Executive Summary
April 2016
Open innovation, a fad or a need:
An observation in the Norwegian mining and quarrying industry
 Do you think that you cannot survive anymore with your existent products and markets?
 Do your current equipment meet your goals in terms of energy consumption?
 Do you need to increase the yield of minerals and products?
 Do you feel frustrated throughout the process of mining permission?
 Do you need to make your operations more environment-friendly?
 Do you want to contribute in the current demand for decreasing unemployment rate?
As a part of my PhD research, I got the opportunity to interview a dozen people in the
Norwegian mining and quarrying industry, in order to gain a comprehensive understanding
about “external knowledge flow and its effect on innovation” in this industry. The interview
was done during December 2015 & January 2016 and includes people from mining companies
(working on different minerals), public authorities, research institutions, the industry
association and the mineral cluster. The insight from the semi-structured interviews was then
combined with related documents and reports to complement the required data and enrich the
analysis.
Why the industry need innovation ever?
The mining and quarrying industry in Norway is currently facing several challenges as
addressed in the above questions. These and some other similar challenges are now quite
common in the mining and quarrying industry of Norway (Though they are not specific to this
industry or even this country). No matter if we are talking about a small company or a large
one, these might be the case, but in different levels and intensities. Hence, companies need to
do some changes in their way of doing business. It does not mean that innovation can do miracle
and will respond to all the challenges, but at least, it’s an important and influential part of the
solutions for these issues. In this case, I will define innovation as either the implementation of
a completely new or improved production process, introducing a new or improved product to
the market, or the use of a new organizational or marketing practice. Firms need innovation in
order to survive, to grow and to get advantage over their competitors. Some innovations target
higher levels of economic benefit, such as reduction in costs (for example energy consumption)
or increased yield, and others are derived by environmental and social requirements, which are
Babak Ghassim
Email: [email protected]
Office: +47 77 62 08 16
Mobile: +47 48 65 29 22
PhD Candidate in Innovation
School of Business and Economics
UiT The Arctic University of Norway
1
Executive Summary
April 2016
obligatory by the related authorities. Therefore, innovation is fundamental for making more
money while being more responsible to the society.
Modes of innovation in mining industry
The base of all types of innovation is
knowledge of some kind, which might be
the result of research activities or
experience (learning-by-doing). Thus, a
central question for innovation is how can
a company get access to the required
knowledge? As the figure shows, a
company might develop an innovation
based on internal and/or external
knowledge. The type of knowledge might
also varies; whether it is derived from
research or experience. Combining these
two dimensions, four basic types of innovation could be distinguished. It should be noted that
an innovation might be the consequence of combinations of two or more types of knowledge
described above. For example, a mining company might innovate by buying a ready-made
technology or license from a supplier (external knowledge) and use internal knowledge for
installing the equipment into its current extraction/production process. On the other hand, the
knowledge might be created through internal R&D projects or truly collaborative means.
This situation reminds us of the prominent question of “make or buy”, which is significant in
several aspects of managing a business or even in one’s personal life. Obviously, a company
could not sit and expect that all its required knowledge and technology will be developed by
others and then be available for purchase. Even in those situations, there are many obstacles for
the company in order to make use of a purchased technology and integration of external
knowledge. Therefore, companies have to be open in sharing their problems and experiences,
to ensure that the right knowledge and technology is flowing into their business.
This is where the new innovation approach lies, i.e. open innovation, as defined by the
intentional flow of knowledge into and out of a firm’s boundary. Within this new era of
innovation, companies can no longer survive on their own R&D efforts and internal knowledge,
but look for new and more open modes of innovation. This phenomenon has several reasons
such as increasing global competition and rising R&D costs, facing more complex and
intractable technical problems, increasing mobility of skilled workers, ubiquity of the internet
etc.
Babak Ghassim
Email: [email protected]
Office: +47 77 62 08 16
Mobile: +47 48 65 29 22
PhD Candidate in Innovation
School of Business and Economics
UiT The Arctic University of Norway
2
Executive Summary
April 2016
Open innovation: is it something for the mining industry?
During my first days of research about this topic, I attended the Arctic Frontiers conference and
discussed with a few people about their attitude towards innovation. Not surprisingly, most of
them refer to purchase of on-the-shelf technologies, as the only way of innovation in their
company. “Is it like getting a nice concept from some flashy and high-tech industries and then
try to push the mining industry into that?” An examination of mining companies in other
countries and also of the Norwegian firms in the similar industries (such as oil and gas) showed
that they are actively using external knowledge in their innovation process. Goldcorp, a
Canadian gold mining company, systematically disclose its exploration problem and
proprietary data to get ideas and solutions from outside the company, ended up in outstanding
economic results. Anglo American initiated an open collaboration forum including different
stakeholders such as suppliers, research groups and peer companies to find more efficient and
more sustainable ways to unlock mineral value. LKAB had done it several times via
collaborative technology development with some of its suppliers. Maybe with these names, you
get the feeling that open innovation is something for large companies. But actually, this is not
true. These giant companies took a big step towards collaborative and open innovation, but
several other practices are available for accessing to external knowledge in your innovation
process. Attending at the conferences while looking for scientific and market knowledge, doing
collaborative R&D projects via the Mineral Cluster Norway and the like, collaboration with
suppliers and specialized institutions in developing and/or improving production facilities,
interaction with peer companies at the meetings or technical workshops of the Industry
Association, cooperation with customers for introducing a new/improved product etc.
Moreover, you might source the required knowledge through monitoring of scientific/technical
publications, direct purchase of license/technology and employing skilled worker.
cooperation with
current and/or
potential
customers
general meetings
and special
committees of the
industry
association
searching in
scientific/technical
publications
conferences and
exhibitions
external
knowledge
collaborative R&D
projects with
research institutes
collaboration with
supplier(s)
Some exemplary sources of external knowledge and practices of open innovation in the mining industry
Babak Ghassim
Email: [email protected]
Office: +47 77 62 08 16
Mobile: +47 48 65 29 22
PhD Candidate in Innovation
School of Business and Economics
UiT The Arctic University of Norway
3
Executive Summary
April 2016
The current state of open innovation in the
Norwegian mining industry:
The interviewees collectively agree upon the
point that Norwegian mining companies need
to go out of their organization’s boundary
mainly because of their small size and lack of
technological/market knowledge. This is
interesting in a way that it contradicts the
common (incorrect) belief of assigning open
innovation to large companies. The findings
generally shows that personal interactions and
supplier-user collaborations are the two most
frequent practices of open innovation in this
industry. As the study is more concerned with
Word cloud from the interviews, which shows the
sources of knowledge, practices for getting in
most prominent terms being used by the interviewees
the external knowledge and linking the
knowledge to innovation, below are the main points derived from the content analysis of the
interviews about the so-called themes:
Sources of knowledge
 Collaboration with suppliers is a fully win-win situation for both sides. Although there
are already some evidences for this kind of interactions, the industry need a closer
contact between mining companies and suppliers to come up with more innovation. The
proximity with the strong supplier industry in Sweden and Finland is a great opportunity
in this context
 The approach towards “Green Society” is a great opportunity for this industry,
especially for product innovations. Besides collaborating with existent customers, the
mining industry in Norway have the opportunity to access new markets by developing
new applications for their raw materials, as some companies in Norway are already
engaged in such activities
 Since local communities and stakeholders influence a lot in the permission process, an
open approach towards communication and using their knowledge will facilitate the
process a lot. Innovation could also happen in your organizational processes
 Compared to the underdeveloped mining supplier industry in Norway, the oil and gas
supplier industry is quite mature and innovative. Based on several common technical
Babak Ghassim
Email: [email protected]
Office: +47 77 62 08 16
Mobile: +47 48 65 29 22
PhD Candidate in Innovation
School of Business and Economics
UiT The Arctic University of Norway
4
Executive Summary
April 2016
areas between these two industry, mining companies could take advantage of being
connected to the knowledge in oil and gas sector in Norway
Practices for getting in the external knowledge
 Being a small business community, Norwegian mining companies shows more desire
to work in smaller joint projects and networks. Alignment of partners’ expectation, trust
and mutual understandings are the most important success factors for any types of
collaboration
 Many people working in research institutions have experience from the industry, and
this will help a lot in the flow of scientific knowledge
 As mining companies are mostly acting in B2B markets, they have limited opportunity
for product variation. The industry should try to be connected to more relevant process
industries and end-users, be familiar with their needs and involve them in new product
development
 You might not always find the required knowledge in Norway or Scandinavia, further
it could be harmful to be locked-in to your region. There are already several instances
of successful international collaboration in this industry that you can learn from
 Strong connections among limited partners including companies and research institutes
is a good starting point for open innovation, however not enough for long-term. After
some time, there might not be something new to learn in close relationships and network
Linking the knowledge to innovation
 Having research competence in the company will increase the possibility of being
connected to external research-based knowledge, and therefore the possibility of
innovation
 In most cases, the fear of losing proprietary knowledge of the company is unreasonable.
There are many success examples of mining companies who benefit from actively
sharing knowledge with the others, even their competitors
 Many innovations in this industry are as small improvements in production processes,
based on the employees’ learning-by-doing. Interaction with the relevant partners such
as suppliers and other companies in the industry will sharply improve the internal
competences
Babak Ghassim
Email: [email protected]
Office: +47 77 62 08 16
Mobile: +47 48 65 29 22
PhD Candidate in Innovation
School of Business and Economics
UiT The Arctic University of Norway
5
Executive Summary
April 2016
Managerial takeout to benefit from openness
Even though a company doesn’t have a full open innovation plan, these small steps will show
the benefit of being more open towards innovation and prepare the company for bigger jumps:

Don’t stick into one-to-one partnerships with suppliers and try to involve a group of
them on a specific challenge.

Getting access to the relevant scientific knowledge doesn’t always need to be via formal
R&D projects. Try to get in touch with research institutes at the several relevant meeting
points, and also build your own communication way via regular meetings and exchange
programs.

Broaden your personal as well as formal connections, both within the businesses and
academia. Plan for and be active in the industry association, the mineral cluster, mining
and mineral conferences and exhibitions, EU projects etc.

Norwegians are globally famous for high levels of trust. Use this, then you can much
more easily be open when it comes to sharing your history. Remember that in most
cases, you will get knowledge if you give it in the other way.

Hold an open competition on your key challenges: design an open call to stimulate a
broader range of ideas and solutions to your company.
Future steps of the research
In this document, I briefly presented the outcome of my research so far and I hope that my PhD
study will result in practical implications in the end. I believe that the topic is essential both for
businesses and for policy-makers, to help the industry be economically and environmentally
sustainable. To my knowledge, this is the first innovation research in Norway (and I did not
find any similar one elsewhere) that focuses on mining and quarrying industry. In this regard, I
make my PhD per se “an open research arena” and your comments are always welcome. As the
next step for this research is doing a large-scale survey in the whole industry, your contribution
is crucial to help me bring it forward and achieve the above purpose.
Babak Ghassim
Email: [email protected]
Office: +47 77 62 08 16
Mobile: +47 48 65 29 22
PhD Candidate in Innovation
School of Business and Economics
UiT The Arctic University of Norway
6