Engineering, Sarah

Implementing blockchain in the mining industry


So far we have run through what blockchain is and its component parts, and investigated the benefits and drawbacks associated with these. Once an organisation determines the benefits accrued outweigh the drawbacks then it will need to implement the technology. Anyone with any experience of change management, large or small, will appreciate this comes with a whole new raft of challenges. This blog will investigate some roadblocks for the implementation of blockchain in a mining company that have been identified by running through Kotter’s 8 Step method for change management. If people are interested I could always write a whole other series on change management models 😛

I’ve decided that blockchain will prove very beneficial to my organisation, where do I go from here?

In this case you will first need an in-depth understanding of the organisation, structure and culture in which this change will be implemented. Factors to be considered include the scale of the organisation, how joined the stakeholders are to the culture of the organisation, the duration and timing of implementation, and the overall goals associated with the strategic direction of the company. Implementation of organisational change is not guaranteed to succeed, and (Iveroth, 2011) states that 75% of organisational change efforts that involve technology will fail, a higher failure rate than most organisational change initiatives. It is suggested this is due to the managers preoccupation with the technology itself, its functionality in particular and what that can bring to the organisation and the structural aspects of change such as the change message and plan, and in doing so they pay less attention to those involved and impacted and their social activities. As a technical person I often run in to this problem myself and sometimes as engineers we need to take a step back and consider the technical, structural and social aspects of the change or design we are currently working on or looking to implement.

What barriers to change or roadblocks are we likely to encounter along the way?

A vital step to implementing change is the removal of barriers. Typically, these barriers could include inefficient processes and archaic norms, complacency, and in the case of global supply chain management outdated legacy procedures. Managers may even need to recognise and alter their own management practices if they are too bureaucratic and could impede change. A common barrier to technological change is the resistance to change by employees. Employees may resist change, in particular technological change, as they lack the skills to use and gain benefits from this technology. Within the mining industry new tech is often applied to the automation of high-risk activities and associated with organisational restructuring and a change in the power base as the skilled work involved in production or processing is removed and power shifted to technically skilled staff with specialised education. This is likely to happen with the implementation of blockchain in supply chain management as manual jobs such as data entry or administration are removed from the supply process and replaced with automated tracking systems that all parties involved have access to on a private enterprise blockchain.

To counter this resistance, managers need to communicate the bigger picture and explain how the application of new technologies will change how business is done, processes are executed and how the business model is changing using different media available to mobilise for change. Management needs to create an understanding within the organisation of the need for change and instill a sense of urgency regarding this change as well. An example of this was seen when Ericsson completely restructured one of their business units whilst also implementing an enterprise resource planning system. Managers at Ericsson understood that the larger the common ground created between all parties involved, the simpler the future change would be and effort was spent in relation to communication of the external forces such as globalisation and technology that were contributing to new competitive telecommunications market situation featuring new competitors customers and markets and the internal sense of urgency created by financial difficulties (Iveroth, 2011).

Implementation of blockchain for supply chain management by its very definition will involve multiple departments so the organisational structure itself may present a large roadblock. From my experience mining companies tend to operate in silos with little thought given to those upstream or downstream from the production unit an individual employee is part of. This has been shifting for the better in recent years with the rise in popularity of the mine to mill movement where technical staff are encouraged to think about how their department and processes impact the overall mining cycle. This same focus should be applied to the supply chain and departments encouraged to consider the stakes for other departments and the organisation as a whole.

A change as significant as the implementation of blockchain into the supply change will be a difficult sell in a traditionally conservative mining industry. Blockchain is a transformation driver but is still seen as novel by some so the vision and initiative presented at this stage really needs to address the concerns the organisation may have regarding new technologies. Typically, within the mining industry new technologies are introduced to automate work processes often resulting in redundancies so this issue must be addressed before managers will be able to receive any buy-in from employees. Industry wide there has historically been an aversion to or inability to define and undertake change management to properly integrate emerging technologies, possibly attributable to the capital-intensive nature of the mining industry with high barriers to entry. On the whole operations produce standard products so product innovation which is a feature of other industries doesn’t play a large part in operating mines, so mines have historically not sought out innovation (Jordaan & Hendricks, 2009).

This great, now we have all the benefits, drawbacks and implementation roadblocks on the table

Looking back at the previous post as well the drawbacks and implementation roadblocks identified can be split into two categories. From a technical standpoint, as blockchain is an emerging technology there is currently a lack of a clearly defined governance and regulation framework which would no doubt trouble an established miner committed to operating to accepted global standards, the security of blockchain itself has been questioned regularly since the launch of Bitcoin and other ICOs and transferring commercially sensitive data across a non-secure public network raises immediate red flags, and the speed and volume of transactions that can be validated is far below that of public systems such as Visa. These issues can be primarily addressed by implementing private blockchains within companies and along supply chains instead of public blockchains. This enables companies to have far greater control over their data and improved forecasting and planning for the volume of transactions required.

The second group of challenges arise during the implementation of blockchain within an organisation. As an emerging technology there is generally a lack of understanding amongst executives and the wider workforce regarding blockchain, what it is, useful applications and how it can assist organisations. This lack of understanding will make it more difficult to communicate the change message throughout the organisation and gain traction this way, and choosing initial guiding coalition team members may be more of a challenge as they need to be able to digest and then further communicate the benefits of blockchain and reasons for change. This implementation will then occur in an industry that historically has not embraced technological innovation and whose multinational companies are most often composed of silos that stifle the flow of information and innovation.

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