I am indebted to Scott Perkins, former Chief Executive of the Northern Territory Department of Minerals and Energy for the idea for this week's post. Although it has morphed somewhat from his original suggestion.

Scott rang me to suggest that one of the matters that often appears to be overlooked in any debate over mineral development, is the fact that all human activity impacts on the environment to some extent and that the role of government agencies is to assess whether the benefits of undertaking a particular activity outweigh the negative impacts caused by carrying it out.

To underline his point he related a conversation that he had over lunch with a prominent environmental lobbyist.

In this conversation he suggested that this person was happy to live in and enjoy the amenity that the wonderful city of Darwin provides but that in order to create that built environment, we as a society, and by implication they, had accepted that there would be a price to be paid by the environment. Habitat would be lost, flora and fauna species may be locally depleted, groundwater, surface water and the air quality would most likely be adversely impacted. Nonetheless, the city was built and continues to be developed.

Perhaps because we all need somewhere to live, food to survive and hopefully a job to fund the former two needs, that we find it easy to accept these compromises or perhaps we simply ignore them.

The recommendations of regulators to their political masters on any development, whether it be a housing development, industrial complex or a mine, should be entirely fact based, the result of detailed scientific studies, social impact assessments and economic modelling.

However, the decision on whether or not to approve the development are nearly always made by politicians and in my view politicians rarely let the facts get in the way of their decision-making! They are nearly always swayed by public opinion, or more precisely outrage and in particular whether they think their decision  will enhance or diminish their chances of re-election.

In my opinion the challenge for the mining industry is not in getting the population in general and politicians in particular to understand that every human activity is a trade-off; that much I think is implicit, the true challenge is in dealing with the outrage that often accompanies a proposal.

This challenge can be summed up in the two words, Risk Communication.

In the late 1990’s I attended a seminar in Melbourne given by Dr Peter Sandman. Dr Sandman specialises in Risk Communication and founded the Environmental Communication Research Program (ECRP) at Rutgers University in 1986, and was its Director until 1992. 

Dr Sandman coined the equation, “Risk = Hazard + Outrage.” Just think about that for a moment. What he is arguing is that risk has two elements, Hazard, the actual physical threat or danger and, Outrage, the community response to the Hazard.

Peter Sandman's studies have shown, there is often very little correlation between Hazard and Outrage. In other words an activity or proposed activity can actually have a very low danger and yet still trigger enormous public outrage. Conversely he can cite examples where the physical danger is high yet outrage is at best muted or even non-existent.

Another fact borne out by research conducted at Rutgers, is that we humans are far more responsive to outrage than we are to facts.

To demonstrate the point during the seminar, Dr Sandman related a study that they undertook using 30 paragraphs of text relating to an imaginary accident at an industrial plant. The paragraphs were carefully constructed so that they contained either facts or outrage.

The 30 paragraphs were given to a bunch of journalists and they were given the task of reducing this down to an article suitable for the front page of a newspaper. The journalists duly edited the paragraphs. The results were very interesting because they focused on the paragraphs which conveyed outrage although they did still retain some of those containing facts.

The same 30 paragraphs were then given to a group of newspaper editors, who were asked to undertake the same task. Again they focused on the outrage but did still retain one or two facts, but certainly far fewer than the journalists.

Finally the paragraphs were given to a group of newspaper readers who were assigned the task. This group removed all of the facts and left only paragraphs containing outrage.

There are there takeaways from this story, firstly we as readers focus on outrage rather than facts, secondly we therefore get the newspapers that we deserve or at least desire, and finally, once the outrage horse has bolted it is difficult if not impossible to get it back in the stable.

The evolution of Social media over recent years has, by the way, provided the outraged with an easily accessible an ready platform to air their anger and it works far more effectively for those outraged than those trying to quell the anger. Dr Sandman recently wrote an article titled “10 Things You Need to Know about Outrage Management and Social Media”. (Please refer to the references at the end of this article)

One of the other aspects of Risk Communication that Dr Sandman talks about are the "Publics". Yes you read that correctly, plural.

He divides the population into four concentric circles. At it's core are the “Fanatics.” In Dr Sandman's words, "You know their telephone numbers by heart, and they know yours. They want input into everything you decide. Your issue is their main interest aside from job and family." I have had first hand experience of Fanatics.

Surrounding these we have the "Attentives", "They monitor the media on your issue carefully. Once in a while they want to attend a meeting or answer a survey. Your issue is in their top 20."

Further out again we have the "Browsers", "They check you out in the media from time to time, but they don’t want to be bothered providing input. Your issue is on their “worry list,” but way at the bottom."

And finally there are the "Inattentives", "They don’t know and they don’t want to know."

The key is therefore to engage with the Fanatics because the way that they respond influences the way that the broader population will behave. (For those wishing to read Dr Sandman's advice on how to deal with the Publics, please refer to the link to sand40.pdf at the end of this post)

So what does the mining industry need to do?

Firstly there is a need for openness a need to talk with the communities and stakeholders that our potential activities may impact upon at an early stage. Be truthful will them as to how a project may develop, what they can expect from you during each stage of development from exploration through to construction and operation. Invite questions, be open and responsive to people's concerns and provide them with relevant factual information regarding their particular concerns. Identify who the Fanatics are and make sure that you are engaged in a dialogue with them.

When it comes time for an environmental impact assessment in an ideal world Dr Sandman argues that if the meaning of scientific data can be agreed in advance then this will defuse much of the potential for outrage because there is a shared understanding of its meaning.

For example, before any studies are commenced, if it is agreed between the proponent and the community that, if the discharge water from a project changes the chemistry of the receiving water by more than certain limits, then it would either mean that the project could not proceed or that an alternative means of treating the water prior to discharge would have to be employed, even if that were a more expensive alternative for the proponent.

By gaining consensus on the meaning of the outcomes of studies it defuses the opportunity for outrage even getting started.

Developing my previous example of the water discharge. If the proponents scientific advisers and the communities scientific advisers; normally the regulators, agree that a 10% change in the certain elements of the water chemistry is perfectly acceptable and as a result of the studies, it is determined that these parameters will change by approximately 8%. Then by prior agreement this is a totally acceptable outcome.

However, were the proponent to undertake the same studies and deliver this outcome without prior discussion and agreement, there is the potential for someone opposed to the project to seize on the 8% change in the chemistry and fan the flames of indignant outrage, “how can this mining company be allowed to impact receiving waters to such an extent?”

As you can see from these two scenarios, none of the facts have changed yet an opportunity has been created for significant outrage to be generated from something that by agreement would have been an acceptable impact.

We have all seen the newspaper articles and headlines with emotive phrases such as, "the food bowl of Australia", or, "this pristine environment". I'm sure readers could contribute many of the own examples of such impassioned statements. The factual evidence may differ starkly from teh perception created by such emotional phrases.

So my recommendation to the mining industry is to get on the front foot, talk to your community and other stakeholders, and discuss what the impacts might be and gain agreement on what is acceptable and what would require an alternative approach to be taken.

I also highly recommend that anyone involved in gaining approvals for mining developments attends one of Dr Sandman's seminars or at least takes the trouble to read some of the many articles that he has written on the subject.

Footnote:

I did toy with the idea of using either the "Lock The Gates" or perhaps the "Frack Off" logos as the image to accompany this post as examples of the kind of outrage that can be generated by resource proposals, without thoughtful management. However, whilst it may perhaps have made the point, I decided that rather than give these campaigns yet further web coverage, that I would instead use some old images of some poignant stickers that used to be distributed by the Minerals Council of Australia.
  
There will be no blog next week as I shall be attending the Africa Down Under conference. If you are attending then please come and seek me out.

References:

http://www.psandman.com/index.htm

http://www.psandman.com/col/social-media.htm

http://www.psandman.com/handouts/sand40.pdf

http://www.minerals.org.au/

With the fall in commodity prices over the past couple of years we have seen an enormous toll taken on the mining industry with mine closures and layoffs. Those operations that have survived are working their way through the inevitable cost-cutting measures trying to save every last dollar.

But there is within all of these organisations hidden wealth that is not; in many cases at least, being realised because the management style of many of the industry's leaders does not create an environment that unlocks its potential.

Just like many mining engineering students before and since, the syllabus for my degree included lectures under the heading "Management". I recall this broad banner encompassing lectures on such topics as economics, project planning and management, law, industrial relations and occupational health and safety.

You will note that nowhere amongst that group of subjects was the topic of "leadership". Whilst I have no doubt that this was reflective of the times, it is perhaps an indictment of the education system of the time that no one considered this subject to be important enough to warrant lectures on this topic.

The only source of insight into leadership, that we as students encountered, was provided informally via discussions with various lecturers and the staff at the test mine, on their experiences in management roles.

When I tell you that a large proportion of the mining engineers who comprised the mining department had worked in Africa, it would not be surprising to learn that their preferred leadership style was very "colonial" in outlook, harking back to the days when a white skin gave you authority and power.

I do recall having a slightly more enlightened discussion with one of the staff at the School of Mines test mine. This gentleman had worked overseas for Crown Agents when it was a UK public statutory corporation, overseen by the British Ministry of Overseas Development. He had managed a quarry for them in the West Indies.

I remember him explaining to us one day, that if we wanted to get buy-in to a particular idea, concept or change of work practice from our employees that we needed to find a way to engage with them and make them feel as if it was their idea. He suggested to us that if we had a new idea that we wished to implement then we should wander around the site talking to various employees; in particular those who would be directly affected, float the idea with them and then get them to come back to us with their thoughts. He expressed the view that in this way they would believe that it was their idea in the first place and would therefore be committed to its implementation.

You will gather from this description that it was still a case of the boss telling the employee how they were to do their job by the least there was some recognition that management needed to engage with the employees.

Personally I believe that it was naive to think that the employees would not weigh up for themselves whether the new method was an improvement on the old way or not, but that they might either decided that it was actually an improvement or the fact that management was talking with them was in itself an improvement.

Whilst mining degrees still include units on Mine Management, I must confess to not knowing exactly what this entails. I can only hope that it now includes something on leadership.

As I mentioned in my post a couple of weeks ago, the industry, unfortunately, still has a high proportion of alpha male types, for whom "my way or the highway” is a popular theme tune. They mistakenly believe that this shows them to be a strong leader who is clear in their purpose and therefore someone who deserves to be followed.

The truth is very different to their perception of strength. People follow them because to do otherwise could be considered a "career limiting" act, so people do as they are told but in many cases only half-heartedly and in the worst cases may look for an opportunity to move somewhere else as soon as possible.

Such leaders will never get the best out of their people no matter how vociferous they are in indicating where they are heading and how they will get there. They are, at their core, diminishers and their leadership style will always lead to their teams underperforming.

In boom times this under performance probably goes unnoticed, commodity prices are high and everyone is making good profits, companies are scrambling to attract and retain employees and employee turnover in the industry as a whole is high.

However, in more normal times and especially in bad times the deficiencies of this management style become stark. Output is lower than comparable operations, costs higher and turnover still high relative to peers.

Contrast this with the manager who engages with his employees, listens to their ideas and suggestions and facilitates their implementation, where appropriate.

Here I am not talking about the proverbial suggestion box. I mean real engagement, holding open discussions without the threat; real or implied, that anything negative that is said might be career limiting. But most importantly just listening to what your employees think about the business and the way in which it operates, the good, the bad and the ugly.

This is not to say such employee proposals or criticisms should go unchallenged. Part of the role of the leader is to challenge those ideas, to test them to ensure that the perceived or proffered benefits of a new method or approach are real and will benefit of the business. Where criticism of the business is raised, again it needs to be tested, those conversations normally run along the lines of, “you say that we never XYZ…..when was the last time……?”.

Not only should the leader test these employee orginated new ideas, it is their role to encourage others to do likewise and to build on the idea so that if it passes this testing stage and is implemented, that it is the best implementation of the concept that could possibly be achieved because everyone has had input into the execution of the change.

This approach ensures not only that the idea will improve outcomes for the business but as importantly, that those involved in the business are committed to it because it is in fact their idea and are therefore determined to prove that it is a better method than that which it replaced.

So to an extent the former Crown Agents, Quarry Manager was indeed correct. Engagement with the workforce is the key to unlocking this wealth within the business. But it is the power of people working together to implement their plan rather than one imposed on them.

Perhaps we would have more productive mines if a greater number of managers did less talking and more listening to their workforce.

In my post of 16 July 2015, I touched on the issue of strategy and strategic planning. I opined that there appeared to be a lack of strategic planning in the mining industry, although I have no doubt that many an MD and senior executive would protest that this was untrue.

So perhaps I should be more specific in my criticism and say that it is not that "strategic planning" sessions are not held, but rather it is the processes employed, or the lack of them and the quality of the discussion that takes place that I take issue with.

The Oxford dictionary defines strategy as:

“A plan of action designed to achieve a long-term or overall aim”

The origin of the word is from the Greek stratēgia, meaning "art of troop leader; office of general, command, generalship", which obviously speaks to its military origin.

Like most people in the resources sector I have been involved in strategic planning in the various companies for whom I have worked for much of my career . As with many of you I suspect, I have found the processes employed to have varied significantly from one company to another, both in terms of structure and content.

I have seen a number of methods employed to run "strategic planning" sessions, both good and bad. In its worst form it has amounted to nothing more than an MD or other senior executive leading the board and/or senior executives to a predetermined outcome. Typically such sessions have an agenda prepared and circulated in advance that pre-empts the matters that will be discussed before leading everyone to a preferred conclusion! In my mind this is not strategic planning. Such meetings are also often time constrained to ensure that the participants stick to the “script”.

It may well be that the MD or executive leading the strategic planning session has indeed been through a process in their own minds that led them to their conclusion or preferred outcome, but this is not a true strategic planning process.

A strategic plan needs to be contextual and needs to be owned by the group drawing it up, this can only be achieved if the process of arriving at the plan is open, engages all of the players and is free to take-up lines of discussion that may not have occurred to one individual in drafting an agenda leading towards their preferred outcome.

Maybe because I am an engineer I like structure and whilst an agenda is indeed a structure, it is not what I mean in this context.

To me structure in the context of strategic planning, refers to a structured process which guides the participants through all of be factors that they should consider in arriving at their strategic plan.

To date the best example of a structured process that I have encountered, is that which was used by Gold Fields in the mid-2000’s and is based on the book by Chantelle Ilbury and Clem Sunter called Games Foxes Play (GFP).

The Fox is used as a metaphor to describe how we should change our plans based on changing circumstances. As Ilbury and Sunter point out, Foxes do change their minds - when they realise they are wrong about something or something better exists out there.

The GFP approach is a two phase process. The first phase they call "defining the game" and comprises five steps:

1.    Scope of the game
2.    The players
3.    Rules of the game
4.    Key uncertainties
5.    Scenarios

They refer to the second phase as "playing the game", this too has five steps. They draw on the strategic insights gained in the first phase and take a more focused view of the possibilities ahead:

6.    SWOT
7.    Options
8.    Decisions
9.    Measurable outcomes
10.  The meaning of winning

Participants in the process engage in what the authors call a “conversational model” which is circular rather than linear, with each step of the process interconnected so that it can lead to a review of earlier material based on the conclusions reached later in the process.

A graphic, extracted from the book, showing this conversational model is shown below.

Source: Games Foxes Play, Ilbury & Sunter

The process also allows for the noting down during the course of the discussion, issues for potential action (IPA’s). This allows thoughts and ideas that may not relate to the immediate area of discussion or to be captured and incorporated later in the process if they are considered to have a material impact on the options and decisions.

The process is not quick and nor should it be. A strategic plan is an important document that will guide the actions of a company or a site for the next 12 months or until circumstances change significantly, in which event all good Foxes will reassess their strategic plan

Gold Fields used to set aside two days each year, for each of the company's site teams to go through the GFP process to arrive at the following year’s strategic plan. The budget was then shaped around the actions needed to achieve the strategic plan.

I will not attempt to lead you through the process that is not my purpose here. If you are interested in this area, then I would thoroughly recommend obtaining a copy of the book and reading through the process and maybe even encourage your company to use it for their next strategic planning session.

My intention was merely to raise it as a model of how a structured process can and does work. This one does happen to resonate with me, but I am sure that there are other models that work as effectively.

I also wanted to make the point that a company's strategic plan requires a commitment of time. Whilst the actual time may vary from company to company and process model to process model, I am firmly of the view that a sound strategic plan cannot be arrived at in a mere two hours!

For those who are interested in furthering their reading on strategic planning, I would also recommend [10] lessons from the future and lessons in radical innovation, both by Wolfgang Grulke.

Whilst not about process per se these books highlight how radical thinking can create new futures for a company that are currently not imagined.

In [10] lessons, I found it particularly interesting to read Grulke talking about the life cycle of an organisation and describing how, in the first half of a company's life cycle the focus is on customer value but in the second, it is on the business efficiency and costs.

He argues that inevitably companies become so large that an enormous number of people within the business are focused solely on managing the organisation, rather than focusing on what the business actually does. At this point smaller, more versatile companies start to take market share away from the established player.

Whilst mining, it could be argued, is different to retail or banking, which is where Grulke focuses much of his discussion, perhaps the analogy is in small and lean juniors acquiring the cast off assets of the majors and turning them from loss-making enterprises into profitable ones.

In conclusion, whether it is GFP or some other process model, I urge would you to adopt a structured process rather than an agenda for your next strategic planning session and give it the openness, application, diligence and time that it deserves because there is surely no more important an activity that you can undertake than to arrive at a good strategic plan.

References:

http://www.mindofafox.com/site/home

http://www.futureworld.org/PublicZone/Gurus/GuruOrg.aspx?GuruID=4485