Margie Seale FAICD has experienced digital disruption firsthand. She was managing director and publisher of Random House when, as she puts it, “the whole e-book thing happened” with the release of the Kindle by Amazon in 2007.
“Publishing companies were left scrambling because Amazon hadn’t told them very much about what they were doing,” Seale recalls. “The Kindle came hot on the heels of the iPhone and since then we’ve seen that as soon as a new device is launched, consumers automatically assume that everything they want will be available on the device. We saw with the launch of the Kindle, however, that a lot of publishing companies had not got their e-book programs in order.”
Fortunately, says Seale, Random House was ahead of the game and had many books ready to go, but it still took the publisher some time to get the whole list turned from print to digital. In addition, many internal systems and new commercial issues had to be addressed, fast. It was an example, says Seale, of how an organisation from outside the traditional business world can turn an incumbent’s business model upside down.
Seale is now a non-executive director of Telstra, Ramsay Health Care, Bank of Queensland and Scentre Group – all of which are having their business models transformed to varying degrees by new technology.
Her career as a company director began in 2012 with her appointment at Telstra. In November 2016 she was named the “rising star” of the boardroom in a report on board diversity by Ownership Matters and the Australian Council of Superannuation Investors, after adding two additional publicly listed directorships to her portfolio in a year. She is one of only a handful of women to hold four major company directorships.
The digital landscape
When discussing the role of technology in business, digital disruption is not a term Seale likes anymore. “The word disruption is overused. In 2007, the Kindle was a very early example of industry shaping disruption. Disruption now is business as usual and we all need to get used to it, if we aren’t already,” she says.
“What people really mean when they talk about digital disruption is the impact on business from – and customer expectations of – technology, whether that is systems and processes, the internet, mobile devices, using data more cleverly, better or different software, new product offers or disparate storage methods. These can be as much internally as externally focused.
“In many cases it’s how a company’s systems meld together to make the customer experience better,” Seale says. “I think business has gone way beyond thinking digital is just ordering things online for example, which is only a small part of the digital ecosystem.”
Indeed, one of Seale’s key points is that “digital” is not a separate thing anymore. Digital is so integral to the way that businesses operate that it’s anachronistic to talk about digital in isolation.
Experiencing disruption in the publishing industry taught her that things can happen very quickly and from external sources. “While the retail book trade hadn’t stood still, it had changed slowly. Then, despite seeing bigger change coming, it suddenly changed very rapidly and many weren’t ready, but your customers’ expectations when new technology arrives is that your company will be ready,” she says. Interestingly, e-book sales grew from five, to 10, to 15, to 20 per cent of publishers’ revenues, but have since stalled at between 25 and 30 per cent, Seale notes.
Another lesson that Seale has observed is that disruption can provide companies that traditionally had a business-to-business model with opportunities to engage directly with end consumers. For instance, publishing houses which traditionally sold to bookstores and major retailers, but like many in the fast-moving consumer goods space, marketed and promoted its products to the end consumer. One important outcome of the technological revolution is companies’ ability to gather data about their consumers and use it in product development, and segmentation and marketing strategies, she says. “The data that’s available should, in theory, make you more efficient and more targeted to the consumer or customer you’re trying to reach.”
Seale grew up in Dural when it was a rural district on the outskirts of Sydney. Her father was a chemical engineer and had a growing industrial chemical business, so business, sales and customers formed part of the family’s daily dinner table conversation. She devoured books on the 90 minute bus ride each way to high school in North Parramatta, and studied English, French and History at Sydney University and held an ambition to work in journalism or publishing.
Later, after 13 years at Random House, Seale says she started to consider what her next career phase might be and decided she was interested in the variety that a non-executive directorship career could provide.
She was accepted into the Australian Institute of Company Directors’ (AICD) Chair’s Mentoring Program with non-executive director Diane Grady AM FAICD as her mentor. Through the program she came into contact with the broader business community and met a range of board recruitment specialists. One of them put her on the long list for a position on the Telstra board.
Not many directors start their board careers with an appointment to a company with the size and profile of Telstra, but Seale says the telco has an “excellent” induction program.
She spent the first six months learning all she could about the company, spending time in call centres, with teams from finance, product and networks, and going out with technicians in the field.
“I spent a lot of time learning, just as most directors do when they first go on any board. It was just a bigger gulp than a lot of companies,” she says.
“Telstra is very good at continual director education and the management team is switched on to bringing the board with them as far as they can. So much of the company involves new technology and staying abreast of that through management/board education is important.”
Like many boards, the Telstra board makes annual trips with management to tech centres globally – in 2016 it was to Silicon Valley – to visit major global technology players and start-ups. “The trips focus on seeing where the new thinking and products are, what the new technologies are, and who and where they’re coming from. It’s also interesting to see how those companies operate and what their cultures look like,” she says.
Assembling the right board for the digital age requires diversity. This doesn’t necessarily mean stacking the board with young tech professionals, “but it helps to have people or a person who lives in that world,” Seale says.
Likewise, not everyone needs to be a digital expert, “but you certainly want enough people around the table to understand the company’s processes, products, customers and how technology is changing them.
“Directors, as do senior company leaders, need to understand technology and the impact it is having on the businesses and sectors they are involved with,” she says. “If there are new products or new processes being driven by technology, or investment in technology is required, as a director, you need to be able to understand the decisions that have to be made.”
Seale believes continuing director education is critical and took herself “back to school” to keep herself current on digital. Since exiting executive life she has completed courses at Stanford, Harvard and Chicago Booth, in addition to some computer coding and data courses. In one of these recent courses she experimented by building her own basic app. She has further education plans pencilled in for 2017.
Seale also reads widely on technology, in the tech sections of the world’s major newspapers and magazines, in books and online. “I try to incorporate it into my life and my ongoing education as much as possible.”
One of the big challenges for directors is how companies can keep performing while they are changing (Seale remarks that ‘transforming’ is another overused term), particularly while the environment is also changing so quickly around them.
“It’s not about old and new. It’s about how you revolutionise or adapt the core business to ensure that, as far as possible, its future success is assured,” she says. “There are major revolutions impacting many companies and how you keep up with them and manage to keep ahead of them is something that is very much on my mind as a director.”
Customer expectations are changing rapidly and companies and directors need to think about a total new level of customer expectation, Seale says. When one company offers a fantastic app or a brilliant customer experience – such as Uber or Airbnb – then companies which don’t offer the same level of experience all of a sudden don’t look as good. Consumers expect all companies to keep up.
Companies need to be “obsessed” with their customers and their customer experience, and that’s what has struck Seale most from her trips to the west coast of the US.
“Their focus on customer experience is above and beyond what I see in most companies and organisations in Australia. Focusing on the customer and the experience – it doesn’t matter about the product – is very clarifying for boards of directors.”
Seale quotes a phrase that is widely used in Silicon Valley: “Eat your own dog food.” It means staff and boards should use their own products and be customers of their own organisation. It’s an approach Seale follows with her own directorships.
Seale believes companies should plan to routinely disrupt themselves before a new technology comes along that is easier and cheaper to use, and which customers will jump on. The days of customer inertia are long gone and the speed of social media, for good or ill, means the power of word of mouth is stronger than ever and customers can move quickly. “I think it’s important to look at where the specific company is making a lot of money, perhaps even a disproportionate amount of profit. Disrupting yourself might be better than letting someone else do it, consequently ensuring those profits don’t disappear completely,” she says.
Companies need to think about what it is about them that annoys their customers. Seale says it comes back to having an “obsession” with the customer, because companies which are constantly thinking about their customers will probably think of products or services that improve their customers’ experience, which may lead to them introducing those potentially disruptive innovations themselves. It’s not easy to disrupt profit pools and such decisions can be difficult, but if a board and management team do not consider it, someone else eventually will, she says.
Seale talks about revolutionising core business and turning what a company already does into a business that will be successful in the future. But this isn’t always about adding on new bits. The real skill is how to make what you already do relevant and attractive to customers in the future and how to evolve that.
On her trip to the US with the Telstra board last year, Seale visited Amazon Web Services, and found they have an institutional “yes” culture rather than an institutional “no” culture. Essentially, the company is more likely to try something than not. They have a real skill in funding innovation and new ideas, and that is defined in their sense of purpose and the DNA of the company, she says. Learning that skill isn’t easy for companies and it’s one that Amazon defined as part of its personality from the beginning.
“I find the organisations that have really defined their sense of purpose – and where both board and management really believe in it and think about how it’s communicated – can be more successful and achieve higher staff engagement scores,” she says.
“Of course people want to earn money, but most people also want to feel part of something bigger, something beyond the financials. When you go somewhere like the west coast of the US, the sense that they are changing the world, apart from wanting to make billions of dollars, is something that drives them.”
Pursuing innovation doesn’t mean that all organisations need to behave like start-ups, and boards should consider different ways of structuring their organisation. “Some organisations work well with the so-called start-ups/new ventures separate from the main company and some can do it within the core. How to do it best is something boards and management ask themselves frequently. There are lots of issues to consider beyond commercial return and growth, and this includes cultural issues. Apart from everything else, as a staff member, do you want to be the person stuck in the ‘old’ part of the business versus the ‘new’? And there can be complexities when trying to bring the ‘new’ business back into the core.” Seale says.
She adds: “If you can keep evolving the core so that it’s relevant for the future, you may be able to prevent needing to have a separate start-up environment somewhere else, figuratively or physically. Making sure resources and investment are available to whatever extent they can to help the core business grow and flourish should be a priority.”
All of the companies Seale serves on are embracing digital. At Telstra, in the last financial year, 58 per cent of all consumer services were completed online – and the amount of data carried on the Telstra networks grew 68 per cent over the past year. Traffic on the mobile network has increased ninefold over the last five years. These are huge changes in short timeframes and are indicative of how differently people are living, Seale says.
Bank of Queensland is using technology to reduce the time to “yes” in core processes like loan origination and is leveraging social media strongly in local branch areas. Similarly, Ramsay Health Care is a leading participant in the digital reform of Australian health care, partnering with the Federal Government’s newly formed Australian Digital Health Agency (ADHA). The agency is building a supply chain where medication management and clinical care information can be shared across different health providers, with the patient or consumer at the centre. Ramsay has partnered with the ADHA to develop a smart phone app for doctors to securely access patient information anytime, anywhere.
Bricks-and-mortar shopping centre owner Scentre is fast-embracing the digital world and the board and management team spend much time imagining the shopping centre of the future. The company recently appointed its first director of customer experience and has a variety of digital pilot programs ready to launch. The company was an early adopter of data use, and has had a strategic analytics, insights and research team for some time with the aim of driving higher shopper advocacy and ultimately sales for its retail partners.
“At the moment, if I wanted to buy a particular pair of shoes in a Westfield shopping centre online, it’s possible, but not easy as online inventory systems vary a lot,” Seale says. “In future, it would be great if I could go onto the Westfied website, then click and collect at a location that works best for me. Or I could just go to the store where they would have put them aside for me to try on.”
Outside the boardroom
Outside of her directorships, Seale and her husband, David Hardy, have founded and run Ponder & See, a philanthropic literary travel company. Twice a year they take interested readers to writers’ festivals and instead of taking the margin of a travel agent, they use the profits to fund writers or the festivals themselves.
In the past couple of years they have taken groups to festivals in Ubud in Bali and Auckland, and will take a group to the Shanghai International Writers Festival later this year. “That trip booked out in 24 hours,” Seale says. “They’re great fun, interesting trips.”
As for her own reading, when Seale turns to a book to relax, she prefers fiction. Most recently she has enjoyed The Good People by Australian author Hannah Kent and A Little Life by Hanya Yanagihara, “which is a remarkable book.”
Seale is also involved with Code Club, a voluntary organisation that teaches coding to children between the ages of nine and 11 across Australia. It aims to “to give every child in Australia the skills, confidence and opportunity to shape their world,” and provides after school coding clubs, curriculums and teacher training.
“Coding is only just beginning to be on the primary school curriculum in Australia and it will take a while to roll out thoroughly. That’s something that concerns me. Coding awakens you to a whole lot of STEM skills. It’s about problem-solving and creativity,” Seale says. “What’s important for children is to know not only that they can use this technology ‘stuff’ but they can actually create it themselves as well.”