Purposeful Business, Purposeful Country
24 September 2016
This opinion article by Business Council Chief Executive Jennifer Westacott was published in the The Australian on 24 September 2016.
We have an expression we use constantly at the Business Council: “Doing nothing doesn’t mean nothing will happen”.
Why? Because purpose and intent really matter.
People with purpose usually lead meaningful lives. Organisations with purpose usually succeed. Countries with purpose usually have better living standards and are more resilient.
The alternative to purpose – inaction, cynicism and inertia – usually means at best muddling through, and at worst, being overwhelmed by external forces or allowing others to imagine your future for you.
As a medium-sized economy in a highly volatile world, Australia is currently feeling many of those external forces acutely. And they are not going to go away. If we want to ensure enduring prosperity for all Australians, we must act now to ensure we foster a purposeful and competitive business community, as well as a clear, shared vision of what an Australia with purpose would look like.
Let’s start with the business community.
As someone who is privileged to spend a great deal of time with the CEOs and Chairmen of Australia’s top companies, I’d like to throw out a challenge. While Australian business has much to be proud of, including some true world-leaders within our ranks, I’m not convinced enough of our organisations have got a genuine focus on purpose.
I’m not sure they constantly ask the question – why?
Yes, many have well-crafted mission statements. But that is not the same as a true understanding of the “why” – a clarity of direction that is shared across the organisation.
There are a few things we can do to help clarify that purpose.
First, context is still king.
I am surprised sometimes that some companies do not really understand or constantly reset their understanding of the context in which they are operating.
Right now and into the foreseeable future, what happens in Asia, not just in China, matters for Australian business and, indeed, for all Australians.
It’s not a blip on the economic timeline; it’s a fundamental transformation of global economic dynamics. But I suspect some Australian companies and indeed policy makers want to believe that we will eventually return to our comfort zone: North America and Europe will drive global economic growth.
Of course we want growth in these jurisdictions to rebound. But it is time to accept that the rise of China and other emerging Asian economies means nothing will ever be the same again.
Companies who are not placing key leadership in Asian countries, who are not building real, rather than superficial, Asian capability will either be overwhelmed or left out.
Entwined with this new reality of the rise of Asia is a second critical contextual issue, that of the evolution of global value and global supply chains.
All Australian business leaders should be asking: Where are the emerging markets? What are the sectors that will thrive? How is the production process transforming? What is happening in the services sector, where are the premium opportunities? And where can our company and capabilities tap in?
Australian companies often get overwhelmed by the scale of Asia. But that scale, coupled with the fragmentation of supply chains, is an opportunity, not a threat.
However, to tap into those growth opportunities, you need to have a purposeful strategy. Better understanding context needs to be coupled with the right mindset to drive real purpose.
In this regard, Australian companies need two mindset changes.
The first is putting the consumer at the centre of everything they do.
Consumers are more empowered than ever.
They have more choice than ever.
They will be the innovator, the regulator.
They will overwhelm business models.
Companies who do not relentlessly pursue a deeper understanding of the consumer, will fail.
This must be done with purpose.
Building a deep understanding of what consumers want after they have started to walk away is very hard to do.
Part of that understanding comes with a serious investment in data analytics. Companies who work with their customers, who deeply understand them and use big data to tap into trends – will have a comparative advantage. They will have an even greater advantage if they secure a trusted environment for that data.
To my second mindset change: I strongly advise all Australian companies to change how they think about the digital revolution. Specifically, we need to think constantly about service disruption and adaptation, rather than about innovation programs and technology solutions.
When I had a sabbatical in Silicon Valley last year I was intrigued at how seldom people used the term innovation. Instead, they talked about disruption and adaptation, all driven by that deep understanding of the consumer.
They talked about imagining the services people wanted and removing the pain points for consumers. They did not talk about products and technologies which, as we know, are in a state of constant disruption.
So whenever I hear companies talk about innovation funds or innovation initiatives or about how technology will fix their problems, I worry. It narrows the domain, positioning innovation as a program, not part of the DNA. And it probably won’t work.
My third recommendation for companies wanting to act with purpose is about valuing and investing in skills and capabilities.
Companies that leave the development of their people to chance are taking the greatest risk imaginable.
Jobs will change profoundly. The nature of work will change.
We cannot predict the exact nature of the jobs at risk and the jobs that will be created. We cannot protect against much of this. But we can protect and build the skills and capabilities of our people.
We can give people those generic skills of problem solving, of design thinking, of team work, of effective communication. These skills will give them more resilience and durability than most specific occupational skills.
We can think about the cultures that will allow people and companies to thrive.
A crucial task now for all Australian businesses is to rethink the diversity challenge. Viewing diversity as part of the new world of work and the modern agile organisation rather than a tick box exercise on gender is essential.
I strongly believe that diversity in its fullest context, that is not just gender diversity, is the greatest protection from disruption. Narrow skill sets, narrow mindsets and narrow gene pools will hold organisations back. Open cultures, different views, new ideas, will propel organisations forward.
Finally, regarding business, companies of all sizes must actively rebuild trust and leadership.
The business community here and overseas has lost critical trust in recent years. I strongly refute the idea that our cultures are worse; in fact, in my experience and observation, they are better.
But the rise of social media and the evolution of digitally driven campaign techniques means mass anti-business campaigns can be mobilised quickly and effectively by activist groups.
In the often hyperbolic and unbalanced world of social media, the rational truth becomes more complicated to explain than a simple lie. But it won’t be good enough for business leaders and people like me to express frustration.
Indeed the business community needs to constantly re-examine how we communicate and the way we are doing our core business, not just our corporate social responsibility. How we treat our staff, our customers, and our suppliers over the long-term matters to reputation. We must ask ourselves: are they our partners, or just resources we utilise?
Are we prepared to face up to systemic issues that damage reputation, like tax transparency and supplier payment terms?
Do we examine how we can create more shared value from our core business?
Do we get out in front of issues and explain them better?
Do we mobilise our people, our shareholders, our suppliers to get out at the local level and talk about what our companies are achieving on the ground?
Do we remind the community regularly that business is not just a group of executives but the 10 million Australians who currently work in private enterprise?
Finally, business must, take an active leadership role on the key issues confronting our country.
To date, too many business leaders have been reluctant to speak out, but that can’t go on. We need every business to see thought leadership as core business.
If we do not, we are surrendering to a set of forces that will see the rise of policies which are anti-growth, anti-corporation, anti-innovation, as well as isolationist, xenophobic and just plain dangerous.
The hardest hit victims of these policies will not be the people sitting around board rooms. They will be the people who lose their jobs. The people whose wages don’t go up. The small business people who rely on a well-functioning business eco system to survive.
The people whose expectations of the social safety net will not be realised because there is simply not enough to go around.
The people who want a mass education system which can’t be delivered, because revenue is not there to pay for it.
I don’t believe there has ever been a more important time for business to speak up.
Of course, business can’t do it alone. And so, to what a purposeful country looks like – and the leadership it will take to set a course with purpose.
Let me start by saying that right now, I think we are at risk of losing our collective sense of direction and purpose. And I think the community senses we are in danger of drifting.
We have had five prime ministers in the last eight years. This is disruptive and costly and has stalled reform and confused our purpose.
Think about a company that every 18 months changes the Chair, the CEO, the CFO and pretty much everyone on the board, and restructures each of its divisions. What would be happening to that company’s share price? Its reputation?
A purposeful country would not continually put off the big work needed to put the budget in order.
It would not run the risk of giving future generations crippling rates of taxation because hard decisions can’t be made now.
It would not leave the safety net vulnerable to external forces, some of which we can’t predict.
Instead we would begin the careful, methodical redesign of our major programs of expenditure to make sure they are meeting people’s needs, that they are efficient and that we can pay for them in future.
A purposeful country would not leave the confusion, duplication and buck-passing of the Federation unchecked.
Instead, we would ask: what do we want to deliver for the citizens of Australia in areas like health and education.
What are the incentives that will drive better service delivery? And who is best placed to take responsibility?
A purposeful country would not leave our competitiveness failing, stalling or declining.
We would not despair our stagnating multi-factor productivity, which we know is at the heart of living standards and higher wages.
Instead, we’d encourage business investment through pursuing lower taxes, better regulation and lower costs.
We’d make our workplaces more flexible, and more creative. Not to destroy the safety net, but to protect it – by protecting people’s capacity to have jobs into the future.
A purposeful country would not neglect the potential of its areas of comparative advantage.
Driving our comparative advantages is about clearing the way, with purpose and intent, to maximise our strengths.
A purposeful country would not idly watch South Korea, the UK, Germany, New Zealand and much of the developed world drive through deliberate, purposeful policy, the areas where they know they can succeed on a global scale.
A purposeful country would not try and prop up unsustainable companies and jobs.
A purposeful country would develop and protect the skills and capabilities of its people. It would make serious investments in them.
To that end, a purposeful country would not allow our VET system to fall into disrepair.
We would put Vocational Education and Training (VET) front and centre of the national agenda, not as an afterthought. We would see it as a critical tool to manage the transition underway in our economy.
A purposeful country would not continue to pursue teaching methods and an approach to education, which is actually producing worse results.
Instead, we’d focus on teacher quality, science and maths, and new ways of teaching through inquiry-based learning, not just academic learning.
A purposeful country would not send multiple mixed and confusing signals on foreign investment.
Instead, we would understand the strategic purpose of investment. And we would set rules that were consistent and transparent.
Foreign investment has built our economy to date and will build it into the future.
Many people call for the government to produce a plan, and perhaps they should.
But maybe the starting point is to have purpose. To have intent. To act with determination.
And we are just not seeing enough of that.
Australians know it. And they know one other thing for sure. They do not feel better off.
The fundamental question is: what do we need for Australians to feel, and really be, better off?
That is Australia’s leadership challenge.
Finally, to rise to that challenge, people with purpose, companies with purpose and countries with purpose – all of us must have strong values. Without values, purpose can often be a to-do list. Or it can be misdirected.
I believe in the values of citizenship – honesty, compassion, respect, responsibility, and courage.
As we advance with purpose, we must remember that values-driven people make great contributions, no matter what part of society they’re in.
Values-driven organisations with a strong sense of purpose are successful over the long term.
Values-driven governments with purpose can withstand major shocks, major disruptions and protect the living standards of their citizens.
Values are our foundation; purpose is our engine. Combined, I believe they can drive enduring social and economic prosperity for all Australians.
This is an edited version of a speech given to the Deloitte Australia Partners’ Meeting 2016.