Focus on tomorrow - embrace innovation today

CEO of The Beanstalk Factory, Peter Bradd argues to innovate when you’re ahead

CEO of The Beanstalk Factory

Why companies must focus on tomorrow, when today looks good

CEO of The Beanstalk Factory, Peter Bradd argues that innovating when you’re ahead, not behind, gives you enormous advantage

We build companies and products faster these days and we have the potential to fail faster – much faster. In fact, the average tenure of a firm in the S&P 500 has shrunk from 61 years in 1958 to only 18 years in 2016.  Even amongst the largest and most successful companies, standing still is no longer an option. The most powerful opportunity – and, indeed, the only opportunity – for brands is to continually innovate and disrupt.  

The Forbes Most Innovative Companies list reveals the powerful impact of an innovation premium on brands like Amazon and Uber.  Amazon, for example, has moved into one sector after another and gentrified it, even if that meant tearing down its own existing structures. It has meant they have been able to run one of the most successful companies for over 20 years.

Rather than resting on the laurels of UberX, like Amazon, Uber continues to invest into new innovation in self-driving cars. There is every possibility that those innovations will disrupt Uber’s own business, as it will introduce a new direct competitor to its drivers.  But

Uber, now the world’s most valuable venture-backed company, clearly views that as a less important risk than standing still.

These companies are continuously looking to the future, even when today looks good, to stay relevant.  This is something all companies embarking on an innovation effort must do.

Iconic author and innovation expert Peter Drucker famously said companies fall into trouble because the temptation in the existing business is always to “feed yesterday and to starve tomorrow.”  This is, of course, a deadly temptation, says Drucker. “The enterprise that does not innovate inevitably ages and declines. And in a period of rapid change, such as the present, an entrepreneur period, the decline will be fast.”  

Pay Attention to the Sigmoid Curve

To avoid inevitable decline, it’s important to consider the natural lifecycle of a business – learning, growth and decline – which is best illustrated using the Sigmoid Curve.  When applied to business, the Sigmoid Curve demonstrates the key to sustaining a healthy business is to transition to a new curve before the existing one is too far in decline. Truly innovative companies rethink their strategy during the growth period. Innovating during this period often leads to a small dip – due to increased R&D investment – however, the success ultimately launches a new curve. This new upswing motion forms an inflexion point and creates the Sigmoid curve.

Changing direction while things are going well can feel counterintuitive. In Australia, we are in our 26th year of consecutive annual economic growth. However, innovative leaders know that good times don’t last forever and that strategising for the future is the key to ongoing success.

Innovating on the rise, versus innovating on the decline is much more favourable. Companies that innovate on the rise have access to great talent, more spare cash to invest, a good customer reputation, and the confidence of the board, senior leadership team and shareholders. Not to mention, media may highlight the company’s vision and recent successes, thus bolstering the above.

That’s not to say there aren’t challenges. When things are going well there is often less airtime for innovative, new ideas – such ideas will often get pushed off the boardroom agenda in favour of immediate opportunity. Further to this, new business ROI can be small and can appear to not be worth the effort, and talented staff are expected to uphold the quality of existing business so allocating them to new business can be risky.

The mood towards innovation amongst companies that are in crisis mode is often what’s needed during the good times. Risk appetite significantly increases, margins are no longer a concern, there is more time at boardroom-level to discuss innovation, and there are dedicated teams running full steam at strategic opportunities. Yet innovating on the decline is stressful. The best talent has probably left, cash is short, the brand’s reputation is weaker, stakeholder confidence has dropped, and confidence in leadership is reduced. More often than not, the media will focus on what the company has done wrong rather than what it’s done right.

It’s important for companies to build a continuous culture of innovation and there are a few ways to do this:

  • Get comfortable with calculated risk: Without appropriate levels of risk-taking companies will become less and less relevant. Uber was founded on the same principles and continues to fearlessly experiment in markets all around the world. Fear of failure, or of doing “the wrong thing” needs to be replaced with a hunger for trying new things and accepting that many of them may fail but some will succeed spectacularly.  
  • Stop looking at your competitors: If the past five years have taught us anything it is that competition can come from the most unlikely places. Identify what capabilities you have that you can loan into new business models, and create an innovation plan which involves the entire organisation, not just a person or a department.  
  • Stay open to partnership: Corporate's rarely invest into core invention R&D, nor should they. Most corporate innovation comes from a partnership between existing capabilities and someone else's. Keep in mind, that competitor you have been nervously eyeing off, may in fact be a great partner, investment or potential acquisition for your business.
  • Innovate from the top-down and the bottom-up: Innovation needs to be genuinely understood and implemented from the top and it needs to be understood and owned by the entire business. If you want to hire the best innovation workers in the world, you need to provide them the workplace and opportunities for them to be great.
  • Invest in innovation: As part of a robust innovation plan, consider whether you have allowed appropriate levels of resource for some of the less obvious areas. For example, how great is your commitment to creating an innovative culture? This will involve training and development programs for everyone in the company. Have you invested in the right technology? It should go without saying (but often doesn’t) that embarking on an innovation drive with decades old technology infrastructure is not ideal.

In short, the successful companies don’t get complacent. Rather, they are constantly looking for new growth opportunities, even if they are frightening to the industry, or product set, that the company operates within. There is truth to the adage “innovate or die.” As legendary businessman Jack Welch put it; “if the rate of change outside your organisation is greater than the rate of change inside your organisation, the end is in sight.”

Don’t stop innovating when today looks good. It’s understandable companies are busy with today but if you’re not also looking after tomorrow, then who else is?

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Feeding diversity, sustainability, and community

Interview: Ian McKenzie, KPMG Head Chef

Since the beginning of time and the earliest of civilisations, food has brought people together. The preparation and sharing of meals – whether it be around a tribal campfire in the remote outback or a boardroom table in the heart of the city - provides a profound opportunity for people to bond and connect, share stories, debate ideas and to defuse differences.

Food service is also an opportunity to embrace wellbeing, celebrate diversity and champion sustainability, and few know this better than professional services firm KPMG. With commercial kitchen facilities at Barangaroo that would rival those of any international five-star hotel, the organisation takes meal preparation and food service very seriously indeed.

“As an organisation, we believe KPMG is a reflection of the general community itself,” says Ransdale Dinger, National Client Experience Team Leader, KPMG. “We are an international company, which means our people are incredibly diverse, as are our clients. However, we feel some things are universal – great hospitality and service, celebration of community, and the provision of nourishment, and our goal is to use thesethings to bring all people together.”

With a team of approximately 2,500 in Sydney, and just over 7,000 nationally, the KPMG community is a mirror of modern Australia, and the organisation relishes its role as a responsible corporate citizen in every aspect of its operations. One of those is in the preparation and service of meals to its teams and clients. On any given week, the kitchens within its Barangaroo office at International Towers, Tower Three, prepare an average of 500 fine-dining lunches and dinners, cater to hundreds more for breakfasts and casual meals, bake thousands of muffins, and deliver an endless supply of fruit and beverages.

“The sheer volume of food we prepare each week means we have a genuine opportunity to make a difference to not only our own community at KPMG, but the greater community too,” says Ian McKenzie, Head Chef. “We work very closely with our community of farmers and growers, not only so that we can source the very best, seasonal produce, but also to minimise waste and food miles. We adhere to a paddock-to-plate and nose-to-tail ethos, which helps us to deliver an experience that is as sustainable as possible, and that is also very much focussed on the health and nutrition of everyone we serve.”

Currently, around 80 per cent of all waste from the KPMG kitchens is recycled or repurposed. An achievement like this doesn’t happen by accident. By taking control of the supply process – for instance, sourcing sustainably grown, whole fish and preparing them in-house, using the bones to make stocks for soups and other dishes, Ian and his team have been able to dramatically reduce the amount of food waste, as well as the organisation’s environmental footprint. A Waste Management Induction process, hosted by Lendlease and International Towers management, also provided valuable insights into how the industry-leading, recycling and repurposing facilities within the Towers work, enabling all involved with food preparation at KPMG to work together toward a common mission, and introduce processes to ensure they were working as sustainably as possible. This includes a highly disciplined approach to recycling, as well as other initiatives, such as supporting National Recycling Week, promoting multiple-use coffee cups, and working with organisations such as food rescue charity OzHarvest to distribute surplus meals.

Ian, who has cooked for CEOs, dignitaries and royalty all over the world (he was once the chef on the Royal Yacht and cooked for Lady Diana), also understands his unique position to influence the wellbeing of the community he serves. “The way people eat has changed, and continues to evolve,” he says. “People are much more conscious of the role of diet in their overall health, so we try to support that – and even drive that – through our kitchen. For example, we’ve replaced many of the biscuits we used to bake as team snacks with fresh fruit and nuts; we’re serving less carbohydrates, making cold-pressed juices and we recently established a close relationship with Bell & Brio from within our Barangaroo community to make our bread, using pure ingredients and amazing, whole grains. We even adopted a cow from the dairy in the Camden Valley that supplies our milk. The milk is bottled at the farm and delivered straight to us and, on a clear day, we can even see the dairy farm from our office at International Towers. It doesn’t get more local than that.”

Community responsibility at KPMG isn’t confined to the dining table. Outside the kitchens, the organisation has a robust program of events and initiatives, and uses every opportunity to engage with its own community to support a range of causes, from distributing white ribbons to its service teams in support of ‘White Ribbon Day’; purple neck ties for ‘Wear It Purple Day’; and hoodies in support of NAIDOC Week, to even decorating the coffees they serve with icons relating to national causes and community initiatives to raise awareness and start conversations.

“It’s all about experience,” says Ransdale. “If we can improve the life of a single person through our actions, then everything we do is worthwhile. If we can improve the lives of all in our community and beyond, then we have achieved something incredibly special.”

Disrupting the market

Interview: Rosie Kennedy, CEO, OnMarket

OnMarket is a unique, crowdfunding and venture advisory business that is helping democratise finance for investors and bring new, early-stage funding to startups and small, scalable businesses. The company recently completed its 100th IPO and introduced the world’s first App for crowdfunding IPOs, and was one of the first to receive the new crowd-sourced funding licenses in January 2018.

We spoke to Rosie Kennedy about how her traditional finance background led her to help build the OnMarket business.

As a professional, and now an entrepreneur, you have a wonderful mix of experience across traditional finance, financial governance and disruptive fintech. What are the highlights?

I began my career in the money market, then ran the government bond trading desk for what is now UBS.

My next major role was heading up business development at ASX, where my focus was on trying to allow retail investors to invest in fixed interest securities, or debt securities, because Australian investors are traditionally very equity-focused.

I went on to work at ASIC in the area that supervises exchanges. I also helped simplify the prospectus regime for debt issuers – again hoping to free up the debt market so retail investors had an opportunity to participate.

Then you met your co-founder at OnMarket, Ben Bucknell, who was trying to do something very similar in the equity market?

Yes. My passion came from being intimately involved in the bond market, and seeing the importance of diversification of portfolios. It was clearly apparent that retail investors were not being given the same opportunities to diversify their portfolios as institutions. Ben had the same vision in the equity market.

Initially we licensed our intellectual property to ASX, to build ASX BookBuild. This system was built within ASX’strading platform and was a tech-driven solution to improve the pricing on equity issuance by listed companies and improve participation for investors.

As this was a B2B model, we really needed some firms in the big end of town to grasp the opportunities arising out of digital disruption in financial markets. But remember, when we were launching ASX BookBuild, it was before the word ‘fintech’ was in common usage. The reality was that there were a lot of powerful, vested interests in the existing process, and it was not easy to get support for an innovative new approach.

Ironically, that lack of support drove us to develop OnMarket, which is a B2C service on desktop and in the App Store. It’s simple, and a far cry from what we were originally doing, but it seems to solve a real problem for investors (by giving them access to discounted IPOs) and companies (by providing a cost effective way of reaching investors).

What companies do you think stand out in the crowd-financing area?

We’ve had a few firsts. We closed Australia’s first equity crowdfunding offer, Revvies, in March 2018. And we’ve completed the largest crowdfunding deal in the world in terms of the number of investors. The company is called DC Power. They got 15,000 investors, and previously the largest number of investors globally was about 6,200.

One of our more interesting offers is The Cup eXchange (TCX) – which is a sustainable, coffee cup business which is solving the disposable cup conundrum. This offer opened in November 2018, and the minimum raise was covered in the first seven days.

It’s a subscription model where consumers are given two cups and they exchange those cups via scanning. Each cup has an identifier, and they scan the cups for credits. Once the coffee is finished, you pop the cup back to that particular café, or to another participating café.

That cup can be used by any participating café, and it never finds its way to landfill because if the coffee cup is ever damaged – which is unlikely because it’s made in a durable way that is very sturdy – it’s crushed down and made into another one.

It’s on trial in Sydney and Barangaroo, and in Melbourne as well. And they are the first-to-market with this product – there is no reason it can’t go global.

Does a crowdfunding raise also help with marketing and awareness of a business?

Definitely. The smaller companies can also use this process to engage their whole stakeholder chain – from employees, to the suppliers and the customers who really embrace the product and engage with the whole process – it’s a nice way of tying all the stakeholders in. For example, we completed a successful crowdraising for PT Blink – a technology company that is revolutionising the construction process. The key benefit for that group was getting referrals from customers. People saw their story whether they invested or not. As a result, large building companies got in touch with PT Blink to use the product.

You expanded your business to Tower Two at International Towers in 2018. You were previously based in Bligh St in Sydney’s CBD, what was behind the move?

We were looking to scale our business – and the tenant model at International Towers was beautifully configured for that kind of progressive growth.

Also, OnMarket is very much in the innovation business and the incredible strength of the innovation community at International Towers was a big attraction for us. We were drawn to the powerful community of enterprise and growth companies and the partnership approach International Towers takes with its tenants.

I think it’s a great benefit that we’re able to work together in such a collaborative environment, especially on our floor. As an example, with The Cup eXchange I spoke to fellow tenant partners, the Green Building Council Australia about relevant contacts in the sustainability area. They connected me with a terrific person at one of the large accounting firms, who has since put us in touch with a facilities manager, and as a result they’re about to sign a large partnership deal.

...which in an enterprise world is very fast-tracked?

Unbelievably. That all happened in 3.5 weeks. That’s a classic example of the working environment, but also of the collaborative nature of the people here. It’s certainly early days, but the camaraderie we’ve already experienced is fantastic.