Posts Tagged ‘technology’

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.

australia's creeping inertia

australia’s creeping inertia

There are many things that fill me with pride as an Australian. There are others about which I am increasingly embarrassed. We all have long lists on both sides of that ledger. The one which disturbs me most, and which can most impact our long term prosperity, is inertia.

I’ve been in the UAE, China and Singapore recently and returned wondering why we’re being beaten hands down in development of convention centres, bullet trains, sustainability programs, new hotels, freeways, and even knowledge economies. The world is moving at an incredible pace. In many areas, we seem to lag, even behind the developing world. Why?

Within the context of “free market” principles, national sovereignty is diminished as global markets, multinational corporations and global institutions play a major role in shaping our economy. While these forces also prevail in emerging markets like China, they are matched by a hunger to catch up and exceed, which is strongly nurtured by State. By contrast, inertia is rife in Australia, not so much in the private sector, but certainly in public policy.

 I’ve spoken with a few wise heads to get an angle on our malaise (in the spirit of “first seek to understand”) and have developed some thoughts. I wondered whether to tackle the ultimate sacred cow by asking “is democracy itself the problem – and do democracies inevitably tend to inertia?” On reflection, I think the issue is more the way our democracy is manifested. Australian democracy today is being impacted by four forces:

  1. The shape of politics today

- Reform is always slow and politics is about compromise  – a challenge enhanced by the current political mix. Without masterful negotiations or bipartisan support for reform, we have a melting pot for inertia.

- As membership of, and interest in, political parties diminishes, the influence of factions and divisions increases, resulting in a sub optimal mix of candidates. There are too many poor performers, insufficient diversity, too many lawyers and union officials, too few business people and visionaries. As a consequence, we have fewer issues focused debates and more fixed partisan positions, with vested interests buried in ideology and inaction.

      2.    Our relative comfort and apathy

Australians have not faced any prolonged shock or discomfort since the end of the WW2 more than 60 years ago. While there is poverty and disadvantage in our country, standards of living have continued to improve. As consumerism grows and people increasingly “have what they want when they want it”, they are becoming less happy, readier to find fault and carry a higher expectation for “the Government” to fix things. We’ve become more apathetic and short sighted and this flows on to major projects – where is the next Opera House, Harbour Bridge or renewed public transport system? Are they a priority today?

      3.   Media

Lack of media diversity and standards is a major concern. In many of Australia’s media markets, only one single company dominates.  John Faulkner captures the argument – “the media’s freedom to publish was once a safeguard for our democracy. Today, as trash tabloids and opinion-for-hire commentators destroy any semblance of a debate of ideas, the principle of informed decision-making at the heart of the ideal of democracy drowns beneath racy headlines and print-now, retract-later coverage. Radio shock-jocks and shallow television infotainment do the same”.

         4.    The digital revolution

Technology has shrunk and accelerated our world, generated more choice and shortened our attention spans. There are greater demands on our time and more attention to the short term than the longer term.  Faulkner again – “opinion pollsters report a lack of interest or understanding in politics from the very same people racking up massive mobile bills voting for an Australian Idol contestant. This disinterest breeds a vicious cycle, for those who don’t speak up will find nothing so certain as that they won’t be heard”

Solutions?

These four elements are causing indifference, distrust and disengagement about politics and democracy – and apathy about our future. What can we do? Here are four thought starters:

  • Achieve electoral reform at candidate selection level through absolute transparency
  • Win bipartisan support for application of the benefits of the resources boom into infrastructure and other long term benefits, such as creating a knowledge economy
  • Overhaul media laws to achieve diversity, debate and responsible reporting with a view to the future of the country and the globe – not just selling papers. As this is being posted, there are cries for a media review based on the events in News Corp.
  • As individuals, bother to be heard. The world is changing and solutions are not always driven in the traditional way. Look at what GetUp is achieving, for example.

We must achieve major reform and progress in these relatively strong economic times, rather than having to wait to react in the bad times. What about a sovereign fund? That aside, it’s up to us all to make a difference, in a democracy that’s tested but not broken.