Strictly Boardroom has been exposed to more than his fair share of strategy frameworks over the years – some better than others.

Whatever the chosen framework, however, in formulating and executing a winning strategy, one aspect remains constant: companies should take CARE with all their deliberations.

So here is yet another strategy framework – where C is for corporate-level strategy; A is for asset-level strategy; R is for risk considerations and E is for economics. Get that lot right and you’re very much on the right track.

Corporate-level strategy is an overarching guiding light. All strategic actions must align with the corporate vision and mission.

The right commodities and geographies are two degrees of freedom that need to be considered carefully – along with the right value chain footprint, the right combination of exploration, investment, development, mining, processing and trading/marketing as principal activities.

Capabilities also loom large in respect of corporate level deliberation. Doing what a company does best is the overarching factor to consider here, so companies need to know what their corporate capabilities are (most don’t) and whether any of those skills are truly distinctive.

Capabilities are hard assets but sourced from softer, skill-based, origins. So cash is not a capability but rather an enabler of strategy.

Some capabilities are scalable while others are not. Consequently, some capabilities are worth far more than others.

Asset-level strategy is the next tier down from the corporate-level deliberations.

Getting portfolio decisions right is where strategy “hits the road”, so to speak. Errors here take a long time to fix, whereas the right decisions are company-making decisions.

Right team, right approach but wrong asset is a very common error-type.

Risk is the most critical of filters applied to strategies.

Technical risks are generally well understood by minerals companies – even if they can still cause almighty problems. That is, even companies with strong skill-sets in geology, mining, metallurgy and marketing can still get it horribly wrong from a technical perspective.

Non-technical risks can arguably harbour even greater challenges for companies and are an area where the minerals sector is still building expertise*.

Social licence to operate is the current catch-cry – with companies aiming to backfill capability in such disciplines as community consultation, environmental best practices, government liaison and achieving a fuller understanding of the impacts and risks of dynamic mineral policy and legislation the world over.

Economics is the final frontier of strategy.

Nobody has yet developed 20:20 economic foresight but through tools such as scenario planning it becomes evident that some strategies are more robust to potential changes in both micro and macroeconomic factors than are others.

An understanding of future commodity prices and their drivers is only the starting point.

Good strategy is a tall ask indeed – and an exercise that should clearly be approached with great CARE.

Good hunting.

Allan Trench is a Professor at Curtin Graduate School of Business and research professor (value and risk) at the Centre for Exploration Targeting, University of Western Australia, a non-executive director of several resource sector companies and the Perth representative for CRU Consulting, a division of independent metals and mining advisory CRU Group (allan.trench@crugroup.com).

*A Trench, D Packey and J P Sykes (2014). Non-Technical Risks and Their Impact on the Mining Industry. Australian Institute of Mining & Metallurgy – Mineral Resource and Ore Reserve Estimation monograph 30, chapter 7.