Rio chief focuses on collaboration to achieve global goals

Rio Tinto Iron Ore chief executive Sam Walsh delivered a thought provoking presentation this morning with a central theme around business success being built on collaboration and communication.
Mr Walsh - who noted he was a avid reader of our Daily Business Alerts - unveiled the essence of what he'd learned during a 35-year career spanning the global industries of car manufacturing and mining at a WA Business News Success & Leadership Series speech entitled No man is an island - how lessons from a global career drive decision-making.
In brief, Mr Walsh said the simple guides were
- Be bold, set clear plans and then measure, measure, measure to make sure your initiatives are actually being implemented
- Bring a global mindset to your organisation and make sure it is adopted so the world does not leave you behind
- Constantly innovate, collaborate and regenerate, or you will wither and die
- Listen to your heart and head and lead with practical commonsence not untried theory

In spelling out his first point, about being bold, setting clear plans and then measure, measure, measure, Mr Walsh said that he learned a lot about this from the Japanese during his time at Nissan, and still has a deep respect for their management practices.
"The Japanese painstakingly defined a problem, then developed the correct data to measure and analyse it and detect the trends," he said.
"They were then able to develop clear plans and implement them in a way that eliminated many of the knee-jerk reactions we see in Western decision-making methods."
Mr Walsh said Japanese method can be slow but the benefit of its systematic, information-based approach is that implementation can be "blindingly fast".
In short, there was no need to second guess or revisit decisions.
"The data gathering and analysis process is also very consultative, which is the essence of good leadership," he said.
"It encourages communication and reporting from the beginning and ensures management involvement from the very start of a project.
In the past few years, Mr Walsh said Rio Tinto had also focused on the fast and effective capture of data to guide its decision-making and to allow continual measurement of its plans.
"We are using current conditions to invest the tens of millions of dollars required to upgrade our information technology and systems to support this decision-making approach well into the future," he said.
"As a result, for example, the implementation of our expansions has been excellent.
"Since 2002 we have been bold, our plans have been clear and their success is measurable."
"Nearly US$3.7 billion of expansion projects have been approved and progressively completed in the Pilbara in the past four years.
"These projects are increasing our annual export capacity by 66 million tonnes.
"By 2008, our ports will handle annual shipments of almost 200 million tonnes of iron ore.
Mr Walsh said that he was a big believer that front line employees were best equipped to make decisions about front line issues, from new rosters to performing activities safely.
"I'm not on our sites every day," he said. "But they are."
"Rules, procedures and lists can't prescribe every activity.
"Many decisions are better made by the people in close contact with the issues rather than management."
With regard to his second point about adopting a global mindset, Mr Walsh said this was very valid, yet difficult, when a company had primarily Australian operations.
"Even major companies can fail when they venture offshore," he said - without naming names, though Australian industry is littered with bad examples.
"Frequently it's because they lack an understanding of the real world beyond our shores.
"Yet, if we don't know where the rest of the world is heading we will quickly be left behind.
"I learned early in my car industry career that common systems, collaboration, sharing of best practice and a focus on standardisation are the hallmarks of a successful global operation.
He mentioned McDonald's restaurants as a good eample of putting this into practice.
"An equivalent example at Rio Tinto Iron Ore is our current adaption and implementation of the Toyota production system," Mr Walsh said. "It focuses on developing one best way of doing things and rolling it out globally.
"The Pilbara has become our laboratory for developing and testing new ideas to find the one best way of doing things.
"The results are then applied to our operations elsewhere in the form of common systems and best practices."
But the iron ore chief said this kind of global knowledge transfer is not simple.
"The Japanese have perfected it by moving key leaders and specialists outwards to their global operations," Mr Walsh said.
"At the same time they bring their offshore operational employees to Japan to learn exactly how things are done in practice."
In speaking to his third point about being innovative, collaborative and regenerative (or face whithering and death), Mr Walsh said from his start at Rio Tinto it had been open to this approach.
"When I joined Rio from the motor industry 15 years ago, I immediately became part of Rio Tinto's innovation, collaboration and regeneration process," he said.
"My knowledge of mining was limited.
"It didn't matter. I had 20 years worth of ideas to put on the table. "Importantly, they were ideas that were new to Rio Tinto, ideas that could lead to innovations and the Group was open to them."
Mr Walsh said he saw strong parallels in car manufacturing and mining.
"Both use equipment, skills and technology to deliver a product," he said.
"Admittedly car manufacturing has an added emphasis on design, while mining focuses on exploration and then logistics.
"Few people understand that one of Rio Tinto's most important innovations involved transferring manufacturing systems to mining. Our Pilbara One Mine System was established in the late 1990s and has effectively reproduced an assembly line.
"Instead of viewing our mine sites as individual export operations shipping individual products via a port, we operate all the mines as parts of a single assembly line.
"We see ourselves operating one large mine, not 11 individual ones.
"So, in the same way a car is put together, our exploration, mine planning, scheduling and product flow in the Pilbara also come together at a final point - our port.
"The innovations behind the One Mine System have been largely responsible for our success today.
"It gave us the flexibility to increase production to meet Chinese demand, create new product lines and absorb new operations when we took over North's interest in Robe River in 2000."
Much of the decision making behind this came down to leadership of a team, he said.
"Modern leadership is effectively a team effort," Mr Walsh said.
"It involves constant collaboration and engagement of individuals, teams and external stakeholders.
"The more this occurs the better the result.
"Failure to do so is why many businesses fail or do not reach their full potential.
"Unfortunately, many large companies face leadership problems caused by inbreeding in their senior ranks.
"This occurs through the failure to bring in new people as part of a properly planned process of regeneration."
In his final point, Mr Walsh focused very much on leadership - listening to the heart and the head.
"The importance of leadership in delivering and nurturing success, whether organisational or individual, has been a recurring lesson in my career and personal life," he said.
"My observation is that accomplished leaders have high ethical and moral standards and strong values that they carry from their personal lives into their business lives and vice versa.
"In short they are able to listen to both their head and their heart before arriving at a decision."
Perhaps a delivering a gentle backhander to some who operate in the diverse mining community, Mr Walsh said that not all leaders had this.
"There are of course leaders with questionable standards, but they are often transitory successes and history does not judge them kindly," he said.
"The role of parents and mentors in helping establish the moral compass of future leaders should never be underestimated.
"This is an important point for those of us in business who employ or train young people.
"Our leaders are taught to be themselves, to play to their strengths, to take into account the views and opinions of people around them, but ultimately back their own judgement and stick with their bold decisions and clear plans."