO, he hopes that his work will not only impact his company, but also the oil and gas industry.
“I want our people, our suppliers, our shareholders, our communities and our customers to feel that I made things better. I just hope, in some way, I was a positive influence.”