Why are Aussie businesses so gutless? + waiting for a Bob Hawke + thought leadership innovation

Hi

First the budget and now an election. There is a lot going on. But is anything of substance changing? Genuine leadership seems to have gone completely missing.

In this edition, I look at how true leadership in three important areas – business, policy and PR/communications – can deliver the superior outcomes that everyone is craving.

As usual, there are some great lessons for leaders and communicators.

Drop me an email with any comments.

Thanks.

Ben

Why are Aussie businesses so timid?  

We witnessed another uninspiring budget on Tuesday night that did nothing to grow Australians’ long-term living standards.

We can expect the election to be similarly lacklustre and focused on tit-for-tat tweaks to taxes by both major parties.

But three chronic facts about Australia’s business and economic environment are getting surprisingly little focus:

· Australian businesses are not investing. Business investment is at its lowest in decades, and a recovery seems to have stalled. The budget forecast business investment to grow at an anaemic 1.5% in 2025-26 and 2026-27.

· Our R&D spending has fallen behind the OECD average. R&D investment as a percentage of GDP has dropped from 1.18% to 0.89% and has also declined in real terms.

· In global innovation rankings of developed countries, Australia sits at just over halfway.

In recent years, government spending and immigration have driven the economy.

But when you combine big government and big population increases with underinvestment and lack of innovation, you get stalled productivity growth and a sharp decline in living standards, as Australia has suffered. (The budget forecast productivity to keep growing at just 1.2%, well below the long-run average of 1.5%.)

The budget, of course, locks in big government and does nothing to stimulate business investment and enhance productivity. There were no new measures to spark innovation.

But while the budget highlighted the many unresolved macro reasons for Australia’s lack of business dynamism, in a recent opinion article for Capital Brief I look at another cause – Australia’s corporate governance regime.

Australian business can’t blame Canberra for all its woes. It also needs to address a corporate governance regime and culture that is entrenching timid boards unwilling to take the risks that ultimately drive productivity and living standards.

A lack of reform and timid business is a toxic combination that has Australia locked in an economic malaise. We will only spur a new round of higher living standards when we address both.

Why we can’t wait for another Bob Hawke to drive fresh economic reform

Ultimately, Australia’s lack of economic dynamism and reform is a failure of leadership.

As journalist Paul Kelly once highlighted in an address to the Reserve Bank: “The intellectual momentum for the 1980s reforms was elite driven.”

The public wanted change, Kelly said, but “it was not protesting in the streets for a floating dollar, free trade and low inflation.”

A fresh round of economic reform will also require elite-driven leadership.

But what does that look like?

The problem, I fear, is that Australia has totally lost sight of the vital elements of leadership.

We are overly focused on the ‘traits’ model of leadership – that certain people embody the innate characteristics of a successful leader, such as vision and charisma.

Based on this model, only charismatic politicians like Bob Hawke and Paul Keating can deliver big reform agendas.

But the trait model of leadership is extremely restrictive. To start with, it rules out anyone who doesn’t possess these lucky traits.

It also creates the danger that we all sit around waiting for a saviour to miraculously arrive and deliver us the future we want.

(Those charismatic leader types too often deliver us the future they want!)

I like communication thinker Peter Northouse’s more democratic definition of leadership:

“Leadership is a process whereby an individual influences a group of individuals to achieve a common goal.”

The key to Northouse’s definition is that leadership is a process. Anyone can therefore lead.

The truth about Australia’s economic reform of the 1980s is that many people stood up and engaged in the process of leadership – intellectuals, the media, think tanks, union leaders, the Opposition, etc – to achieve an outcome.

Yes, as Paul Kelly says, it was driven by the elites; but the effort was distributed widely.

Keating and Hawke, while no doubt important to the reform process, reaped the rewards of other people’s leadership, which created a fertile reform environment.

But there is another important word in Northhouse’s definition of leadership: common goal.

For years now, our ‘leaders’ have focused on the fact that Australians have nothing in common, apart from perhaps geography.

This is reflected in declining social cohesion. The Scanlon Index of Social Cohesion now sits at its lowest level since it began in 2007. ‘National pride and belonging in Australia’ has also fallen steeply since 2007.

This lack of cohesion makes it extremely difficult for Australia to create ‘common goals’ that are important to us as a nation.

(If I have nothing in common with others, why would I make sacrifices for the greater good?)

This was reflected in Tuesday’s budget.

Where was the sense of shared endeavour? Why was almost every article and analysis headlined ‘What was in the budget for you’? Where was the sense of excitement about Australia’s future?

I suspect a new round of economic reform will emerge, not via a special charismatic leader like Bob Hawke or Paul Keating, but when Australians rebuild their sense of a common destiny, and when more people engage in the process of leadership around the economy and reform.

True thought leadership = innovation

With the emergence of AI, which has made content ubiquitous, showing leadership has never been more important when communicating.

For knowledge and finance firms, that means ‘thought’ leadership.

Thought leadership is often viewed as a communications or PR activity. But true thought leadership is so much more and can transform your organisation.

At its best, thought leadership is innovation. That is, great thought leadership improves products and services … or even creates new ones.

Thought leadership expert Robert Buday, author of Competing on Thought Leadership, argues that the end product of thought leadership isn’t a marketing and sales campaign … but a scalable, high-quality service.

(People should be talking, Buday argues, not about ‘thought leadership marketing’ but ‘thought leadership service innovation’.)

Buday notes that marketing and sales (‘demand creation’) is just one strand of successful thought leadership.

The other is ‘supply creation’ – turning thought leadership R&D into a product/service that can be delivered to clients and customers.

Time and time again, I’ve seen thought leadership lead to better products and services.

I work with a lot of asset managers, for example. Thought leadership has not only helped promote their brand, but has also enhanced their investment product.

How?

The rare deep research and thinking required for thought leadership delivered insights and clarity that allowed them to evolve their investment philosophy. It also helped them make better individual investment decisions.

Future value creation

Thought leadership is linked to innovation because it is focused on the future and change.

Great thought leadership follows the process of

1. Listening to/researching changes in customers, markets and the social environment

2. Identifying problems created by change, and then

3. Providing innovative insights and solutions.

In the best-case scenario, those insights and solutions are developed into new or improved high-value-added products and services.

This is why the Communication Value Circle – a useful model that outlines how corporate communication adds massive value to an organisation – locates thought leadership alongside innovation as an activity that is primarily about future valuation creation.

The true value of thought leadership

Thought leadership is much, much more than PR and can have profound, transformative effects on organisations and their products/services.

When planning thought leadership activities, it’s therefore good to ask – will this enhance our product/service or allow us to create a new one?

Similarly, when measuring the effects of thought leadership, don’t just ask how it affected PR and marketing metrics, but also ask whether your pursuit of high-quality thought leadership improved your IP/services and products. You might be pleasantly surprised that it has.