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 corporate Australia tends to underestimate three strategic themes:
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 CEOs and chairs of Australian companies paid him a visit.
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.
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 in these companies? 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, Australian 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 tended 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 that is 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 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? CEOs 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. Scott 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.
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