Innovation and risk go hand in hand: Wesfarmers director

As businesses work to innovate faster than their competitors, no route is free from risk.

Anil Sabharwal, vice president at Google and board director at Wesfarmers spoke at the Governance Institute of Australia's National Conference in September of this year, discussing the role technology plays in generating business longevity, and the importance of governance and risk management across sectors. 

Anil Sabharwal, vice president at Google

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Asked about Australia's opportunity to become a leading innovator in business, Sabharwal said that for many years Australia was always two years behind the USA.

"I kind of didn't get it at first, but then I realised actually it was intentional. It wasn't that we were not capable, it's just that we said, hey, there's no cost to letting all of that failure happen in the US, and whatever cream rises to the top, then we'll bring it over here," he said.

This isn't possible anymore, however, as the world becomes flatter through digitalisation. 
Sabharwal says that there are two types of organisations, those that are motivated by opportunity and those that are motivated by risk.

"I speak to a lot of different organisations and CEOs and they always say to me, 'When we get in a room and we're really struggling, we sit there and we say, what would Google do?' And I say to them, we have no idea."

"You think of Google as this company that's always leading with innovation and customer, but we have the same problems... we have competitive disruptive risks associated with it, and really a difficult decision as to are you willing to give up the certainty, that is the financials and the revenue,  be able to build products yourself, rather than waiting for someone to disrupt you and then it be too late?"

There is always risk associated with innovation, but Sabharwal cautions that there is also risk in not risk-taking.

“There's a great Facebook quote that I love which is, ‘you should plan for 20 years in advance, and you should plan for six months in advance, everything between six months and 20 years you should ignore,’” said Sabharwal.

“What are we doing today, that gets us six months closer to that vision? Are we just waiting for someone else to figure it out and then we hope that we can licence it and use it, or are we going to be the company that actually leads that charge and figures it out?”

Referencing Jeff Bezos' famous "obsession" with the customer, Sabharwal said that the more you learn about your customer, the better.

“Any data that you have about your customer, anything you can understand about them and know that they were willing to provide or share, you should get all of it,” said Sabharwal.

"If you know your customer intimately, that is your biggest asset, but it is also your biggest risk, because you have all of this data, and you have all this information that your customer has trusted you with."

Sabharwal believes that businesses often fail in achieving the balance between acquiring enough data to innovate and protecting the privacy of customers.

"How you are stewards of that data, how you choose to be able to use it but also how you protect and ensure that customers feel like their data is safe with you is critically, critically important."