Australia risks a hit to the economy if the country’s biggest organisations don’t improve their “weak” approach to innovation, three of the country’s technology leaders have warned.
At the Australia-Israel Chamber of Commerce's ‘smart disruption’ lunch in Sydney today, ANZ Bank’s Maile Carnegie, Australia Post's head of trusted ecommerce solutions Andrew Walduck, and Optus chairman Paul O’Sullivan lamented the country’s inability to scale innovative ideas.
“Australia is very good at knowledge creation,” Carnegie, the former head of Google A/NZ, said.
“What we’re very weak at is knowledge transfer and knowledge application ... and we’re going to have to address that.
“We are getting increasingly trade exposed, so we’re going to have to figure out how to make sure our large companies and our start-ups thrive.”
Carnegie said fast-growing companies account for less than one percent of total exports in Australia, way behind Israel and the US which boast figures in the mid-to-high teens.
Carnegie joined ANZ Bank as its head of digital banking last year, following three years at the top of Google’s local operations, to help the bank “digitally transform”.
“This is where we are the most vulnerable: our large companies are not innovating enough, and we don’t have a rich enough pool of start-ups to be able to offset what happens when the large companies [don’t deliver],” Carnegie said.
“If some of these elephants don’t start dancing, the economy - because we’ve been so weak in high-growth start-ups - [will be] in a tricky place.”
Australia fell two places on the global innovation index last year, and now sits at 19th spot behind the likes of Switzerland, Sweden, the US, and UK, as well as regional neighbours Singapore, Korea, and Hong Kong.
Australia Post’s Walduck called disruption one of Australia’s biggest challenges. His organisation has had no choice but to innovate thanks to a 50 percent reduction in its core letters business since 2008.
“I think we’re at a really interesting point with our innovation culture. I think the organisations that have been investing for a while in their ideation and experimentation capabilities have been getting better at it, but the piece that we lack in Australia is the ability to scale our ideas,” Walduck said.
He said big organisations could no longer fall back on their size for survival.
“Seventy-five percent of the world’s largest companies are forecast to leave the S&P 500 in the next 15 years,” he said.
“If you go back in time to the 50s and 60s, once you got to be a big organisation you stayed being a big organisation for a long time. That world is now over. The world now is one where the rate of change has dramatically increased because it’s been enabled by technology.
“And those organisations that are exploiting this capability that now exists and changing their [internal] cultures can move fundamentally faster.”
Is partnering the way to go?
The key to success in the innovation game is partnerships and collaboration, according to all three technology leaders.
ANZ’s Carnegie pointed to the bank’s adoption of Apple Pay, a move which - while not well received by rivals in the finance industry - was eagerly swallowed up by the bank’s customers.
“At the end of the day it’s a race to deliver on the customer need the fastest, and if you can get there on your own, great. But increasingly today I don’t think you can. I think the way you’re going to get there the fastest is through partnerships,” Carnegie said.
“[The Apple Pay partnership] was a big decision for a couple of reasons: one, it was a signal to our customers that we are listening to them, because they wanted it. We could have said ‘we’ve got a digital wallet’, but they were asking specifically for Apple Pay and Android Pay. And if that’s what they want, we need to figure out the most pragmatic way of giving that to them.
“While it gave us a strategic advantage in terms of customers, [it also] sends a signal to other potential partners that we are looking at doing the right thing for our customers and we will partner - within reason - with anybody that can help us deliver on that mission.”
The objective of Optus’ $250 million venture capital fund is to “follow the money” in order to predict the next big technological innovation, the telco's chairman Paul O’Sullivan said.
“Its mission is to wash its own face and make money, but actually for us in management it’s all about following the money … to find out what’s happening in the tech world and how it will impact [us],” he said.
“The pace of change is so fast, information flows so freely, that large companies cannot innovate and keep pace with the world that’s changing outside.
“The economies that grow the fastest and the cities that are the most successful are the ones that have the densest links - between large companies and small companies, business and academia. The stronger the networks and links, the faster the growth.”
AusPost's Walduck attributed Australia’s innovation stagnation to assumptions about how success is achieved.
He said the notion that "you have to get into it and win it on your own" was flawed.
“I think the whole system needs to grow up and see that it’s co-operative partnerships that are going to create our ability to drive the next wave of things that can scale," he said.
Walduck cited AusPost’s current build of a digital identity solution, for which it has partnered with Boston Consulting Group Digital Ventures, as an example of this kind of collaboration.
The digital identity solution aims to revolutionise identity authentication in ecommerce. It is founded on identity services that AusPost already provides - like drivers licenses and passport applications - and will utilise a smartphone’s touch, camera, and voice functionality to verify an individual.
The service is currently in beta phase. AusPost is also working with unnamed parties to store the data in a blockchain.
“Right now that whole system is problematic. When you buy something online you enter your name, address, payment information - you give away lots of your information because you want the thing that you bought to be delivered to you,” Walduck said.
“There is a world right now that I believe is constrained from its next wave of digitisation because we cannot be confident than an individual is exactly who they say they are.
“The future is about collaborating with organisations who have some of that best technology, but then what it’s about is empowering customers to have choice in that moment over how they want to use their information to perform really important things.”