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Can Agile management principles help metals and mining companies embrace innovation?

As investment in digital technology rises across the industry, BCG Managing Director and Partner Agustin Costa discusses the best way to balance individual projects and overarching strategies.

19 October 2021

Contributors

contact-Mark Fraser

Mark Fraser

Account Director

When it comes to innovation, metals and mining may be turning over a new leaf. Traditionally reticent to adopt disruptive working methods and new technologies, the industry seems poised to make a big change.

That message rings loud and clear through Axora’s latest Innovation Forecast. Compiling data from more than 150 senior decision makers in metals and mining, the report features promising insights into the industry’s digital transformation efforts. Nearly every respondent said innovation was crucial to their company’s survival, while 85 percent reported increased investment in digital technology over the past year. Together, these statistics suggest a commitment to digitalisation over both the short and long term, as companies race to boost efficiency and fulfil demand generated by both the green energy transition and growing population.

Metals and mining companies need to have a holistic view for the roadmap and execute in specific use cases

But while metals and mining leaders understand the importance of digital transformation generally, attitudes and deployments remain fragmented across their organisations. Senior site managers and operations staff said they are devoting more money to technology, both now and over the next five years, compared to their peers in engineering and IT. Those same departments are also more likely to report seeing benefits from said technologies. Top priorities varied significantly across each category: operations and senior site management were more likely to adopt solutions that increased productivity, while IT sought to maximise return on investment and engineering put more effective decision making above all else.

So although leaders from all departments agreed that technology is essential for the industry’s future, their concerns and financial commitments can vary wildly across departments. With so many competing interests at play, how can metals and mining companies execute their digital transformation strategy in a coherent way?

The need for a balanced approach

The answer may be to take a more piecemeal approach.

Digital transformation specialists often advocate for holistic, end-to-end deployments that allow companies to apply technologies across any point in the value chain. For BCG Managing Director and Partner Agustin Costa, that approach only paints half the picture. Since an overarching strategy needs time and resources to reveal all potential use cases, departments also need to prioritise individual pilots and projects if they want to make progress.

“You can have the ambition to develop a master algorithm that will let you manage your mine end to end, but that is actually a set of use cases that are integrated together and need to be deployed in a piecemeal way,” Costa says. “Execution needs to be granular and specific. If not, you’ll end up planting 1,000 flowers and none will actually bloom.”

Planning is everything when you’re building a $2 billion mine, but that kind of thinking won’t work for digital

Costa explains that organisations should attempt to implement their grand, company-wide visions through smaller, more efficient projects. He’s seen companies attempt to build the AI-driven mines of the future, only to install data systems across their entire organisation rather than in key areas. Ultimately, the result was a costly, time-consuming effort that couldn’t adapt to new technologies. Conversely, departments can get lost in their own individual efforts, leading to the kinds of disconnected, siloed operations that digital transformation is supposed to rectify.

“You see both all the time in mining companies,” Costa concludes. “Neither of them works. Metals and mining companies need to have a holistic view for the roadmap and execute in specific use cases.”

The benefits of Agile

But while it’s important to strike a balance between strategy and execution, it’s also easier said than done. So what can companies do to ensure they don’t tip too far in either direction?

The first step may involve reconfiguring how metals and mining teams operate. Costa believes companies should embrace Agile management principles when deploying new technologies. While engineering, IT, operations and site management staff may all have different priorities in a traditional mining company, Agile brings together representatives from each group in small, project-oriented cells. These groups then deploy solutions in short development sprints that produce a working product quickly and then iterate new improvements and features over time.

Sprints don’t need to produce shiny, complex products; they just need to create something that offers sustained results

Popular amongst software developers, the Agile approach has yet to become dominant in metals and mining, where an engineering mindset still dominates. But Costa notes that the methodology is starting to make inroads. As the industry turns to new solutions to streamline operations, it only makes sense that it would do away with project charts and long timelines in favour of management practices that suit technology development.

“Planning is everything when you’re building a $2 billion mine, but that kind of thinking won’t work for digital,” says Costa. “It will take you to a two-year development of a tool that’s already outdated by the time it’s deployed.”

Making Agile work

So how can key stakeholders start deploying Agile in their digital transformation efforts? For Costa, the key is to dive right in. By reorganising teams, managers can break down the siloes that would traditionally impede the spread of information across an organisation. This facilitates better decision-making and enables the kinds of holistic, end-to-end operations that digital transformation strategies are expected to deliver.

Of course, metals and mining companies can be risk averse, and if Agile is to catch on, its proponents need to establish its viability quickly. Costa stresses the importance of “lighthouses,” shining examples of what Agile can achieve over short periods. Proving value is crucial here. Sprints don’t need to produce shiny, complex products; they just need to create something that offers sustained results.

“Being able to tie a piece of technology or use case to a pain point in the organisation is phase one,” Costa says. “Phase two is about creating value. Unless you’re able to prove cost savings or throughput, it’ll be very difficult to ask for additional budget.”

In the end, Agile offers another mindset shift to metals and mining. The industry has already changed its attitude toward digital transformation. Now, the teams deploying that technology must change as well.

Read more about digital transformation trends among metals and mining companies in the Axora Innovation Forecast, which surveyed 150 senior industry decision makers. Get your copy here

19 October 2021

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