This is an edited extract of a speech by our Chairman, David Thodey, entitled Maintaining Australia’s Competitiveness in a Digital World, given on Wednesday night at an Australian Information Industry Association function.
We all understand that the world is changing very quickly – driven by fundamental advances in technology. The internet – reinforced by sophisticated logistics and new business models – now exposes every company to global competition.
This has significant consequences for the way we compete – as a nation and as individual businesses.
In 1982, our GDP per capita was $11,600, in 2015 it was $67,000; we have the 12th-largest economy in the world; third-highest average adult wealth; the share of the population with a wealth above $100,000 is the highest of any country in the world – I could go on.
Australian companies have played a critical role in growth. Australian companies are world leaders across a number of sectors – mining, banking, agriculture, financial services, and telecommunications. However, you can never stand still.
Our industries – indeed every industry – are impacted by the so called Industrial Revolution 4.0 or digital disruption: lower cost of computing; greater connectivity/bandwidth; automation and robotics; artificial intelligence and new software development tools; new business models and the sharing economy.
The government’s innovation and science agenda has laid out a sound set of policy initiatives to address many of the impediments to innovation and scientific research in Australia.
The critical question I would ask is whether Australian companies are seizing on the opportunities of digital transformation as rapidly as we need to – are our aspirations bold enough – and are we really thinking globally?
How do Australian companies maintain their competitiveness in a digital world – so that their businesses become stronger and create greater value?
First they must have a digital mindset. In this world, a business is always connected with real-time data, all processes are designed with the customer in mind and with complete transparency, and social media is the norm.
We must be willing to reinvent ourselves.
Secondly, we must be willing to reinvent ourselves. This is very difficult for a corporation as they are bound to current business models and processes. The whole organisation must be so focused on the customer that the only question asked is: ‘will this improve the customer experience?’ This is the single most powerful driving force for disruption.
Investing in Innovation
Thirdly, corporations must invest in innovation. Corporations often find it difficult to invest in innovation as they are prone to protect incumbent positions.
For me, innovation is about five things – process, product, technology, organisation and behaviour.
Innovative processes is about defying complexity and bureaucracy and involving your employees in decisions about efficient ways to run the business.
Innovative products is about companies encouraging product innovation, especially when there are long product development cycles.
Innovative technologies comes from companies always being vigilant in looking for new innovative technologies.
Dedicated innovative groups means allowing a part of the business the freedom to invest in and explore new innovations.
Innovative behaviours means giving people permission to be innovative and unleash their creative potential – you will be surprised at what happens.
Fourthly, we must change our corporate culture. Many new digital companies have very different cultures to older companies. I am not proposing that we wholly adopt these norms – but I am saying that the digital world requires a different way of working and interacting than we have known.
While we must never lose the identity of what a company has created or stood for – its essence – the culture must evolve and develop in the face of these challenges.
Lastly, capability, organisation design and leadership must change.
To win new talent, companies must compete on purpose and authenticity.
Millennials are now the largest group in the global economy – they are seeking companies that have values they can relate to on a daily basis. Immigration is a key consideration – we must attract people with diverse talent and skills and make it easy to come to Australia to work and contribute.
Organisational design must also change. Corporations with seven to 10 layers of management are slow in decision-making, pedestrian in communication and generally supportive of a command and control culture that destroys innovation, trust and accountability.
Lastly, our model of business leadership, which hasn’t really changed for the last 100 years, is long overdue for an overhaul. We need a new generation of Australian leaders who are not hierarchical but recognise and celebrate thought-based leadership in networked organisations. Leaders who enable rather than direct, who have moved from compliance to trust, who do not have all the answers but are continually learning and developing.
Australia has had a wonderful period of economic prosperity. To sustain this we must adapt to the new digital world. This will require more entrepreneurs, more early-stage investment and more innovation.
There are no easy fixes. But we know what we need to do. If we focus on these five initiatives we would make great strides in helping Australian corporations benefit from the opportunities presented by the digital world.