In a world in which the rate of change is ever-increasing, businesses must create cultures that foster innovation, with the customer at the centre of decision-making, former Telstra CEO and current CSIRO chairman, David Thodey AO told the Carsales Luncheon at the 2017 AADA National Dealer Convention on Wednesday.

“You’re not the only industry that’s changing,” he informed Dealers.

“Every industry is changing, for a whole lot of reasons. The pace of change has accelerated. The issue is, what do you do when there’s a period of change?

“The world has become more volatile, there’s no question. It has become harder to predict. What’s life going to be like in two years’ time? I’m not sure I can predict it. Socially, we have enormous changes going: ageing population, social disparity, wealth disparity, poverty levels are going up.

“Where do we go to? Where does our business need to be? What sort of cars are going to be sold in 12 months?”

David Thodey gave an inspiring talk about the importance of innovation

Three or four years ago, Brazil, Russia, India and China were going to be the great saviours of the world economy. Not so much any more.

“We are shocking at predicting the future, absolutely shocking. It’s a very volatile world politically,”Mr Thodey said.

“I’m sure you all predicted Brexit. There’s a New Zealand election on the weekend, and who knows who’s going to be in power in New Zealand. We saw the US, and all these problems in the Korean peninsula.”

Data

Mr Thodey said ‘Big data’ was nothing new – it was just a collection of statistical analysis.

“More data doesn’t necessarily make your life better. You’ve got to get to insights, and real take-outs from it,.

“What I’ve not seen in my 40 years of working in the industry, is so many technologies coming together that are really starting to impact the way we live and work. It is changing every industry and it is changing your lives – as you’re seeing – and your children’s lives.

“Don’t feel alone, because every industry, whether you’re a telco, whether you’re a bank, everyone’s feeling disrupted. But the big question, is what do you do about it? Do you all need to become software engineers? Do you all need to become digitally literate? Is that what the magical answer is? I don’t think it is.”

Create a ‘customer-centric’ culture

“Being a customer-centric organisation is far deeper than just delivering great service,” Mr Thodey told the audience.

“What it really is, is about the orientation of a company or a group of people. If you look at most organisations, they lurch from crisis to crisis. You can look at any of the top 100 companies in Australia, the top 100 companies in the world, and what you’ll see is that they go through periods of great growth and then they plateau, and then some change happens and there’s a burning platform and they have to do something else. But that’s not right. How do you get continual growth, how do you get continual focus on your business so you’re never standing still?

“The most important thing you can do is to have such a customer-centricity that you never stand still. Because if you’re really listening to the customer, your business cannot stand still, because customers need change and they’re looking for more. Don’t get fooled into thinking customer-centricity is just about better service; it’s about very deeply what your company or your group stands for.”

Mr Thodey said Dealers should not regard themselves as not in the business of selling cars, but in helping people to get where they needed to go.

Rules don’t rule

Having set rules of behaviour within a company is “probably the worst thing in creating innovative companies. Because what you want is for people to behave in a certain way that they can be innovative and take risk, and yet within a certain framework”, Mr Thodey said.

“In big corporations, the most frustrating thing probably is a thing called the travel policy. When you travel, usually, you have to go and get your manager’s approval, to say ‘can I please go to this wonderful AADA conference up here in Sydney?’, and then you get approval, you go to the conference and when you get back you fill out an expense account, and who do you give to? You give it to your manager, who wasn’t there, has no idea whether it’s true or not, signs it off and then your credit card gets reimbursed.When you study that behaviour, really the value that the manager adds is nothing. When I was CEO of Tesltra, I had to sign off every international trip. Do you think I understood at all about whether that trip was valuable or not?”

Mr Thodey said this method resulted in an abdication of responsibility from the worker to the manager, when what should be happening was building trust.

“We did away with all travel approvals and we did away with all expense accounts, because we said, we can add no value. But one of our values was, we said, ‘We’re going to trust you. We’re going to trust each other to deliver’. The trust was the key thing.

“When a person, if they were to violate the travel expense, we wouldn’t fire them because they violated the travel expense, we fired them because they were untrustworthy. It’s a very powerful idea. Values are far stronger with people, and in terms of driving the right behaviour in the future. Purpose and value-led businesses allow you to have a strength that is what rules-based companies will ever do. I’m sure you’ve got a lot of rules in your businesses. I would encourage you to go and look at them and ask, are they really fulfilling what you want them to be, i.e. innovative and drive-forward?”

Innovation

“Innovation’s become a very popular term. To me , innovation’s very simple: it’s the constant desire to improve, to never accept the status quo, to always do something better. Innovation can be the way I prepare a presentation, it can be the way I answer the phone, prepare an email, or it can be a really big innovation: a new design of a car or something like that.

“You’ve got to actually invest time in it in your organisation. You’ve got to say, ‘Hey, I want new ideas. I want new things to come out. I want you, the people of our organisation, to be forward-thinking and action-thinking about what you do’.”

Closely related to innovation was the concept of reinvention.

“I think companies move in five-year cycles, and you’ve got to keep reinventing yourself. What you did last year is not good enough for next year. And it’s the same in your careers, you’ve got to keep reinventing yourself.”

Leadership

“One thing that has not changed in the last 150 years is the style of leadership. The days of autocratic, all-knowing, wise CEOs has gone. They never existed, if the truth be known. So you’ve got to find a different way to lead people, and it’s got be based not on hierarchy but ideas, about how you bring people together, about how they take ownership and go forward.”