The Australian Institute of Company Directors has just called for additional legal protections for directors in the form of an ‘honest and reasonable director’ defence to create an environment where company directors can feel more confident to take risks. While it is a laudable idea, in reality legislation will not alter existing boards’ risk appetite.
Australian boards are characteristically risk averse. The problem is our business culture, which these days lacks outspoken, audacious entrepreneurial leaders who make risky decisions.
Not a day goes by without another economist warning that Australia is about to experience a reduction in living standards if we don’t improve productivity and increase growth. But is there anything left to be squeezed out of businesses and industries that are groaning from maturity to obsolescence? The Australian business community must be very comfortable indeed, if it can’t think of a more audacious solution than milking the same old cow.
Necessity is the mother of innovation and business is clearly not feeling it enough yet. That's not to say that Australian businesses have had it all easy. But while the government can still be touched for another loan, subsidy or grant, what impulse is there for radical and brave business ideas? We aren’t exactly complacent but we aren’t hungry enough yet either.
Where there is pain, business leaders are assiduously covering it up. Chief executives are so frightened by the media’s reporting and the potential reaction of markets and the community that they no longer speak openly. Their public comments are manicured to create a sense of control and certainty. Other than when they are lobbying the government for more favourable conditions, chief executives in this country no longer show vulnerability or discomfort in public.
When business leaders cover up their failures and vulnerability, they create a false perception of certainty, where there truly is none. Failure is an inevitable part of work and, just as positive parenting leads to emotionally frail children, a business that pretends everything is fine loses the opportunity to develop resilience. We need more leaders to stand up and demonstrate their resilience, to be more open about the potential to make judgments that are wrong and to bounce back from these failures.
In the 1980s and '90s, Australia’s public debate was dominated by openly resilient businesses that took audacious risks to adapt to the economic environment. Macquarie Bank, Qantas, Westfield, and Billabong. These companies grew through adversity and, by being audacious, they punched above their weight on a global scale.
Qantas’ first chief executive James Strong was famous for his tenacity and resilience, for being stubborn, competitive and yet approachable. Frank Lowy, a Holocaust survivor, turned his resilience and resourcefulness into making Westfield a legendary Australian success story. Billabong, from its beginnings on the Gold Coast in 1973, was audacious, and grew through acquisition, great timing and clever distribution deals. It made sense that an Australian company would be the first to monestise a ‘surf’ brand. It represented everything Australia wanted to be: brash, bold and on the beach.
Arguably since then, Australian businesses have coasted on the successes established through the big decisions of that time. Comfort and complacency have had an impact on our ability to adapt and innovate.
In a study last year by two economists at the London School of Economics, it was shown that growth and success come from entrepreneurs more than salaried businesspeople. The study also found that entrepreneurs have common characteristics and among these was a tendency to have been involved in illicit activities as teenagers. They got in trouble a lot compared with other types of businesspeople. It is these rule breakers who become ‘growth-creating innovators’.
Instead of being tight-lipped and safety conscious, the types of people who create economic growth are resilient, independent and don’t conform to the rules. They are less concerned about popularity and the approval of others and therefore they make bigger decisions beyond the concerns of their mates. They don’t need someone to put their arm around them and tell them it’s all right. They have a bit of mongrel in them.
Not to be overly nostalgic, but in the 1980s Australian public life tolerated, even lauded, the outspoken larrikin leader. Bob Hawke, John Singleton, Doug Walters, Paul Keating, Kerry Packer, Ita Buttrose, were all bold ratbags who pushed the envelope. They weren’t afraid to show discomfort, to get into trouble tackling hard issues or to rise and fall very publicly.
Business and political leaders today have lost this capacity for audacity. They may be victims of Australia’s mateship culture, of having too many ‘yes men’ around and worrying what others will think. A survey done by the Australian Institute of Management last year found that relationships with coworkers is the thing keeping two thirds of professionals at work. The mateship contract isn’t just a hurdle for diversity and inclusion, it is stifling business decisions. Dobbing on a mate is verboten and fear of speaking up makes those that do targets for career-hindering derision.
Australian needs to move away from the kneejerk flaming of people who stand up and make big decisions. Instead we should challenge each other and embrace the need to take a knock and get back up. This means opting out of the mutual appreciation society and giving meaningful feedback in order to build a more resilient work culture. Otherwise we risk creating another generation of Australian business people without the resilience and mongrel streak they need to succeed, innovate and grow the economy.
Luke Harvey-Palmer is chief executive of Alive Mobile.