Mining industry CEOs are unpicking the bad habits acquired during the boom through a mix of cost reduction, embedding innovation and introducing next generation technologies into operations, according to independent think-tank Innovation: State of Play.
The Innovation: State of Play report, CEO Insights, illustrates the continued difficulty mining companies are having building agility into their businesses in response to rapid technology advances, while also managing unprecedented cost-cutting.
VCI director and report co-author Dr Graeme Stanway said many CEOs are coming to a similar conclusion – that the only clear path to growth is by building competitive advantage through technology.
“The impossible-to-ignore advances in sensing, data and analysis technologies have seen the industry mind-set change from seeing these technologies as inherently flaky and high risk, to being a strategic imperative,” Dr Stanway said. “It is now also seen, ironically, as a core element in managing risk – albeit now the risk of being disrupted.”
Dr Stanway said mining executives were learning how to build systems with agility and adaptability to deal with unexpected consequences.
“Ultimately, this means emulating ‘organisms’ and their ability to sense, respond and move.”
The most important aspect to achieving this end-state is to balance the twin imperatives of ‘top down technology strategy’ with ‘bottom up engagement and incentives’.
“Designing and implementing a successful top-down program is often best executed in larger companies,” Dr Stanway said. “It requires a structure and investment aligned with the business strategy which is able to drive big platform shifts.”
According to Dr Stanway, two broadly recognisable examples of this approach are Rio Tinto’s ‘Mine of the Future’ and AngloGold Ashanti’s ‘Technology Innovation Consortia’. Both clearly align a top-down approach with their fundamental business strategy and needs.
“On the other hand, CEOs that tend to embed the best bottom-up programs are the smaller or mid-tier companies, which are less bureaucratic and willing to provide more autonomy to their workforces. Success is a product of a clear broad intent, culture and incentives.
“A fantastic example of this approach is Dundee Precious Metals which has doubled production with no increase in workforce or major machinery. CEO Rick Howes put the digital building blocks in place and gave his workforce the space to innovate.”
Ultimately, the key is in “seeing, moving and implementing”; overcoming the “industry’s fallacy that being a technology fast follower is a valid technology strategy in its own right”.
This is perhaps the report’s major insight – there is a direct correlation between the successful implementation of innovation and the propensity of an organisation to take a leadership role in its stated areas of competitive advantage.