Unlocking shareholder value with strategic innovation

In 1965, Intel cofounder Gordon E. Moore penned Moore’s Law to document the exponential increase in the number of transistors on integrated circuits. According to Moore, computers double their processing speed every 18 months.

This “law” is an important part of our understanding of technological progress, because the capabilities of many of today’s digital electronic devices are strongly linked to it. Essentially, it means that technology is progressing faster with each passing year. In 2001, author, inventor, and futurist Ray Kurzweil wrote, “We won’t experience 100 years of progress in the 21st century—it will be more like 20,000 years of progress (at today’s rate).”

The availability of new technology is impacting every industry. It is creating opportunities for improved productivity, quality, safety, risk reduction, and sustainability. Technology has changed the way that we communicate with each other, and the way that we receive, process, and store data. It has introduced us to new applications for artificial intelligence and virtual reality. And, it has helped us find and store new sources of energy. The tools are seemingly endless.

All this new technology at our fingertips can be overwhelming. The task of applying it can be daunting to any organization. What tools do we use, and when, to meet our business objectives? How do we best apply new technology in our efforts to be innovative?

In the mining industry, commodity prices are cyclical in nature. This, combined with deeper, lower-grade ores and changing environmental regulations, means that costly mining projects are challenging the financial returns of companies. The aspect that requires the most transformational change—and has been the most difficult to unlock—is the actual “mining” of the resource. The more traditional methods of cost cutting and continuous improvement are not offsetting the reduced revenue and escalating costs.

Innovation and continuous improvement are complementary, but different. If we simply look to improve on the past, we will only see incremental change. Looking for tools to fix one-off problems doesn’t go nearly far enough. Organizations that have, so far, resisted the need to innovate and digitalize their operations will be looking for new technology at a strategic level. They will need partners who can help guide them through the sandstorm of ideas and concepts. By working with our clients to develop a structured innovation program, we are helping them stay grounded in business fundamentals that drive shareholder value.

One of the regular challenges we face is staying focused on value rather than just implementing the latest technology. Transitioning historic, established organizations from their mine-of-the-past operations to a mindset that begins to envision "our mine of the future" will require several platform changes. An integrated approach is required, not just the implementation of one widget to solve a problem.

People often want to hear about the solutions and the products. We need to reposition the discussion to be “What problem are you trying to solve?” If you start the conversation with the solution (for instance, the new technology), you’ve potentially eliminated many other opportunities to be innovative along the value chain. Whereas, if you start at the beginning and identify "the" problem, a more holistic, integrated solution is more likely to present itself. The solution could change the whole course of the operation rather than address problematic symptoms.

Our approach is a multidimensional view of a company’s organization, simplified by technology portals that provide focus and alignment: people, digital, energy, and water. These unifying portals cut across the full value chain to target shareholder value. The value comes from specifically targeting new technology to positively impact one of four intensities: labor, mining, energy, and/or capital. By specifically targeting these four areas, efforts are focused on shareholder value. New technology becomes a strategic part of delivering and growing the business.

Glencore’s Sudbury Integrated Nickel Operations (INO) is including an innovation program as they invest in their future. The INO leadership team recognized that managing the introduction of new technology can be more difficult than people initially anticipate. So they wanted to introduce a structured innovation program. More specifically, they wanted to ensure that the application of new technologies stayed focused on driving value. They have selected Hatch as a trusted partner to provide that structure and to help them deliver a high-quality outcome. The Sudbury INO is an integrated operation. From exploration to final product, it is an opportunity to include the entire value chain in the program. Initially we are starting with the greatest potential value—reshaping underground mining as we build “our mine of the future.”

Beginning anything new can be intimidating. Within mining companies, moving towards transformational change can be complicated and riddled with anxieties. Wanting a better outcome and doing things differently are not always directly linked, and the mine-of-the-past has a certain known comfort. Shareholders want to see continuous growth and positive returns, and new technology is often seen as an additional risk and significant cost.

It all sounds very simple. And it is, once you find the path. When we meet with our clients' leaders, we talk to them about how an innovation program is not just about going out and finding solutions to problems, and then figuring out what the problems are. Strategic innovation starts at the beginning, with design principles that can be applied across the entire value chain, from exploration to final product. The innovation program enhances the overall strategy by helping manage the introduction of new technology to unlock hidden value.

Many of our clients are somewhere on a path of discovery with respect to utilizing new technology. We provide structure for a strategic innovation program that focuses on shareholder value. We are doing more than helping them focus on business fundamentals and social impacts; we are configuring their operations for long-term success.