The Zimbabwean businesswoman has transformed from a retail queen into a non-executive director. She has strong ideas about digital disruption and knowing your customer but, as Tony Featherstone reports, you still can’t keep her out of Australia’s shops.
Socks, jocks and childrenswear seems a long way from one of the most critical issues facing boards today: the collision of technology, strategy and customers in a digital world.
But seven years as managing director of Target Australia gave Launa Inman MAICD, a unique perspective on using technology to understand customers and drive strategy. After a lifetime in retail, she is acutely aware of how technology is enabling companies and consumers.
That is not only an issue for retailers. Across many industries, boards are grappling with the effect of digitisation on their organisation’s strategy. Technology’s ability to destroy traditional business models and create new ones in quick time is a key discussion in high-performing boards.
In our interview, Inman talks about the transformative potential of “big data” in organisations that use technology to understand, predict and respond to consumers with tailored offers like never before.
She says boards must understand how social media is changing consumer behaviour and how technology is blurring and reshaping global industry boundaries.
“Unless you have a really competent and able technology strategy you often can’t deliver the overall company strategy,” says Inman. “It’s not enough to just understand the strategy these days; directors have to test the technology strategy that will drive it.”
Inman’s comments raise important questions for boards. Are there enough directors who deeply understand the interplay of consumers, technology and organisation strategy? Or how technology is creating opportunities and disrupting companies that fall behind?
Although Inman emphasises technology, her customer insights were developed the old-fashioned way: selling fast-moving consumer goods in a brutal discount department store market. Born and raised in Zimbabwe, Inman came to Australia in 1997 to run Big W’s clothing department, before being poached to join Target, now part of Wesfarmers, in 2000.
In 2003, Inman was named Telstra Business Woman of the Year and a year later, she became managing director of Officeworks. Her steep career trajectory continued, appointed to run Target in 2005.
Inman led Target until November 2011, overseeing $1 billion in sales growth to $3.8 billion, turning Target into a world’s best-practice retailer in its category and leading 25,000 employees. She understood that childrenswear was Target’s great strength.
Target has been beset with problems since Inman left, most recently suffering a $680-million asset writedown and waning financial performance. Inman is too diplomatic to comment on the reasons for Target’s fall, but describes the retailer as an “iconic” brand that can be turned around.
Like all good retailers, Inman had impeccable timing. She left Target unexpectedly in November 2011 and became managing director of the distressed surfwear retailer, Billabong International, four months later. At the time, commentators were surprised Inman agreed to take on the role. But leading a large listed company, after running a division of one, was a big prize. And she would become one of only six women leading S&P/ASX 200 companies at the time.
Inman spent 15 months at Billabong. She left in August 2013 when a salvage deal by US private equity firm Almont Capital Partners required she make way for a US executive to lead the group.
During her stint as CEO, Inman negotiated refinancing deals, dealt with takeover bids, watched Billabong stock plunge 85 per cent from when she joined and several key executives left.
Critics could argue that Inman oversaw catastrophic wealth destruction at Billabong. However, she never had much of a chance to turn the company around, given ownership distractions.
Inman describes her time at Billabong as a success. “When the [takeover] deal eventually went through we managed to keep that iconic Australian brand,” she says. “Billabong is still on the stockmarket. We kept 5,000 people employed. Most importantly, the shareholders are in with a chance of recouping their investment. I was very proud of that.”
The real payoff might be Inman’s learnings from her Billabong experience. In 15 months, she probably experienced what most executives experience in 15 years, if at all. In many ways, the Billabong experience is a tremendous asset for her other board roles.
Today, Inman is enjoying life as a non-executive director of the Commonwealth Bank of Australia (CBA), which she joined in 2011, and as a director of child protection charity The Alannah and Madeline Foundation and the Virgin Australia Melbourne Fashion Festival. Inman is unlikely to return to executive roles, given that she has already led three prominent retailers.
One certainty is that Inman will never be far away from retailing in one form or another. Asked how she relaxes away from board life, she quickly says “shopping”. But that is as much work as pleasure, with Inman watching customers, assessing new retail offerings, and thinking deeply about how the customer experience in online and offline formats is changing.
Here in an edited extract of her interview with Company Director:
Company Director: A big strategic discussion in boardrooms is the impact of digitisation on business models. How do you see technology continuing to disrupt retailing?
Launa Inman: I don’t see technology as a disruptor. I see it as an enabler. The National Australia Bank recently said there is $15.5 billion worth of sales online and that it is growing at nine per cent. As retailers, we should embrace technology. Today, when a director hears about a strategy a company is intending to take, the next question should be: What is the technology strategy?
CD: Time and again we see organisations underestimate the threats and opportunities of technology. As a director, how do you monitor the competitive threat from insurgent companies that use technology to attack incumbents?
LI: Directors need to read broadly and try to get an understanding of what technology is today and what is emerging. It is also about understanding how the customer uses that technology. For example, about 30 per cent of all people on Facebook are only using the mobile side of it; they don’t have it on a desktop. The average person looks at Facebook 15 times a day, so how can you use that for better company profits and for shareholders?
CD: We are seeing signs of Australian companies trying to exploit so-called radical adjacencies – that is, entering seemingly unrelated markets as technology reshapes industry boundaries. For example, there has been media talk of the big retailers possibly moving into banking. What does this concept of radical adjacencies mean for boards?
LI: Again, it’s about trying to understand what is coming down the pipe. It is not only through reading that one builds that understanding. Where possible, directors should be travelling internationally, especially to the US, because it is the forerunner of technology and innovation. You need to be exposed to what is happening worldwide. It’s about recognising that what you think a company is today, it may not be tomorrow. For example, Apple has moved into the entertainment business and yet, at the same time, there’s talk that with all the data it has from iTunes and iBooks, it could become an iBank. Directors needs to constantly consider and brainstorm ideas of what could happen and recognise it is an opportunity as well.
CD: Another defining trend is the rise of big data, as companies use technology to predict customer behaviour and respond accordingly. How will big data change Australian business and what does it mean for boards?
LI: It is such a critical part of business. I go to a lot of retailing conferences, including in the US. Five years ago they were talking about online. Then it moved to mobile. Now they have assumed it is all about data mining. It’s about how do you take that information and use it wisely, so you can satisfy the customer?
I talk about three “Cs” now – customer research, customer analytics and customerisation. You need to understand who your customers are through research. Through customer analytics, you can understand what they are buying and what motivates them to do that. Thirdly, if you understand who your customers are and how they shop, you can utilise that information to produce products that are customised for them. That is what retailing is all about today: making customers feel special and that they have got a differentiated product.
CD: Are Australian boards adequately equipped to understand the confluence of strategy and technology in a global market?
LI: It is complex. One of the challenges boards have is that many directors have not grown up with technology. Our children automatically know how to go onto Twitter or Facebook. Directors have to learn those skills and understand that even if you are not very good at it, just having that sense of what is happening out there, and the technology customers are using, is useful.
CD: Another key question in boardrooms these days is, what has happened to the consumer? Is current weakness in the Australian household sector simply a cyclical issue or are we seeing a more permanent change?
LI: I don’t believe there are no customers. We have this burgeoning population worldwide and a lot of people are moving out of having a sustainable life, to becoming consumers, in emerging countries. In countries where the population is more affluent, it is not that they are not spending, but they are more discerning in how they spend. They are looking at entertainment and the experience, and it’s about understanding that. That is where data mining comes in. You need to understand what that customer wants and adapt the company accordingly. With that comes profits and happy shareholders.
CD: If you listen to some economic thinkers, the world is facing a prolonged period of persistently weak demand and chronic oversupply. Is that the case in retailing and perhaps many other Australian industries?
LI: We have already seen consolidation in retailing. The global financial crisis definitely affected a lot of companies that were not very good retailers. The retailers that survived have shown they are nimble, focused and can adapt. There are not many new retailers, but the successful ones have started to look globally. The likes of Zara and Uniqlo have come to Australia. Both are very well-established retailers. What is different is that they are not only trading in their own countries, but now looking at the world as parts of different markets they can enter.
CD: How can directors develop a deeper understanding of customers and culture, and ensure they govern a truly customer-centric organisation?
LI: Effective boards do not just stay in the boardroom. There needs to be education where directors are taken into the organisation and the coalface. It does not matter whether you are in mining, entertainment or any industry – there is always a consumer at the end of it. It is about asking the right questions as a director.
If you want to understand the consumer, ask to see the customer research, and test who the organisation believes is its customer. If you want to understand the organisation’s culture, ask the CEO and team members about the climate surveys that have been done.
CD: You took on the CEO role of the distressed Billabong International in 2012 and left 15 months later. What is it like running an organisation when the share price is plummeting, key executives are leaving and the company is being trashed in the media?
LI: When I joined Billabong I was given two directives. First, we needed to come up with a long-term sustainable strategy because the company was in a lot of difficulty. Second, we needed to stabilise the balance sheet and get the organisation refinanced. I’m pleased to say we did both. Within six weeks of arriving, I did an equity raising and a couple of days later, a private equity firm put in that second takeover bid, a tentative bid that required an enormous amount of due diligence from them. It was a trying time for the company because we were trying to formulate the long-term sustainable strategy as well as deal with private equity approaches.
Also, it meant a lot of culture change was needed and some people did not want that. You always get that in turnarounds. You also need to bring new skills into an organisation, so it did mean various executives being moved on. That is always difficult because you can’t always talk about why you do these things. In hindsight, the lesson I learned as a board member was that we needed to manage the press better [during the Billabong takeover]. The media has a job to do and journalists write what they believe is correct. But they are often fed incorrect information by covert parties with hidden agendas.
For me, I deem that whole time at Billabong a success. When we eventually got that deal through, we managed to keep that iconic Australian brand. It’s still on the stockmarket. We kept 5,000 people employed. Most importantly, we made the situation such that the shareholders are in with a chance of recouping their investment. I was very proud of that.
CD: What type of support does a CEO need from the board in such situations?
LI: It is critical that the board supports you and the changes taking place. And you must recognise that when a company is in distress, or when it is being taken over or sold, it is usually because there are major structural issues. As CEO, you need the support of the chairman. You need to be able to speak to him or her at all hours of the day, however long it takes. The board needs to work with the CEO to make sure the strategy is right, ask the correct questions and support you and your team members.
CD: Is there a risk that boards get in the way and are too hands-on in turnarounds?
LI: They do become more hands-on in a distressed situation. It is really up to the chairman and CEO to work out what is a good relationship. The board needs to be concerned with what is the strategy and the leadership team is concerned with the how and when. That is negotiated between the CEO and chairman.
CD: What did you learn from the Billabong experience, as both a CEO and now a non-executive director?
LI: I grew immensely as an individual because I had condensed into 15 months what most directors experience over many years. I found you need to not take it personally and that was the biggest personal learning. As a director you have to understand that your obligation is to the shareholders.
During a takeover, you are trying to get the best possible price for investors, and with another party [private equity] that wants to pay the lowest price. You have to work out how both parties can come together to benefit the entire organisation and have a win-win situation.
CD: What advice could you give boards that are governing an organisation undergoing a turnaround?
LI: When many directors govern a listed company that is going through enormous difficulty, it is the first time they have been faced with such a challenging situation. Yet they are dealing with firms, such as private equity, that do this every single day, so that is immediately quite stressful for directors.
You must be aware of your continuous disclosure obligations. With every decision Billabong made, we had to decide if it was going to affect the share price and the disclosure required. Another thing is being very aware of the governance and constantly checking that you are doing what is correct.
CD: Is there a risk of entangling yourself in conflicts during takeover approaches?
LI: We were very conscious of making sure many of our meetings [at Billabong] were held after the stockmarket was closed and, depending what decisions were made, we would get legal advice as to whether that needed to be disclosed to the market. It gave us time overnight to prepare the statement. It was really about doing everything by the book, but also in the best interests of shareholders. We had legal advice sitting in on every board meeting to make sure what we did was correct.
CD: During your stint as Billabong CEO you were one of only six female CEOs of ASX 200 companies and you have played a significant role in other bodies that champion women in business. Do we still need to put a rocket under Corporate Australia to get more women running it?
LI: We certainly need more women in leadership roles. We are starting to see more women get on to boards and that is good news. But there needs to be more progress and we need to measure it. If it does not improve, we need to think of things like board quotas [for women]. If half of the population is women, why aren’t half of the people on boards women? That will eventually come, but we need to keep the pressure on.
CD: How could government policy better support working women and make it easier for them to stay in the workforce longer and climb the corporate ladder to executive and board positions?
LI: Over 54 per cent of university graduates are now women. Many want to carry on full-time careers after they have children. We need to make it as easy as possible for them to go back into the workforce after having children, if that is what they choose. Childcare should be tax-deductible and there should be no stipulation as to what that childcare should be.
Depending on the age of your children, the requirements of childcare differ as they grow up. It is up to the family to make the decision that best suits them. We need to recognise that people who look after children are performing a service and they also pay tax. So you have a situation of when a woman goes back to work, she pays tax and employs someone who also pays tax.
CD: What of the work of The Alannah and Madeline Foundation? It seems like a great organisation to be involved in.
LI: It is a fantastic organisation and cause. I have been on the board for a number of years and have really got to love it. When I was running Target it became evident that our 25,000 team members wanted the company to have a voice in the community. We asked them, if Target was going to get behind a charity, what charities they would choose. They said it should be for children because they saw Target as a family store. We went to Alannah and Madeline, and jointly created this red bag that saved the use of bags within the environment and the proceeds from selling the bag went the charity, which is for abused children. They have also done a lot of work on cyber-bullying and helping schools and libraries to become cyber smart.
CD: Will we see you on more boards in coming years or is a return to executive life likelier?
LI: Having run three of the most iconic retail brands, it is hard to better that. I would never say never, because you never know what the opportunities are. But I enjoy being on boards, and I feel I can make a good contribution, because I am one of few women who have run large listed companies and have been directly responsible for profits and keeping shareholders happy.
I find board work very interesting. You get exposed to so many different things that may not naturally have been deemed your core competency. I love being on the CBA board because I have been exposed to so much there. CBA is also about the consumer, branches and retail banking. I really relate to that and understand how technology plays a critical role.
CD: How do you relax away from work?
LI: I love learning. I love walking around the branches of banks. I go to retail shops and see what’s happening. We travel a lot and do adventurous holidays. Wherever I am, I always look at what is happening on the retail front because so much of what happens in retail can be put into other businesses, whether it be property, banking or entertainment. Every organisation has customers and I’ll always enjoy thinking about how those customers are being served.
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