One of the world’s leading change and disruption expert claims the Boards of most Australian corporations are unprepared for the digital age – with some even unable to make the change.
Larry Quick said the Boards of Australian companies were not ready to deal with the change to a digital age.
“They are disconnected from the digital age and have a very low understanding of what needs to be done,” Mr Quick said.
Quick is a world leading strategist, author and researcher with more than 40 years experience in both the government and the private sector, specialising in disruption and how to take advantage of it.He is the founder and Managing Director of Resilient Futures, which helps Australian and international companies transition to meet the challenges of the digital age.
He has published a number of books including Disrupted: Strategy for Exponential Change, with partner David Platt, which has been hailed as a breakthrough by many of the world’s leading thinkers in organisational strategy and professional development.
His latest book “Do or Die Disruption” has just been published.
Mr Quick said in today’s operating environment, no organisation or industry is or will be untouched by disruption and all organisational leaders must make a choice – see disruption as a tailwind and act to leverage it, or view it as a headwind and fall foul of its consequences.
“Australian Boards do not have an understanding of the type of disruption they are experiencing or what they need to do to survive and take advantage of it,” he said.
Mr Quick said this was particularly true of listed companies which often struggle more than private companies to adapt to change.
Research carried out by Deloitte backs up Quick’s observations.
The Deloitte research The Fourth Industrial Revolution is Here—Are You Ready? found just two per cent of Australian companies were highly confident they could fully harness the changes associated with Industry 4.0, compared with 14% of executives globally
The research also found that only 4% of respondents from Australia consider technology a key competitive differentiator, compared with 20% globally.
“Listed companies have commitments to shareholders,” Mr Quick said.
“Unless they produce results every quarter, they are in trouble,” he said.
“What they’re not going to do is say, ok we’re going to take 10 years to take our people from this particular set of competencies, to this set of competencies, so they can hold onto their jobs.
“They then try to up-skill too quickly, let those people go and get new a new bunch in with that previous group being lost.”
“The recent Royal Commission into banks is a good example, he said.
“You had a bunch of CEO’s who could run stable state banks and take on practices that weren’t necessarily appropriate, to make it work,” he said.
“What they really needed was a transformational leader who could actually re-create the business model, because they are being disrupted by non-conventional business models.
But the banking industry is in a different position because they are forced to produce a level of return which their shareholders rely on, and the industry finds it difficult to evolve into the digital age.
“It’s a Catch 22 position for banking, as it has to produce results, while working with outdated business models and the market won’t allow them to take two years off to re-organise,” he said.
Mr Quick said all organisations and particularly banks need transformational leaders.
With more people getting into Fintech, such as Apple becoming a bank, it will be next to impossible to compete if you have leaders who do not understand how to compete in these types of environment.”
Mr Quick said private companies can adapt to the change quicker because they don’t have the incumbency of reporting to the stock exchange.
“While that is a great opportunity to do things differently, they don’t always have the strategic capability – they are not looking forward, they’re just doing Business As Usual,” he said.
“This is what is called Managed Adaptive Decline.”
“If you’re not moving forward, then you are standing still and if you are standing still you are going backwards.”
Mr Quick said how quickly and effectively a company can change would depend on its leader.
There are two types of leader he said.
“There’s the Transactional Leader who wants to understand the best way to continue business as usual and then there’s the Transformational Leader who wants to understand the future and then goes for it.”
Transactional Leaders account for about 70 per cent of all CEO’s.
Business he said needs more Transformational Leaders.
Mr Quick said the rate of change could be slower in Australia, as Australian business is conservative by nature with a strategic planning framework that is sub optimal.
“Too many organisations also don’t pay enough attention to Material Strategic Risk. We don’t have enough board members with the nous to understand material strategic risk,” he said.
As for the future of those companies that don’t adapt:
“Their future is like everyone else’s. Two thirds of organisations fail because of material strategic risk,” he said.
He said mining and manufacturing are two industries that are already ahead of the game and have adapted well and are continuing to do so.
“The automation in the industry which has been around for a while continues to improve,” he said.
“The future will see mines that are run totally on automation, with no miners underground. There will be some-one ensuring the machines operate correctly, but there will be no miners working in the pits.”
“The material would then be transported from the mine to its destination in driverless vehicles.”
Automation is also happening in food delivery, with Woolworths recently announcing that packing for its home delivery service would be carried out by robots, and in the future, delivered by driverless vehicles.
Mr Quick said change won’t happen by itself, we need governments, education and corporations to empower people to make the change. Larry Quick will be one of the key speakers at the Future Work Summit in Sydney on Oct 15 during this year’s Spark Festival.