“There are risks for everybody, and we’ve got to be prepared to take risks,” proclaimed Australian Prime Minister Malcolm Turnbull with the launch of the Federal Government’s $1.1 billion Innovation Plan on December 6th 2015. “The key to our success is innovation to drive productivity and competitiveness.”
At the core of the Innovation Plan are a series of tax breaks and a radical new approach to insolvency laws offering a US-style Chapter 11 clause, which makes it possible for businesses to trade out of a cash-flow crisis rather than being forced into bankruptcy.
The message couldn’t be clearer as the mining boom subsides; the Australian business community needs to become more agile, less risk averse, more collaborative and ultimately be prepared to accept failure as a fundamental step on to the path to success.
The Innovation Plan is designed to encourage a change in corporate attitude towards innovation in Australia, the cultural challenge faced by business leaders should not be understated.
Innovate to remain relevant
Over the past decade, the impetus to adopt more agile business practices has become an imperative not only within the IT sector, but across all industries as individuals and whole businesses have been replaced by new platforms and players in the digital economy. In effect, digital disruption has become a euphemism for losing market relevance in an economy threatening to outsource one in six Australian jobs to robots by 2030.
However, just a day before the release of the Innovation Plan, 22 Australian business leaders of the country’s largest and most powerful corporations were asked to define innovation, and the results were published in The Australian Newspaper. Of the 22 respondents, only one, KPMG CEO Gary Wingrove, cited “being prepared to fail” as part of the innovative process.
It’s an attitude that needs to change if organisations are to survive and thrive in the current business climate according to Steve Vamos, former Microsoft Australia and ninemsn CEO, and non-executive director for both Telstra and Fletcher Building.
“Being afraid to make mistakes is a huge issue in our business culture. You have to be clear about your change agenda and then encourage people to fail on the road to learning because there is nothing you are good at today that you didn’t get good at by making mistakes,” says Vamos. “Nothing.”
Having led technology companies through boom and bust, Vamos has participated directly in the cultural shift that resulted in technology-based firms finding ways to effectively disrupt their own business models, lest they be superseded.
The age of agility
There’s no doubt that technological change will continue to force many business leaders to adopt a more agile approach to innovation at the same time as it provides the information, access and capabilities organisations need to make those changes.
For Australian companies, this might mean a less risk-averse entrepreneurial mindset; leveraging mobility to connect geographically dispersed ideas or using predictive business data in real time.
“There’s been a big recognition that ideas don’t just happen in one place,” says Annie Parker, co-founder of muru-D, Telstra’s start-up accelerator program.
“They can happen across all parts of the value chain of your business and if you’re not engaging with all those parts then you’re potentially missing out on some awesome ideas.”
Being afraid to make mistakes is a huge issue in our business culture. You have to be clear about your change agenda and then encourage people to fail on the road to learning.
– Steve Vamos, non-executive director, Telstra and Fletcher Building.
The time to innovate is now
As key players establish cross-industry partnerships, tapping into the capabilities they lack to form new, hybrid approaches, executives need to be more agile than ever before in order to remain relevant.
Together with the convergence of technology and government support, this means there’s never been a better time for large companies to embrace the innovation mindset, and be prepared to fail, in order to succeed.
“The reason you’ve seen that shift is just a significant reduction in the barriers for innovation,” says Parker. “[However], there are lots of different ways to engage in innovation. My advice to corporates is to figure out what problem you’re trying to solve first.”
Idea in brief
- Companies need to reinvent their strategies every five to 10 years
- The 21st century is about disrupting your own business from within.
- If you’re going to innovate, figure out what problem you need to solve first.
- Innovation needs to happen across all parts of the value chain.
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