10 Jun Tomás Sánchez, Strategy Director at Accenture Chile: “Mining has gone through the same as other industries: when there is no incentive or competition that forces you to innovate, you don’t do it”
The Innovation expert and columnist for Diario Financiero, Tomás Sánchez, analyzed for Cesco the document “Towards 4.0 mining: Recommendations to Promote a Smart National Industry”. This is his view of the main obstacle for companies, organizational culture, and the roles of suppliers, academia, and the State.
Conservative and reluctant to change. The mining industry has a transversal diagnosis when analyzing how innovative it is. However, efforts to find formulas that allow progress towards faster technological adoption have grown in recent years.
Based on this premise, it is that the Center for Copper and Mining Studies, Cesco, carried out a detailed analysis and mapping of the state of progress of different solutions linked to the technologies of the Fourth Industrial Revolution. Besides it assessed various obstacles that this adoption has been hindered and the roles of the different actors involved, which have been reflected in the document “Towards a 4.0 Mining: Recommendations to Promote a Smart National Industry”.
And to get a new look at this analysis, it is that Cesco contacted the Strategy Director at Accenture in Chile and columnist for Diario Financiero, Tomás Sánchez. “The analysis, both in terms of penetration and technological maturation and its obstacles, is well done. Many times, you see lighter and more rhetorical articles, so it is good to have something more exhaustive and categorical”, says the expert.
The stumbling block of companies
For Sánchez, in the mining indusry there is something that does not exist in other economic sectors. “If you ‘tighten a nut well’, you make a lot of profit, and I think here ‘few nuts are being tighten ’, despite of having the monetary incentives to do so.”
This is related to the organizational culture, one of the main barriers to adopt new technologies identified in the document, and in which Sánchez deepens his analysis. “We are facing a closed culture. A culture that feeds itself back, where you have little relationship with others, which occurs from a physical point of view. The mine is far from the universities, the universities, in turn, are far from the mining companies, for example,” says Sánchez.
The executive adds that, in the past, the industry had not been forced to innovate, as it had no problems with margins or greater problems with competitiveness. With the aging of the mines, the fall of the grades, and with increasingly complex concentrates, Chile risks losing its privileged position as the world’s largest copper producer. Added to this are new demands from both society and the market, where more sustainable and sustained production is expected. This is why today the industry is at a key moment.
“This has further challenged extraction to make it profitable. But historically mining has gone through the same as other industries: when there is no incentive or competition that forces you to innovate, you don’t do it”, he explains.
“Cultural change is, perhaps, one of the most complex challenges that mining companies have ahead of them”, Sánchez explains. “It has a lot to do with leadership and being open to other areas, to the possibility of incorporating executives from other sectors that can count on very good practices. The best innovations in other industries have occured because experiences from other sectors have crossed. Something that has worked very well in retail was applied later in construction, and something that was applied very well in construction was applied in the technological world”.
In this regard, Sánchez assures that this “cross-pollination” is an enriching experience that in mining has not become widespread, as it is a sector that is having difficulty accepting human capital from other sectors.
“You have to get out of the declarations of good intentions. As they say, what is not measured, is not managed, so the organizational culture of each company must be measured, and serious goals must be set to improve in this area”.
But to get out of those declarations of good intentions and the reluctance within the company to incorporate new technologies, Sánchez says that knowledge and education within the organization are key. “This is solved with user experience. When the user, in this case the worker, is incorporated from the beginning in the innovation, he understands the genuine problem that is going to be solved, and he understands that the problem is going to be solved for him”.
However, the executive explains that innovation is normally done outside the operation, without considering who will use the innovation directly. “That is precisely what generates rejection, so innovation is going to have many adoption problems. When innovation is done from the user, the user has a strong sense of belonging and being part of the development and that innovation works, the adoption will be much easier”.
The other actors
The report “Towards a 4.0 mining …” provides recommendations for the four actors that are part of the mining ecosystem: the company, the suppliers, the academy and the State. Although it is the company that must take on much of the challenge of taking a major technological leap, the truth is that each party has a responsibility for the success of the adoption.
In the case of suppliers, Sánchez explains, there is a barrier to entry to a mining company. And here there are two realities once the task is successfully entered: there is a supplier sector that can go a long time without further competition in a highly structured environment, so it has no greater motivation to continue innovating; while another sector knows that to continue growing and being competitive, and not staying in a limited market, it must look to other countries.
“Suppliers are essential”, says the executive. “In an industry that is becoming more specialized every day, where mining companies seek to reduce certain tasks to focus on specific issues of their business, more spaces are being created so that suppliers can act in new areas of the value chain”.
However, the expert points out that “there has been no joint work to worry about those suppliers to develop and that those suppliers later export. Many times, those suppliers stay with a couple of clients, and with that, they remain calm. Few of them actually have a bigger ambition, or have an order and the professionalism to go out and export and be an emblematic case”.
In the case of the academy, Sánchez explains that there is an outstanding debt with all industries, not only with mining. “The academy is structured in such way that the incentives for academics are placed in publishing papers, and having a good teaching evaluation of its students. They have no incentives in applied science or in working with companies”.
The executive explains that when academics go to work on mines, there is a very important cultural gap. “The academy works with a scientific method, with hypotheses, with research, and with times that are not those of mining. The times of methodology to innovate are different between academia and mining”. In this sense, Sánchez explains that it is a matter of how the system is designed within the academy, which must adapt to new times.
In the case of the State something different happens. For Sánchez, the State has not had a vision regarding how certain sectors are promoted. “The State has been more pro-market, rather than pro-industry, and therefore has allowed the market to operate freely. It has not had a coordinating or promoting role for certain industries and certain developments”, says Sánchez. For the expert, there must be some type of intervention, in the sense of correcting externalities, and so that it generates greater well-being for the country’s population when there are opportunities.
The executive adds that the State has not taken more drastic measures -such as regulations that facilitate this-, to encourage innovation in the industry, and export mining, not just minerals. “Clearly in a sector where we have competitive advantages such as mining, the State should have a more active role in developing the industry, and not simply stay in this more orthodox position that the State will stop acting, without getting involved”, he ends.