Directors on Digital Episode 3

Collaboration is core to value creation as Alan Kohler AM reveals. He speaks with Josephine Sukkar AM AAICD, founder and principal of Buildcorp, director of Washington H Soul Pattinson and chair of the Australian Sports Commission, and Deanne Stewart GAICD, CEO of Australia’s second-largest industry super fund, Aware Super, in Episode 3 of Directors on Digital, brought to you by Microsoft and Company Director, the member magazine of the AICD, we explore how boards can embark on new partnerships and reposition their business as part of the broader ecosystem — and how they transform engagements among internal and external stakeholders. 

Guest 1:  Deanne Stewart, CEO of Aware Super
Guest 2: Josephine Sukkar, founder and principal of Buildcorp

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Transcript

Alan Kohler: This episode was recorded on the lands of the Gadigal people of the Eora Nation and we’d like to pay respects to Elders past, present and emerging.” 

Hello and welcome back to Directors on Digital, the podcast where we sit down with Australia’s leading company directors to discover their experiences and insights in driving digital transformation, brought to you by Microsoft and Company Director magazine.

Recent research has shown that collaborative work motivates people to stick with their tasks longer, have higher engagement, lower fatigue, and higher success rates compared to those expecting to work on their own - and businesses need employees to disrupt old ideas, create new possibilities and then use that massive productive capacity to make those ideas profitable. 

One of the most important foundations is to have a business culture that supports innovation from the top down and the bottom up.

It's also about understanding that your enterprise operates within a broader ecosystem - its employees, its customers, its suppliers and researchers who all bring elements to bear.

So, how can directors and executives create an environment where innovative thought is encouraged?  

 

To shed some light on all of this, I sat down with Josephine Sukkar, founder and principal of Buildcorp, director of Washington H. Soul Pattinson, and chair of the Australian Sports Commission; and Deanne Stewart, CEO of Australia’s second largest industry super fund, Aware Super.

They share why collaboration counts, how they’re doing it, and why it’s essential to look outside your organisation.

 

Josephine: So, it's one thing for a board and executive to impose change transformation upon their people. But as we all know, totally different when it comes from the bottom up. 


Alan Kohler: How it changes your approach to recruiting and attracting employees. It's about team performers rather than star performers.  


Deanne: When I'm doing recruiting, the number one thing I actually look for is, are they ‘we-focused’ or are they ‘I-focused’?


And show that safety-first doesn’t mean keeping a watch out for trip hazards on a building site.


Deanne: ...if you don’t feel safe, you won’t take the risks.


Alan Kohler: I’m your host Alan Kohler. Let’s dive in as I ask Josephine Sukkar how important collaboration on boards is to drive digital transformation and innovation. She opens with a challenge. 


Josephine Sukkar: I think if we don't get a little bit more courageous on boards and wrap our arms around disruption in a collaborative way, it's going to be done to us, which would be the worst outcome, we won't be in control. So I would imagine all stakeholders need boards to embrace this collaborative look at change and disruption, or it will be done to us anyway.


Alan Kohler:  Deanne, you’re in the thick of it at the moment, putting together two big organisations, the First State Super in New South Wales with VicSuper. And that, at the same time as bringing these organisations together, you're transforming the businesses as well. Talk us through what that involves, particularly in terms of collaboration and getting them to work together.


Deanne Stewart: It's been just an incredible 18 months of change and transformation So, from Aware Super's perspective, as you said, yes, we've gone through that merger, but also a second merger as well with WA Super. As well as then changing our name to Aware Super from First State Super, and then, kicking off a whole bunch of things, what we do around responsible investing, like what we're doing around climate change and affordable housing. So it’s been this huge year of transformation and through that process, I think there's been a couple of things that I'd say both at the board level and at the executive level that we've learned, firstly, just being really aligned behind the strategy and the purpose. So, why are we doing this? What problem are we solving and why is transformation needed?


Because to bring two organisations or three organisations in our case together, and actually forming one organisation, you have to be so clear on what that purpose is and why it's in your member's best interest. So, I think it starts there with that real alignment. But then secondly, as we were looking to bring the organisations together and all the technology, it's recognising that it isn't just about banging technology together. That actually, when you're going through that degree of transformation, you have such an opportunity to take a step back and particularly look at, have you got the processes right, the,  have you got the resources and capability right? Have you got the business model right?


So, we've used it as an opportunity really to reflect and look at all of those things. But, that very much has been set by the board, and then the executive team following that and really being given that, in a way that safety to really go for it, and be bold and use the transformation agenda as an opportunity to really leap forward, rather than feel that there's fear there, that you better not get anything wrong, you better get it all right. And that really is set by the board, I have to say, as we've gone on this transformation journey.


Alan Kohler: It's very interesting you talk about safety and the way that collaboration gives people the safety to go for it.


Deanne Stewart: Correct. For me, the safety element is a huge element of your culture. There's been so much research on psychological safety and that enabling innovation, enabling high-performance in many ways, because if you don't feel safe, you won't take the risks. And, that's a really big thing from a board's perspective if I think about it, and why we focus so much on psychological safety within our culture is that, if your teams don't feel safe, they will always go to what the minimum is.


Deanne Stewart: That for us, has been a really important thing. But from the collaboration perspective, when you're embarking on transformation, I think being really clear about what you're really good at, and actually where other partners really can help you is really important. So in our case, for example, we are not the experts in technology. So as we were looking to completely replumb our administration, it was a recognition that we need to collaborate with other organisations with a real partnership mindset that were phenomenal at that, that was their everyday bread and butter. And, that we were very good at knowing our customers, serving our customers, and investing that money responsibly, but we were not a technology shop. And so, looking for a real partnership in collaboration with different technology players has certainly been a huge focus of the transformation.


Alan Kohler: Josephine, safety in your business, construction is a matter of life and death in some ways. And over 30 years, I imagine you've had to build up a system of collaborating with subcontractors to build the business, really?


Josephine Sukkar: You've hit on it right there, on the culture piece, and what you're prepared to have tolerance for. And for safety, there can be zero tolerance, physical safety, zero tolerance, because the workplace is just too dangerous, especially on construction sites. 

But the psychological safety piece that you touched on is massive and that's where all of us are moving. And, how do you create in your culture a psychologically safe workplace for innovation to come along? So, it's one thing for a board and executive to impose change transformation upon their people. But as we all know, totally different when it comes from the bottom up. So, one of the things that we've recently done, we bring into Buildcorp cadets. So, they're undergraduates who are starting either construction management or civil engineering. And, they're asked to do a project in a group once a year and they solve a business problem for Buildcorp.


Josephine Sukkar: So, the management will list eight potential issues that if they were solved would be incredibly helpful. And, we make it our business to apply that solution wherever it is in whatever form it is. They get together, we create a very safe, what we call a safe workplace. They're terrified, they're 20, 21. And they present an idea, so they've got to stand there and tell my husband and I and all of their general managers, so there'll be 10 of us in the room, head of HR, all the different general managers from the different states sit and listen to these young people tell us one of the things that we ought to be doing better. And then, here are some of the solutions for what that looks like. And when it comes from them, it's totally different, but you do need a psychologically safe workplace to do that, because let's face it, the innovation is going to come from that generation.


Josephine Sukkar: Because when we began the business, my husband and I, I was 26, he was 30. What do you know about the world? Nothing. Our first project was a $40 million project in,1990 we began the business. 


Alan Kohler: What was the project?

 

Josephine Sukkar: It was called Citadel Towers, it's a twin tower on the corner of Victoria Avenue and the Pacific Highway in Chatswood. And, it was half complete when my husband was leading that project as a project manager for Girvan Corporation. And Girvan went into receivership, it was in the 1990 crash. 


Josephine Sukkar: There's a different courage you have when you're that age and a different innovative mindset. And we know that the bravest, most creative ideas are going to come from that cadet group, if we make them feel safe enough to share them.


Alan Kohler: How do you do that? Is it simply a matter of ensuring that you don't yell at them if they get it wrong? I mean is there more to it than that?


Josephine Sukkar: 100 per cent and we've got to show them as well, what happens when we get it wrong. I remember the first time we expanded our business up into Queensland, we lost a lot of money and you sort of pull back, review and you share these things, right?. Review, have another look and go back up again. But, I can remember some of our people saying to us, ‘What are you doing?’ ‘We can't go back to Queensland, we don't make money there.’ And I'd go, ‘No, we had our business model wrong,’ but here are the things we learnt and off we go. So, there's lots of conversations that have to happen. But I do think that the role of boards and executives in a sector or a business where transformation is important, their role then becomes to take those clever ideas that look terrifying and build risk frameworks around them.


Josephine Sukkar: Because when we began the business, I wouldn't have known how to build a risk framework around that, because I had no experience. But right now, you know, some of those scary ideas, if I came up with them myself, if I had the capacity, I'd probably go, ‘But, here are the 200 things that could go wrong,’ that's what 31 years of having a business has taught me, versus here's a scary idea.


Alan Kohler: So powerful ideas and innovation come from all levels of an organisation if boards and executive teams are brave enough to listen to what they’re being told, and allow the space for this to flow. 

And lived experience brings a different perspective and transferable skills. In the case of Buildcorp, it was a discovery that the sporting field provides a discipline which can translate into high performing teams.


Josephine Sukkar: When I met my husband, he was playing rugby union, he felt that rugby helped develop in him a whole bunch of transferable skills that he took to business. And, he didn't realise it at the time he was just playing footy with his mates. But, one of the things that we have observed over the years is that people who are team players in high-performing teams, whatever they are, seem to come to construction with a whole bunch of behavioral competencies that are transferable and they can use on site. So, if we're delivering a project, there's usually a project manager who might be the equivalent of a captain of a team, and their job is to take a whole bunch of stakeholders, a whole bunch of Buildcorp people, subcontractors, consultants, clients, and deliver a project on time, on budget in a way that a client might give us another project, because they thought it's good.


Josephine Sukkar: Every time you build another project, you have a totally different team. It's like turning up to work all over again in a new office, in a new workplace in construction. So it's a bit different to turning up to the office again, where mostly people stay the same. These people on construction sites have a particular skill set working with different people, and influencing them to help us deliver that project on time. And they won't see themselves that way. A lot of them are trades people, a lot of them are civil engineers. They don't necessarily see their jobs as influencing people to do something, but it’s actually what they do.


Alan Kohler: Deanne, that's really interesting what Josephine was saying about the way that the collaboration works in that way.

Talk us through how you see that turning into safety, and then turning into innovation because there's a clear line through those things, isn't there?


Deanne Stewart: You're absolutely right. It is about teamwork. It is about the collaboration that actually determines whether there's high performance or poor performance, that determines whether you can innovate fast or slowly. Both acknowledging that most of what you need to get done as an organisation is team, yet so many individuals, particularly when they're junior or coming up through the ranks, it's actually about their individual performance and how well they've performed as an individual. 


I speak a lot about teamwork in really enabling the very best and really fast momentum in our organisation, because it is the difference. If I think about when I'm doing recruiting, the number one thing I actually look for is, are they we-focused or are they I-focused? And if they're I-focused, even if they have every bit of capability and experience, I'll never hire them. Because ultimately, I know that they are the star performer, they're not team performer and you'll therefore never get what you need done in an organisation. So for me, it's a primary way of recruiting.


Alan Kohler: Josephine, you've just recently taken over as leader of the Australian Sports Commission.  To what extent has your experience in Buildcorp helped you to do that job?


Josephine Sukkar: It's interesting because my hard wiring from Buildcorp has been, it all has to happen in teams, so I've come to the role with that type of hard wiring. Because the role is so vast in what it covers, all the sports, nationally, there's a hundred national sporting organisations and then sitting beneath them, there's a national institute network and a whole bunch of others including Paralympics and Olympians and Comm Games, et cetera.


Josephine Sukkar: I've approached the role and I've spoken to most of the presidents of the national sporting organisations so far. And in those meetings, I've asked them to do a couple of things with me, to sit just at 50,000 feet with me for a little bit, to understand the broad network and the broad sports ecosystem within Australia. And let's take a look at it now 40 years down the track from when the AIS was first established in Canberra, to say, is that still fit for purpose? Is the structure we have fit for purpose? Is this where we want to go in the next 40 years? And help me re-imagine sport.


Josephine Sukkar: Because if change needs to happen, and I'm not convinced it does yet, but if it does need to happen, the very worst thing to happen to a national sporting organisation would again be to have disruption be done to them. 


Deanne Stewart: Many years ago, an individual said to me, and it's just so stuck with me of, when you are looking to change an organisation, or in your case, it's got an even higher purpose than that right across the sporting industry, never forget that you've got to take three steps, not one. And what they meant by that was to say the three steps was, firstly really honor the past, and that isn't just lip service to the past, but truly understand it, understand the history and what's led to today.


Deanne Stewart: The second then is jointly, which is exactly what you were doing by going and seeing the different presidents of the sporting, create a vision of the future together. Because if you do it in solo or just do it as you're the board or you're the CEO, you'll lose everyone. And then thirdly, go and execute with a learning mindset.


Deanne Stewart: And that's just really struck with me, you're often tempted to go straight into execution mode. If you think you know what the problem is, you go straight into execution mode, versus actually honoring the past and really understanding what has led to successfully get to the organisation as it has been today. Create the vision together and then go about executing.


Alan Kohler: But when you’ve still got to focus on the day to day and get things done, is innovation always front of mind? 

With Deanne acknowledging it is a tricky balance between merging and transforming at the same time, I asked her what we need to take into account when dividing the responsibilities.

She also outlined how her board and executive at Aware Super handle the heavy lifting on transformation and their key lessons. 


Deanne Stewart: Even as we were merging, we actually put teams on from both sides of the two different organisations to really help create this vision of the future.


Really what you need to do is make sure through a merger that you're really humming on BAU. You don't want to be dropping the experience or the service that you're providing your customers, or in our case, our members. And at the same time you've got the BAU, you've got the merger, and then you've actually got a separate team starting to work on the transformation.


Alan Kohler:  So how does the board manage all that - do you kind of divide up the responsibilities?


Deanne Stewart: We've actually split out our whole catalyst and transformation program from our BAU and made sure that we're resourced up on both sides. Because if you're trying to do it within the organisation, you've absolutely got people split over five or six different things that they're having to do, or in some cases, 10 different things.  And that was our first version, when we all began. We sort of were doing it within the organisation, and what we noticed is many people saying, hands in the air, "I'm working on too many things here. What's the priority?" And so actually by splitting that focus, but having real integration between the two at a manager level, has really given us much more momentum.


And the reason why we've chosen the member committee to really focus in on our digital transformation  is that they're the ones that are literally representing the member to make sure that everything that we're doing in terms of digital transformation is done with the customer or the member in mind, not just because it's cool and you wanted to do it from head offices. So I think it's really critical.


Alan Kohler: Josephine, have you had to go through a big transformation like that in Buildcorp?


Josephine Sukkar: No, we've deliberately tried to keep a very set of steady hands on the leavers of a construction company. The margins in construction are just tiny. Construction seems to be at the coalface of every economic upturn, downtown. So our focus has been around keeping a strong balance sheet, and keeping our people. Look, the piece with transformation as well is, the digital transformation is one thing - and that's easy to do. That's just an enabler. But what is the capacity of people to change, at what rate, and how and why if they don't understand why? So there's also this other piece where, what can people actually absorb and take on board and how do you set strategies and priorities for a transformation? And if you do it together, you will have your list of hundred things you need to do.


Josephine Sukkar: But then of those hundred, when you sit together with your team and say, " But what are the top 20? What are the most important 20 that will result in 80 per cent of that change?" The Pareto principle. Which are the 20 actions that are going to deliver you the 80 per cent of change - do you need and work and deliver it with them?


Josephine Sukkar: It's a very scary place to be, but, when you give genuine authority to executives, and that's different to responsibility and then KPIs, but then actually authorise them with, here is the problem versus here's how I want you to solve it, and they come back with solutions as to where you want to get to, you've got an infinitely better chance of success. And giving authority means giving up control and that can be frightening because that can have significant financial ramifications if it goes wrong.


Josephine Sukkar: There's a couple of things that are really important there. Data as the first one. You can collect data, but if you're not using it and demonstrating to your people and stakeholders how you're using it, it's not going to have any cut-through and they're going to stop giving you anything of quality. And they've got to trust that it's anonymous, if it needs to be, if it's a pulse survey, and that you're going to use it.


Josephine Sukkar: I know with our annual employee opinion survey, but it's taken 31 years, we feed back to our people, here are the things that you scored. Let's face it, it's a mark on my husband and I. Here's where you scored us, the top three things you scored us well in, and here are the three things you reckon we need to work harder on. Give us three weeks. We'll go away and come back to you with a solution for them. And to continually be focused on what they need to perform at their best and come to them with genuine solutions.


Josephine Sukkar: In an industry like ours, particularly in the fit-out business where you're doing fit-outs and refurbishments, it's important that you acknowledge that work-life balance is an issue for everybody if you speak to them, but more so if you're delivering a fit-out where you have to work in the middle of the night when no one is in the office, so you can do jack hammering or demolish a set of stairs. And what does it look like then? And they need to be heard.


Josephine Sukkar: I remember, we set up one year, because it kept appearing as an issue, but we were watching that a lot of our people just hadn't taken any of their leave. And we're like, "Well, you've got to take your leave, people!" One of our actions was, here are the things that you think are the trickiest. If you work in the fit-out part of the business, Buildcorp, work-life balance. If you actually take your three weeks leave, we will give you another week for free.


Josephine Sukkar: Now it cost us a million dollars, but it said to our people, "We hear you. We're going to not only encourage you to take your leave, but actually pay to give you another week for free every single year." 


Alan Kohler: That's great.


Josephine Sukkar: Yeah, so but they've got to be heard. You've got to recognise it as people that you want to change. And you have to use the data and the information. The actions and the people are only going to be as good as how much they trust you with it and how much they share.


Alan Kohler: To what extent do you as a director need to, as it were, know as much as they do or even more? To what extent do you have to inform yourself as a director?

 

Josephine Sukkar: People have been building the same for you know, millennia let's face it, but where are the opportunities to create a commercial outcome from an investment in technology? Some of our people came together and asked if they could develop an app to help improve the quality of projects that were handed over, so that usually when you deliver a project, a very large you know $50 million project, there might be a list of a hundred defects or 200 defects that the builders will go back and sort out over the couple of weeks after handover and it's done. They said well, it would be really great if we could deal with that and there were zero defects, and when the team left that site, they never went back again.


Josephine Sukkar: And they developed an app. We got federal government funding for it, and that relies on not only our people using it but subcontractors taking it up and consultants, et cetera, and all of these other subcontractors and consultants have got lots of other software that they're being compelled to use as well. So you can imagine all the stakeholders are like another thing, another thing, I'm going to have to adopt, another thing to do. But what we've been able to do for clients is demonstrate a commercial benefit because now what we do is we will often offer, for clients, an extra year's warranty on a project, because we'll say we use our Onsite app, it's called, we use Onsite. There will be zero defects when we hand it over, and, in fact, we're so comfortable with the quality of the project we'll warrant it for another year.


Josephine Sukkar: A commercial outcome to a technological investment, but you need to talk about that to your clients, to your people. They're sensible, they're smart people, the war for talent's real. If you want good people, you've got to be able to demonstrate to them what the business benefit is of anything that you're doing. You have to be very clear on the why, why are we doing it? What's our purpose?


Alan Kohler: I asked Deanne Stewart about the extent Aware Super walks the talk on all these issues when they look at investing in other companies. 


Deanne Stewart: One of the biggest changes that's occurred in the last five to 10 years if you look at the role of investors and super funds, is that real focus it's often wrapped up in ESG, but what it really means is are you looking at the right environmental, social, and governance that actually really does impact the long-term sustainability of a company? Certainly if I think about it from an investor's perspective, when we're looking at companies, the culture and the conduct matters a lot. And in fact, our team's written a whole white paper on it, really from lessons learned of how do you actually ask the right questions to really get at the culture?


Deanne Stewart: For example, our ESG team now, have been doing interview techniques that get beneath the psychology of responses and how to actually get people to open up, get boards, get executives, to open up, so you actually understand more of what's truly going on in the culture. 


Deanne Stewart: So that’s a really big one.  But so too are things, like your governance and your REM and your incentives, and how is that lined up and aligned to what shareholders want? And then finally, I think the point that you were making in terms of their ability to transform, that's a huge part of what we look at. So we've spent a lot of time looking at business models globally, and what's really working. What industries are really taking off and what’s going underneath from a business model perspective.


Alan Kohler: How do you think Australian boards stack up internationally with innovation?


Deanne Stewart: There's a fair degree of risk aversion at board tables I would say if you think about that degree of innovation that you see globally versus here in Australia. And I think certainly one of the aspects is both the resources and the capability, but the other aspect would be the ability to really take those risks and to truly innovate. I don't know that I'd give us an A in Australia. I think probably more like a B.


Josephine Sukkar: I would actually support that. I led a trade delegation in 2017 to Israel looking at property technology with the Chairman of Charter Hall, David Clarke. And we saw lots of property technology, but just the nature of prop tech at the moment and how we communicate, and information moves so quickly from one country to another, I didn't see very much there that we hadn't seen here. What they did have in Israel, which they do have in America, is that entrepreneurial mindset. When you're an entrepreneur yourself and a business owner, you do have to take measured risks, otherwise you're just going to stand still. But it's how you wrap those perceived risks, what one person would describe as entrepreneurship, another may well see as risk. And I think it's really important that when boards look at setting risk appetites, they really get a little bit more steel in their spine. Risk around what?


Alan Kohler: And when it comes to getting more ‘steel in their spine’ Josephine Sukkar argues that requires more diverse perspectives in the decision making.


Josephine Sukkar: If I were to put a very young person, a 30 year old, onto Deanne's board, what might she learn from someone who was 30? What counsel might they be able to provide her and would that role be better sitting in her executive team? You know what I mean? For me, boards need to be able to sit back a little bit and provide a higher level of governance, oversight, testing that culture, exactly as Deanne has said. What are the right questions to ask and test to make sure the culture's okay? 


Alan Kohler: But was diversity of voice alone enough to drive innovation and success? While Josephine Sukkar agreed that culture was important, she did note that there are definite nuances.


Josephine Sukkar: I think innovative companies and good culture are two different things. You can have companies that are quite stable and staid, but have a very good culture. 


Josephine Sukkar: Boards are there to ensure that shareholders are receiving the returns that they need, and to make sure that some of these, what we call softer targets, are non-financial targets that we have set KPIs for CEOs against, are actually measurable. And how do you measure these soft targets? You know it's not like what are your earnings per share? It's really very difficult to measure, and sometimes can either be too advantageous for CEO, or too unfair. I think I'd probably be focusing a little bit more on when we talk about ESG, what do we actually want? How can this company X over here tick all of the ESG boxes, and can also make a return... Big ask.


Deanne Stewart: I also look at it, Alan, from say our private equity portfolio and what we've certainly learnt over time when you look at companies that are really strong, that are high-performing, that are scaling up fast and innovating. So much of it comes down to the people. So really...


Josephine Sukkar: It's all about the people.


Deanne Stewart: ...backing the people, knowing the people. As an investor, it's certainly knowing the people. I'd say from a board's perspective, knowing the people-


Josephine Sukkar: 100 per cent.


Deanne Stewart: ...and then knowing particularly in a private equity sense, that the people that have really founded, created the idea, are moving on to the next phase in that organisation. The energy of the founder, the knowledge of the founder actually needs to be there for a period of time. That is the purpose. That is the ‘why’. That is the energy in the organisation.


Alan Kohler: Josephine, you and Tony have had to kind of do that in a way yourselves, haven't you? because you started up from nothing and then built an organisation. And so to what extent did you and your husband have to focus on creating that culture particularly in the early days - your first five years or so, what sort of mistakes did you make?


Josephine Sukkar: Gosh. It had to be thousands, right? But here's the thing about that entrepreneurial mindset. You're so busy and don't forget interest rates were 18 and a half percent, and I was pregnant with our first baby, by the way I might add, when my husband came home without a job. So there are a number of years he was on his own having to set that up. But when you're busy, you do have to put your head down and not look at the noise around you because you'd be paralysed, not look at the mistakes you're going to make or might make or could make, or what could go wrong, and just start with, is this the right thing to do? Is this going to take us to the business that we one day want to be?


Deanne Stewart: The other thing that I'll often say with that which I think is very similar in many ways to the entrepreneurial mindset, is this real learning mindset that I think is really behind innovation...


Josephine Sukkar: Growth mindset.


Deanne Stewart: ...and often behind the growth of a company, full stop. You've mentioned a few of them, both the transparency, the curiosity, you've absolutely got to have curiosity in that learning mindset. You don't have all the answers and that absolute curiosity to learn more and learn from others and really make sure everyone has a voice at the table. But the other thing that I often say is progress over perfection. It’s probably harder in a construction perspective, but it's amazing how many people want to get everything perfect and land the perfect big project or whatever it might be, versus really experiment, learn, and actually make failure in inverted commas, okay. What are you learning from that and how do you just get better and better and better? And that's actually a really hard thing to do.


Alan Kohler: But that mindset I imagine comes from the top.


Deanne Stewart: It certainly does.


Alan Kohler: To make it okay to fail.


Deanne Stewart: It certainly does. And it goes side by side with what we were talking about earlier, which is that psychological safety that it's okay to fail. It's okay to be transparent and say, ‘we screwed up here, or we actually learnt a lot from doing that.’ That is hard in a really highly regulated industry like superannuation, but you've really got to work hard for it, and it starts right at the top with the board. And how does the board react when you actually come to the board and you say, ‘All right, we didn't get this right,’ or, ‘We learned from this.’ What does the board ask you next? And that norm that they're creating, that tone that they're creating, tells you whether it's okay or not to fail, whether it's okay or not to be transparent about your failure. And I often think that if a board clamps down at that point, gets really aggressive with their executive team, what you'll often find is them retreat and then learn to not innovate, learn to just stay safe, and then years later wonder what happened. 

 

Alan Kohler: I imagine that's quite challenging in construction because most of the time, I imagine, it's not okay to fail. In terms of the building.


Josephine Sukkar: You can't have cracking in cladding and all that. No, no, no, none of that's okay. So when we set up in Victoria, we engaged somebody, put them on contract, and said, ‘Go away and do a piece of work to tell us what we might do here in Victoria, should we be minded to set up a branch of Buildcorp in Victoria.’ And then we engaged that fellow to set the business up, and we usually do a, "Here's X number of dollars that you've got to invest in the business, and we expect year one we'll probably lose money. Year two, we'll probably break even, but we'd like to see a return in year three."


Josephine Sukkar: Now, if you sit with that... not a pilot mentality, but an opportunity to say, ‘We don't expect this to turn money now, but…’ you've got to be very clear about your expectations and the move forward and what support you provide them with. That's just better, but I've learned something also in government, we have a foundation, a not-for-profit foundation, The Buildcorp Foundation, and we set up a pilot, and calling something a pilot seems to also give government a bit of safety around, ‘Let's try it and invest and if it doesn't work, well it was only a pilot anyway, right?’ So I went to the then Minister for Education in New South Wales, Rob Stokes, and said, ‘If the Buildcorp Foundation gave you a million dollars, what might you do with it to improve mental health outcomes for young children?’ And he set me up with the department and they were fabulous. And we agreed to go into a partnership where we invested $1.2 million.


Josephine Sukkar: They matched us for $1.2 million for a pilot project to train 100,000 primary school children in mindfulness and meditation tools to help them manage anxiety, et cetera, but calling it a pilot apparently was a really helpful thing. The thing with all that data that I was looking for, the hardwired scientist in me, PwC sat alongside that piece of work and benchmarked where these 100,000 kids were, and measured where we ended up. So we looked for that shift and change, because if we're wanting people to... and in this case, it's a little app, Smiling Mind, and children are trained in it, but who are the influencers to ensure that that is successful? So the teachers, of course, the counselors, the parents.


Josephine Sukkar: And in this case it was particularly successful and got to 140,000 kids. But that's kind of a nice story and couches the whole project in a little bit of safety by saying, ‘I want to see if it works or it doesn't work.’


Deanne Stewart: One of the key things that I think you've just touched on, then whether you call it a pilot, but it is so pivotal to an entrepreneurial mindset or a learning mindset is experimentation. Doing things bit by bit, once again this progress over perfection is so critical. 


Deanne Stewart: The other thing that I would say, particularly depending on how large the digital transformation is, is to also know from a board's perspective that they can use consultants and advisors in different ways as well, that it doesn't all have to sit with the board. So in our example, with that huge digital transformation we're going through, we're actually bringing in an independent consultant to work with that board committee on this digital transformation so that that actually really helps and supports the board. And then similarly, we've actually got a third line, an assurance, we're getting a big four to come in and provide assurance right over that program and what we're doing in a digital space so that once again, the board can get comfort with that degree of transformation.


Alan Kohler: And Josephine, how do you keep yourself informed as a director in each of the roles you've got?


Josephine Sukkar: I have to say sometimes it feels like there’s a bit of learning on the run because the change is happening so rapidly, but first of all, starting back with, but what is the purpose of it? What is the financial outcome? What is the people outcome and the why? To me, the digital technology is just an enabler and the investment isn't so material to me as much as the outcome and the return, the people return, the business returns. Often it sometimes does happen on the run, but we do have teams within the business who in our business, in Buildcorp's case, are focusing on that all the time.


Alan Kohler: And Deanne, what about keeping yourself informed, but also helping the directors, your directors stay informed?


Deanne Stewart: So if I think about the three things that I would do, first of all, it's very much that listening to the customer. I've got it literally on my phone basically every day, what members are saying to us, what's good, what's not so good, and just being really on top of that. Secondly though, is very much what's going on in the industry. And I do that very much, both reading articles, being involved in all the different industry things, but also with our partnerships. So whether it be our partnership with Bravura, for example, that's doing a lot of our transformation, or with Microsoft that actually is really working with us on a lot of our technology, working with them, hearing and learning from them is the second. And then the third, which I certainly would say a lot of people will smile: that know me on this.


Deanne Stewart: I am a podcast junkie, so not a day doesn't go by where I'm not listening to a different podcast on innovation, on leadership, et cetera, just with that learning mindset, what can you learn? So they're the sorts of things that I do. Then every board meeting, I have a CEO-only session with the board. it's just myself and the board. And what I try to do is both give them a sense of the learnings, what we've learned over ...and I try and be as transparent as possible. Here are the things going on in the industry. Here are the things that matter to our members, and then here's what's going on in the organisation. So I do a member session, I do an industry part to it, and then I do inside the organisation to just really have a transparent relationship with the board on that.


Alan Kohler: And do you expect your board, your directors, to have a separate source of information to you?


Deanne Stewart: Certainly. And I certainly know that they do. They’re very much both they’re plugged into the industry, but also things like, so I know a couple of the members that are really on that member committee as we go through this digital transformation, they themselves have elected to do extra digital transformation research and courses to just make sure they're staying abreast of that. And I think that that's fantastic. Once again, it's this learning mindset, none of us have all the answers.


Josephine Sukkar: It used to be boards felt to me like places where a wise old sage went to go after they've finished running stuff to deliver their counsel down to workers and executives. But today directors have to be much more agile. And I would argue that some of these collaborations as well, that you've got with the Microsofts of the world, you know make no mistake. They're learning as much from you as you are from them. So they need the direct input and interface from large organisations and small ones, to understand how they remain relevant as well. So we're all having to remain as connected and collaborate as much as is physically possible, but keeping ourselves reminded that these are enablers and it is all about the people.


Alan Kohler:  That’s it for this episode of Directors on Digital, thanks to Josephine Sukkar and Deanne Stewart for their insights.


We’ve heard how creating a culture where it's safe to speak up and test ideas is the secret sauce for speeding up your organisation’s transition;


There’s nothing as valuable as getting direct feedback from your customers - make sure you’re all over the pain points, just for starters - to keep you on track.


And why, so often it is those removed from upper management, that can offer the greatest insights.


We’ve touched on the important role that data plays in innovation and growth - but do you know what data you have? In the next episode we’ll investigate further with Microsoft Australia’s national technology officer Lee Hickin. 


Lee Hicken:  ...the opportunity is huge. The potential is massive for organisations that can wrangle their head around dark data. And dark data doesn't stay dark data. It can become lit-up value creating data.”


Alan Kohler: I also chat with Tim Reed, president of the Business Council of Australia, who provokes us to think about what tradeoffs we’re making in our privacy for the convenience of digital platforms.

Tim Reed: How would people feel if you had a phone account with Telstra and they listened to every one of your calls and then sold that information to other businesses, to be able to market things to you? I think most people would be reasonably affronted by that.


Alan Kohler: And Yasmin Allen, chair of the Digital Skills Organisation and a non-executive director of the ASX, Cochlear, and Santos.

Yasmin Allen: You have to be high level and principles-based because you can't analyse every single input. And that's why I use that example of the Robodebt, the output was clearly wrong.”


Alan Kohler: Join us as we discuss the opportunities and dilemmas in data and reveal the key issues that directors need to consider.  I’m Alan Kohler, see you again next time.