Strategic Alignment: A Mining Industry Challenge

Strategic alignment throughout a mining organization is critical to effective strategic execution and good business performance. The alignment of strategic goals and objectives in the different operations and functions in a large global operation is a challenge facing executive management in light of legacy organizational structure and processes. An additional confounding factor in strategic alignment of acquisition and new project expansion is that mining projects and operations are frequently multi-cultural in terms of country origin as well as organizational culture. This brings together many cultures to accomplish the project or complete an acquisition (Financial Times, 2006). The mining industry presents numerous challenges to executives and mine management by the nature of the operation and organizational processes used in running it. For example, there seems to be an inherent conflict between the individual goals of the components that constitute a mineral processing operation (the mine, the mill, the smelter and the refinery), and lowest cost production of the final product. Managers of these component operations have specific objectives passed down from the corporate executives. Those site managers tend to be compensated based on throughput and perform to this main metric. This tendency to maximize throughput for an individual operation can contradict the general process flow of a best-fit solution to producing the final product at the lowest cost. In an effort to become more aligned, firms are increasingly using balanced scorecard derivatives at great cost and effort (whether internally or externally sourced) in an attempt to help with strategic alignment. Balanced score-cards have been effective in providing a good strategic scorecard to companies with some measure of strategic alignment. Many firms make this effort of using balanced scorecards. However, most firms are not strategically aligned or, at best, are sub-optimized, in terms of strategic alignment (Kaplan and Norton, 2006). The tendency in mining operations is to focus on operating individual components as optimally as possible and stretching existing assets to the best possible production rates. ?Making tons? is the common operational focus. Numerous factors underpin this focus and can affect the ability of the operation?s ability to align properly with the corporate strategy and strategic goals. Critical factors are legacy organizational structure, culture, processes and performance measurement systems. Changing anyone of these factors to affect better strategic alignment requires significant attention to managing change.