The window to reform Australia’s economy will close quickly unless enterprise and Government now firmly grasp the innovation nettle and grow their appetite for risk, according to the chairman of the Australian Institute of Company Directors Elizabeth Proust.
She said that the AICD’s latest Director Sentiment Index, slated for release in November reveals; “Our members are looking for national innovation and industry strategy as a leading priority for transitioning the economy. I think this is a ‘now’ issue, and if we don’t the window will close pretty quickly.”
Without a culture of innovation prepared to take risks; “Growth in the Australian economy will continue to be anaemic and we won’t be well positioned to ensure that our children and our grandchildren have a better future. It think it’s pretty urgent.”
In an interview with InnovationAus.com, Proust said that the once loud call for innovation from government had grown faint. “That is a real worry,” she said.
Proust applauded the passage of the safe harbour legislation in September that offers some protection to directors taking bolder steps when seeking to reinvent a flailing business, but noted that apart from that there had been little further progress on the government’s innovation agenda.
“That means it’s urgent for business to step up into this space,” she said.
The AICD will from early 2018 establish a technology governance and innovation panel led by board member Kee Wong. He has previously lamented the “dangerous sense of complacency in some boardrooms” with regard to innovation and the digital agenda.
In a recent edition of the AICD’s Company Director magazine Wong noted that; “The anecdotal view is that the current level of commitment to the digital agenda is low.
“Most boards still do not have this as a priority…in order for businesses to move the dial, boards in Australia need to have innovation, technology, disruption as a standard agenda items for discussion at every board meeting.”
Proust said the technology governance and innovation panel would include local and international members, including experienced technology company leaders able to provide Australian directors with advice and insight.
“One of the issues in companies is to ensure that there is enough time and attention paid to the innovation space,” said Proust.
While that was the lifeblood for startups, she stressed that; “Mature companies need to ensure the board agenda, the executive have the resources and time to think about the next horizon, and often in ways that long production cycles, complicated processes, bureaucratic red tape can often work against.”
But she stressed that; “I think the days of the director as someone who quickly scans the board papers to go to a meeting, ask a few questions and then forget about it until next one are pretty much gone.
“The directors I know really take the time to understand the operations of their business, the future trends for the business, they take the time to understand the competitive landscape.
“I think the best ones are involved in thinking about the policy frameworks, the role of government and most of the directors I know even when they are seemingly on a few boards spend their time reading, talking and educating themselves.”
And that includes educating themselves about emerging technologies such as machine learning, artificial intelligence, blockchain and the algorithmic economy, said Proust.
“The most useful thing that a director has is an enquiring mind. I went to Davos for the World Economic Forum in January this year. Between a quarter and a third of all formal sessions were about AI, the future of work, the industrial revolution.
“Despite some probably well-founded criticisms of the WEF, that material is available online in real time – it’s not an exclusive club keeping the information to itself.”
But Proust warned that companies hiring directors to the board for their technical understanding and experience should be clear about how those directors contribute value.
They should not be expected to have single-handed oversight of a company’s digital agenda or act as an in house technology consultant.
The AICD offers a voice to around 41,000 company directors, is keen to educate and inform its members, and keep the national conversation about innovation and reform alive.
In its 2017 Blueprint for Growth report it called for a range of reforms including fixed four year federal parliamentary terms; fiscal sustainability; innovation entrepreneurialism and a pushback against protectionism; and the development of a 15-year infrastructure plan.
According to Proust; “The issue that concerns me is that in Canberra we have three year terms of Parliament that run into two and a half years; two and a half years of governing and six months of campaigning.
“The timeframes are so short that the medium to long term planning that this country needs is not happening. We are so focussed on short term horizons that some of the big issues we are not spending enough time on.
“We are currently advocating and getting some support for four year fixed terms – some might say it should be longer but four years is a hell of a lot better than two and a half, and each of the state governments has done it and generally has a fixed date every four years so there can’t be any gaming of the system.
“That gives the government medium term planning. In the Commonwealth it requires a change to the constitution and we all know that’s not easy but it would be a big step forward for this country if we could get to that.”
Another big step forward that Proust and the AICD have been seeking is greater diversity at board levels, but have recently acknowledged that in the area of gender diversity it is unlikely to reach its stated target of 30 per cent female representation any time soon.
“Our recent report (shows) that in the ASX 200 25.4 per cent of director are female, up from 8.3 per cent in 2009 so that is an improvement – but it has stalled this year so it looks unlikely we will reach our target of 30 per cent,” said Proust.
Worse still however is Australian businesses’ record on cultural diversity. “Even those companies who have significant business dealings with Asia, many of them lack people with either Asian backgrounds or experience of dealing in Asia and we have begun the conversation on our own board and more generally about the need not just for gender diversity but cultural diversity.”
The appointment of Kee Wong and Nicola Wakefield Evans to the AICD board, both of whom have extensive Asian experience, is intended to shore up the organisation’s own cultural diversity, as it swigs its own innovation and relevance medicine.
Disclosure: The author also writes for Company Director magazine.