The Governance Leadership Centre spoke to the Chair and CEO of CHOICE about the organisation’s approach to innovation.
Sandra Davey MAICD, Chair of leading consumer advocacy group CHOICE, and Alan Kirkland, CEO of CHOICE, discuss innovation in organisations and the boardroom.
How has CHOICE adapted to a rapidly changing operating environment?
Alan Kirkland (AK): The biggest change for me has been to bring all of our core digital product development in-house. Go back a decade or so and everyone was looking for opportunities to outsource. But it’s hard to make that work in an environment where you need a combination of agility and a deep understanding of your users’ needs. You need product people and developers embedded in your organisation, working alongside subject matter experts, in order to be able to respond to rapid changes in your environment.
Sandra Davey (SD): I’d add our approach to innovation and agility. We’ve invested heavily in our people, platforms and tech over the past few years. As Alan said, insourcing what we now agree is core intellectual and creative property, and, along with that, augmenting and uplifting our existing people capabilities by hiring people with experience in product, UX, developers, and underlying technology and enabling platforms. We have also further augmented our people capabilities by hiring for commercial digital business model and commercial development expertise.
What are some examples of innovative initiatives adopted by CHOICE in recent years?
AK: We invested in a dedicated innovation team, New Things, which had a brief to experiment, free of any need to deliver results for existing products. That approach brought us some great results – the CluckAR free-range egg app, which was one of the early augmented reality apps in Australia, a new online community to engage our users, and the Transformer energy service that demonstrated the potential of an energy switching concierge service.
But the greatest impact of this approach was probably the impact it had on our culture. It gave us the confidence that we could launch new things that users loved. We’ve now wound down that team, as we’re more confident about our ability to drive innovation from within the organisation.
SD: Building on what Alan says, we’ve also seen an impact upon our systems, processes and structures. As we increasingly work in cross-functional and multi-disciplinary teams, this has started to break down (in a good way) some of our legacy practices. “Agility” typically starts in software development or product teams, and once it takes on, it creates the opportunity to rethink other practices, many of them stale anyway and in need of a shakeup.
How does the CHOICE board foster, drive and monitor innovation?
SD: We’ve done it in a few ways. Among Board members, and being conscious of where we need to get to, our skills matrix has changed considerably. When I joined the Board nine years ago, we had minimal “digital/product/innovation/tech” experience. More than 60% of the Board now has significant capability in these areas. The current Board has had the privilege of a healthy business and healthy cash reserves, so our risk and investment profile has morphed in line with our needs and strategy.
Another example is the language and behaviours used in our conversations and throughout the organisation: continual learning and improvement, and, importantly, breaking work down and iterating in faster, smaller chunks.
AK: Having clear expectations is important: it is crystal clear to us that the Board sees innovation as a priority and is willing to invest in it. The Board is also really clear about its need to get out of the way – it is disciplined about not getting into the nitty gritty of ideas we may be testing – it’s more interested in knowing why we have decided to play in particular markets and how we will measure success. It’s a real shift from outputs to outcomes; that takes discipline but it’s very important.
What do you think are the key barriers to innovation in organisations?
SD: Two of the key barriers are Boards and Leadership Teams. I’m a believer in the idea that the quality of results is a function of the interior condition from which we operate. If the Board and Leadership Team doesn’t have a growth mindset along with an openness to new ways of working, we won’t get anywhere. I’m not saying it’s easy. In fact, breaking down systems, processes and structures that no longer work is far easier compared to the “unlearning or relearning” that many of us have to do.
AK: For any organisation with established business models, the biggest barrier is competition for resources and attention. There will always be a long backlog of stuff you could do to fix existing products and processes and the items on the backlog often have powerful advocates. However you go about it, you need to carve out some distinct resources that are targeted at innovation.
CHOICE has also been a leader in innovation in the boardroom. What are some examples of innovative board processes adopted by CHOICE?
SD: Using a mashup of agile, lean, and product-led practices and techniques. For example, the OKR framework has dramatically helped to shift our focus from outputs to outcomes. Using simple but effective techniques – such as retrospectives for learning and improvement, and self-selection and no-objection decision making – to free up time for work that really matters.
AK: I’m constantly surprised at how willing the CHOICE Board is to just try something new. One thing we are increasingly trying to do is find the right mode of conversation for a subject. Where we need people to be thinking creatively and collaboratively, we try to get them on their feet, scribbling on paper. Maybe that sounds a bit simplistic but the way you have a conversation really matters. Put people in seats around a table and they interact in different ways than if they are on their feet, moving around.
Do you think governance innovation is needed for higher board performance?
AK: Traditional approaches to governance may be fine for some organisations but I don’t think they can deliver the best outcomes for organisations that are operating in rapidly changing environments.
SD: Good governance is a given. But, like Alan says, some approaches that have worked well in the past, don’t work so well when faced with the kind of volatility, uncertainty and complexity we now operate in.
Can governance innovation help facilitate organisation-wide innovation and improve organisational performance?
SD: The way we structure our organisations, business units, and their practices and processes is changing in order to operate in this new world order, so taking a leadership stance is critical. How we think about power and hierarchies, how we think about our organisations’ systems and structures, how we empower and enable autonomous teams to make decisions – these all require different approaches to governance.
AK: I would not say that governance innovation drove organisational innovation or vice versa at CHOICE. For us, it has been more of a dynamic exchange – we adopt agile approaches within the organisation, then start to think about how to apply them at Board level. The Board starts to think about how best to measure innovation and that infects the way that we think about measuring impact internally. It’s ideally a constant exchange of ideas and approaches.
Looking forward, do you expect more organisations to increase the focus on technology and innovation in the c-suite and in the boardroom over the next 5-10 years?
SD: Without a doubt. We can think about technology and innovation both internally and externally. We already know the extent to which we now contend with different user needs, different market needs, a rapid pace of change, and the velocity at which new entrants arrive to contend in the spaces we operate. Technology and innovation have internal impacts as well – so how focusing on our people, their happiness and their capabilities, as well as focusing on refiguring our systems, processes and structures, are all necessary.
AK: I’d say that has been the pattern over the past 5 to 10 years and it will only accelerate. If the sector in which you already operate hasn’t already been subject to attempts at disruption, there’s a reasonable chance somebody is planning it. More importantly, technology is changing users’ needs, so if you want to retain customers, you will need to innovate, most likely through technology. It’s hard to imagine a board that would not expect the amount of attention it pays to technology strategy and innovation to grow year-on-year.
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