Innovation: A path towards maturity

How can Australian mining companies succeed in creating an effective path towards an innovative culture?

What innovation means to mining and how it is implemented has been a fluid situation since the commodities downturn and into the recent recovery.

While innovation was previously used to combat the impact of the mining downturn, it has since evolved into a necessity for organisations in their efforts to be more productive, safer and to stay ahead of the technology curve.

The concept of innovation in mining has grown to be an essential part of a mining company’s culture, Deloitte’s 2018 Tracking the Trends report explains.

Despite being a common focus area of innovation strategies, technology is not the only element where value can be created.

As Deloitte reinforces, innovation in mining also includes “the adoption of more innovative approaches to engaging with stakeholders, re-envisioning the future of work, and identifying the commodities that will be in greatest demand going forward.”

However, Deloitte also points out that mining still lacks “systematic consistency and strategic focus” when it comes to innovation, in part, because companies face several barriers to achieve their goals.

For Australian mining, many innovation barriers have become specific to the country’s industry, according to Ian Sanders, Deloitte Australia’s national mining lead.

Sanders referred to institutional or culture-related challenges, in particular, that Australian mining companies had to overcome to achieve their innovation targets.

“Particularly here in Australia, it is about institutionalising innovation into your strategic mindset and into your leadership. Then, by achieving that it will cascade perfectly into an innovative culture,” Sanders told Australian Mining.

“If mining companies are able to embed innovation into everything they do then they will end up with far better outcomes and an organisation that is a lot happier.”

Deloitte identified four key roadblocks that are stopping companies from reaching innovation maturity, including that they are traditionally averse to taking new risks that may impact cash flow or their licence to operate.

The second roadblock is the propensity for companies to favour short-term cash flow generation, which works to the detriment of creating longer-term net present value.

Thirdly, Deloitte believes miners often lack a clear vision to guide and enable longer-term transformation.

Finally, Deloitte explains that mining’s historical inclination to operate in isolation when it comes to intellectual property (IP) and competitive advantages means they are distrustful of collaboration, hampering the development of junior and mining services companies.

Despite the challenges these barriers present for innovation, Sanders believes the Australian mining industry has increased its focus on overcoming them.

“I think mining companies have been looking at trying to embed innovation within their organisations over the course of the last 18 months more so than they probably did for five to 10 years before that,” Sanders said.

“There are instances where it is helping to drive a cultural change. It is absolutely helping to drive productivity improvements, and it obviously pairs very nicely with the digital transformation in mining.”

Sanders said the increased focus on collaboration over the past 18 months was helping Australian and international miners overcome these barriers.

In Australia, collaborative agreements have commonly been signed between major miners, mining services companies, original equipment manufacturers (OEMs) and tech-focused organisations.

Sanders added that workforce management strategies had also emerged as a central innovation focus in Australia, particularly as production activity ramped up and skills shortages started to appear.

“A worker’s location is obviously important — you only have to look at some of the remote operating centres that have been built over the last couple of years and how that has changed where and how we work,” he said.

The remote operating centres may have been a bold new vision at the time, but according to Deloitte, that’s exactly what’s needed to remove these barriers to innovation.

Deloitte’s leading strategies for ‘overcoming innovation barriers’ include:

  • Develop a systematised approach to innovation: To determine the type of innovation to pursue to realise transformational change, Deloitte urges mining companies to define their innovation and rally their workforces around it.
  • Build the organisational support: To turn innovation into an organisational core capability, Deloitte believes companies must make it a leadership priority and implement governance systems to empower decision making throughout the organisation.
  • Secure the right resources and competencies: Deloitte explains that corporate innovation efforts must be adequately funded and supported with the right resources and capabilities for companies to progress towards more mature innovation.
  • Develop metrics and incentives to guide performance: Deloitte advises that organisations must have the ability to both measure the effectiveness of their innovation strategies and incentivise appropriate employee behaviours before it can be delivered as a discipline.

This article also appears in the April edition of Australian Mining. 

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