The Institute for Economics and Peace founder is convincing companies that peace and prosperity is not just a festive slogan, but a business model. Tony Featherstone reports.
The brightest ideas sometimes come from the darkest places. Steve Killelea AM FAICD’s vision to develop a peace index was inspired by a trip to the province of East Kivu, the epicentre of a bloody, brutal conflict in the Democratic Republic of Congo.
After witnessing the horrors of war and atrocities committed against women who had been gang-raped and mutilated, Killelea wondered what true peace looked like. From the heart of Africa, almost a decade ago, he asked if peace could be measured.
To his surprise, nobody tracked peace scientifically. World leaders spoke about the lofty goal of peace and most countries aspired to it. But Killelea, founder and chair of the successful ASX-listed technology firm Integrated Research knew a simple business truth: if you cannot measure it, you cannot manage it. The Institute for Economics and Peace (www.visionofhumanity.org) was born in 2007.
Its Global Peace Index (Twitter @GlobPeaceIndex) is now the leading measure of peacefulness and the institute was ranked this year in the world’s 15 most impactful think tanks with a budget below US$5 million. Killelea has made presentations on peace at the United Nations, the Organisation for Economic Co-operation and Development, European Union and World Bank, and to the Club of Madrid, the world’s largest forum of former prime ministers and presidents of democratic nations.
The institute is Killelea’s second philanthropic venture. In 2000, the Killelea family started The Charitable Foundation, a private ancillary fund dedicated to helping people in the world’s poorest regions. The foundation says it has made a difference to 2.6 million people in Africa and South-East Asia.
Killelea, a software engineer who became one of Australia’s wealthiest tech entrepreneurs, developed a passion for philanthropy after a trip to Laos in the late 1990s. Kevin Gray, a former chief financial officer of World Vision Australia and a director of The Charitable Foundation, asked Killelea to accompany him to the impoverished, landlocked Asian nation.
Killelea funded a water project that cost less than US$20 a head to build, reduced the death rate for children under five from 18 per cent to 12 per cent, and eliminated a third of diseases in the area. A project that cost US$350,000 over three years probably changed 20,000 lives. “I was hooked,” Killelea says. “I saw first-hand the incredible difference you can make in poor countries with relatively small amounts of money. Philanthropy became my passion.”
Killelea established The Charitable Foundation and seeded it with $40 million of his personal wealth, long before the global trend of successful entrepreneurs leaving a chunk of their family fortune to philanthropy. The foundation grew to $100 million while still spending over $60 million on projects. Killelea also regularly visits several overseas projects each year to decide where to invest, and he is reported to be one of Australia’s largest individual donors to overseas aid.
“From the outset, we wanted the foundation to work with the poorest of the world’s poor,” Killelea says. “We wanted interventions that were substantial, life changing and for people who were in a dire situation. Inevitably, that took us to war zones around the world and to communities who were suffering from violent conflict and poverty. Often we would go in after a conflict ended and help clean up some of the terrible damage to communities.”
Killelea spent time in Bosnia in the mid-1990s after its civil war and was a frequent traveller to Myanmar (Burma), a country he loves, over 15 years when it suffered its worst human rights violations. The foundation has also funded projects in East Timor, Cambodia, North Korea, India, Vietnam, Zambia, Kenya, Uganda and Zimbabwe.
Killelea says the most shocking violence he encountered involved child soldiers in northern Uganda. The Lord’s Resistance Army, led by the infamous Joseph Kony, kidnapped boys aged 7 to 10, killed up to a quarter of them, brutalised the rest, and often forced them to kill members of their village, including their parents and siblings, to cut off any hope of escape.
The foundation funded a project that helped rehabilitate up to 800 child soldiers a year over eight years. Killelea produced and was the main financier of the documentary Soldiers of Peace, which was shown at the 2009 Cannes Film Festival and won awards at many other festivals.
“You never fully rehabilitate child soldiers,” he says. “We worked on their physical health problems, provided counselling, and tried to help them see they were victims who would have been killed if they had not become child soldiers. Where possible, we relocated them back to the family, but in some cases the acts were so horrific that their family would not take them back.”
Killelea’s work in helping victims of war made him think more about its opposite: peace. “I would spend time in all these damaged, stressed nations and thought, what could be learned from the world’s most peaceful nations? I did basic research on the internet and found that most studies were about conflict, not peace. I kept thinking, how can the world improve peace if it’s not defined, tracked and compared each year across countries? There was not enough hard data on peace to inform policies and get people objectively talking about progress on peace.”
The institute’s Global Peace Index, produced in conjunction with The Economist Intelligence Unit, ranks 162 countries on 22 measures around three themes: safety and security in society; the extent of domestic or international conflict; and the degree of militarisation.
Now in its eighth year, the index ranks Australia 15th for peace and in the top band of countries that have very high peace. Iceland was the world’s most peaceful country in 2014 and Syria was the least. The world has become gradually less peaceful every year since 2008, according to the index. Higher terrorist activity, a rising global homicide rate, violent demonstrations, and higher weapons exports and imports are key factors.
Killelea launched his latest work, a Global Terrorism Index, in London in November 2014. Published through the Institute for Economics and Peace, the index examines the causes of terrorism, measures for combating terrorism, and the global outlook on terrorism. It is fascinating, big-picture stuff that prominent bodies in Europe have picked up on. The launch was one of the top five news stories for two days and was featured on the front pages of The New York Times, The Guardian, and on BBC World.
At face value, Killelea’s work on global poverty, peace research and now terrorism, suggests he is more of a spiritual than commercial capitalist these days. But the 65-year-old makes no moral judgements on global poverty or violence. He says: “Our job is to provide high-quality data to help inform government policy on reducing violence and increasing peace. By quantifying how much violence costs, and whether it is rising or falling, governments have more incentive to act.”
Quantifying peace also has implications for boards, Killelea says. “Greater peacefulness increases the size of markets and helps companies make more money, it’s as simple as that. Boards should ask whether their organisation is helping improve peace in markets in which it operates, particularly in poor countries. Organisations have a corporate social responsibility to ensure they do no harm and do not detract from peace.”
Ever the entrepreneur, Killelea wants the Institute for Economics and Peace to have a bigger global impact, and to launch other research products in coming years. As this interview took place, Killelea was preparing to head to Italy, Nepal and the UK to meet members of a joint parliamentary committee on terrorism. A global perspective has given Killelea a bigger profile overseas than he has in Australia.
Killelea still has much work to do in Australia. He founded Integrated Research in 1988, listed it on the Australian Securities Exchange (ASX) in 2000, retains a 56 per cent shareholding of the $164 million company, and chairs it. The board is overseeing the implementation of a bold new strategy from the CEO, Darc Rasmussen, who joined last year. The shares have more than tripled since mid 2011.
Killelea’s entrepreneurial work in public and private technology companies, and on several not-for-profit ventures, provides insights into the value of good governance. He believes entrepreneurial founders who retain a majority shareholding must think carefully about how they encourage non-executives to challenge the owner and provide strong input.
Although he has given tens of millions of dollars to philanthropy, one senses Killelea gets back much more in return. The lives of millions of people in poor countries have been changed, and potentially many more, by shedding new light on global peace and terrorism. His experiences have greatly changed how Killelea sees the world and its potential.
The humble engineer, who grew up in a modest, loving family environment in Sydney, never thought he would mix with prominent world organisations or leaders, or play such a role in the biggest issues of our time: poverty, violence and human rights abuses. But Killelea’s journey from entrepreneurship to boardrooms and now a global stage, has a long way to run.
Here is an edited extract of his interview with Company Director:
Company Director: What is the connection between economic prosperity and peace?
Steve Killelea: When I started looking at peace I was immediately struck by its connection with economic prosperity. Our research suggests the cost of violence, and dealing with its consequences, is about US$9.8 trillion a year, or 11 per cent of global gross domestic product – a conservative figure due to inadequacies with the raw data.
I have no personal judgements about this. Violent criminals should be locked up, but we must also recognise that if you didn’t spend billions of dollars on prisons each year, that money would be freed up to build a new transit system or provide other infrastructure for impoverished communities thereby reducing the drivers of violence. By quantifying the benefits of peace we can help governments worldwide more objectively make policy decisions.
CD: What is the connection between governance and peace?
SK: Peace is a public good, or in the words of [18th century Scottish economist] Adam Smith, something that benefits everyone, but is too expensive for an individual or group to afford, therefore the major responsibility falls with government. Greater peace grows the size of markets, makes organisations more profitable thereby increasing the government’s tax take. It is simply good business. Research shows a clear correlation between improving peacefulness in poor areas and growth in local commerce.
Boards must ensure their organisations do not damage the peace in the markets in which they operate, in other words do no harm, particularly in impoverished areas.
Directors must know that the organisation’s individuals on the ground in emerging countries are not unintentionally caught up in acts that could be seen as human rights violations. Conditions in some Third World countries are a lot more precarious than people in developed nations realise.
CD: Which three global problems most concern you?
SK: The first is sustainability. There is an imbalance between the emphasis on growth and the sustainability of the planet. Over-population is the underlying cause.
The second global problem is the proliferation of nuclear weapons and war. The third is the sheer level of global debt, which will see many countries remain impoverished for years to come.
CD: What does the future of world peace look like to you?
SK: The world is 5 per cent less peaceful than it was seven years ago. It is hard to see world peace improving in the next decade if current trends continue.
CD: Do you sense more high-performing business people are increasingly yearning for a sense of ‘“spiritual capital”; that is, doing more professionally than just earning money?
SK: The trend is certainly under way. I see lots of impressive people in their twenties who realise their own future is unsustainable without global changes and are searching for ways to have more impact. They want to build a successful career but also give more back to the community and find a greater sense of purpose in their professional and personal lives.
CD: How did work as a technology entrepreneur prepare you for overseas aid projects?
SK: Looking back, it was a really good training ground for social innovation. The technology industry forces you to take a global perspective, have an incredible sense of urgency, and think about the minimum viable product to get to market. We took that approach with the Global Peace Index and our other products at the Institute for Economics and Peace where work had not previously been done. We are able to develop quality products faster each year.
CD: Moving to industry and governance, is the federal government doing enough to stimulate a more vibrant technology sector in Australia?
SK: I don’t think enough people realise how innovative Australia has been in technology over the years. The problem is, too many of our best high-tech innovations end up in overseas companies, particularly American ones. We have OK research and development policies to stimulate innovation, but much more thinking is needed on how we keep and commercialise the best within Australia.
Much can be learned from Japan, South Korea and China. They have built thriving technology industries by keeping the best technology innovations in local hands. Australia can do the same. It has to if it wants the most promising start-up companies to grow into billion-dollar organisations over time, and to develop a vibrant high-tech sector. Given the demise of the mining industry, this is crucial for Australia’s prosperity.
CD: What can be done to better connect technology entrepreneurs and the governance community, so they have access to advice, networks, experience and good governance when they most need it?
SK: Most technology entrepreneurs start with a good idea and then quickly realise they have an awful lot to learn about running a business. I see greater potential to link company directors with technology entrepreneurs, via the Australian Insitute of Company Directors, and provide that layer of experience.
Improving insolvency laws in Australia so we have something more akin to Chapter 11 bankruptcy laws in the United States, also makes sense.
CD: Is it harder for non-executive directors to contribute on boards where the founder is the majority shareholder?
SK: It can be. With Integrated Research, I put a lot of energy into getting an independent board and high-quality directors who were not afraid to speak their mind and challenge me. Generally, I am the last person to comment on an issue in board meetings. I want other directors to have a say first, express their opinion, and feel included. From the founder’s perspective, it can be incredibly valuable when directors disagree with you on the issue and when you are open to other points of view on the board.
CD: Will we see you on more boards or launching other social ventures?
SK: It’s possible I could join more listed company boards, but our work on peace will drive me for at least the next five years. We are having a global impact and there is so much still to be done, especially around the terrorism index.
CD: What motivates you?
SK: I have a really interesting life. I can’t remember the last morning I woke and thought, ‘this is a day I’d rather not have’. I feel incredibly motivated by the work on poverty and peace, and feel a much more globally aware person as a result. It’s been a true life-changing experience.
CD: How do you relax away from work?
SK: Tai Chi is a favourite and I incorporate a bit of Qigong (Chinese yoga). I also run, swim and play golf (off a 10-stroke handicap), and like to watch soccer. I have never thought of retiring, so staying physically and mentally fit is very important for me.
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