Lessons from the mining boardroom frontline
Debate is more important than answers. That was the big take-out from the recent MPi Boardroom Forum.
Lessons from the mining boardroom frontline
Debate is more important than answers. That was the big take-out from last week’s Mining People International (MPi) Boardroom Forum, where leadership in mining was a hot topic for discussion.
As a nod to my non mining industry readers, these take-outs are universal.
We had a diverse line-up of 13 attendees at this month’s event, all of whom were Principals, Managing Directors, Non-Executive Directors and Chairs of mining companies.
More on the take-outs in a moment. First, here’s how the conversation went.
The topic
The central presumption of the forum was that as the incredibly volatile mining sector sees commodity prices recover, companies find it easier to raise money, list on stock exchanges, explore and develop projects, and undergo other such fundamental changes to their business activity. Therefore, these companies are likely to require fundamental changes to their board and senior executives — and often quite quickly.
For reference, here are the questions put to a two-person panel that initiated debate from the room. I’ve included a very brief answer on each one but the debate itself was fascinating. Look out for the key takeaways below though.
- Do you actually agree, that the boardroom “needs” to change in all cases?
No. - When is the right time to introduce the idea of change?
At the start, before it is needed. - How do you manage the fluidity and cyclical nature of capital markets?
If moves are needed, we tend to make them earlier rather than later. They’re going to be needed eventually and beginning too late is more likely to be fatal than being too early. - What if there is disagreement on the need for change and how should relationships be preserved (if indeed they should be)?
The greater good is what’s best for the whole shareholder group. If needed, someone just has to have the tough conversation. - How much consideration should be given to the financial impacts on founders and long-term shareholders, particularly where sale events might be triggered?
Refer to answer four. - At what point do the three best mates who had an idea and started the business, call in independent help – and is it your experience that they do in fact usually need to?
It’s almost impossible. Three close founders can render an independent director less effective than a shop mannequin. But if there is real willingness to listen and a fearless independent can be found, it is probably better to begin with one.
Repeated emphasis on the word “if”.
As you can imagine, these questions created a lot of energy in the room and were hotly debated by our very experienced group of attendees. It’s worth noting the key takeaways from this discussion are relevant to any industry experiencing rapid change, not just mining. So, what were they?
So, what were those key takeaways?
There are too many subtleties to really do the discussion justice, as you can imagine, but broadly, here are the takeaways:
In mining
The ore body and where it is rules pretty much everything – along with where your major projects are on the development time line and the commodity market cycle.
These things govern everything, including the optimal mix of board and senior executive skills. And, yes, this will change over time.
(This doesn’t sound earth-shatteringly unique does it?)
There was one other key learning.
In any business
As I said up the top, it’s not just about the answers you come to, what’s more important is the debate around them.
Ensure everyone accepts from the start that when it is their time to stand aside and let someone else take a part of the business forward, they will be willing to have the debate and do the best thing for the greater good. If they aren’t the kind of people who are willing to do that, frankly you should be able to see that at the start of the relationship and simply not go there, as it will inevitably end in failure.
As one of the panelists said, “everyone needs to adopt the playbook that says we’re one team, all working for the same objective (success); we work hard and will get out of the way if circumstances require it.”
A bit about MPi Boardroom Forums
We run two or three forums a year. The next one is in March 2018. Participant numbers are strictly limited and by invitation only. If you’re a director or chairman and would like to participate, or have an idea for a topic, please email me directly at steve.heather@miningpeople.com.au.
This is my last piece for the year so if I don’t see or speak with you again until next year, thank you for reading my thoughts throughout 2017 and thank you for getting to the end of this piece.
You have my best wishes for a restful few weeks and a successful 2018 ahead. In the meantime if you need help accessing some broader quality mining executive talent pools then get in touch. steve.heather@miningpeople.com.au