Opportunities for High-impact Innovation in Mining

PROCEMIN 2011 Santiago, November 2011 Arturo Herrera S. CEO aherrera@innspiral.com

www.innspiralmoves.com

Kings of leveling downwards

Por qu NO sucede esto en Chile?

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Innovation is creating relevant and unique value

Innovation

Create and capture value using

knowledge

applied to solve unmet needs

Research

Innovation = transform knowledge into money Research = transform money into knowledge Rafflers Circle
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The initial source of innovations is to find the maximum profitability of the installed capacity
High

Use of Installed Capacity

Substantial Innovation

Enterprise 1

Innovadora S.A.
Enterprise 3 Low Low

Incremental Innovation

Managment Capacity

High

Both innovations may occur simultaneously and also in a complementary manner, so an integral management is required
Source: Innspiral Moves

4 Tcnica INNSPIRAL Propuesta 4

There are two innovation clusters in the mining industry and based on them we can create strategic focus to look for new business
What is it? Why is it important?

Cluster based on capacities

Cluster focused on operational decisions; it allows the company to identify profit opportunities in its own capacities, whether they are related to their partners or not

The cluster identifies new business opportunities designed to capitalize on ones capacities and their partners

Cluster based on market trends

Cluster focused on corporate decisions; it allows the company to find innovation among the market trends and its own needs

The cluster identifies new business opportunities to solve the major issues in the mining industry

Source: Innspiral Moves

The first innovation cluster enables the company to develop different business opportunities with its own capacities
Maximising the installed capacity

An installed capacity which is not in use, allows improvements and optimisations without significant investment

Changing of obsolete technologies

The technology considered in the design of projects is already obsolete by the time of starting operations

Profiting from internal knowledge

There are professionals who have acquired significant knowledge of internationally developed technologies and methods that often do not have the opportunity to apply them in Chile

Source: Innspiral Moves

Conceptual Map
It is possible to group trends in four main focuses

People

Resources

Business

Growth

Disinterest for the mining industry Aging workforce Cyber activism Relationship with Communities Inclusive Business Negotiation with trade unions Outsourcing Augmented Reality Womens World Diversity in Talent Mining Security

Sustainability is everyones responsibility Increasing water consumption Hydro-Efficiency Increasing Energy Demand Increasing Regulations Greenhouse Gases (GHG)

Decreasing Costs Investment in Mining Mining Oriented Financial Market Mergers, acquisitions, and expansion Emerging Economies Crowd Sourcing Innovation Avalanche Sulfuric Acid Market

New Technologies and Automation Co creation Copper Sustainability New Markets for Copper Chindia New ITs

Disinterest for the Mining Industry

In spite of being the main driver of our economy, a great part of the population sees the mining industry as unattractive, which generates a future shorthanded problem

Knowledge
Workers and professionals lack the knowledge, skills and abilities required for this industry.

In 2007 only 2,713 were enrolled, representing 0.37% of all students that year.

Only 0.93%...
of the labor force in Chile was employed in the mining industry during 2009.

13% of professionals
in low income countries fulfill the necessary conditions to perform successfully in their roles.

Mining Engineering, Metalurgy and Geology Majors

In 2010, 4,225 were enrolled, yet this is still merely 1% of all students that year.

New Technologies and Automation

Innovation is the key to increase competitiveness and productivity in the industry through the use of new technologies

MINING.com
Mining companies throughout the world are increasingly adopting new technological solutions and all that information can be found in the MINING.com Magazine.

Andina
Automation system in subterranean mine allows to remotely control the tasks of (un)loading and transporting materials.

Arouses Interest
According to Microsoft, Chilean mining companies are more interested in applying new technologies such as coworking and Cloud Computing.

ABB was awarded US$ 50 millions for the Automation and the Electric System implementation of the Toromocho Mining Project.

Co-Creation
Generating new business models with the companys network brings a sustainable two digit growth

Cobreloa-Mining Co. El Abra

Community Alliance intends to include new partners, give interesting talks, sport workshops and support for young soccer with the project For a better life quality in the Loa Province

Value Network Diagram

Providers and Allied Channels

Metso Minerals
A Finish manufacturer of mining equipment that negotiates with mining companies to sign agreements or strategic alliances that help improve the efficiency of their operations.
Open Knowledge Networks

Clients

Competitors

IT Mining Standard
SOMI, the model that also integrates Freeport McMoRan, seeks adherence of big mining companies and intends to set an IT standard for the mining industry.

Complementar y Allies

Like in Horse Riding, to win a race of double digit growth, having pure blood horses (projects) is not enough; the riders must also be winners (entrepreneurs), and the track must be appropriate (corporate environment)
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Innspiral designed, implemented and operated the Innovation System in the mining industry
Mainly activities realized: Definition of the innovation cluster with its strategic focuses Design and implementation of the innovation system Creation of the Innovation Committee and the Innovation Department Design and implementation of the technological alert system

Results Innovation System operating successfully and projects portfolio in execution

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The innovation system starts from the overlap with corporate strategy until the generation of results.
The Innovation System

Corporate Strategy

Innovation System

Results

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The innovation system is structured from the strategic towards the operative, reinforced by supportive processes and facilitators
Corporate Strategy

Innovation System
I Strategic Level
Roles, Goals and Innovation Focuses Innovation Portafolio Management Project Management Organization Intraentrepreneurs Management

III Facilitators

II Operative Level IV Support

Knowledge Management Management Control

Resources

Results

Positioning and Diffusion

Networks

Innovation Alerts

Corporate Strategy defines the decision criteria and strategy for the innovation system. At the same time, the results of the system are useful inputs for re-orienting the strategy

Fuente: Metodologa Innspiral

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 And the portfolio management is the pivot between strategic and operative aspects, facilitators and supportive processes
Corporate Strategy

Innovation System
I Strategic Level
Roles, Goals and Innovation Focuses Innovation Portafolio Management Project Management Organization Intraentrepreneurs Management

III Facilitators

II Operative Level IV Support

Knowledge Management Management Control

Resources

Results

Positioning and Diffusion

Networks

Innovation Alerts

Corporate Strategy defines the decision criteria and strategy for the innovation system. At the same time, the results of the system are useful inputs for re-orienting the strategy.

Fuente: Metodologa Innspiral

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The innovation system is structured from the strategic towards the operative, reinforced by supportive processes and facilitators

Corporate Strategy

Innovation System
I Strategic Level
Roles, Goals and Innovation Focuses Innovation Portafolio Management Project Management Organization Intraentrepreneurs Management

III Facilitators

II Operative Level IV Support

Knowledge Management Management Control

Resources

Results

Positioning and Diffusion

Networks

Innovation Alerts

Source: Innspiral Moves

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Focuses are specific challenges from which organizations can generate new business opportunities
Corporate Strategy Innovation Cluster II

Trends
Solutions
Direct Indirect Explicit Latent

Needs
Problems

Innovation Focuses

Innovation Cluster I
Companys Abilities Assets Networks

Companys capacities

Opportunities

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Characteristics: 1. Question 2. Simple 3. Brief 4. High Remembrance 5. Evident Answers 6. VERY aligned with strategy

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Project Management materializes the value of innovation for the corporation

Corporate Strategy

Innovation System
I Strategic Level
Roles, Goals and Innovation Focuses Innovation Portafolio Management Project Management Organization Intraentrepreneurs Management

III Facilitators

II Operative Level IV Support

Knowledge Management Management Control

Resources

Results

Positioning and Diffusion

Networks

Innovation Alerts

Source: Innspiral Moves

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While the innovation process advances, the exploration of opportunities evolves from the interior to the exterior of the corporation
Levels and Methods of exploring new business opportunities
Knowledge and Internal Creativity Co-creation and Copy External Knowledge

Brainstorming
Generating business ideas from the connection between problems and needs of clients, the trends that affect the market, and the capacities of the company.

Co-creation workshops
Joint exploration opportunity with providers and companies that present complementary capacities.

Technology Alert
Exploring new technologies that could leverage new businesses for the company (Patents, Academic R&D, Industrial and Technological Fairs).

Historical Projects
Restarting old projects that were stopped for diverse reasons (lack of focus, contingency issues, etc.).

Copy
Exploring products, services, and technologies that are tested or sold by similar companies in other markets or countries.

Open Innovation
Inviting entrepreneurs and academics whose businesses or developments are related with the innovation focuses of the company.

Source: Innspiral Moves

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The different actors of the development and sales chain for new technologies will be identified
Actors in each kind of technological innovation
I II III

Applied R&D
1 R&D Centers 2 3 4

Start-ups

Consolidated Companies

Technology transference and patenting Business Incubator

Innovation Promoting Entities 5 6 7 Angel Investors Risk Capital Funds Industrial Associations

Source: Innspiral Moves

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The ideas are evaluated by the workshop participants, analyzing those with the highest potential
Ideas Classification (conceptual)

4 3

Impact

Ideas that require little development for ther implementation. The potential impact can be low.

Ideas that require development for their implementation. The potential impact is high.

2 1 0 1

Ideas that require development for their implementation. The potential impact is low.

Ease of Implementation

4
Potential Quick Wins Reject or Freeze

Goes into design and evaluation process.

Source: Innspiral Moves

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The entrepreneurial capacity is the key for the success of projects, therefore this function is specially relevant

Corporate Strategy

Innovation System
I Strategic Level
Roles, Goals and Innovation Focuses Innovation Portafolio Management Project Management Organization Intraentrepreneurs Management

III Facilitators

II Operative Level IV Support

Knowledge Management Management Control

Resources

Results

Positioning and Diffusion

Networks

Innovation Alerts

Source: Innspiral Moves

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The Intraentrepreneurs management must respond to 5 specific objectives to find and enchance extraordinary talents
Component 1 Recruitment and Selection Process Specific Objectives Choosing the most suitable people inside or around the organization to develop new business or innovation projects. Evaluating the performance of the intraentrepreneur in a systematic and formal manner during the development of his project (design and evaluation, execution and growth). Providing and incorporating learning related to innovation, intraentrepreneurship, project and personal capacity development for each intraentrepreneur. Generating a structure and instances that support and enhance both the development of the intraentrepreneur and of his project. Defining incentives (pecuniary/ non pecuniary) to motivate potential intraentrepreneurs and align them with the objectives of the company.

Evaluation Process

Formation and Development Process

Support Circle

Incentives Program

When counting on extraordinary intraentrepreneurs we cando the projects with

the
Source: Innspiral Moves

right people

and therefore increase their chance of success.

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It is fundamental to define the structure of actors that assume different functions and responsibilities in the portfolio management

Corporate Strategy

Innovation System
I Strategic Level
Roles, Goals and Innovation Focuses Innovation Portafolio Management Project Management Organization Intraentrepreneurs Management

III Facilitators

II Operative Level IV Support

Knowledge Management Management Control

Resources

Results

Positioning and Diffusion

Networks

Innovation Alerts

Source: Innspiral Moves

Fuente: Metodologa Innspiral

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It is expected that the intraentrepeneur is continuously supported by 4 different groups

CEO and First Line Managers Make decisions regarding all activities in the system Innovation supervisors at the company Support both the formation stage and the execution of the project

1. Innovation Committee

4. Sponsor A first line executive for the intraentrepreneur Lend political support and enhance the technical/strategic development of the project

Central Actors

2. Innovation Management Team

3. Intraentrepreneur

Company executives that dedicate part of their time to developing the project. Lead the execution of innovation projects

5. Other Areas

Source: Innspiral Moves

Different areas of the company dedicated to supportive activities Reinforce the supportive activities (Human Resources, Communications, and Studies) as a counterpart

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It is fundamental to define the structure of actors that assume different functions and responsibilities in the portfolio management

Corporate Strategy

Innovation System
I Strategic Level
Roles, Goals and Innovation Focuses Innovation Portafolio Management Project Management Organization Intraentrepreneurs Management

III Facilitators

II Operative Level IV Support

Knowledge Management Management Control

Resources

Results

Positioning and Diffusion

Networks

Innovation Alerts

Source: Innspiral Moves

Fuente: Metodologa Innspiral

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The supportive processes contemplate knowledge management, innovation alerts, networks, and management and diffusion control
Components in an Innovation System.
Feeding the process and developing projects from knowledge and existent innovations in the market (national and international) in the framework of innovation focuses and projects, in both a proactive and reactive manner. Managing in an integral form the different components of the Innovation System to assure the expected results (Portfolio management, project management, etc).

IV Support
Knowledge Management Innovation Alerts Networks Management Control
Positioning and Diffusion

Capturing and making available the knowledge generated from operating the innovation system, the development of projects and the companys network.
Source: Innspiral Moves

Encouraging, developing and managing an open network for innovation (internal and external) that integrates collaboration of people, organizations, and companies.

Positioning the company as leader in innovation. Positioning innovation inside the company. Encouraging participation and motivation of people to contribute towards forming an innovation culture.

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Innovation is a manageable process, enabling companies to achieve at least seven benefits

1. Constant source of value creation for the company 2. Alignment of the company strategy with innovation goals 3. Creation of the necessary culture to facilitate the development of innovation projects and their entrepreneurs

Innovation as a manageable process

4. Increased chances of success due to a rigid control and management of projects 5. Reduced uncertainty associated with a portfolio of innovation projects 6. Systematic development of intrapreneurs to lead innovation projects in an effectively way 7. Systematization of high impact results on EBITDA

Source: Innspiral Moves

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We will innovate.

When we sincronize the Business Model of the company in which we are, with our own business model =

Life Project
(Great Dreams)

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Opportunities for High-impact Innovation in Mining

PROCEMIN 2011 Santiago, November 2011 Arturo Herrera S. CEO aherrera@innspiral.com

www.innspiralmoves.com

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