Smart Disruption - Optussmb.optus.com.au/opfiles/Business/smartdisruption/... · Smart Disruption: a perspective on innovation for Australian organisations is a qualitative study

A perspective on innovation for Australian organisations

SmartDisruption

Smart DisruptionDisrupting your own business by better anticipating evolving customer needs and innovating to meet them. Achieved by partnering with organisations of all sizes and stages of maturity to share insights and experience to create mutual value.

04 0807 09

24 31 3616

About

Achieving smart disruption

Enabling smart disruption through customer-centricity Executive Summary

Final thoughts

Delivering smart disruption through innovation and agility

Foreword

The business culture and skills needed to deliver smart disruption

Table ofcontents

About

Smart Disruption: a perspective on innovation for Australian organisations is a qualitative study exploring how established and digital-born organisations in Australia are approaching business transformation.

Interviewing 25 senior decision makers – including CEOs, CIOs, CXOs and CDOs – from some of the country’s

most prominent established and digitally native organisations, the report provides a framework all organisations can use – regardless of heritage, size and industry – to achieve success in this new era of business.

The report describes the similarities and differences between how each group approaches transformation. It also highlights a desire

across both groups to create collaborative partnerships and to learn from one another’s strengths and experiences.

It reveals that partnering for mutually beneficial outcomes can ensure the longevity of Australian organisations at all stages of their transformation journeys, as well as the future stability of our economy.

D I G I T A L N A T I V E S

E S T A B L I S H E D O R G A N I S A T I O N S

Take a more holistic view

Knowledge of how technology is consumed by customers

Smart Disruption: a perspective on innovation

Operational excellence

Deep understanding of how customers act online and the inherent difficulties of getting people to grasp content

Have the capital and expertise to invest soundly

Understanding and comfort around the pace of change

Resources to ensure changes are implemented correctly, leading to more resilient platforms

Flexibility to try out new platforms (e.g. SaaS), to test and learn, discarding or adopting as desired

Established Organisations’ strengths

Digital Natives’ strengths

Long relationship history with customers, and knowledge of what they value

Non-digital channels that work alongside digital platforms

5

Advanced OrganisationsStrong adoption of change programmes, with a focus on customer, innovation and technology. Digital is now part of who they are, not what they are trying to become.

Advanced NativesPeriods of intense growth have led to rapid adoption of more systems and structure making it increasingly difficult to be agile. Striving to maintain a culture of innovation, but suffering from legacy IT and increased internal and external scrutiny.

Established Organisations Beginning their transformation journey, but encountering internal challenges: a focus on the bottom line and legacy IT.

Digital NativesAgile, fast-moving and innovative. Understand how to operate in an environment of constant change, but lack the systems and processes to scale. Operating in rush mode and find it difficult to prioritise.

Australia's current business characteristics

Comparative strengths

“We have our roots in a traditional banking company, and credit and risk management are still very important. But ultimately, we have aspirations to act like a 200-year- old start-up, and we want to make sure we’re fostering innovation in a variety of ways.”

Travis Tyler, General Manager of Consumer Digital, Westpac

Established Organisation

Enterprises of all sizes, government departments and agencies right across Australia are all dealing with unprecedented disruption.

The best response to this disruption has to be innovation.

The importance of innovation to the future prosperity of our country was highlighted by the launch of the Government’s National Innovation and Science Agenda. The Agenda is designed to ‘drive smart ideas that create business growth, local jobs and global success’. Fostering innovation and commercialising ideas is the key to growing productivity and competitiveness – both for our organisations and our country.

Our challenge is how to achieve this. What differentiates the successful organisations? How do you build a culture of innovation? How do you establish partnerships between businesses, academia and researchers to collaborate

and shape future industries and generate wealth? These are some of the questions the National Agenda looks at.

We know that disruption is caused by the fast pace of change created by increasingly rapid advances in technology. To better understand the impact of this constant disruption and transformation, Optus Business interviewed leaders from Australian organisations – from Top 100 ASX listed companies through to innovative digital start-ups. Our goal was to identify the opportunities for organisations at different stages of their transformation journeys to share existing knowledge and experience.

We discovered that there is much that digital start-ups and established organisations can – and want to – learn from one other. Each group shares a common goal of achieving long-term sustainability, and to do so with an innovative, yet structured approach.

What’s emerged from our research is the need for organisations to embrace a new mindset of collaboration and partnership. Creating an environment where learnings are freely shared will prepare businesses to more readily respond to – and anticipate – changing customer needs and enable them to jointly build new business models.

This is what we’re calling smart disruption, and it will ensure that your customers have no need to look elsewhere to have their demands met.

However, this process of continual self-disruption is not easy and few of us have all the answers to achieve this alone. This is where collaboration and partnership plays its part – the sharing of learnings and experience. The opportunity lies in our ability to leverage these learnings, because if we can do this well, it will position us strongly to fuel the future of the Australian economy.

7

Executive Summary

John PaitaridisManaging Director, Optus Business


Australian businesses – from start-ups to traditional players – are long used to turbulence.

Be it transformed by deregulation, the removal of protections, globalisation, new market entrants or evolving customer needs, all of our industries and markets have had to adapt to real and lasting change.

In previous years, these periods of transformation have been interspersed by significant periods of market stability, where customers, competitors and the business environment are relatively predictable.

Today, this pattern of cyclical transformation and stability is no longer applicable. It has been replaced by one of constant turbulence. As long ago as 1965, one of the fathers of modern strategy, Igor Ansoff, defined “turbulent environments” and spent the next thirty years developing theory to help managers grapple with what he saw as their common characteristics:

Difficult if not impossible to extrapolate growth;

Historical strategies are no longer successful;

Profitability and growth are not coupled;

The future is highly uncertain; The environment is highly surprising.

To many current business leaders, this environment may seem very familiar, and is being perpetuated by what Steve Blank calls “explosive shifts in technology, platforms and markets.”1

Surprise, uncertainty, complexity, explosive change, unclear future paths and the diminishing impact of traditional strategies are all making ongoing transformation both necessary for survival and difficult to achieve.

Yet, if businesses are to succeed in this new environment and Australia is to have a successful innovation economy, then they are challenges that must be addressed and overcome.

Encouragingly, Smart Disruption: a perspective on innovation

for Australian organisations, shows that we have a deep and diverse spectrum of skills in both established and digital born organisations. The great opportunity now is to bring these skills together into a collaborative network. Providing support, frameworks and platforms where the work of meaningful innovation and transformation can happen, will benefit individual businesses and Australia more broadly.

To quote one of history’s great customer centric innovators "Coming together is a beginning, staying together is progress, and working together is success." Henry Ford


Foreword

1. Why large companies find it difficult to innovate, and what they can do about it. Steve Blank, June 2016. https://steveblank.com/2016/06/23/intel-disrupted-why-large-companies-find-it-difficult-to-innovate-and-what-they-can-do-about-it/

8

Dr Lara MorokoMacquarie Graduate School

https://steveblank.com/2016/06/23/intel-disrupted-why-large-companies-find-it-difficult-to-innovate-and-what-they-can-do-about-it/

https://steveblank.com/2016/06/23/intel-disrupted-why-large-companies-find-it-difficult-to-innovate-and-what-they-can-do-about-it/

Chapter 1Enabling smart disruption through customer-centricity

The most successful business transformations are driven by a desire to deliver superior customer experiences2.

“We can’t stand still. We’ve got to continuously move and continuously improve to create better experiences for customers and employees,” explains Virgin Australia’s Royston Lim. From the Digital Native perspective, Carolyne Burns from Expr3ss! says: “We’re very much about ‘the customer comes first’. It’s all about listening to them. We actually need to understand what’s happening in their business.”

In today’s digital world, ‘the age of the customer’ is firmly established in many industries. Consumers have control of their overall experience with brands, with more choice than ever before – from products to engagement platforms – as well as plenty of channels through which to air grievances.

Business has always been about delivering products and services in ways that delight consumers, which in turn drives brand loyalty and delivers revenue growth.

Today, true innovators are creating markets where previously none existed. They “find a way to turn non-consumers into consumers” 3, and sustainable futures are founded upon an ability to predict and satisfy the customer needs. Excellent customer service is as much about anticipation as it is participation.

Getting it right has never been more important either. NewVoiceMedia estimates Australian businesses are losing $11 billion a year due to poor customer service4.

Reassuringly, Established Organisations and Digital Natives both state unequivocally that delivering a product or service to enhance the customer experience is at the heart of the majority of business decisions made.

Discussing the importance of customer-centricity to Westpac, Travis Tyler says: “We always make sure the customer is supported first, and then ensure our processes and policy systems don’t get in the way. With the level of transparency options available, if you don’t look after customers and make sure they’re first, then you won’t receive their business longer term.”

The sentiment is echoed among Digital Natives. Peerbrief’s Rob Fanshawe says: “Customers are our world. Everything from next round investment to revenue is based on customer numbers, engagement rates, and growth rates. If we don’t focus on the customer, then we don’t exist.”


Advanced OrganisationsFocused on understanding customer needs and then meeting – and beginning to anticipate – them. They use various channels and methods to gather, listen and respond to feedback, and are likely to involve the customer from the outset in product design.

Advanced NativesWhile they monitor for immediate customer feedback, their ability to rapidly respond to it may not be efficient as it once was. They rely too much on data to provide the answers, instead of asking customers exactly what they think.

Established Organisations On the journey to become more customer-centric. Introducing new customer experience roles, implementing customer-centric design thinking, and involving the customer as part of the ecosystem. They monitor and respond, using NPS to measure satisfaction.

Digital NativesBuilt around satisfying customer demands, but still trying to fully understand how customers engage with them. Create online ecosystems for customers, developers, and engineers to share questions, learn and develop product improvements. Struggling with effective scalability.

2 https://www.squiz.net/blog/forrester-report-cx-drives-business-transformation 3 What is disruptive innovation? Clayton M. Christensen, Michael E. Raynor, Rory McDonald.

Harvard Business Review 2015: https://hbr.org/2015/12/what-is-disruptive-innovation 4 http://www.newvoicemedia.com/blog/19181-2/

10

Characteristics: customer-centricity

https://www.squiz.net/blog/forrester-report-cx-drives-business-transformation

https://hbr.org/2015/12/what-is-disruptive-innovation

http://www.newvoicemedia.com/blog/19181-2/

The opportunity for shared business learnings exists in how Established Organisations and Digital Natives interact with their customers. How they manage and grow their customer base, use customer insights and involve customers in product development.

Customer-centricity means placing the needs of your customers at the heart of your business. This ensures that you are delivering services which customers actually want and need. This approach gives brands a competitive advantage, unleashing a possible cycle whereby organisations can continually tailor offerings based on their deep understanding of their customers.

A journey of co-creation and collaboration

11Smart Disruption: a perspective on innovation

Both Established Organisations and Digital Natives are collecting, collating and sharing customer feedback. However, how they listen is different in structure, nature and type.

Established Organisations typically rely on traditional methods, such as Net Promoter Score (NPS) to listen to customers and develop an understanding of their brand advocacy. While significant time and resources are

spent by this group on listening to customers, the value of this information is in knowing how to act on the insights gathered.

This understanding empowers Established Organisations to better target specific audiences. It also helps tailor offerings to optimise business performance.

Conversely, Digital Natives tend to rely on customer data to evaluate satisfaction, understanding how a customer engages with them, rather than why. Many in the group want to develop an understanding of why, but do not

always conduct sufficient market research to effectively analyse what the data means. There is also uncertainty around how to accurately measure customer satisfaction and to really understand their needs.

These examples highlight the need for organisations to maintain a level of intimacy with customers as they scale and grow. This can be done by maximising engagement with customers through all available touchpoints, with a consistent experience delivery.


Understanding the how and why of customer engagement

12

“We send a market survey and customer survey to our guests post-travel, which returns 500 daily responses. Over the course of a year we capture over two million customer data points we can analyse to monitor trends and track performance against competitors and our own expectations.”

Royston Lim Virgin

Australia

“Even though it’s the more traditional way of doing it, when you’re small and you don’t have a large sense of volume, talking to customers is the best way of building an understanding of what they like and dislike. The online data captured can be quite misleading without this context.”

Rob Fanshawe Peerbrief

While online services have changed the way individuals engage with brands, bricks-and-mortar stores still have an important role to play. Most Digital Natives lack experience in running physical operations. As a result, many from this group may struggle to tap into the growth opportunities this presents.Expr3ss! is adopting a personal approach to ensuring customers are engaged through digital and non-digital channels: “We place regular calls to our customers. These constant ‘touches’ of direct customer engagement allow us to understand what users of our services like and dislike, so we can

rapidly respond to their individual needs,” Carolyne Burns says.

Regardless of the channel used to engage with customers, consistency is key. According to Flight Centre’s Peter Wataman, “The fact that our customers do engage with us quite a bit, either through enquiry or through their travel management, delivering a very consistent customer experience, is paramount to our business in terms of repeat customers.”

Many customer experiences start online. From product and services research, individual brand offerings and peer and industry reviews. Digital Native expertise in operating in these environments where there is considerable competition, and understanding the features customers’ value in their buying decisions, are invaluable.

However, Peter Wataman, in describing a shift in Flight Centre’s retail stores being purely transactional to become more experiential and inspirational, says “Anyone can go online and search and see options. To come in and look and ask for some expertise becomes extremely important and obviously we encourage that person-to-person consulting, which tends to bring a bit more of a trusted relationship.”

Digital Natives understand customers want flexibility when purchasing products – especially those on monthly cycles – and have successfully turned low barriers to exit into a selling point. Even if it has a negative impact on the bottom line in the short run. As Ento’s Aulay Macaulay states, “People are more likely to select us because there’s a lot lower risk with the lock-in contracts. But, it’s a low barrier to exit that keeps us on our feet, which works well.”

Creating presence in physical and digital marketplaces

“We could see a handful of customers were operating poor data models, and even though there was going to be a short-term revenue hit we made a conscious decision of doing the right thing for the customer by helping them improve their model, which in some cases meant that they could move to a more cost-effective node type. While it wasn’t great for numbers during those couple of months, it was ultimately better for the business as we’ve got a happy customer who is engaged and loyal.”

Doug Stuart Instaclustr

“A florist called us at 5pm on a Friday to say it had its EFTPOS machine stolen – this was a few days before Valentine’s Day, meaning without it the store was going to miss out on huge amounts of weekend business. We managed to find a replacement machine, and then drove two hours to the store to ensure it could open for business as normal on the Saturday.”

Travis Tyler Westpac


Growing engagement opportunities through mobile, social, digital and in-store experiences opens a range of avenues for businesses to co-create with customers, truly delivering against customer wants and needs.

But few Australian businesses believe they are effectively partnering with customers. This leaves a wealth of opportunities to innovate and drive forward industries ripe for the taking.

Established Organisations further along their transformation programs are the most likely to feel they are partnering with customers to launch tailored services. Businesses from this group involve their customers in product design by hosting human-centered design workshops that aim to uncover consumer wants, and strategic meetings with senior executives, to seek real-time industry feedback.

Using this approach, Optus is building longer-term customer engagement and loyalty from its decision to collaborate with customers: “Before we commence anything, we determine desirability through customer feedback, customer involvement, and

validation at workshops such as those in our co-creation environment, ThinkSpace. We listen to customers, turn what we hear into the product or service they want, and then engage them in the ways they want. The journey is such a powerful thing when it comes to customer relationships,” says John Paitaridis.

Some Digital Natives are involving customers in product development cycles, through online communities consisting of customers, systems engineers and sales and marketing professionals. This allows them to maintain a high level of quick response and support to customer queries, and uncover customer priorities for the next stage of product development.


Anticipating customer needs through collaboration

“The product team spends a lot of time investigating what people want, and what the best way of doing things are, usually in the form of AB testing on the website or app. This provides two feedback loops – customer feedback on the issues they’re having, and how customers are responding to the changes made. These two cycles are extremely visible and important to the business.”

Brent Maxwell THE ICONIC

“There are crowd- sourcing platforms built into our software, where users can make suggestions on new features they’d like to see added. People can up or down vote on whether they’d like to see this feature added too, meaning our customers are effectively defining how the product evolves themselves.”

Rob Fanshawe Peerbrief

14

How to use behavioural insights to improve customer experiences

Which market research and advocacy measurement tools to use to better understand drivers of customer engagement

Best practice for creating online ecosystems and initiatives that efficiently capture customer feedback

How to consistently interact with and engage customers non-digitally and within a physical environment

How to best use data to provide valuable customer insights

Insights around effective marketing and customer retention strategies

Which digital tools and services enhance the customer experience, and how to build these

How to effectively manage large customer bases

What Digital Natives can learn from Established Organisations

What Established Organisations can learn from Digital Natives

Sharing opportunities: customer-centricity

How to create a customer-centric business

15

Learn how Flight Centre, Virgin Australia, Airtasker and carsales approach customer centricity.

View other videos in series


http://optus.com.au/business/smartdisruption



Chapter 2Delivering smart disruption through innovation and agility

Australian businesses have an unprecedented opportunity to change, supported by current Government policy as well as technological capabilities.

Embracing innovation and transformation across all organisations will help the country fulfil Australia’s vision for an ‘Ideas Boom’. It will also improve the country’s position as a leading player in the global economy.

Currently, only 16 per cent of Australian businesses have a high performing innovation culture, while 39 per cent have little or no innovation culture at all5. In the World Economic Forum’s world ranking for digital competitiveness Australia ranks just 18th, behind countries including New Zealand, Canada, Denmark, and Netherlands6.

Australia has many innovation strengths, ranking high in the Global Innovation Index for competition intensity (#8), gross expenditure on R&D (#14), and ICT use (#16)7. Regulations are being implemented to foster IT and entrepreneurism, creating an attractive marketplace for all businesses that keeps our country’s best talent on its shores.

The difficulty is in bringing these strengths together and

overcoming the challenges faced, to ensure that all businesses have the resources they need to be innovative and agile.

Those Australian companies that do have a high-performing innovation culture are mostly start-ups or early stage companies. They have a strong focus on continually developing ideas, and there is an expectation from within that developing and questioning new ideas is part of an employee’s day job. These companies have structured themselves to actually work on the business rather than in the business.

As Digital Natives grow and mature, it often becomes difficult for them to maintain this initial focus on innovation and a vibrant, ideas-driven culture. Growth and scale present operational challenges, from effectively engaging employees and satisfying the needs of a growing customer base, to increased financial reporting and compliance. They also need to turn ideas into action.

Anthony Saines from carsales explains how expertise from Established Organisations helps overcome issues created by growth: “Not having experience managing a growing business can have an adverse impact on results. Leadership have never known anything different, meaning the decisions executed can be naïve, labour intensive, and inefficient

as they’re based on what’s best for a small business, instead of established one.”

Established Organisations acknowledge the need for a greater focus on innovation and seek new partnerships, often external to the company. This type of collaboration can help overcome known gaps or weaknesses by providing fresh thinking. However, the group often finds itself restricted by allocating the majority of its resources to business-as-usual activity. It may also lack the innovative and energised culture that drives change.

Australia Post is an example of an Established Organisation changing the way it approaches innovation and transformation: “Innovation is about testing in a low-fidelity way, so you’re not investing huge amounts of time and money in something that’s not proven, and shut it down or change if it’s not working. It’s something start-ups do really well, and a mentality we’re trying to foster internally,” says Samatha Bartlett, Australia Post.

While Established Organisations recognise a need to do more to enable innovation internally, the group still plays a central role in delivering Australia’s ideas boom.

Its expertise in scaling businesses for growth and overcoming barriers to it, is an invaluable asset. The lessons Digital Natives can learn from this will improve their chances of success, domestically and globally.

5. 2015 Australian Innovation Systems Report. http://www.industry.gov.au/Office-of-the-Chief-Economist/Publications/Documents/Australian-Innovation-System/Australian-Innovation- System-Report-2015.pdf

6. The Networked Readiness Index 2016: http://reports.weforum.org/global-information-technology-report-2016/

7. The Global Innovation Index 2016: https://www.globalinnovationindex.org 17

Advanced OrganisationsConspicuous focus on innovation rather than expectation. Multiple avenues being used to explore innovation, including internal incubators, external partnerships, design thinking, and support from start-up accelerators.

Advanced NativesFeel they could be doing more to be innovative. However, conflicting priorities and a focus on running lean while experiencing growth, can restrict innovation.

Established Organisations Addressing past oversights and beginning to do more AB testing, test and learn. Implementing ideas is a bigger challenge than coming up with them. Looking to develop partnerships with Natives to assist with innovation.

Digital NativesInnovation is central to this group, and how it operates. There is extensive testing, the group is comfortable with the 80:20 rule, and they are open to risk taking. Data is accessible, and businesses are able to action ideas.

Characteristics: innovation and agility


http://www.industry.gov.au/Office-of-the-Chief-Economist/Publications/Documents/Australian-Innovation-System/Australian-Innovation-System-Report-2015.pdf



http://reports.weforum.org/global-information-technology-report-2016/

http://reports.weforum.org/global-information-technology-report-2016/

https://www.globalinnovationindex.org

Smart Disruption: a perspective on innovation 18

Enablers Present In Barriers Present In

Leadership Time

Listening to customers

Resources

Partnerships Mindset

Collaborative culture

Knowledge

Openness to critique

Pathways and processes

People Technology

Environment Culture

Control

Conflicting priorities

The unknown

EOEO

EO

EO

EO

DN

ALL

ALL

EO

EO

EO

EO

EO

DN

DN

DN

DN

ALL

Barriers and enablers of innovation

According to the National Innovation and Science Agenda, innovation is about new and existing businesses creating new products, processes and business models.

Our report findings suggest that the most important innovation requirement for organisations is to anticipate and address customer needs. This ability to self-disrupt will lead organisations on the path to a sustainable future.

Established Organisations and Digital Natives can fuel smart disruption by sharing their respective expertise around test-and-learn processes, fostering innovation cultures and mindsets, effectively managing business growth and overcoming barriers to innovation.

Innovating your way to smart disruption

To ensure long-term success, it’s essential that organisations identify and pursue the right innovation ideas. This means fostering the right culture to encourage ideas to flow, as well as the processes to capture those ideas and decide how and if to act on them. There are a number of approaches to consider.

Hackathons

Hackathons maintain and develop a focus on innovation, and provide easier routes for ideas to be realised. Events also foster a collaborative culture, and processes and structures are becoming more mature as organisations learn to optimise their outputs. For example, carsales’ hackathons

require entrants to present to a committee before progressing their investigations, and THE ICONIC invites customers to judge ideas.

Scoring Systems

To prioritise and identify the best ideas, scoring systems can decide what ideas get put into action. Businesses adopting this approach are also creating dedicated teams who are responsible for managing the entire process of how a new product goes to market, and communicating back on its performance.

Incubators and Partnerships

Internal incubators, design thinking, and establishing subsidiaries and partnerships can overcome barriers to innovations. Subsidiaries are investing in start-up incubators to remove organisational restraints to business, along with hiring “Native” type people to run

internal innovation incubators. Human-centred design helps businesses understand where opportunities exist and how to address them.

Virgin Australia introduced an internal crowd-sourcing platform to foster innovation. Ideas Lab is open to all 10,000 staff, where users are encouraged to submit solutions to business challenges and briefs posted on the site.

Royston Lim, Virgin Australia explains: “Each challenge entered into Ideas Lab must be sponsored by a business unit. It’s their responsibility. We make it clear they have to review every idea, and respond to provide employees with feedback.”

Westpac has a number of incubators to rapidly ideate and test concepts, and uses human-centred design to better understand where opportunities lie in its value chain.

19

“Our ‘intrepreneur’ program involves developing an idea, pitching it to people within the organisation, and then the rest of the business votes as to whether it progresses to development. In fact, one of my young team members has gone off to work with a venture capital company to accelerate an idea that delivers value back to the company.”

Samantha Bartlett Australia Post

“Ideas Lab supports the notion for staff that we’re an innovative company, and value employees’ ideas and contributions. It’s great from an innovation and staff satisfaction perspective.”

Royston Lim Virgin

Australia

Creating your ideas boom


To succeed in the digital economy, both in Australia and on the global stage, businesses benefit from being able to move quickly and rapidly adapt to market change.

Digital Natives are typically the best equipped to be agile, and are comfortable operating in an environment of constant change. There is no legacy that needs protecting, making decisions and change faster and easier to implement. In contrast, many Established Organisations recognise it is an area where they need to improve.

Both groups can build and support an innovative culture by adopting approaches such as:

Agile Methodologies

Daily huddles and scrums develop a collaborative culture and provide a constant feedback loop. The impact of this approach is illustrated by

Sidekicker’s Thomas Amos: “We have daily stand-ups to make sure everyone is on top of what they’re doing, to discuss any problems that people are having, and things that might be working really well. This constant feedback loop is critical to our business, and ensures we’re always moving forward.”

Applying the 80:20 Rule

Adopting the 80:20 rule – the principle that 80 per cent of business outcomes are determined by 20 per cent of activity – and iterating during the process allows decisions to be made rapidly. It also means changes can be applied as required. Aligned with a fail-fast culture, businesses successfully adopting the 80:20 rule understand that if they waited for every data point they would never get to making a decision.

Adopting this principle overcomes challenges created by too many stakeholders being involved, which only slows down the decision-making

process because they wait for the entire picture to emerge first.

The case for implementing the 80:20 rule is supported by Airtasker’s Tim Fung: “The concept of perfection is very difficult in the modern internet world. Bugs and glitches are almost inevitable, meaning it’s about acceptability. You have to know that some things in your software won’t work first time.”

Data Accessibility

Digital Natives place significant value on using data to make business decisions, while Established Organisations place more emphasis on corporate knowledge and experience. By making data more accessible to employees, Established Organisations can open up innovation avenues, with all staff empowered to identify new trends and demands, and respond and develop services accordingly.


Overcoming the innovation limitation

20

“You can always come up with a million ideas, but if you don’t implement it counts for nothing. We’ve got 1,000 tools we want to build, but only have capacity to push out 10 things in a month. That’s our biggest innovation limitation.”

Ying Wang Venuemob

Test-and-learn is second nature to most Digital Natives. It’s used extensively by the group. Established Organisations feel they should be doing more in this space, meaning they have a significant opportunity to learn from their digital born counterparts.

To adopt the mentality, and overcome an inherent fear of failure, Established Organisations should look to develop and test new products, services or policies on a micro-scale, before mass production and distribution.

One Established Organisation successfully transitioned to a flexible working environment with test-and-learn: “We had a pilot space over 12 months, with every employee cycled through it for a three-week period. We’ve used different configurations each time too. It’s been a great way of getting feedback on the technology, and the space itself. Similarly, we’ve proved this way of work is very doable, meaning the business is more supportive of the changes.”

Established Organisations must also develop a higher tolerance and openness to risk, taking less- calculated steps and challenging the status quo. It is another area where the group can learn from its Native counterparts. In doing

so, Established Organisations will recognise where you can take risks without jeopardising the trust of customers, and learn to build a culture where employees are not punished if they make mistakes.

Discussing why Redback Technologies is risk-aware rather than risk-averse, Managing Director Phil Livingston explained: “We encourage our team to take risks, as long as it’s not on the compliance or legal side of the business. And as long as at the end of it, we have data to show why something did or did not work, and why.”

Be risk-aware, not risk-averse

“Traditionally, we had a number of large multi-year programmes that cost tens-of-millions of dollars executed over a number of years, we’ve now broken these up into incremental chunks of capability that are re-prioritised on a weekly, monthly and quarterly basis. This breaks up the delivery process into much more agile and iterative development cycles that deliver faster results and in doing so we’re also encouraging teams to take more risks, to fail fast and iterate again until the problem is solved.”

Ean Van Vuuren IAG

“At a time when the business wasn’t profitable I was able to formulate a business case to demonstrate how hiring a big number of new people would build out our capabilities, saving us millions and millions of dollars. That’s a sign of people being open to risk, change, and keen to evolve at scale.”



Established Organisations are able to share learnings around test-and-learn by providing Digital Natives expertise on managing growth. It is an area where many Established Organisations have significant experience, whereas it's one Digital Natives can struggle with.

Tim Fung, Airtasker, sums it up: “I think the benefit of working with big businesses is they have solved 99% of problems. They’re absolute experts in their field.”

When going through rapid growth, Digital Natives tend to be focused on numerous things simultaneously to achieve it: how to increase market share, minimise

churn, and cross-sell and up-sell. The challenge is maintaining a focus on people, culture, quality control, innovation and customers at the same time. Balancing these areas is the key to success.

Handled poorly this can lead to staff dissatisfaction and attrition, meaning Digital Natives must learn to manage it better.

By partnering with Established Organisations – who have expertise in delivering, structuring and managing growth – Digital Natives can learn to:

Manage break points in the growth cycle

Navigate the mergers and acquisition process

Effectively break down the costs and implications of running a growing business

Better negotiate with other

Digital Natives and Established Organisations

Leverage existing partnerships, enabling innovation and expanding customer bases

Articulate and manage organisational change

Implement new policies and practices supporting staff

Discussing the impact of Ento’s partnerships with Established Organisations, Aulay Macaulay says: “The partnership works for both sides. We get greater access to market products, and we become part of their innovation strategy because we’re agile and can execute quickly.”


Managing business growth and scale

“In areas where there’s no benefit in being different, our opportunity is to use our scale to reduce the cost of doing business in those commodity areas, which then allows us the time to focus on where we do want to be different according to our markets and our customers.”

Peter Wataman Flight Centre

“We’ve got really smart people who have a wealth of experience from other areas which they can bring into our business. It’s important we bring these learnings into our business, and apply them for our gain.”

Thomas Amos Sidekicker

22



Sharing opportunities: innovation and agility

How to become and remain innovative and agile

23

Developing internal incubators and hackathons to capture ideas

Developing processes to address issues around capability, knowledge, time and resources

Accessibility of data to improve decision making

Piloting ideas with small groups of users before expanding them

How to create an appropriate evaluation and approval process for ideas

Best practice for managing organisational restructures and growth

Test and learn to improve knowledge, take smaller risks, fail fast and iterate

Insight into innovation methodologies like Agile and the 80:20 rule

Learn how Mirvac, Sidekicker and Redback Technologies approach innovation.






Chapter 3The business culture and skills needed to deliver smart disruption

True business transformations are only possible with the right skills, attitudes and experiences. Organisations need to attract and grow new talent and skills to foster an innovation culture and leadership, enabling them to take advantage of new technologies to support their ongoing transformation.

While the attitudes and experiences are evident across Established Organisations and Digital Natives, the technology skills are in short supply.

However, a lack of ICT skills among graduates represents only part of the shortages being felt by industry. New technologies and processes mean businesses need to re-skill employees who were previously recruited for roles that have evolved. “Almost five million jobs face a high probability of being replaced in the next decade due to digital disruption”8, according to CEDA.

Employers are seeking workers who can see the ‘bigger picture’ and better understand the context within which they work.

While training within academia and industry, together with government initiatives, will help narrow the technology skills gap, organisational cultures, experiences and leadership will help close it further.

Through talent, leadership, partnerships and culture, businesses must empower current employees and future generations to believe they can be savvy innovators in this new economy. They must entice an interest in technology, ICT and STEM among current employees and future generations by demonstrating the potential these roles play in the future of the Australian economy.

By shifting just one per cent of the Australian Workforce into STEM roles, PwC estimates there would be a $54.7 billion increase in Australia’s GDP9.

Established Organisations are least likely to feel they have a highly energised culture. Businesses from the group are looking to build a more open, flexible and collaborative working environment. This will complement structured and formal learning policies.

Digital Natives embody creative, flexible and dynamic cultures – enabled by flatter structures. Yet the group still admits to lacking the leadership and experience to scale their business for growth, recognising a necessity for guidelines and values communicating what the organisation stands for. Digital Natives are experiencing issues with attrition as they grow and mature. This can be due to a lack of formal policies.

When it comes to creating an innovation environment, there are clear distinctions in structure and cultures between Established Organisations and Digital Natives. This difference presents a collaboration opportunity to provide the respective groups with the abilities they need to transform and upskill employees for it.

“We are shifting away from rigid hierarchical structures and becoming more fluid, the aim is basically to assemble the necessary skills or capabilities for a particular piece of work. By having this flexibility, we’re able to pull individuals together from different parts of the business, combine their expertise, deliver on an initiative, and then transfer across to another piece of work or team upon completion.”

Ean Van Vuuren IAG

25

8. Australia’s Future Workforce. CEDA. 2015: http://adminpanel.ceda.com.au/FOLDERS/Service/Files/Documents/26792~Futureworkforce_June2015.pdf

9. A Smart Move. PwC. 2015: http://pwc.docalytics.com/v/a-smart-move-pwc-stem-report-april-2015


http://adminpanel.ceda.com.au/FOLDERS/Service/Files/Documents/26792~Futureworkforce_June2015.pdf

http://adminpanel.ceda.com.au/FOLDERS/Service/Files/Documents/26792~Futureworkforce_June2015.pdf

http://pwc.docalytics.com/v/a-smart-move-pwc-stem-report-april-2015

http://pwc.docalytics.com/v/a-smart-move-pwc-stem-report-april-2015


Advanced OrganisationsTransforming to create a more collaborative and energised environment, introducing cross-functional teams and flattening organisational structures. Constantly looking to others to evolve and learn.

Advanced NativesWorking to maintain a creative, flexible and dynamic culture, while being more performance driven. Learning focus is not as strong as in the early days, but a big listening culture remains. Encountering issues with attrition from poor management of restructures.

Established Organisations Trying to foster a more open and flexible culture, with a strong focus on learning and opportunities to expand knowledge. Understand how to manage growth, have employee policies in place, and looking to attract and retain Gen Y talent.

Digital NativesEstablishing their culture, recognising a need to attract and retain staff. Working collaboratively, but more thought is needed around how the organisation is going to scale. Must identify new ways to ensure staff are sufficiently supported.

Established Organisations and Digital Natives recognise that hiring the right people is a critical component of business transformation. It is fundamental to acquiring skills and leadership, maintaining company cultures, ensuring diversity, and not employing too many individuals from competitors.

A common recruitment challenge faced by Established Organisations and Digital Natives is that despite the need for diversity and fresh thinking, businesses are more likely to attract employees who are comfortable with the way they

work: Digital Natives appeal to people who are flexible and agile by nature; Established Organisations appeal to people who value stability and working for large organisations.

This natural selection strengthens the existing cultures of both groups. However, it makes it harder for them to change and adapt.

Recruiting Outside the Comfort Zone

Some Established Organisations and Digital Natives are actively trying to attract employees outside their usual type to integrate the skills they need to transform. The benefit of this is that it creates a more diverse workforce, with varying personality traits in the team – be it more flexibility and agility, or more process orientation.

Both groups are recruiting from one another to acquire leadership skills and talent too. For example, Flight Centre’s Peter Wataman says: “For certain circumstances we look to hire from start-ups. It’s extremely important to make sure where those people are placed in the organisation and the role and responsibility they have. The challenge for an organisation like ours is there is still that traditional way.”

On the other side, Aulay Macaulay at Ento, says: “We’d definitely hire from established organisations. Our perfect candidates have a mixture of small business and large in their work history. It’s important for roles like implementation, support, and project management, as they understand the rules to play by.”

Building a diverse workforce for smart disruption

Characteristics: business culture and skills

27

Strong Leadership is Important for Change

With a willingness to learn and challenge leadership a key feature of effective business transformation, it’s critical all businesses boost technology and digital skills and foster a belief that each employee has a role to play in change. The best leaders understand they don’t always know everything. With strong direction, they create a culture of constant learning. Sharing this expertise and fostering a collaborative culture across the business enables the organisation to better serve customers and the product or service.

At THE ICONIC, the CEO strongly promotes the understanding that he doesn’t know everything. He doesn’t always have the best information. And he relies on his teams to feed him the best information. At a recent off-site, “The CEO got people to practice saying ‘no’ to him. That’s how serious the Executive Team are about people challenging.”

Maintaining Learning and Development

As Digital Natives scale, however, the focus on learning can decrease. In these instances the formal structured and prescriptive learning processes deployed by Established Organisations are one solution to overcome this challenge.

To maintain a healthy and dedicated focus on learning and development, one Established Organisation has quarterly training themes: “Four times a year for an eight-to-ten week period we’ll have a focus on a core business area, such as developing customers, improving processes or boosting NPS. During this period there’s ongoing communication, videos and other content hosted on our owned channels, and activities such as timetabled training sessions. This training extends across our entire workforce, and ensures we’re developing the skills we need to succeed, and to help our customers.”

Building a Corporate Memory

With many Established Organisations and Digital Natives ‘learning as they go’ in the digital era, a formal structure to ensure past mistakes are not repeated is key. Few organisations in either group have processes in place to achieve this.

The businesses overcoming this have implemented networking and mentoring programs, to ensure learnings are transferred and celebrated. They also have post-implementation reviews to learn about what contributed to success (or failure), and what they should avoid doing again in the future.

One Established Organisation has e-learning systems in place to train employees on how to do things. This is supported by a “buddy system”, where executives will show new team members how to do something, coaching them through the process until it is mastered.

“It’s making sure that you let your experience in the past inform the future and it’s about getting that fine balance between looking at things again in a different way, but also using what you have learnt to get a better outcome going forward.”

Travis Tyler Westpac

“We aren’t afraid to refer back to mistakes that were made. Our Executive Team believe you’ve got to be upfront if you’ve made a mistake. It’s a mistake you don’t want to make again, but which might be relevant to something we’re considering doing.”




“Learn where people’s strengths are, and then find and foster those – that’s exciting. It builds a stronger team, which is in the best interest of the individual and the collective.”

Carolyne Burns Expr3ss!

There is increasing recognition of the benefits of cross- functional teams or matrix structures in business.

Smaller, collaborative teams can help foster leadership and accountability. They ensure the necessary skills can be rapidly sought and developed to capitalise on opportunities. For instance, THE ICONIC embeds engineers into each of its teams to enable faster innovation and problem solving.

Flatter structures consisting of cross-functional teams also allow organisations to scale, seamlessly operate across borders, enable teams to stay connected globally, but act in the best interests of the local market, and reduce issues caused by short staff tenure.

One Established Organisation benefitting from functional teams is Westpac. Explaining the development process for its

fingerprint logon capabilities, Travis Tyler says: “It was literally three people in the organisation working together for a couple of months – a developer, security expert and business person. Within six weeks we went live to customers, and that’s been one of the most successful customer-facing initiatives we’ve done in the last two years.”

Keeping staff engaged and developing their skillsets is a core component of delivering successful business transformations and fostering the necessary skills. While Established Organisations have more resources at their disposal to achieve this, Digital Natives are typically smaller so can be more interactive and more personal with staff.

Both are important abilities, and they should be adopted by both groups. The key to success including:

Communicating Celebrating company wins, recognition from senior leadership and harnessing internal social media platforms

Listen and respond Glean insights from employee satisfaction surveys, one-to-one meetings and mood boards

Open and transparent Remaining true to the company values

Rewarding and recognising Remunerate, reward and celebrate success

Stock options and share schemes Encourage staff to be more invested in company performance

Growth opportunities Provide opportunities for staff to step up in the business

Corporate Social Responsibility Enable staff give back to the wider community

Be an industry leader Build dynamic teams, recruit the best talent and set the industry standard

Flexible work environment Empower staff to work the way that best suits them

Business structures for smart disruption

29

Engaging with a variety of mindsets can provide businesses with fresh and different thinking, allowing them to remain at the forefront of industry trends.

One demographic that both Established Organisations and Digital Natives are seeking insights from is youth. After all, businesses’ future employees are also their future customers. Hiring the mindset of the people you’re serving can enable a plethora of growth and innovation opportunities.

It also helps to generate an interest in technology and the opportunities available to bridge the skills gap as the next generation enters the workforce.

One approach is to have formal partnerships with universities. Or in some instances, be located on university campuses. The pathways created – from intern programs and formal recruitment initiatives – enable improved collaboration to deliver new thinking and ideas, and create a talent pool businesses can draw from.

Others involve universities to help solve business problems, or host one-day competitions and hackathons. Using the learnings provided by students, businesses are approaching problems in new ways and delivering new capabilities – for employees and customers.

Flight Centre asks students to work on business problems, bringing a fresh lens into the organisation. "The challenge and opportunity is in how we harness that, and we’re seeing a lot of fantastic ideas.”

Reverse mentoring programs, where senior management are partnered with graduates and younger staff, are a popular choice for helping businesses engage with the youth mindset and foster skills and leadership. One Established Organisation explained: “The whole idea is there’s an element of you teaching them about the organisation. But more importantly, the students are teaching you about the technology they’re using, how they’re communicating with friends, and what’s important to them.”

However, there also remains recognition of the value that experience can bring to an organisation. Travis Tyler from Westpac says, "One of our focuses is how we can leverage the experience from different generations and demographics, because you can't mimic or fake experience."

Get a fresh view from diverse thinking

“I’m here to put the fabric of a mature organisation into a less mature organisation, without losing that flexibility and response.”

Name Withheld Digital Native

“Certainly within IT there is an ageing workforce. We need new ideas and new talent, meaning you’ve got to bring in fresh blood and new ideas. Encourage that thinking, not punish it.”

David Crisp Ford




How to develop the right skills and culture

How to foster a collaborative, open and more risk-tolerant culture

How to support a large workforce effectively through formal programs and policies

What’s needed to create an environment of self-learning

Encouraging challenges to senior management

Insight into effective tools to use when identifying and developing company culture

The importance of experienced leadership in enabling the business to grow and scale

Communication channels that encourage collaboration

Insight into effectively working in cross-functional teams


Sharing opportunities: business culture and skills

30

Learn how Mirvac, Flight Centre, carsales and Expre3ss! approach skills and culture.



https://optus.com.au/business/smartdisruption


Chapter 4Achieving smart disruption

Twentieth-century thinking dictated a company should build or buy in competitive advantage, create a barrier around their turf and defend it at all costs.

This worked well when the pace of change meant competitors were known, attacks could be anticipated and market position could effectively be defended.

With turbulent change here to stay, this type of mindset is proving to be less and less effective. Australian companies are evolving their capabilities to be more flexible and open. But they often find it difficult to build these “dynamic capabilities”10 organically, without the benefit of external reflection, input and mentorship.

So what can companies do, starting today, to embrace innovation and smart disruption, while positioning themselves to thrive in turbulent competitive environments of the future?

By reflecting on the experience and aspirations of participants in Smart Disruption: a perspective on innovation for Australian organisations, together with global thought leadership and best practice, these three practical measures could help Digital Natives and Established Organisations to supercharge their engines for smart disruption:

1. Close the collaboration and innovation capability gap – at an employee and team level

The Australian Bureau of Statistics estimates that only 45 per cent of Australian businesses are “innovation active.”11 Anecdotal evidence through my work with

the Macquarie Graduate School of Management suggests that for many companies, there is a disconnect between knowledge of collaboration and innovation best practice and the ability to implement and embed it in their day today businesses.

This is a significant issue for individual companies and the economy as a whole, as the Australian economy may stand to lose “$9.3 billion worth of value, if it doesn’t leverage collaboration in the workplace (currently worth $46 billion a year).”12

Established Organisations are successfully addressing this gap by building internal teams with deep capability in innovation that can collaborate with business verticals to coach, mentor and model best practice. These teams not only support innovation initiatives, but identify employees throughout the organisation who have the capability to champion ongoing innovation work.


10. Teece, D.J., Pisano, G. and Shuen, A., 1997. Dynamic capabilities and strategic management. Strategic management journal, pp.509-533

11. Australian Bureau of Statistics (2016) Innovation in Australian Business, 2014-15, 21/07/2016. Available from http://www.abs.gov.au/ausstats/[email protected]/mf/8158.0

12. Deloitte Access Economics (2014) The Collaborative Economy – unlocking the power of the workplace crowd,17 July 2014, p.1. Available from http://www2.deloitte.com/au/en/pages/ economics/articles/collaborative-economy-unlocking-power-of-workplace-crowd.html

The building blocks for smart disruption Dr Lara Moroko

Macquarie Graduate School

http://www.abs.gov.au/ausstats/[email protected]/mf/8158.0

http://www2.deloitte.com/au/en/pages/economics/articles/collaborative-economy-unlocking-power-of-workplace-crowd.html

http://www2.deloitte.com/au/en/pages/economics/articles/collaborative-economy-unlocking-power-of-workplace-crowd.html

33

Practices of internal collaboration, such as this, have been shown to be a key driver of innovation in Australian businesses, as well as having positive impacts on staff engagement and productivity.13

Perhaps more importantly, these companies build a broad internal network of employees who are “collaboration-ready” and sufficiently skilled to identify the types of opportunities for external partnership and innovation that create value for all parties. It may seem implausible that an Established Organisation would find it difficult to detect and evaluate a fruitful partnership opportunity. However, the nature of Digital Native ventures can mean that indicators of future success generally relied on by Established Organisations, such as audited accounts, testable and reliable profit projections and customer adoption rates, simply don’t exist. Evaluation of the opportunity may rest instead on the demonstration of “product market fit”, i.e. the core product/service/idea of the Digital Native works effectively and meets the needs or solves the problem for a substantive customer group. Practice with the common tools of innovation and entrepreneurship can give individuals and teams inside Established Organisations a ready lens to appropriately assess prospective opportunities for partnering with Digital Natives in the initial stages.

Other criteria, commonly used to evaluate Digital Natives for the purposes of partnering (or indeed direct investment or incubation), include the general capabilities and aptitude of the founders and the depth of their customer or market insight. Digital Natives’ founders and management teams' ability to understand and respond to the needs of the partnering organisation are also critical and come to the fore as the partnership progresses to formalisation. These “soft” skills can be a challenging final stumbling block preventing the establishment of an otherwise fruitful collaboration. Furthermore they are difficult to acquire in the absence of existing experience or ready internal mentors. Savvy Digital Natives, who understand the need for and benefits of collaboration, are engaging with seasoned professionals with deep market knowledge and Established Organisation experience to bridge this gap. This engagement may be via informal mentoring, through the creation of advisory boards, consulting, or formal board appointments.

Detecting and evaluating prospective successful collaboration partners is a worthwhile, but generally underdeveloped asset for most individuals and teams. At the Business Model Design Centre (an interdisciplinary centre for business model research at

Aalborg University in Denmark), for example, drivers of partnership and investment readiness for both Digital Native and Established Organisations (in this case, venture capital) are currently being researched with the anticipation that advancing knowledge in this area will fuel successful innovation activity and smart disruption.

2. Evolve internal business models to be collaboration-ready at a business unit level

Collaboration and co-creation for innovation have been shown to result in a swathe of positive benefits, from access to resources, faster time to market, enhanced customer experience, more competitive offerings, decreased costs and strategic flexibility, to enhanced brand awareness14. Despite these benefits, the ABS found that only “15 per cent of innovation-active businesses had at least one type of collaborative arrangement during the year ended 30 June 2015.”15

Working with intrapreneurship, entrepreneurship and innovation, the stumbling block to an otherwise fruitful collaboration I commonly see is one or more partners with an inflexible business model. A business model describes “the rationale of how an organisation creates, delivers, and captures value”16.

13. Ibid14. Frow, P., Nenonen, S., Payne, A., & Storbacka, K. (2015). Managing Co‐creation Design:

A Strategic Approach to Innovation. British Journal of Management, 26(3), 463-483.15. ABS Op Cit16. Osterwalder, A. and Pigneur, Y., 2010. Business model generation: a handbook

for visionaries, game changers, and challengers. John Wiley & Sons. p.14 Smart Disruption: a perspective on innovation


An Established Organisation commonly has a number of business units, each with a specific business model. The business unit/model is organised around a factor that shapes the natures of its creation, delivery or capture of value; for example customer type, product group, geographical region, or regulation. A Digital Native, particularly in the early stages, starts with a single business model – in this way it is a one business unit enterprise. When Established Organisations and Digital Natives partner, it's likely to occur between the Native and one business unit of the Established Organisation.

Flexible business models allow for partnering with other businesses to provide superior value and experience for customers and/or efficiency of resource use and costs for the partnering businesses. Conversely, inflexible business models depend upon exclusivity or control with respect to IP, production, customer relationships, distribution and/or network engagement to capture sufficient value to be sustainable. Put simply, the business models are not flexible enough to share the upside of collaboration (in terms of profit and other intangible benefits) with partners.

The opportunity to create collaboration-ready business models exists for early stage Digital Natives as well as those going through rapid growth and iteration. The opportunity

also exists for established business, particularly in periods of transformation – across the business or within individual business units. Thought leadership in business model innovation urges us to create and deliver value for customers while structuring the business for profitability and flexibility. Increasingly, this requires partnering. This process can start as simply as asking “Who can we partner with to solve this problem/deliver better value to customers/fill a real need?”, “What can we offer the partner?” and, “What do we expect from them?”.

3. Actively create, support and opt in to “matchmaking” platforms for collaboration - at an organisational level

In addition to staff engagement and productivity and business flexibility, a core imperative for innovation is successful commercialisation and profit growth. Recent research into successful commercialisation of innovation in our region found collaborating with local, established firms was critical to start-ups in building the skills, scope and multinational reach typically needed to establish reliable profitability.17

While platforms for partnership and collaboration exist (e.g.: incubators, accelerators and early stage investment programs),

there are exciting possibilities for increasing the scope of exchanges between all business types. All businesses can benefit from seeking out like-minded organisations who are trying to solve the same problem, delight the same customer or meet the same need.

At times, this may require engaging with potential competitors to share the common problems. At Sydney incubator Stone and Chalk, for example, established funding partners and start-ups are all prospective competitors and beneficiaries of advances in fintech. Despite this, the value of collaboration to solve common problems has compelled these competitors to co-create, promote, resource and evolve this hub.

At other times, proactively establishing diverse networks is required. The Australian Hearing Hub is a collaboration between researchers, educators, clinicians and innovators with expertise in linguistics, audiology, speech pathology, cognitive and language sciences, psychology, nanofabrication and engineering sciences. Each partner organisation has a deep specialisation that contributes to the achievement of the collective common goal, i.e. improving the treatment of patients. The depth of skills, experience and resources of the individual Hub members is complimented by sufficient breadth across the network.

17. Paradkar, A., Knight, J. and Hansen, P., 2015. Innovation in start-ups: Ideas filling the void or ideas devoid of resources and capabilities? Technovation,41, pp.1-10.

35

This means that treatment of hearing and speech disorders can be undertaken holistically, underpinning the Australian Hearing Hub’s position as a beacon for research, training and practice.

Collaborative networks exist and thrive when the level of success achievable by the network is greater than what is possible for individual members. The willingness of partners to share skills, connections and resources (including customer/market knowledge, technology, capital, customer networks and scaling capability), is a common key to vibrant and robust collaboration platforms.

In Australia, truly diverse networks of complementary collaborators tend to be more common in contexts where success comes from achieving broad goals. In these contexts, profit, market share or revenue targets are sought in addition to other sources of value, such as positive social impact (e.g.: better patient or student outcomes, the creation of knowledge). Perhaps it is the scarcity of funding, the complex nature of the challenge at hand or the promise of achieving a lasting positive legacy that draws

willing collaborators to work together, meaningfully. Whatever the reason for their inception, these networks can serve as an exemplar for more creative and robust commercial collaborative platforms. Entrepreneurs and intrapreneurs alike need look no further than their customers for inspiration. Going beyond organisational boundaries in order to collaboratively solve a pressing customer problem or meet a vital need is a critical first step on the path to positive market change and smart disruption.

The engine for smart disruption exists

In my work as an academic researcher, I often engage with companies that have reached maturity in local markets, foresee headwinds for future growth or acknowledge that their once successful business model is a natural target for disruption. Encouragingly for the national economy, many of these companies see this as an opportunity to explore new markets and business models, solve new problems and tackle emerging areas of customer need.

It is for this reason the National Innovation and Science Agenda is important to our collective future. New sources of economic resilience can be created by supporting the innovation capability of people and teams, the scope of collaboration-ready business units and the willingness and capacity of organisations to create collaboration platforms.

Smart Disruption: a perspective on innovation for Australian organisations clearly shows that Digital Natives and Established Organisations are willing and eager to evolve and adapt, embracing the strategic posture and capabilities that underpin success in the 21st century globally competitive environment. The engine for smart disruption exists. Fuelling the engine with support for partnership and collaboration is a worthwhile investment for our companies, markets and the Australian economy.


Never has business transformation been so pervasive. No organisation today can be complacent about their place in the market – they must continuously adapt and innovate to remain relevant and grow. In speaking with the many organisations – both Digital Natives and Established – through our research, we found that while all are actively working on customer-centricity, there were three key components at the centre of successful transformations where there is more to be done: Business Culture and Skills; Innovation and Agility; and Partnerships and Collaboration.

Business Culture and Skills

In Australia, we have reached a tipping point – we are seeing a shift to the next wave of growth through a services-based economy. Digital disruption is no longer a phenomenon exclusive to the IT department, its effects are being

felt right across the organisation; and ICT skills are predicted to become an entry-level requirement for many jobs of the future18. This combination of circumstances is creating the perfect storm.

While the rate of Australian ICT jobs is expected to grow more quickly than that of the workforce as a whole19, growth is not keeping up with demand. The ICT skills in high demand are those which are multi-dimensional – combining technical with soft skills. The Government is responding to this gap with a commitment of $48 million to inspire STEM literacy for the future, along with more immediate initiatives such as improved visa arrangements to attract entrepreneurs and ICT-skilled workers.

As business leaders, we also have a critical role to play in addressing this challenge. Building partnerships with academia can help to fuel our future skills requirements, while we can start

to address more immediate needs by creating the environments and cultures to attract and retain the best talent, growing their skills and empowering them to deliver innovation. Innovation is not a department; it’s an organisation-wide mindset, and having the right skills, culture and leadership in place will enable ideas and organisations to flourish.

Innovation and Agility

Only by equipping ourselves to innovate, will we be able to adapt to the need for constant transformation. This ever-ready state of change and ability to self-disrupt will mitigate many organisations’ ‘Fear of Being Uber-ed’ that we identified through our research.

Digital Natives show us the way with their inherent openness to change, to risk, to innovation; their agile and flexible approach to trial and error; and their culture of challenging the status quo.


18. Tomorrow’s Digitally Enabled Workforce: Megatrends and scenarios for jobs and employment in Australia over the coming twenty years. Hajkowicz SA, Reeson A, Rudd L, Bratanova A, Hodgers L, Mason C, Boughen N, CSIRO (2016).

19. Australia’s Digital Pulse: Developing the digital workforce to drive growth in the future. Australian Computer Society, 2016.

John PaitaridisManaging Director, Optus Business

Final thoughts

37

However, even Digital Natives can learn and leverage from others. What our research has shown is that where many Established Organisations have an innovation advantage over Digital Natives is in the embedded structure and governance to identify which ideas to pursue and to scale them for growth.

In addition to these formal processes however, embracing methodologies and concepts like 'test-and-learn', 'agile' and ‘fail-fast’, will allow innovation to sit easily alongside business as usual and to start delivering value.

This is a journey that Optus is on; we face the need to continuously adapt to stay ahead of changing customer demands. To address this, we have developed a company-wide approach to innovation, enabled by our Think Big ideas platform, as well as our Yes Labs and ThinkSpace, where teams follow test and learn methodologies to build innovative customer solutions.

Partnerships and Collaboration

However, we have learned that we don’t always have all the answers to solve innovation alone. We reach out to a network of partnerships through which we can extend our own skills and capabilities and benefit from the knowledge and experience of others. For example, we believe that it’s vital to collaborate with educators to address the future skills gap, which is why we’ve joined forces with Macquarie University to develop a joint cyber security education hub. Our shared ambition to protect Australia through cyber security has resulted in a partnership which seeks to narrow the STEM skills gap through cyber education, training, research and consultancy.

We are a founding partner of the Macquarie Park Innovation District, the goal of which is to drive innovation and competitiveness, to attract and retain talent, and to create inclusive employment and entrepreneurial opportunities for the community.

We were also the first partner of Fishburners, now Australia’s largest co-working space for start-ups; as well as being the technology partner of Stone and Chalk, Australia’s leading fintech incubator. Optus and our parent company Singtel also manage our own venture capital arms, Optus Innov8 and Singtel Innov8, through which we fund technology start-ups like BitSight and the IoT platform Jasper (which was later sold to Cisco).

These examples are based on a foundation of shared values and goals with our partners. They are built to deliver long-term mutual success, and we believe, will play their part in delivering Australia’s innovation agenda and its strong economic future.


As an educator, researcher and industry consultant, Lara combines her passion for entrepreneurship and innovation with her expertise in the area of value creation for customers, staff and stakeholders. Through her research and consulting background, Lara builds a bridge between the latest in global thought leadership, and the challenges and opportunities of implementing best business practice.

Prior to embarking on her academic career in 2005, Lara spent more than 10 years working in the private sector across the banking and finance, pharmaceutical and health, construction and engineering, advertising, design, IT and telecommunication industries.

Lara draws on her experience in the corporate sector and her ongoing consulting work throughout her role as Lecturer in Management at the Macquarie Graduate School of Management.

Dr Lara Moroko

Macquarie Graduate School of Management

B.Bus (Hons) (UTS), MCom, PhD (UNSW)

She is responsible for the co-creation of unique and immersive learning and teaching programs, where students wrestle with live business issues while working alongside industry partners from social entrepreneurs and start-ups to ASX 100 companies. Specialising in innovation, entrepreneurship and strategy she is a lecturer in the MBA, Master of Management and Executive Education programs.

Lara has been widely published in academic, management and general business media in Australia, New Zealand, the United States and Asia. Her research areas include inter-relating and implementing Design Thinking; innovative business modeling and "lean" practice; and the creation of value through enhancing employee, customer and student engagement.


Dr Lara Moroko biography

39

With thanks to:


© 2016 Singtel Optus Pty Limited.

Join the conversation#SmartDisruption

optus.com.au/business/smartdisruption

@optusbusiness

youtube.com/user/optusbusiness

yesopt.us/li

Blogyesopt.us/blog


https://twitter.com/optusbusiness

http://youtube.com/user/optusbusiness

https://www.linkedin.com/company/optus-business

https://yescrowd.optus.com.au/t5/Optus-Business-Insights-Blog/bg-p/OBInsightsBlog