Innovation in Mining
WHY MINING INNOVATION PROGRAMS FAIL
Substantial effort has been focussed on big data, digitalisation and automation as ways to improve mining profitability. Many mining companies have found this journey to be difficult and achieved disappointing results. Despite its promise innovation strategies have not managed to deliver substantial productivity improvement.
A 2015 McKinsey study found that productivity in mining has declined on average 28% over the last decade, across all mining jurisdictions. This even though the study compensated for declining grades and rising costs. Given this backdrop, one could argue that in some cases “innovation” (The way ERP systems were introduced and the use of information originating from this source) have decreased overall productivity and have become an impediment to further improvements
OBSTACLES TO EFFECTIVE AUTOMATION, DIGITIZATION AND INNOVATION
Mine managers and Information Technology departments mention the following obstacles to innovation;
- Siloed data that cause communication and interoperability issues. Without the overall context, this data is not information.
- Not knowing which information is crucial for effective running of the overall system.
- Not knowing how to implement effective systems to deliver the correct information to the right departments and decision makers.
- Not able to identify the crucial information each department requires and how changes in other parts of the system affect this.
- Not knowing in advance how decisions could affect other stakeholders and therefore not knowing where to start and how to adapt?
- Lack of ownership and resistance from those who must use the data to start working in new ways. (Not invented here, especially noticeable where technology has been centralised away from future users)
- Not having the right skills and/or not knowing what the right skills are (which makes it difficult to effectively upskill employees)
- Culture, measurement and reward systems not in line with the new ways of managing and operation required.
- Presence of silos and difficulty in coordinating in agile fashion across functions, close to where the real work is being done.
- Not understanding the capabilities of our current system, or its potential to be adapted for what is needed.
These issues can be considered as component parts of an overall “wicked problem” first explained by Horst Rittel. With wicked problems “the overall problem cannot be clearly stated; understanding the problem is the same as solving it; we are not sure if we are dealing with root causes or symptoms; there are no provable right or wrong answers they are only good or bad relative to each other; every time we attempt to solve the problem we change its structure so that the problem cannot be replicated.”
These characteristics suggest that despite the best efforts of consultants, we cannot bring a template of something that worked elsewhere, implement it and expect good results. Experience shows that processes and structures that are adaptive, iterative and bottom up, deal better with this problem than the centralised, vertically controlled (over constrained) systems most mining companies are relying on.
Given this backdrop, we could state the problem as follows: “How do we create an environment where innovation is actively embraced, where it quickly delivers financial (increased productivity) results, where employees at all levels volunteer to contribute and align their activities for the common good?” We must change tried and tested tools, systems, processes and more important the way we measure, manage and reward employees.
And to achieve this, how do we delegate decision making authority to the lowest level without losing control, impairing safety or profitability? What are the new measurements, new culture and new decision-making processes we need and how do we introduce this? How do we develop our current talent?
This leads us to the most important obstacle to our stated aim. Our organisation cannot sustain effective innovation without radically changing itself.
We will argue that successfully incorporating new technology into mining companies are best done through creating a Hyper Productive Knowledge Work environment in mining, as explained in the following section. We have 15 years of experience in doing exactly this:
We believe that the most productive innovation is driven bottom up, incrementally and continuously. Big bang processes may work, if those choosing these have a profound understanding of the operation of the mine where this will be implemented. And this understanding will only arise where there is daily horizontal coordination amongst all departments on the mine as to what is constraining the system and what therefore needs to be addressed. Only effort focused on the bottleneck department will have a substantial immediate impact, working on other areas results in a dilution of effort, resources and limited employee motivation. This is one of the reasons why successful innovation in one mine is difficult to reproduce in another using a big bang approach with external consultants. The “best practices’ used in many mines hide these bottlenecks.
The article below explains in more detail.
Download “Why Mining innovation programs fail” (PDF, 635KB)
MINING CAPABILITY PLATFORM (MCP) – SUSTAINABILITY
The world has changed dramatically over the past twenty years: the tragic events of 9-11; the GFC and its still lingering impact; the increasingly stark effects of international terrorism on all aspects of life. For some time now mining industry analysts have been saying the time has come for a serious review of how companies need to operate. They point out that the volatility, uncertainty, complexity and unpredictability of the new world order are combining to fundamentally affect the way the industry needs to be managed and led. Commenting on this in their recent publication “Mine 2016 – slower, lower, weaker, but not defeated…”, PwC analysts made the following observation:
“Costs have already been cut deeply, but need to be sustained at these levels in prices stay depressed. Pressure will rise as attention turns to the next wave of productivity initiatives, which will have longer-term paybacks and require fundamental rethinking of structures, processes, systems, technology, organisational designs and capability needs. This is uncharted territory for the industry, at a time of rapid change in all sectors of the global economy.” In other words, how do we ensure that mining becomes sustainable given rapid change.
While correct in their diagnosis that mining companies need to engage in a ‘fundamental rethinking’ of how they need to adapt, they did not offer any suggestions regarding how this was to be accomplished.
At Stratflow Australia we have been focused on precisely this challenge since early 2016. In the intervening period, we have engaged with industry leaders and specialists around the globe. The culmination of these investigations is the launch of what we refer to as our Mining Capability Platform. Based on a proprietary concept called constraint-based capability building, MCP represents a practical pathway towards achieving two vital outcomes:
- A comprehensive rethinking of what YOU need to do to re-position your enterprise to not only cope with, but thrive in, this new environment of volatility, uncertainty, complexity, and unpredictability. In other words, how do you become sustainable?
- The translation of that rethinking process into a series of integrated, pragmatic initiatives which allows addressing three key 2017 imperatives:
- Improving operational productivity- Mining Productivity Platform (MPP). (We do this via an innovative fusion of Goldratt’s Theory of Constraints and no-nonsense humanistic psychology)
- Building organisational capability around the theme of achieving and sustaining the capacity for high reliability performance, specifically as it relates to the management of safety, the management of the environment, and the management of stakeholder and community relations.
- The systematic stewardship of the company’s intellectual capital via the (i) creation of new value-adding knowledge; (ii) its dissemination to all parts of the enterprise; (iii) its careful storage and curation; (iv) its retention within the organisation when key personnel move on.
We look forward to bringing MCP to your company in the near future.