Innovation in mining – where to from here?

One of the unfortunate consequences of the mining industry’s focus on maximising volume during the boom phase of the cycle was that significant inefficiencies became deeply embedded in operations, organisational structures and in the back office functions of mining companies of all shapes and sizes.

So when the cycle turned, the industry developed an unrelenting and often brutal focus on removing cost.

Following a period that saw the disposal of poorer performing assets, the deferral of new capital projects, reorganisation and headcount reductions, the mining industry could be confusing operational excellence and continuous improvement with true innovation.

No surprise then the industry appears to be asking “where to from here?”

There is broad acknowledgement of the need to be working smarter and the next wave of productivity and growth opportunities will come from doing things differently. The mining industry appears to have embraced innovation as a godsend in the face of an uncertain outlook for commodity prices. But where is the real innovation that will continue to drive productivity and growth?

We hear the message “we need to embrace innovation to drive productivity and growth” repeatedly from mining companies. Good examples such as automation and remote operations centres are often cited, but haven’t these now become the norm? Isn’t the real question for mining leaders “what can we as an industry learn from leading innovators?”

Firstly, innovation is a team sport. In fact, an organisation that depends on individual innovators alone is destined to fail. Understanding how you can wire innovation into your organisation, and build a robust internal innovation capability, is an imperative for any company doing business in today’s dynamic world.

Secondly, one of the more dangerous myths about innovation is it is fundamentally a challenge of creativity. Innovation almost never fails due to a lack of creativity. It’s almost always because of a lack of discipline. If we frame innovation as a challenge of discipline – of learning to use the right methods, tools and approaches at the right times – then we quickly focus on very different imperatives:

We become students of innovation. We don’t expect someone without training to build a discounted cash flow model or develop a marketing segmentation. Nor would we expect someone new to an industry to already understand its structure and dynamics.

So why do we expect our colleagues and leaders to suddenly manifest an ability to innovate? And why don’t we expect them to study innovation systematically, both the methods they should apply in different contexts as well as meaningful innovations in the surrounding landscape. Like any other business function or discipline, innovation has tradecraft that we can learn, practice and hone.

We measure methods and results. When we start seeing innovation as a discipline, then we also start focusing on what does and doesn’t work. We set goals and measure results. This doesn’t mean we start asking for a five-year financial projection two weeks into an initiative. It does mean paying attention to which inputs yield better outputs; did our time spent brainstorming in a room yield better ideas, or the same time spent studying our markets and customers?

We start reviewing our efforts, spotting where we made critical breakthroughs and where we missed key insights. This should be the point of “celebrating failure,” which, if we’re honest, is a silly thing to celebrate for its own virtue. We salvage all possible learning, and see how it can improve both our current business and our innovation capabilities. We also look across the range of innovation initiatives underway, and ask if they’re collectively addressing the right issues. Do they have the right balance of risk and likely return, and are we dedicating enough resources to them?

We make innovation obligatory rather than optional: Finally, if we can see innovation as a discipline, then we can start demanding it from our organisation. We can hold our team and business unit leaders accountable for sponsoring innovation initiatives, and charge our bright, high potential employees with developing it.

Some of the most powerful innovators in history have connected involvement in innovation initiatives to career development, incentives and promotion. It is what they expect from their future leaders.

Innovation also becomes an investment we start funding programmatically, instead of scraping budget dollars together each quarter, because it’s vital to the ongoing health and success of our business. We stop hoping innovation will happen and start requiring it from each other and ourselves.

If mining companies are going to embrace innovation to drive productivity and growth, they will need to embed innovation as a discipline and think about innovation in a more systemic way. Then we can expect to see more companies building breakthrough innovations – those game changers that enable leading innovators to be top performers that generate superior returns for their shareholders.

Anyone can learn to innovate and, with practice, anyone can become better at innovating. Simply put, there is no longer an excuse not to innovate.

This blog is based on the findings of a new Deloitte report: Innovation in Mining: Australia 2016

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