Australia needs a massive cultural shift on human capital

The most disruptive thing you can do for innovation is to mix things up on the people front. That means different genders, racial backgrounds, sexual orientations, ages, ways of thinking and disciplines.

"t's a pretty much impermeable wad of white anglo blokes who wouldn't know what collaboration really meant if they tripped over it."
Narelle Hooper, Co-author of New Women, New Men, New Economy

Diversity matters because the more different lenses you can bring to complex decision making and developing new products and services the less likely you are to get blindsided.

The Australian government's $A1.1billion innovation policy statement was an important circuit breaker for innovation in Australia.

It promised a systemic approach to tackling shortcomings across four areas: support for startups and venture capital funding, the risk taking policy regime, boosting collaboration between business and universities and developing and keeping top talent.

It is in the latter two - collaboration and human capital where Australia needs a massive cultural shift.

TOO MANY MEN

Scratch the surface of Australia's risk-averse innovation culture and you'll find it suffers the 'too many men' problem. It's a pretty much impermeable wad of white Anglo blokes used to doing things a certain way, who wouldn't know what collaboration really meant if they tripped over it.

There's also a huge dearth of the basic management, communication and information-sharing skills required. For Australia's chief “disruptor", Malcolm Turnbull, it's the kind of mining boom Australia really needs - one that digs deep to put its all its talent to work.

As we show in New Women New Men New Economy (Federation Press), getting agile and boosting innovation has to start with increasing gender diversity.

Organisations that include more women in leadership roles perform better financially, they innovate and solve problems better and they get closer to their customers.

We show that if you don't find ways to get women in on the conversation you aren't innovating adequately or looking after the best interests of shareholders. Organisations where women do well create the kind of cultures that help people collaborate more, innovate faster and more readily adapt to rapidly-changing operating conditions.

The data is so strong you can no longer get away with the argument that your situation or organisation is different or that it's too hard. Ignoring it is plain stupid.

Credit Suisse studied 3000 companies in 20 countries over four years and found organisations with more women in leadership showed a 27 per cent higher return on equity and 42 per cent higher dividend payout ratio.

“There's a strong out performance of companies that have women in management," said Stefano Natella, Credit Suisse global head of equity.

And there's an even more compelling figure. McKinsey & Co recently found companies with higher levels of racial and ethnic diversity were 35 per cent more likely to have financial returns above the median.

“We live in a deeply connected and global world, it should come as no surprise that more diverse companies and institutions are achieving better performance," said McKinsey's 2015 Why Diversity Matters report. It argues that most organisations, (including itself) must do more to take full advantage of the opportunity that diverse leadership teams represent.

“That goes for talent pipelines: attracting, developing, mentoring, sponsoring, and retaining the next generations of global leaders at all levels of organisations."

All the research tells us the current default is shaped by assumptions that restrict leadership roles, access to capital and opportunities for women.

After examining research and case studies from around the world, we honed down four dimensions that you need to factor in to help innovation flourish in context your competitive strategy. (We also examined the critical interaction between individual behaviours, organisational systems and knowledge sharing.)

We think of it as a kind of CODE, a handbook for an Agile Australia.

AGILE CODE

Creativity ignites competitiveness in a world where talent and ideas rival capital as a driver of innovation and growth. It is now a core competency for business success.

There are simple steps as leaders we can take to create environments where people can think, plan and act with imagination. Creativity is not some special gift but is a team sport.

In an Open world, there's no place to hide. When things are moving fast and disrupting business as usual, you need to open up and share knowledge and ideas to accelerate innovation.

It's fine to say we need to collaborate more but we still have a couple of generations of bosses and managers with little clue how to make the connections and cross disciplinary partnerships that go with it.

“How did you go bankrupt?" the character in the Ernest Hemingway novel was asked. “Two ways: Gradually, then suddenly," was his reply.

Diversity boosts performance and problem-solving. Diversity is now a 'must-have' thing for business success, not just a 'nice to have' one.

Increasing the number of perspectives on new services, products and problems leads to better outcomes. Look around at the people in the room and at the table: if they pretty much all look the same, you are missing vital cultural intelligence that will help your organisation adapt. You need to get comfortable with mixing it up.

Equity creates thriving teams and communities that build long term value. Research underpins why win-win is beating the traditional I-win, you-lose mindset most managers have grown up in.

Think of equity as being fair to employees, customers and the community - and that means the generations to come. No matter how tough the negotiation, you need to find the-win win.

Smart leaders now realise diversity doesn't happen, you have to design it in. That's especially the case in a corporate world still gummed up to the max with gender and racial inequities and stereotyped mental models which suffers deeply from delusions of merit.

TAPS ON THE SHOULDER

Australia's elite economic agency Federal Treasury always imagined itself a collaborative, collegiate type of place. When secretary Martin Parkinson got his team to look at the data and hold focus groups with staff he found it was internally competitive and the nature of the policy discussions were overtly masculine. The men got the taps on the shoulders and the development opportunities.

“That's what made me start to think, what is going on here?" he reflected later, becoming a powerful advocate for gender equality through Australia's Male Champions of Change program.

Google is among hundreds of companies now methodically addressing the systemic and behavioural blocks to diversity through hiring, promotion, pay and performance evaluation.

The company's training materials on the role of unconscious biases created and reinforced by our environments and experiences, start with the warning - we're all just a bit sexist and a bit racist, we have to work through that.

“Combatting our biases is hard because they don't feel wrong, they feel right," writes Google's head of people operations Laslzo Bock in his blog, “You don't know what you don't know".

In Sydney, Taiwanese-born Telstra executive Jeffery Wang, who runs the Professional Development Forum, says leaders need to start to value cultural diversity.

“People don't fit neatly into boxes," he says. “A truly inclusive culture creates an environment where people from all sorts of backgrounds and ways of thinking can contribute. That doesn't just happen by itself."

When it comes to getting Australia out of the innovation stall zone and into the #ideasboom, we need to focus less on the fish and start talking about the water.

Australia suffers a drought in Venture Capital but barely 4 per cent of it is invested in women, even though the proportion in new businesses is 50-50. Those numbers alone tell you plenty. Start-up hubs and incubators like Fishburners, Stone and Chalk and Blue Chillt are belatedly starting to ask “where are the women?"

Any serious go at sparking Australia's start up culture needs to create an environment that puts our rich diversity of human capital to work. To kick start Australia's #ideasboom, first we have to outgrow the era of #stupid.

Narelle Hooper is co-author with Rodin Genoff of New Women, New Men, New Economy: how creativity, openness, diversity and equity are driving prosperity now(Federation Press).