Innovation is on the rise in Victoria

The AICD is working to ensure directors prepare for a wave of innovation and the challenges it will bring.

Innovation is not just for startups, carsales.com director Kee Wong FAICD told AICD’s most recent Leaders’ Edge Lunch in Melbourne. Wong explained to more than 200 Victorian AICD members how corporates approach innovation the wrong way — and why current thinking must change.

“Many boards think of innovation as a planned event, like a strategy day, but every day should be an innovation day in business,” says AICD director Wong. “Any entity that creates a strategy without thinking of technology as its core will have a blind spot in the strategic thinking process.”

Wong says time for innovation is becoming less forgiving given the global scale and pace of change across some sectors. He points to photography, from Polaroids and printed images to digital cameras (and the demise of Kodak); the evolution of the smartphone and the rise of Apple (and Nokia’s fall from grace); and the disruption in music, from tape cassettes and the Sony Walkman, to CDs, iPods and now music in the cloud. Wong likens the pace-of-change scenario to being on a beach and looking at the white line in the horizon. He calls it the “innovation tsunami”, and it’s coming straight towards us.

“If boards don’t start thinking differently about innovation, they will be disrupted,” says Wong.

“It’s just a matter of time. And if you haven’t seen the line on the horizon before, stay on the beach.”

He says corporates need to adopt an “agile” mindset in order to survive — innovation needs to become part of their DNA — but shouldn’t forget the difference between innovation and invention.

“If you think about some of the most successful companies that exist today, they haven’t invented anything new, rather they have innovated products that already exist.”

Wong says the big winners are platform builders and diversifiers, such as Amazon, Alibaba, Facebook and Tencent, who grew their market share by developing new products, innovating old products and creating new income streams.

“It’s not about taking your business global either,” adds Wong. “Because with the internet, every business is global. It’s about the big players challenging your existence and how you are going to innovate to remain competitive in the face of it.”

Wong says innovation starts with the board and the chair plays an important role in ensuring it remains a priority. “The chair and directors set the tone and innovation appetite across the organisation. They must allocate resources towards it. Directors are responsible for strategy and risk management, and innovation requires balance of risk. Good governance is a combination of the two elements executed well.”

Nexus Connections

AICD’s Director Nexus program helps members connect through a forum that fosters career growth.

AICD’s Director Nexus program offers members who are non-executive directors an opportunity to connect with other directors in a confidential forum. Small groups of directors and chairs meet monthly to share experiences; discuss emerging issues and trends; access supports and advice; and network to foster growth of their businesses and careers.

Jo Murray MAICD, director, consulting services at Orion Consulting, joined the Victorian Nexus group five years ago. Murray’s motive was ongoing personal development but she says her involvement has allowed her to look at governance issues with fresh eyes.

“Director Nexus is an organic environment, not like a seminar or course which can be sanitised,” she says. “It is honest and gritty. We have rich conversations about what is surfacing in the public domain and across the governance landscape.”

Murray says members are encouraged to talk about their own experiences from the boardroom or workplace in a confidential environment.

“It is a platform to compare, learn and give advice — but only when asked for,” she says. “It’s a real-life narrative about how we show up as directors, when it’s going well or not so well, how we navigate conflict, find courage in situations, grapple with issues, and pathways for progress. And we never name names.”

Discussions cover policy and strategy development; corporate culture; and soft skills, including how to communicate more effectively in a board meeting or managing and improving relationships with fellow directors and the executive team. Experts regularly present to the group on relevant topics, such as cyber security, which helps with policy development and the questions they should be asking of executive management. v

“Discussion topics are not just tactical but strategy shaping,” says Murray. “They cover culture, behaviour, organisational issues, board papers and more.

We share our vulnerabilities, we learn through storytelling, people talk with candour and we build trust with each other.”

Jan Begg FAICD, managing director of Azulin Pty Ltd, joined the Victorian Nexus group in 2013 when she was considering a change in her director career. “At the time, I was considering what my next board role would be,” she says. “I thought Director Nexus would be a good way to explore my options and be exposed to other sectors and organisations. It allowed me to network, meet new people and open up board opportunities I wouldn’t have considered if I wasn’t part of the program.”

Begg says a benefit of Director Nexus is that it has given her the opportunity to look at the topic of governance more broadly. “This experience has allowed me to focus and reflect on the practice of being a director in general terms, without being concerned about solving a particular issue or challenge,” she says. “The group looks at all of the issues that confront boards, the relationships with management, and how that varies across organisations and sectors.”

Hugh Burrill GAICD, non-executive director of IDT Australia and deputy chair and non-executive director of Nova Aerospace, says the program helped him navigate specific governance issues and challenges facing boards and organisations he has worked for, including navigating fast growth.

“Going from a small business to a large proprietary company in a short time meant certain things deemed acceptable and common practice were no longer applicable with the increasing number of stakeholders,” says Burrill, who sought counsel from the group. “I needed to ensure everything was correct from a governance perspective.

“Hearing others’ approaches and insights and what’s been ‘tried and tested’ had a big influence on my decisions during this time, and continues to do so generally in the boardroom. It has made me a better director.”

Burrill says themes arising from the banking Royal Commission, chiefly corporate culture, trust and the social licence to operate, often are raised in the forum. The group also discusses socially oriented trends such as the same-sex marriage debate and how organisations can respond to such developments.

“The mix of directors, organisations and sectors in our group means I hear divergent views on big issues. Across a range of governance issues I found it invaluable to hear how others approached them. The Nexus group provided a confidential sounding board which helped me shape my views and allowed me to take ideas and suggestions back to the boardroom for discussion.”

AICD in Victoria

The Victorian division of the AICD has more than 11,000 members – 42 per cent from the private sector, 22 per cent from NFP, 15 per cent public and 12 per cent from listed companies.

There were challenges across the governance landscape throughout 2018, namely the issues raised by the banking Royal Commission.

In its wake, Michael Whitty MAICD, acting state manager of the AICD Victorian division, says it is more important than ever for AICD to be the independent and trusted voice of governance, committed to building the capability of a community of leaders for the benefit of society.

“AICD Victoria will play its part in helping to achieve this by continuing to work closely with our members, in general, but more specifically via a number of sector and regional member committees,” he says.

“The SME, healthcare and NFP committees assist our team in choosing relevant topics and speakers [for events] and our six regional committees perform a similar function around the state.

These committees are also an important direct link to our member base, helping us identify ways to increase the value and relevance of AICD membership.”

Currently, there are more than 1300 members across regional Victoria in Albury-Wodonga, Ballarat, Bendigo, Geelong, Gippsland and the Great South Coast.

Whitty says in 2019 the Victorian division will continue its work to increase diversity on boards.

“The Victorian state government will offer scholarships in conjunction with AICD to assist in building gender diversity, and we will also offer scholarships to regional members and the NFP sector,” says Whitty.

“I believe 2019 will be an important year to strengthen the voice of governance and to work more closely with our members to ensure it can be heard.”