David Thodey Looks To The Future

Best known for transforming Telstra from a hulking telecoms administration into a technology focused business leader, David Thodey (AO) now Chairs the Jobs for NSWBoard. The former CEO of Telstra and current Chair of the CSIRO Board shares his insights on leadership, board processes and preparation for the future of jobs within NSW.

In your vast career, what are the moments you’re most proud of?

When I reflect on my time as CEO of Telstra, I think the most impressive thing that happened was when the organisation was voted ‘the most respected company in Australia’. To appreciate the enormity of that recognition – Telstra had never been in the top 100 companies in that survey. This was a wonderful recognition of the incredible work of so many people, (in transforming Telstra) to be the most respected company in Australia. It was very gratifying, because it meant that the organisation was really making a difference across a wide spectrum in the community.

I imagine there were many people involved in that process?

Yes, like any period of great change, it is a team effort and it is mostly about the staff, the management team, the Board and the senior management team. It is very powerful when you have strong alignment within an organisation to a common goal and vision. It really is amazing when you get that kind of alignment because it creates its own energy, and the impact is way beyond what you think is possible. It doesn’t happen often.

Different leaders offer different leadership styles. When it comes to managing major transformational change, what approach works best?

It’s never about the individual; it’s about the organisation and the people that constitute to that organisation. It’s also very important to understand who your stakeholders are – employees, customers, shareholders, and the general community in which you work.

 At the moment, there are amazing technological changes taking place in communications around the world. Digital technologies are changing companies, industries, education and our society. This is requiring a focus on specific leadership skills.

It is difficult for traditional, hierarchical, directive leadership to be as effective in todays connected world.

You have to find new ways to engage the majority of your people on this change journey, and that requires a more collaborative, engaged and networked leadership style. You still need to have clarity of vision, clarity of purpose about what the organisation stands for and what it is attempting to achieve.

You also need to define a culture that is most appropriate for your organisation and for what you are trying to achieve a ‘values based’ culture with authentic leadership.

You need to be bold. You need to have a growth mindset, while still managing the cost base. You can’t just do cost out, you must focus on cost and efficiency, while also finding new growth businesses. I think that every organisation, just like individuals, need to create things. That’s what we are driven by, to make a difference, and if you can get a group of people focused on that, then you really can drive enormous value.

Leadership style is very important, and I think that those leaders who can work well with people, who’ve got a transparency about them, who are driven by the success of the organisation, not by any personal ego, they are the types of leaders that do very well in today’s world.

How do you balance the immediate needs of those complex organisations steeped in history and legacy, with preparation for the future?

It is a balance – and it’s a delicate balance because you can never take your eyes off the core (legacy) business, and you must manage that carefully and with enormous discipline, while still pushing the boundaries to find new growth areas.

However, there can come a time when parts of your business are not performing well enough and the future is not as strong as you would like – then you have to say, “This is not giving our shareholders the returns that we need. It doesn’t have the future that we need, and now it’s becoming a distraction. We need to exit that business.” Finding that point is challenging because we all have this innate belief that we can make it better, but sometimes you’ve got to say, “I can’t add any more value here.” And move on.

That’s where boards play an important role in helping management in working through those issues, because it’s not straight forward but you have to get to a point of saying, “Are we getting the returns from the amount of time and effort we’re putting into this business, when we could be going on and building the future of the company?” These are the tough calls that boards and management need to make. I’ve always used the principal that we are about creating the future for an organisation.

You must deliver on what you commit to the market and to your shareholders, and that’s the foundation of building confidence from your investors. Once you have established that trust – you can then invest in the future for the company as well.

How does the shift in technology and cyber security impact the set of skills and capabilities required around the board table? Has it changed in the last ten years, or is it ostensibly the same?

In many ways they’re different, and in many ways, they are same.

Any strong board or management team has great diversity around the table because it’s out of the diversity that you are able to make better decisions. You do need a set of values and culture at the board table that allows that diversity to flourish, and still make decisions. You do need a range of skills. That skill set does change dependent on markets, dependent on different environments, political environments.

A good chairman and good board is always looking to the future of what skills will be needed around the board table; and they’ll create the environment where those voices can be heard so you make better decisions in a timelier manner.

So yes – it is very important for Boards and management to understand technology and cyber security – so you have to either develop or acquire those skills.

However, while there may be some new skills that boards and management require today compared to ten years ago – there are still many skills that are the same as ten years ago like good judgment, good governance, financial literacy and strategic foresight.

 

As the Chair of Jobs for NSW Board, your goal is to create one million new jobs in New South Wales by 2036. Where do you see that growth coming from?

Firstly, employment, work, is so important in our society because it creates meaning for people. It’s how people often are able to express themselves. It’s about having enough financial stability and flexibility in their lives. Job creation is more than just a set of numbers; it’s not just economic, it really impacts our entire society.

We are going through a period where technology is changing the very nature of work because these new technologies are automating many tasks – technology can do things that used to take many people a long time to do. This is nothing new as we have seen this happen in other periods of significant industrial change. Now with the information change, it is starting to impact a wider range of management and traditional office workers. The current estimates are that 40 per cent of all tasks will be impacted by automation.

 We need to understand these changes and be prepared. For example, in NSW we have approximately 3.7 million full-time jobs at the moment. Over the next 20 years we will have a workforce of close to 4.7 million – and if 40 per cent of work tasks are automated – we will need to define or create another 2.4 million jobs. This is a big challenge – and we need to start planning for this transition. I am sure we will adapt to these changes.

We also have an ageing population because we are living longer. A retirement age of 60 may no longer be sustainable so we will all work longer. We also have the dynamics of greater urbanisation, as people move to cities from rural and regional areas. These are big issues as they impact on the nature of work and where the jobs of the future will be. We must understand that work will change. Some jobs (will) go away. You just don’t try to defend the old, you try to manage the transition and create the future, and that’s what we’re really trying to do at Jobs for New South Wales now.

It has been encouraging to see the growth in entrepreneurial companies in terms of employment, often being smaller companies rather than traditional larger corporations. There are a growing number of smaller, faster growing entrepreneurial companies that are driving significant employment growth – we call these companies Gazelles. We need to prepare the workforce of the future for this kind of labour market. We do think we have to go back and look at the education system, to prepare people this new world.

We want to build industries that are focused on export generation, because still if you look at New South Wales most the growth (70-80 per cent) has come from domestic growth rather than international growth. We must look at Asia and other global markets.

We also want to see growth in the international education sector. It has been historically strong – but we think it could grow further. We think the technology sector also as an enormous opportunity, not only from the early adoption of technology, but from building a stronger technology industry in Australia. A great example is quantum computing, where we have some of the best minds in the world working in many of our universities. We also have some of the best data scientists in the world based here in Sydney. This is a great business opportunity.

Creative arts are a wonderful opportunity for us as well, as there is a global demand for digital animation and the new digital services.

We are reviewing industry by industry, seeing how we can enable these new industries for the future, while still supporting many of the businesses that are there today, and making sure that there’s a good transition going forward.

A lot of these jobs will require significant education. Does this broaden the divide between the educated and the uneducated?

We must make sure that it does not increase the divide.

However, when you look at the Australian people, we are well educated. For example being a tradesman today requires a broad set of skills and you are running your own business. You have to manage the capital expenditure. You must manage your cash flow. Trades are great businesses, and I think there’s going to be newer innovative businesses that start to become viable as some of the old ones go away.

We have a very skilled workforce, and we just need to get them prepared into these new types of jobs. That is very important.

Lots to do, but I do think the opportunities are there.

It would seem there is a lack of venture capital funding in Australia when compared with other parts of the world. What’s your take on the local investment community?

It’s improving.

Australians have traditionally been great investors in early stage companies, but it’s been predominantly in agriculture and mining. When you look back at our risk appetite, you will see very predictable behaviour – venture capital has flowed to areas that have great potential – like mining and agriculture. Our mining sector in Australia is one of the best in the world, and in agriculture we have wonderful innovation and investment in agriculture right across this country. So, capital has traditionally flowed to these industries, rather than venture capital being invested in high-tech, med-tech or technology companies.

This is now starting to change and it is exciting to see new venture capital flowing to new technology start-ups across a wide range of industries. We must foster these early stage initiatives. It is still early days but there are some encouraging signs. There are an enormous number of opportunities, which makes these changes very exciting.

It has also been encouraging to see the support from Government to the National Innovation and Science Agenda, which has expanded the role of CSIRO to support sci-tech start-ups, spin-outs and other publicly funded research initiatives make their way to market.

We want the mining sector to do well, we want the agriculture sector to do well, we want the tourism sector to do well, and we want to have a vibrant services and technology sector to support jobs and economic growth for the future of this great country.

I am very positive about the venture capital markets. As I said, it is still early days and while we still have a way to go – it really is a large opportunity for this country.