By Peter Munro & Nigel Andrade
Success can have two common bedfellows – hubris and apathy. Hubris – that everything unfolded solely on account of our individual enterprise and unique capability. Apathy – that nothing will really ever change for the worse.
How did Australia find itself with one of the highest GDP per capita amongst OECD nations produced by an economy that has not seen a significant r recession in decades?
One of the initial drivers of Australia’s prosperity was the privatisation of key government assets including telecommunications, utilities and financial institutions during the 1990s. This sudden shift to a more competitive landscape forced Australian companies to strive for greater operational efficiency, which contributed to increases in average profit margins of between 8.3 to 11 percent. A further welcome side effect of this move was an increase in the small and midsize enterprise population, which nearly doubled in numbers between 1994 and 2014, a key factor in Australia’s healthy employment rate.
A second factor was the fortuitous move away from Europe centric trade and increased trade with Asian neighbours, just as the Asian growth journey began. Asia now represents four times Australia’s trade volumes with Europe, and continues to grow.
Thirdly, the brain child of the Keating Labor Government in 1992, the Superannuation Guarantee Scheme has increased total savings across the nation to now equal Australia’s annual GDP of US$1.5 trillion as well as providing working Australians with greater access to retirement funding through compulsory employer contributions. This has provided enormous value not only to the senior citizens of Australia in terms of lifestyle, but the creation of a pool of investment funds that have been and should continue to fund the growth of Australian enterprises.
While these events have indeed been fortuitous, some would say “lucky” and others would argue “prudent or farsighted”, future prosperity will need to be more carefully designed.
To celebrate its 20 years in Australia the Partners of A.T. Kearney collectively developed a view on what it would take to remain “lucky” by Australia’s own design going forward. In our book, “Australia 2034: Luckier by Design” we posit that while Australia should in no way be held up as a “Poster Child” for the rest of the world, there are lessons to be learned from both the journey and the capabilities advocated to successfully navigate an unpredictable future.
One capability set we call out recognises that value is on the move and often not to be found in the same place tomorrow as it is today. Fundamental to the future is nurturing an expansive mindset. Businesses need to foster the constant exploration of new value-creating opportunities and genuinely confront and challenge their inherent biases. Working smarter with Asia – beyond resource exports and beyond low cost manufacturing is the key to accessing the real value pools on Australia’s doorstep. We are only just learning how to leverage our Asia-fluent workforce to shift our ability to engage with Asia, transcending cultural and regional boundaries and engage as genuine peers in the local markets across Asia. Multi-cultural communities in Europe, Africa and North America have the same opportunity to lift their game in thinking beyond traditional boundaries.
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Another lesson Australia is learning the hard way is that we must reshape how the public and private sectors collaborate to unlock shared value. Generations Y and Z are demanding attention be given to social issues such as healthy eating, online privacy, responsible lending, and environmental stewardship. Politicians and regulators at times struggle to keep up, and businesses will need to take up the mantle. Organisations that respond in ways that go beyond Corporate Social Responsibility can shape new markets and will earn the support (as consumers and employees) of our future spenders and thinkers.
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Business has to get better at responding to disruption. Banking and retail are examples of industries being particularly disrupted by the rise in digital technology which is changing the nature of traditional value chains. We all know we need to become more “Agile” but how exactly does one Inject Agility into an organisation’s DNA?
Businesses need to “Think Agile”. We need to start distinguishing between assets and activities that will be valuable for future success and those that may be threatened in order to put the right focus on incubating next-generation value propositions and not merely riding the inevitable decline of legacy businesses.
Beyond thinking, we need to reflect Agility in our behaviour and this needs to be nurtured as a capability – not just an intention. Establishing a diverse workforce, for example, can genuinely unlock agility in organisations. Diversity feeds new ideas and problem solving, and challenges management styles and organisational biases that block innovation and responsiveness. We must continue to challenge unconscious biases that cause us to choose to work with people and ideas that are similar to us and current conventional wisdom.
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A further capability set talks to “Innovating to Unlock Value”. Australian companies, like their global counterparts, are embracing the customer-centric mantra. But some are going further and focusing on “Pivotal Customer Events” – those windows in a customer relationship when the customer has a genuine goal or problem that needs resolution – often requiring companies to reach beyond their boundaries and become “experience aggregators”.
Other pathways to innovation involve nurturing productivity and making better use of data and analytics. Productivity is not only a cost reduction program but also a capability focusing as much on driving “more value for money”, as on reducing costs. Data (big or small) is in itself not the holy grail – rather it is the organisation’s capability and leadership deriving new insights and making increasingly better decisions that matters.
We believe we can create our own luck over the next two decades. We encourage nations and businesses around the world to reflect on your history, and then ignore it; to consider your future, but not predict it. Rather focus on building some of the capabilities outlined and you will be better prepared for future success.