Mining and Construction

Frugal Innovation for the Resource and Energy Industries

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Developing and Deploying New Technologies During the Lean Times

At the recent Real World Futures event, we heard from Professor Robert K. Perrons who talked to strategies in why and how to approach Frugal Innovation and its application and benefit to the mining sector.

So where has this come from… What’s changed?

Taking a systems view of the sector and its opportunity, Australia’s economy (Gross Value Added by Industry) in 2019, has the mining sector contributing 9.3% towards the Total GVA in Australia.  Within this, the energy sector delivered a compound annual growth rate (CAGR) of 10.2% between 2001 and 2019 and the resources sector a CAGR of 9.8% in the same period.

Total GVA graph :Source: Austrade’s “Why Australia?” Benchmark Report 2020 - https://www.austrade.gov.au/International/Invest/Resources/Benchmark-Report

Energy and Resources statistics from Source: Austrade’s “Why Australia?” Benchmark Report 2020 - https://www.austrade.gov.au/International/Invest/Resources/Benchmark-Report

Source: Austrade’s “Why Australia?” Benchmark Report 2020 – https://www.austrade.gov.au/International/Invest/Resources/Benchmark-Report

As we’re aware, the revenue and margins of mining organisations are tight and it’s becoming increasingly more and more difficult to continue trading in the same ways as the industry has relied upon for some time.
Introduce… Innovation.

The need for innovation

Most of today’s fossil fuel-based energy companies realize that they have to adapt or die. Innovation is crucial in order to identify agile and lean innovations to deliver new solutions and grow opportunities.

Rob Perrons presenting at the recent Real World Futures event

We need Frugal Innovation

Jugaad innovation emerged in 2012. “Jugaad” is a Hindi word meaning an innovative fix born from ingenuity and cleverness. Frugal innovation largely rooted in philosophical underpinnings of Jugaad innovation.

Let’s consider the six principles of Frugal Innovation, which are built from the Jugaad foundation.

1: Engage & Iterate

Instead of relying on insular R&D departments, observe your customers’ behavior in their natural environment. Large, corporate R&D labs based on “big science” and technology push are less common and less effective. There is an opportunity to iteratively go back and forth between the customer and the lab to refine designs and innovate.

For example: Intuit’s Quicken software for personal accounting. Here, CEO Brad Smith would hang out at Staples stores (like an American version of Officeworks) and offer to go home with customers to observe how they actually installed and used the product. He called this his “Follow me home” strategy. He wanted to see how customers used his product in their home to identify areas of improvement.

Another example: Fujitsu engineers worked side by side with mandarin farmers in Japan for several days to find ways to increase mandarin yields with digital technologies such as mobile phones and wireless sensors.

So how does this translate into the resource and energy sectors: We need more hands-on observing of new products being used by end user. We need to foster a different kind of relationship between technology suppliers and service companies.

2: Flex Your Assets

The industry needs to share resources. What production and distribution assets within your firm sit idle sometimes? Why not allow other firms (potentially even rivals) to use them?

For example: Mars, the global food manufacturer, cooperates with competitors to share a distribution vehicle fleet. And another example in Africa and India, it has been common for years for competing telecoms companies to share mobile phone towers—and Western companies are now doing it too.

We need to find opportunities for piggybacking. What other industries might need a network, distributed asset, etc. where you need a similar network to be? How can you share data with partners?

3: Create Sustainable Solutions

With the greatest of respect to the environment, not creating waste is the frugal answer! Recycle and take part in the circular economy where possible. Turning waste into wealth is where the opportunity lies.

For example: ATMI has created processes that remove gold micro circuitry from consumer electronics, which generates a bullion bar every two days!

Innovate with multipurpose products in mind. Is one process’ “waste” another process’ feedstock input? For example: Qarnot Computing from France accepts computationally-intensive jobs for their servers that generate a lot of heat, but then use that heat to warm homes and offices for free nearby.

4: Shape Customer Behavior

Customers are often more wasteful than the companies that supply them. For example: Unilever’s chief supply chain officer, Pier Luigi Sigismondi, estimates that half the company’s water consumption relates to how consumers use the product rather than what Unilever does directly.

Consider visualization. For example: helping consumers be more frugal with their energy use by making them aware of how and where they use it. Have them consider the social impact. Let customers know what their neighbors are doing can goad them towards frugality.

For example: Telling electricity customers the average energy consumption in their neighborhood on average reduces consumption by 2%. Think of how this could also be gamified.

5: Co-Create Value with Prosumers

The rise of the prosumer. This is where people who consume your innovation are now able and willing to help you produce it. This is partially fueled by a precipitous decline in the cost of 3D printers, open-source hardware, and open-source software. Everyone can become a MacGyver (or equivalent). Peer-to-peer sharing platforms make it easy for fellow enthusiasts to collaborate on projects for which they share a passion.

Customers will come up with great new uses/applications for your product that you never imagined. For example: IKEA created ikeahackers.net. One innovation of thousands: Grundtal toilet roll holder converted to headphone hanger. Give these customers a forum for sharing these ideas, and then pay attention.

How does this translate this to the resource and energy sectors: How can you democratize your innovation processes? Have you considered “Hackathons” which are already happening, but can you go further?

6: Make Innovative Friends

Open innovation is a two-sided coin. What innovations are being created by other organizations, industries, etc. that you could be using? What innovations are you creating that could be monetized in other sectors?

Don’t just protect your intellectual property—monetize it!

To explore how Frugal Innovation could be applied to your organisation or to enquire about courses on this topic, please contact qutex@qut.edu.au

 

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Adam Lenihan is a Corporate Partnership Manager at QUT, leading a portfolio of corporate education partnerships in the mining, resources, construction, and utilities sectors. Adam works with his clients to develop a thorough understanding of their executive and professional development needs to deliver high-impact, real world education partnerships and leadership development programs. Adam’s partnership activities for QUT have resulted in a range of specially designed programs that have harnessed the University’s capabilities to develop leaders and equip organisations with the skills and confidence to succeed in complex, ambiguous, future-focussed and emergent environments. Adam holds a Master of Business Administration (MBA), a Master of Security Studies, a Bachelor of Creative Industries (BCI), and is recognised as a Fellow of the Institute of Managers and Leaders (FIML) and in 2019 was awarded the Chartered Manager (CMgr) designation by the Chartered Management Institute.

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