From rapid digitalisation at Pos Malaysia (Malaysia Post), to internet pivots at Museums Victoria and Singularity University in the United States, and round-the-clock collaboration at the global vaccine alliance GAVI, 2020 tested the capacity of board and executive teams to respond to immense risk and volatility, and clearly highlighted the role of technology and leadership.
The AICD’s Governance of Innovation and Technology Panel, set up in 2017 and chaired by Kee Wong FAICD, consists of 28 strategy and technology specialists whose work spans the globe. It provides expert guidance to the AICD’s ongoing innovation work in deepening the culture in Australian boardrooms for appropriate risk-taking.
When members of the panel met in March, boards were dusting off their crisis management plans, and the findings of Driving Innovation: The Boardroom Gap were fresh in their minds. The 2019 AICD-University of Sydney study — Australia’s first in-depth look into director practices on innovation — revealed that while boards recognised the importance of innovation, most were struggling to prioritise and implement it. Directors lacked digital literacy and organisations were lagging behind their international counterparts.
Survival vs opportunity
During subsequent months, directors and executives lived gripping real-time examples of strategic innovation that will become a source of learning for years to come.
In September, the AICD panel met again and Gavin Slater GAICD, CEO of Melbourne SME finance startup Nimble and former CEO of the federal government’s Digital Transformation Agency, noted that the year had highlighted two types of responses from organisations: survival innovation and opportunity innovation.
Commonly, directors related that many digital transformation and improvement initiatives already underway suddenly had to accelerate when COVID-19 hit. “We had it on the plate, but it was not moving as fast,” said Yasmin Mahmood, chair of Pos Malaysia. “We literally had to dive into innovation and new ways of doing things.”
On the one hand, parcel post was booming, but costs were also up, while voice calls were coming in at three times the normal volume. A special board committee was set up — drawn from directors and the executive team — to examine cashflow, customer service and handling. The board hunkered down on strategy and innovation. Chatbots were brought in to help with customer responses. Realising that digital signatures would be the “killer app”, Pos Malaysia quickly went to “proof of concept”, chose a strategic partner and put the organisation in a position to launch.
“We are still on this journey but, on the good side, we feel innovation is finally touching this legacy organisation,” said Mahmood.
Steve Leonard, a director of boards in Singapore and Hong Kong, became CEO of Singularity University, a US-based global learning community, mid-pandemic. “Singularity University’s model changed overnight,” he said. “We had to completely reimagine our own business from one that was based on person-to-person discussion to one that was entirely virtual. It’s been a tremendously challenging time and one we would have liked to have gone through more thoughtfully rather than in 20 days.”
Industry Innovation and Science Australia chair Andrew Stevens said that since March, Australia has had the highest level of non-R&D investment in its history and the events that transpired were an acceleration of major trends. “The competitive frontier has moved dramatically,” he said.
26% bought a new digital device as a direct result of being at home through the pandemic
47% of 18- to 24-year-olds bought a new device
39% increase in the hours spent watching pay TV and movie streaming services during lockdown
Source: Deloitte Digital Consumer Trends Survey, based on a survey of 2000 Australian consumers in June and July 2020
Nicholas Davis, a special innovation adviser to global vaccine alliance GAVI, said he’d seen an executive focus on five areas: foresight, workforce strategy, stakeholder engagement, cybersecurity, analytics and data. Non-R&D innovation still requires strong innovation management, he said. “It’s about finding and implementing tested solutions from elsewhere or finally making full use of applications and systems.”
Louise McElvogue FAICD, a non-executive director of Healthdirect and industry professor at the University of Technology Sydney, said she had seen the biggest changes in her health and education roles; for example, a government board that stood up a COVID-19 helpline in two weeks and pivoted to contact tracing. Responding to the crisis required leadership and courage at a time when “one of the strongest emotions was real fear”, she said. “You had to make really tough decisions.”
According to Bronte Adams AM GAICD, a member of the federal government’s Australian Broadband Advisory Council and a director of Museums Victoria, the response was “much more about leadership than technology and innovation”.
Said Adams, “The best leaders I see are putting a disproportionate emphasis on the people side.”
After the forced experimentation of COVID-19, the issue is to what degree the changes are likely to be temporary or more lasting. Panel members believe hard work is required to build a sustainable innovation framework for what comes next.
“[The question is] can boards be equally effective or even more swift and effective with our opportunity innovation?” said Stevens.
Wendy Stops GAICD, a director of supermarket group Coles and charity Fitted for Work, noted that the best-placed organisations will be those that capitalise on their achievements and embed them into how they do things. “What concerns me most about ‘legacy’ organisations is that when things revert to a more ‘normal’ environment, the DNA naturally reverts to the more traditional, structured way of decision-making,” she said.
Whole board or committee?
Many panel members said that deepening an organisation’s culture of strategic innovation should be a whole-of-board focus, although some believe there is a role for a separate committee to focus on technology at a deeper level than what a whole board can typically have time to address in a busy agenda.
“Boards need to think hard as to whether they are supporting the new or the old DNA — and the consequences,” said Kathleen Bailey-Lord FAICD, a non-executive director of the Bank of Queensland, Melbourne Water and QBE Insurance Australia, New Zealand and the Pacific.
“Innovation is an operating model,” offered Dr Peter Wilton, a senior lecturer at the University of California, Berkeley’s Haas School of Business. “There is an innovation maturity curve and we need to understand where we are on that. That is not an innovation committee or a function.”
Dr Michael Hartmann, a professor of medicine and management at the DeGroote School of Business at Canada’s McMaster University, said the old systems and ways of doing things will kick in for many legacy organisations unless the incentive structures are realigned to the “new” ways of doing. “Agile is no longer a buzzword; it is a cliche,” said Hartmann. “There is a requirement to unlearn a lot of the things we’ve done before.”