australia's corporate blindspots

australia’s corporate blindspots

Inspiring case studies about Asian market penetration, leadership in technology and global excellence in sustainability programs, show what Australia is capable of. However, across the ASX 200 and beyond, we tend to lag in some game-changing areas. While it’s risky to generalise, I believe that corporate Australia tends to underestimate three important strategic themes:

  1. Fully understanding the impact of China on a number of fronts – as it shifts from a low cost manufacturing base to the biggest consumer market in the world; as it moves from a user of technology to a creator of technology (2.2% of GDP in the next five year plan on R&D); and as the need for primary resources (minerals and food) continues to grow. Geoff Raby, retiring Australian Ambassador to China, said that the one thing that surprised him most about his time in Beijing, was how few CEO’s and Chairs of Australian companies paid him a visit.
  2. Treating environmental and sustainable challenges as opportunities rather than impositions. There are many ASX 200 companies with lengthy annual sustainability reports, however few demonstrate genuine belief that environmental responsibility and growing profitability are not mutually exclusive. We desperately need a mindset shift from compliance and complaint, to realism and possibility.
  3. Recognising the value of leading rather than lagging in embracing digital technology-based innovation. Although there is variation in responsiveness within the sectors, media and retail are two sectors which have been caught asleep at the wheel. Is this an age related phenomenon – as older people are in positions of responsibility? How many senior executives and directors have you heard pass off Twitter as being frivolous, rather than seeing its potential as a primary source of focused information? Yet I know many savvy over 60’s behaving like digital natives. No, it’s not age per se; it’s about mindset, openness to change and awareness.

In a global context, Australia business has performed relatively well in the last decade, supported by resources based economic growth, a sound banking and legal system and excellent corporate governance. After the GFC, some observers have suggested that this same good governance has trended towards risk aversion and consequent inertia.

As the world is turned on its head by the digital revolution, major shifts in the global economic balance, and the need to resuscitate an environmentally struggling planet, there is no room for board and executive risk aversion in these areas. While being in the “late adopter” or “laggard” group may not have threatened company survival in the past, today’s environment calls for a positioning as “early adopters” at worst, and “innovators” at best.

Peter Williams, CEO of Deloitte Digital, goes even further in suggesting that any board of directors or group of managers who are not moving fast to understand and harness changes that technology is delivering – social media, cloud computing, mobile devices and data – is abrogating its responsibility to deliver leadership and governance.

Over the next ten to twenty years, the future of Australia will be fall into three main areas – primary resources (minerals and food); the service economy, and the knowledge economy. Julian Cribb believes that by 2050, our economy could be 70% knowledge based. In China last month I saw evidence of the emerging demand for our capabilities in disciplines like urban planning, agricultural science, energy, information technology, architecture, engineering, water management and medicine. We have a long way to go to understand the scope and shape of that knowledge economy, let alone create it. The building blocks exist, but success will depend on the ability of corporate (and political) Australia to gain insights and show leadership in the three areas that we underestimate.

What can we do? CEO’s need to get on the court and play – go to China and understand the market and people. Get immersed in the new technology – as ABC CEO Mark Scott does, personally sending 140 relevant tweets a week. He knows the medium and can talk the language because he has become involved. Shift from a mindset of lobbying Government about regulation, to one of understanding which way the wind is blowing and putting up the spinnaker. Get rid of dead wood on boards – people who are reluctant to change and enjoy peer group support for their scepticism. Much focus is given to gender diversity on boards – we need some mindset diversity as well! It’s not too late but we need to act quickly.


4 Comments


  1. Enjoyed your article Ken … spot-on!

    I joined the Gold Coast Suns this year to see more live footy and noted that their organisation, communication with Members and marketing continues to be most commendable. They have also used social media from day one including during matches. After some time, it was noted that another local AFL club also began to use social media … did their marketing people finally realise that they were being left behind in communicating to fans on a daily basis? Wonder what the age difference is between those who work in these areas in each organisation? That’s at a simple level but there may be a parallel between this example and those in large companies whose role it is to take their organisation forward to meet a changing society and generations who simply think and act differently, daily (or minute by minute). I read an article recently regarding the way some retailers have not seen fit to change their business model to meet the demands of consumers in continuing to grow their business, a point to which you allude in your article.
    Premier Bligh spoke to the media yesterday upon the release of the initial report into (among other things) the causes of Brisbane’s recent floods. She spoke about what might have been done differently with hindsight. Although reportedly not following their own manual, the bureaucratic ‘leaders’ also didn’t get on the front foot as leaders would do and make decisions that reflected the obvious evidence around them. They weren’t ahead of the game and were just like those who lag behind and whose management practices are neither innovative or adoptive in reflecting the changing environment in which they operate. Such governance will see businesses go to the wall, employees asked to move on but some bureaucrats simply use ‘hindsight’ on their way to collecting their pensions.

  2. Ken, a timely point as I work with my 82 year old mother in law to set up her new DVD recorder.!
    A pity her determination to come to grips with new technologies is not shared by our leaders.
    Just today at AMCHAM I listened as Jac Nasser professed a level of indifference to the NBN. He was sure that there many other things we should be spending our money on.
    As the chairman of BHP I am sure that infrastructure that is dependent on bricks and mortar will benefit them more than something a little bit more ethereal , but it makes me want to weep.
    At least he didn’t dump on a carbon tax , merely echoed Kloppers wish for certainty.
    It is a real shame that politics continues to divide AND blind the leaders of our community. Fast Broadband will change the way we interact in ways that we can not forsee.
    I wonder if Gerry Harvey and his board had been amongst those who thought that the internet would have limited applicability to their business model???

  3. Another great article Ken, and thanks. However, can I point out that you never once use the word “BRAIN”.

    Tomorrow I am going to the conference of the Australian Applied Neuroscience group, where I will speak on Saturday. The work on the brain I will report on, has the potential to change a VERY large part of our economy.

    For example, the article in last weeks “Review” in the AFR on Friday , “Born that way” talks about the implication for the law: if we learn to read impulses and impulse control ability directly from the brain, our potential to avoid recidivism will be revolutionized.

    Then there is Chronic Pain (at least 3% of the economy), ADHD (something like 3% of the economy), dementia (how much? it doesn’t matter it is already no. 3 in medicine and growing fast), learning difficulties (about the only thing George Bush got right was to say we need no child left behind, but measuring something is different from doing something about it).

    It might sound like a quibble to mention something that is so much a part of the knowledge economy, but as London, Birmingham and other UK cities are showing right now, the knowledge economy is more than Options, Futures and Other Derivatives (but it is that too).

    It will take enormous bravery for Australia to be a leader in APPLIED neuroscience. No problem in being right up with academic neuroscience (and that’s good) but applied neuroscience is a very different thing: that requires our “venture capital” people to meet with our “regulatory government” people, and a few others besides. We could do it, on paper.

    Noel

  4. Thanks Ken. Enjoyed the read. Agree re Asia. As someone who regularly dropped in on Raby in China, he was a good source of understanding and insight. The even better insight came from CEOs of Chinese companies looking to become global players. Mr Tan Weng Eng, CEO and President of China Southern is an incredible leader who has a big vision for that airline and a desire to see it as a genuine global player. He knows and values the Chinese ingenuity and their inherently industrious nature. But he also values western sensibilities – is very intested in our views about product development in aviation, service, quality and marketing. This attitude, it strikes me, is what makes anyone successful. A strong understanding of where things should go and then a willingness to learn, ask questions and get help from the right places…

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