These days mining organisations are focused on playing the game of mining very differently. In their quest for being ahead of the curve and future proofing what often feels like an uncertain, ever-morphing future, they are seeking to reinvent themselves as technology businesses.
R esearch put out by Ernst and Young (2016-2017) around the top 10 business risks for mining and metals provided insight into why transformation is the catch-cry of the day and why millions are being spent on technology to change the way mining operations are run. According to the study, one of the top ten sources of sleepless nights for leaders in mining is innovation which lies “at the heart of our success” (Guthrie, 2017).
I recently went to an event attended by many of the who’s who of mining in WA around Innovation, Safety and the Future of Mining. Vanessa Guthrie, Chairman, Minerals Council of Australia gave further explanation for what feels like mining and minerals players running in a frantic race to reinvent an industry that has traditionally been known as conservative with a preference for “keeping the factory running”.
“The world as we once knew it has shifted dramatically”, she said. “In order to remain competitive, operators have to be conscious of the fact that activism and the social license to operate has redefined industry expectations.” Ms. Guthrie talked about how new technologies are transforming the resources sector.
It is clear then that to stay buoyant any serious industry contender will have no choice but to adapt or run the risk of obsolescence
In my view, the need to reimagine the way we have always done business and reinvent ourselves is an ongoing commitment that goes beyond the mining and metals industry sector. The speed at which companies are hyper aware and able to respond to changes in their external environment will determine how successful they are. Investing in technology alone will not provide the bandwidth and capability to do this. The real key to success lies in how well the leadership of organisations can shift their mindsets and those of their people to drive the new direction – because it’s people that are at the heart of true innovation.
What I have noted in my client work is that there are three problems associated with the ongoing discussion about innovation.
1. They think that just talking about the problem is enough
2. They think that technology alone will be the solution
3. Most organisations don’t yet have the right mindset and structure to enable true agility and innovation
Let’s talk about mindset for a second. Studies have shown that 20-67% of the variance of creativity in organisations is directly attributable to leadership behaviour. This means that successful innovation or transformation requires leaders that are able to cultivate and support organisational innovation through their words and actions. A key capability therefore is that ability of leaders to demonstrate creative leadership or, “the capacity to think and act beyond the boundaries that limit effectiveness”. This relies on two key elements for success – an innovative approach to leadership and leadership that drives innovation (Centre for Creative Leadership, 2009).
Yet how many creative leaders have you met in the mining and metals sector? How many disruptive innovators have you seen supported even hired to lead the change? How many leaders “crazy enough to think they can change the world” have you bumped into lately? Be honest.
So, one has to ask? Is this too bold an ambition? Are we reaching for an unattainable star?
Greg Lilleyman from Fortescue makes an interesting comment when he describes his colleagues in the mining industry as “scared rabbits with nice ideas but not with the mindset that is required to truly be able to respond to what lies ahead”.
Known for its fixation to maintain the status quo, the reality is that Australians in the business of mining are generally known to be so risk averse that they don’t want to take a chance on something that has not been tried and tested. A former head of business at a global resources company recently shared with me their mantra on investment in innovation and technology – “We like to be first to be second” – she told me. “It’s cheaper for us that way and faster to execute.”
And we clearly don’t want to pay.
I believe part of the reason for our hesitation may lie in deep-seated cultural norms. As an example, Australian travelers are well known for being cheap when they travel abroad prickling at the thought of tipping. Australian tourists are reputed to being the only ones to leave a fabulous restaurant with their bellies full, a feeling of incredible contentment and servers empty handed.
Indeed, instead of investing in innovation we are sending our inventors packing to other nations to try their luck, and those countries are cashing in on the benefits. Case in point, Canada. Canada has a reputation for being bold early adopters of innovation – think Blackberry, and it’s no different in the mining sector. With a country very much akin to Australia in terms of its abundance of natural resources our Australian innovators are helping Canadian mining organisations lead the way and they are the ones reaping the rewards – not us.
Steve Durkin, Managing Director, Safescape tells the story of Kirkland Lake Gold, a Canadian mining organisation that was going through tough times. To save its operations, the organisation funded the development of several lithium ion battery-operated trucks and boggers. This enabled them to continue mining without having to spend hundreds of millions of dollars on a ventilation upgrade.
According to Steve, most Australian underground mines are ventilation constrained, meaning they can’t add any more trucks into their production fleet. In this case the $1m investment into changing one bogger to battery electric would enable an additional truck to be added to the fleet resulting in significant increased production. In many cases this would pay for itself inside a month.
His explanation for all this – “in Australian we wait for a burning bridge as a catalyst for change. We are still using the brick telephone” he said, “then we retrofit the smart stuff after it’s been tested somewhere else”. The mindset really is as long as we are making profits why bother?
It’s an interesting conundrum.
I think we can all agree that waiting for a burning bridge to spark the catalyst for change is not a clever or sustainable response.
Jeff Melanson, columnist on creativity and change at The Huffington Post shared his very real concerns with me that goes way beyond mining – “I worry for countries like Canada and Australia that sit back conservatively on too much natural resources. The coming energy disruption could well decimate resource-based countries.” He talked of a discussion he had with a Senior Executive from the Middle East who said “we should be seriously worried about what happens in the next decade when resources have no value”.
The reality is that we are in an age of unprecedented disruption. If we want to survive, there is no question that we need to become more agile and innovative. So, just how well is the resources sector equipped to be able to handle the challenges of the fourth industrial revolution, the creative revolution?
We need to understand what innovation and agility look like in practice? We need innovative thinking about people. We need to think differently as leaders about the culture we must create to be the supporting platform for the journey that lies ahead, knowing that technology on its own is not enough.
In a recent survey by IBM, the personality traits of the most success global business leaders were analysed across multiple industry sectors. The most common and valuable trait was intellect. Defined by the Oxford English Dictionary as the “faculty of reasoning and understanding objectively, especially with regard to abstract […] matters,” intellect in business shows a leader has the capacity not just to understand their business but to successfully navigate the ambiguity of industry innovation within their given sector. Among other characteristics – Achievement-Striving, Assertive, Imaginative, Altruistic, Cautious and Uncompromising were traits most prevalent in successful Tech Leaders.
Finally, innovation is something that starts when people are disturbed and motivated to introduce change. It needs more than conventional logic and emerges when there is disruption, creativity, and imagination. It requires discipline, a burning curiosity, an adventurous spirit, a focus on people, and the courage and faith to choose the road less travelled.
Food for thought.