James Riley
September 8, 2015

Steve Vamos on cultural change

Steve Vamos on cultural change

Steve Vamos: no part of the Australian economy can afford to be an island

Steve Vamos, the former Microsoft Australia managing director and current Telstra board member, tells a story about Bill Gates’ ability to see things that many of us can’t.

Many years ago, as India's outsourcing phenomenon was gathering pace, Gates had been asked “do you think there will ever be an 'Indian Bill Gates'?” After a pause he answered yes, (of course), before adding that the person would probably be based in Silicon Valley.

Mr Vamos concedes stories about Bill Gates get a bit rubbery, but swears this one is true because he was with him at the time. And of course, there are now many ‘Indian Bill Gates’, mostly living in Silicon Valley as CEOs of multiple billion-dollar-tech companies.

He uses the story to illustrate a couple of things. Firstly, the accelerated pace of change means that things that are not obvious can become commonplace very quickly. And secondly, that Silicon Valley, with its high-achiever culture of open networking between people remains the world's monumental technology force.

And this is what underpins Mr Vamos’ thinking about the tech industry and innovation these days.

Technology does not drive innovation or efficiencies or productivity: People do. And the great secret of Silicon Valley, is its at-scale networks of very smart, motivated people deeply connected across institutions, across disciplines, and across companies.

The great innovation centres of the world through history have shared these traits.

Mr Vamos has mapped change in the tech sector over a long career. Fourteen years at IBM (straight out of a civil engineering degree) before becoming managing director of Apple in Australia (and then VP for the region), before becoming CEO of nineMSN. He went on to run Microsoft in Australia and then moved to Seattle as International VP for its emergent Online Services Group.

Right now, he is a serving board member at Telstra, and recently took a non-executive board role with Fletcher Building. He is a member of the advisory board of the Roy Green-led UTS Business School in Sydney.

He is also Chairman of a couple of startups. The Sydney-based JobVibe, a kind of sentiment feedback system to help teams of people work better, and The Reading Room, a social sharing network for book-lovers that recently moved headquarters from Australia to New York.

The view from managing large-scale corporate operations is different from StartupLand. It is an interesting perspective. In the past decade, Mr Vamos has spent more time than most thinking deeply on innovation issues related to management.

He founded the Society for Knowledge Economics, a think-tank that aims to improve leadership and management techniques for social and economic good in knowledge-based, globally connected economies.

There must be an interesting mental adjustment that takes a high-achieving corporate manager from a buttoned-down IBM early career, to an internationally corporate job based out of the Redmond bunker and finally into the altogether more free-form startup landscape.

Steve Vamos was always the most human of corporate leaders. Exceptional with the personal stuff. His focus remains on people. When he talks about “activating” an innovation eco-systems, he’s really talking about connecting the people.

In Australia, the smart, motivated people already exist, he says. But they are not talking to each other as efficiently as we need them to.

“There is no part of the Australian economy that can afford to be an island,” he says, referring to universities, research institutions, corporates, government departments, and all the other silos.

“We have a fragmentation in our system that we can’t afford as a small economy.”

I spoke to Mr Vamos recently at the coffee shop at Telstra’s 400 George Street. Very fascinating and very insightful. This is part one of a two-part interview.


You have observed a lot of different corporate management styles along the way, and government policy too. When we look at the way the big end of town does business and how the [StartupLand] is emerging … what’s working right now, and what’s not working?


Steve Vamos: There is a lot to be said about how the world is changing. We hear this all the time, that it’s changing faster and faster. But I don’t think people really appreciate what that means, both as individuals and collectively.

When we talk about innovation, it is fundamentally about change. It’s about people seeing an opportunity to make something better or new, and working with others to make it happen.

To have innovation in an organisation – or a person – they have to be motivated, excited and determined to change things. And that is a big shift in itself. In fact it is the shift. Because most of us were employed to do what we were told.

Now we’re saying to our people, ‘create the future,’ and take ownership of innovation [inside the organisation].

So you can imagine when the leadership in an organisation announce some initiative to drive creativity and innovation. People sit there and think “hang on a minute, for the last 10, 20 or 30 years, you’ve been telling me to shut up and do my job.’” This is a big shift in thinking.

The other thing for these leaders – is that we got where we are by being in control (or looking like it); by not making mistakes (or hiding them well); and by knowing the answer (or at least being able to question the question if we didn’t.)

That way of thinking is good when things aren’t changing so fast. It was a mindset and a structure that was about sustaining [the existing system]. But it is not a mindset built for change.

When we talk about our innovation system, and driving innovation across our economy, we need to become open to embracing of change. If we are open to change, we win. If we fight it, we lose.

You can see this in every domain: When people are fighting against change, against the tide of reality to protect the past and protect their domain, it ends in tears. The auto industry is an example.

So that’s the heart of it. If we want to be more innovative and creative, we have to [build cultural] mindsets around change. This is not where most industrialised economies come from. But some are doing a better job of getting there than others.


Australia is a very open economy already, one of the most open in the world. So I would have thought we are relatively good at change …. We have our own regulatory systems here – and we get to make our own rules – are you saying we should open ourselves to everything?


Steve Vamos: If you’re saying that we should be using regulation to stop the tide of imported technology from taking value out of our country, my view is that’s ultimately going to end in tears. Because consumers will decide otherwise.

Australia’s always been a much better user of technology than developer of technology. There are some issues that regulators need to look at – when technology changes the nature of industries and affect areas like GST and other things like that.

But at the end of the day you cannot stop consumers adopting better solutions, and in a way that’s ‘controlling’ [thinking] anyway. That’s exactly the wrong culture. It’s control-culture, not that caring, connecting culture that is more adaptive and innovative.

What I would love is for us as a nation to be far more ambitious about writing the technology industry into our future.

The NBN is a big step, but where’s the rest of the conversation? The NBN is a platform, not an application.

The exciting thing is that the bottom-up energy in the startup community in Australia is very encouraging. And there are successful Australian companies. You’ve got Atlassian, Big Commerce, Campaign Monitor and the rest. And we are seeing more and more of these.

So we are learning how to build scalable companies in the tech space.

I just think we need to talk more about that, and less of the other stuff [in the current mainstream political dialog in Australia.]


We have been great technology users, early adopters and sophisticated innovators in business. But that’s not enough now. Creating IP is everything in this new economy. We can’t just be users…


Steve Vamos: There’s a massive opportunity. Now the distance from other markets is less of an issue. The networks and communications platforms we’ve got mean you can really feel close to consumers in other markets, as well as people who are stakeholders in the business but based in other countries.

We all talk about improving the innovation system – better connecting universities, business and government much more effectively. There is not part of the Australian economy that can afford to be an island. Business can’t afford to be, government can’t afford it and academia can’t afford it.

And the problem is we have been an island, and that is in our thinking. We act like we’re big, when we are small. We have fragmentation in our system that small countries can’t afford.

We have to connect ourselves better around a common view that we says “we want to produce great Australian tech companies, and we want to take Australian IP and commercialise it more effectively.”

It is the fragmentation and misalignment that stops that happening.

In Part Two of this interview, Steve Vamos talks about looking at the big picture.

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