Rare Earths and Wicked Problems

April 8, 2010:

To actually accomplish anything complex, and which has multiple goals, the “wicked” aspects of a situation must be considered (a wicked problem is defined somewhere in the Compression Map). But work organization leaders realize that focusing groups on simple goals is easier than challenging them with complexity. “Go for it” stirs emotional juice; “Think this through” doesn’t. And parties completing only in self-interest in the long run may advance the interest of none.

This kind of situation is typified by a problem that’s urgent, but slow trickling into mainline news — shortages of rare earths: lanthanum, neodymium, cerium, yttrium, and other elements hard to remember unless you deal with them directly. But all of us depend on them indirectly: in fluorescent lights, computers, i-Phones, lasers — all kinds of high tech toys, including military and environmental ones. Hybrid vehicles are pigs at the rare earth element trough. The Prius uses about 10 kilos of lanthanum in its battery and 1 kilo of neodymium in its electric motor. Super-efficiency motors and generators, including wind-powered ones, use neodymium magnets.

China is now the world’s exclusive source of rare earths. In 2009 it mined 97% of rare earth ores, refined 100% of the world’s ores, and made 80% of all precision super magnets. A third of mine-grade rare earth deposits are in China, most of it mined by government-owned Baiyun Obo, not noted as a benchmark for safety or environmental responsibility. Outsiders rarely see it. A Daily Mail report is an exception.

Global demand is rising at 10-15% per year, outstripping Chinese supply capacity. Chinese strategy is simple: Max output; restrict exports; and invest in foreign sources. To China, it makes business sense to export finished products containing rare earths, rather than exporting rare earths. You can start your own dispassionate review of the dull facts with the USGS Annual Survey.

An outdated description of rare earth mining is to inject strong acids down a bore hole and pump up a slurry to become the mother stream for refining. Processing rare earths still uses a lot of hazardous materials, so it’s easy to see why the United States’ primary mine, Mountain Pass in California, was closed in 2002 for environmental non-compliance. Equally crucial, it couldn’t meet the China price. Mountain Pass re-opened in 2009 under Molycorp Minerals, owned by Chevron; volume production not expected until 2012-2014.

Rare earths exist everywhere, but not in mine-grade concentration. Explorations could hit a strike, but private investment in mining and refining fizzled. Small operators could not raise enough capital.

Large companies’ strategies are to assure their own future access to rare earths. Some might invest in new mines; some like GE are helping the Chinese improve their internal operations. Most drift to the obvious: locate near critical material supplies — China.

China is aggressively investing in start ups; last year it rescued Lynas and Arafura in Australia. And China has now taken the world lead in alternative energy applications. If you are feeling the squeeze, tracking this obscure story is a must. Initial reactions to it vary. Its full implications for a world in Compression take reflective thought.

If your company or your suppliers depend on rare earths, this squeeze is immanent. A few companies are seeking technical substitutes for rare earths; some study recycling. But technical miracles are unlikely to materialize soon, so companies dependent on rare earths need to shift vigorous learning into high gear using learning systems and open dialog exchanges — long term think-through that stimulates action rather quickly. So what might a Compression Thinking review look like?

It provokes strategic thinking more fundamental than how to boost sales or improve operations. What’s our role in the world? Do we need a different “business model?” How do we interact or collaborate with others? But factors considered may be highly technical, from all different directions, involving nitty gritty detail. For example, if you are in the wind generator business, is there a way to completely redesign one that works at least as well with a less efficient generator. Or what’s a completely different path for harvesting electricity from wind? Or do we work with a energy source other than wind? That is, what’s our mission and goals? Do we need a change?

Once they have purposeful direction, scientific logic and structured group learning systems (like PDCA-based systems) work well if we throw off our human behavioral waste. Schema for this, like DMAIC are common. But learning to control impulses is learning too, emotional learning, so that we can openly work the wicked aspects of problems where not all meeting agendas may be “on the table,” and for various reasons, some dominate while others are reluctant to speak up. Dr. Deming aptly summarized what we must do as “Drive Out Fear.” But how?

Fixing this seems easy if one is not emotionally invested in a work organization. But inside it everyone is emotionally invested to some degree if they are engaged at all. An owner or manager with hire-fire powers has to initiate the trust necessary for everyone else to fully invest their energy and imagination. And everyone else must be able to relax their wariness of other’s status roles and ambitions.

Frameworks to address broad issues have long been available; an example is Edward de Bono’s collection. Dialog tools for group resolution of complex issues are proliferating in software, with web sites dedicated to mind-mapping. The Compression Map is a form of mind map. Lack of “tools” does not hold us back; it’s cultivating the emotional control for systemic thinking, whether using tools or not. That takes practice until issue-focused behavior becomes the group norm. The Organizational Development community has wrestled with this behavior for years.

This week the EPA crackdown on West Virginia mountain top mining plus the Massey Energy mine explosion were reminders of how far we have to go. The explosion tragedy cued up some old themes. Regulators and union representatives expressed regret, remorse, and proposals to do better – and used it as a talking point to bolster arguments on old conflicts, with posturing by Massey CEO Blankenship and others. Only two weeks ago some of the same people were congratulating the mining industry on a trend of safety progress, but old attitudes die hard.

Compare that performance with the auto industry today. Both the public and the auto industry now demand vigorous responsibility and performance. CYA cools no heat for a company on the griddle, not even Toyota. And in Compression we have to move well beyond auto industry performance today.

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