In the modern economy it’s innovate or perish, warn key leaders

Senior business leaders urge Australian companies to embrace innovation and technology or risk going backwards.

Business freedom in the zone

Two of the nation’s most senior business leaders — National Australia Bank chairman ­Michael Chaney and Rio Tinto iron ore boss Andrew Harding — have urged Australian companies to embrace innovation and technology or risk going backwards in the modern global economy.

Mr Chaney told the In The Zone conference that innovation was “absolutely core to our existence and our future”, comparing today’s disruptive innovators to the rise of Wal-Mart in the US in the 1970s and the ­challenge presented to traditional retailers.

“If it ain’t broke, get ready to change it,” he told 200 delegates at the University of Western Australia.

“Because if you keep doing what you’re doing, you’re just going to be left behind.”

Mr Chaney said banks such as NAB faced challenges from peer-to-peer lenders and other technological threats.

“I can see our profits (at NAB) being higher this year than last year, and higher next year than this year,” he said.

“But how are we going to avoid being worth half as much as a company in a few years’ time? Because everyone is out there trying to eat your lunch, as they say — whether it’s peer-to-peer lending or new payment systems.”

Mr Chaney, who is also ­chairman of Woodside Petroleum, said the Perth-based oil and gas company had a continual focus on innovation and had set up a separate technology department, which was examining issues such as ­­sub-sea engineering and big-data management.

“Woodside is a technology company and if you think about its business it’s pretty obvious why it needs to be,” Mr Chaney said.

“These things are even more critical now with the collapse in the oil price from over $US100 down to the 50s and 60s. In order to make projects economic you’ve got to keep finding better and better ways of developing them.”

Mr Harding said the rise of automation — pioneered in Australia by Rio Tinto’s Mine of the Future project — would help change the way in which the human brain functioned.

He said there had been a “fundamental shift” in the way the mining industry worked on innovation and research with Australian universities in the past two decades. It was common in the past for companies such as Rio Tinto to look to overseas institutions to solve technological problems, yet today the mining giant relied on local universities such as UWA.

Mr Chaney also called on governments to address falling rates of scientific and mathematical education, saying these were the skills that would be essential for Australia in the decades ahead.

“This isn’t the boiling frog issue — this is a sudden, rapidly increasing concern,” Mr Chaney said.

“Because people aren’t going into those things at school, and because teachers often aren’t qualified to teach them, we’re not going to be able to cope properly with the world of the future.

“We’ve got an economy that’s going to increasingly depend on people being trained in these areas, so this is worrying.”

The founder of consulting firm Knowledge Society, Elena Douglas, told the conference that Asia represented a diverse kaleidoscope of countries and cultures.

“As such, we have to respond to countries and markets individually, or we will be ill-equipped to sell there,” she said. “No one thinks of Europe as a monoculture; nor should we do the same with Asia.”

Ms Douglas was speaking at the launch of the Smart Power publication, commissioned by the PerthUSAsia Centre and produced by Knowledge Society.

“We’ve looked at the 18 countries of the zone and run the ruler over things like GDP, productivity, labour markets and so on, and then gone into education, innovation, perceptions about the ease of doing business, economic freedom, regional architecture, and other factors. It is essential that we understand all of this.”

A separate publication, State of Mind, was also launched yesterday. The report calls on business and governments to embrace ­innovation to allow Western ­Australia to take its excellence in mining technology and apply it to areas such as science and medical research.

The report says recent falls in commodity prices present a golden opportunity for WA to exploit its influx of global professionals during the boom by transforming into a regional centre for innovation.

It found that WA’s predominance in mining and energy had led to major spin-off benefits, including a huge number of foreign engineers and scientists who had arrived in the state over the past decade.

But it said WA must do more to retain this talent because advanced nations were pivoting to economies premised on science, data and knowledge.