Broaden your vision: A talent perspective on how mining and energy boards can prepare for industry disruption
Energy & Mining International published a bylined article, “Broaden your vision: A talent perspective on how mining and energy boards can prepare for industry disruption,” authored by Russell Reynold Associates Consultant Jorge Gouveia de Oliveira. He explains that it will be critical for mining and energy companies to bring in talent from other industries to broaden the vision and build the capacity to capitalize on the disruptive forces. The article is excerpted below.
The natural resources sector – largely comprised of mining and oil and gas companies – is cyclical in nature. Companies operating in this sector have experienced both peaks and troughs over the past few years. Part of the price volatility has been driven by demand from China. In the medium to long term, in addition to regional volatility, some permanently disruptive forces will shape the future of the natural resources sector.
This set of disruptive threats includes increasingly affordable alternative energy sources. Emerging markets are now pursuing these sources so aggressively that they are predicted to eclipse developed nations by 2018 in their capacity to generate wind and solar power. Analysts predict that we may already be close to global “peak coal” consumption.
Additionally, the growing focus on electric cars may lessen the demand for gasoline relatively soon. UBS predicts that in 2025 14 percent of cars sold globally will be battery-powered, and in Europe, that share is expected to be one in three. Electric cars – along with smartphones and other high-tech products – are also fueling the demand for materials such as lithium, tantalum and dysprosium. Some of these developments also bring new opportunities to the sector. In particular, technology and digitization can have a positive impact on companies’ operating models and improve both safety and profitability.
Look to Other Industries
To adapt to this new operating environment, mining and energy companies need talent who understand the changing nature of their end-customers, are able to help diversify revenue streams appropriately and can build partnerships with the new industry players. It will be critical for these companies to bring in talent from other industries to broaden the vision and build the capacity to capitalize on the disruptive forces, lest they find themselves on the outside of a new natural resources ecosystem.
There is already evidence of a commitment to evolving the leadership profile, especially among senior executive appointments. Recently, we have seen major oil companies appoint chief digital officers at either the group or division levels. Mining companies are also integrating more digital talent, albeit not necessarily in an explicitly digital role.
Moreover, these roles might not remain distinct for long. As digital technology becomes a cornerstone of natural resources companies’ businesses, it is likely that the line between digital roles and business roles will increasingly blur.
Senior executives from other industries, such as technology and automotive, can help mining and energy companies develop a perspective that accommodates the new elements of a changing natural resources sector. Not only is it important who this talent is, but it is also important where this talent sits. It is the boards of directors of natural resources companies that steer strategy, and creating space on these boards for professionals who bring an outside perspective is important for two reasons.
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