In our 2015 survey, we were finally able to prove with data, what until then we had suspected – being a follower on innovation is likely to deliver lower incremental value over time. Following leads to hesitancy, a lack of internal alignment and poor performance when implementing technology.
This year, through benchmarking and targeted global interviews we identified a few companies that have been outperforming their peers as quick, targeted, needs-driven innovation. This is the second of four case studies that I will explore over the coming weeks.
FMG: Agile, informed, margin-focused innovation
“At Fortescue, we have embraced innovation. If you need it for your own ego, claim it (as yours) if you want, but go out and find the best ideas.”
In May 2008, six years after it was formed, Fortescue Metals Group (FMG) completed its maiden shipment of iron ore from its newly built port facility in Port Hedland, Western Australia. Less than 10 years later, FMG is now the lowest cost iron ore operator in the world.
In its 15 years of existence, FMG has outperformed the majors on every measure: speed from design to commissioning; operating cost; its integrated operating platform; empowering its people, and collaboration with its partners to name a few.
To become the lowest cost operator in the world, FMG has built and embedded the culture that saw it succeed in building 4 mines, a 5-berth port facility, more than 620km of heavy haul rail and shipping 165 million tonnes of ore per year in record time.
There are three key components to FMG’s success:
- Their leadership team continually sets stretch targets that force innovation solutions
- Their reward programme is linked to the company’s long-term vision
- Their people who are prepared to be problem solvers and push the boundaries are reward
With a nimble and agile business ethos, FMG has been constrained by the ‘way things have always been done’. They are willing to try new operational designs to look outside the mining industry for solutions and to drop projects that are not achieving the results they are looking for. This culture of invention and entrepreneurship is at the heart of their success.
This extract from the 2017 Innovation: State of Play Mining Industry report, is part of a 4 part series covering leading innovators and their key to success. The introduction to the series can be found online on our blog here, and the first case study on Sibanye Resources here. The report is on sale now. Our biennial survey has grown to become the world’s largest mining industry survey and has been used to influence entire ecosystem strategies, as well as in shaping individual company direction.