Transcript - some excerpts from Paul's comments at the AFR Innovation Summit (September 2017)

Question: Paul, what’s your thinking about the state of entrepreneurialism in Australia. What are the weaknesses, and are the things that Joe and Nick are doing sufficient to address them?

PS: It’s a little bit different to what I expected. Having lived in the US and UK, and having worked for companies like Oracle and Microsoft and places like that, and having seen the evolution of the internet business since pretty much the very beginning, there were certain things I noticed about company leaders.

You look at Larry Ellison. Larry Ellison is all about winning; Larry Ellison is all about “suck the oxygen out of the room”. He’s hardly a collaborator. He’s not there to build an ecosystem for other people, he’s there to build a business which is going to beat other businesses in that particular space, and those who stand in his way he’ll put out of business or he buys. And that’s what he’s done and that’s what Oracle has done.

If you look at Microsoft - they had a down period when they stopped being quite so competitive; now they’re back again. Look at Google. Look at Facebook. Look at Twitter. Look at all of these companies; and every single one of them is driven by somebody who has a fire in their belly; who has a vision for where they want to go; who wants to win and who drives their team to do so.

I haven’t seen quite that same sense of urgency or ‘wanting to win’ so much here. I’ve heard a lot of talk about collaboration. To me, that has an awful lot probably to do with the way that industry has been structured in Australia for many years; where you have oligopolistic industry structures; where everyone looks out for each other, you cover each other’s backs and you fix your prices.

That’s not entrepreneurialism - that’s basically waiting for government policy to set you up as winners and then you just keep on coasting. And I think that’s basically where we are.

Question: So you mentioned the c-word, collaboration. Yesterday, Will Ferris talked about some of the policy imperatives for government if we want to encourage entrepreneurship in Australia - and there was a big thing in it - let me find it - “incentivising universities and academics to collaborate with business and commercialise their research”. What do you think of this as an area of policy for the government to pursue?

PS: Universities create an awful lot of IP. If I were an entrepreneur, I wouldn’t be looking to a university to act as my product management function. I wouldn’t be saying to the university researchers “You know what? I’d really, really like it if you came up to me and gift-wrapped an idea that I can then take to market.”

As an entrepreneur, I would expect to just knock down those doors. Do whatever I had to, to get access to that IP.

I think we’re putting too much of a burden on universities - we’re actually asking them to do things they’re not really designed to do. They don’t have product managers there! That’s not what they’re there for. So to ask them to sort of cover the backs of Australian business, and to do the actual work for them, while the business then just reaps the rents off of that, doesn’t sound like entrepreneurialism to me.

Question: There’s a lot of people out there who are going to lose jobs out of automation and artificial intelligence. Is it the role of entrepreneurs to address this or is this just government’s problem?

PS: I think it’s an interesting issue. Entrepreneurs are always going to be, in a capitalist system, individuals motivated to make profit. And if you don’t make profit, you get bought by those who do. And it is really Darwinian - that’s been markets from the beginning and that is how it works.

One of the ways you maintain profits is by cutting your costs. Machinery, fixed capital... as you invest in that you need less people. The first investors are the ones who profit and make the most money; the later ones not quite so much. That’s a law, and it’s just happening a lot faster.

I think it’s going to have to be up to government to actually do something in this particular space. People talk about things like UBI (universal basic income) - I think that’s an absolute disaster. I think if you pay people, and you have a lot of people who have just enough to get by, they’re going to be resentful and they’re going to have an awful lot of time on their hands.

And what we’re talking about in this particular case is also white collar workers. Don’t forget what Lenin was, don’t forget who the leaders of the French revolution were and what their class background was. They were middle class. They were the educated classes. They had an awful lot of time their hands. They learned how to hone those resentments. And (inaudible).

Question: So it’s not the factory workers.

PS: No, no, no. If you look at pretty much any revolution, it’s always been led by an elite; it’s never led by the common people. Ever. There’s never been a case where that’s ever happened.

If you then consider that, I think that what the government needs to do, in that particular case… You know, people need jobs. People need something to give them a feeling of connection to the community. Government is probably going to have step in and provide some way of funding  community service in exchange for income, so you’re actually doing something meaningful and you’re tied to the community and you’re not completely disconnected. But they can’t do that based on taxes, because that will wind up really hurting the economy.

So we’re going to have to look at nationalising certain firms.

Question: We just got done hearing from MYOB that their number one risk for 2017 is retaining talent. So, thinking with your more like big business, corporate Australia hat on, how are companies going to be able to retain the talent they need to pursue these  opportunities?

PS: I can say that when we were setting up the DTO, we found it really, really, really hard to get talent. It was not easy. We were looking for product managers, user researchers, and designers; we were looking for developers, delivery managers and web-ops engineers and so on.

We found there was a very wide talent pool spread across the entire continent, but there weren’t many deep pockets of it. And so it was difficult for us, because we believed in [inaudible] space, and co-located teams..

The one thing that we found that allowed us to get the people we needed was the social mission. The people who felt that there was a really strong  - who felt very strongly that wanted to do something good for society, good for other people, like contribute to delivering really great government services, because when you use a government service typically things aren’t really great in your life at that time… That’s how we got them.

I do think that businesses that are able to project strong meaning - and people look for meaning - whether that’s community in their countries, or community in their lives or in their business or in anything else... companies that can provide that community are those who will thrive.

Question: Can all companies do that?

PS: You’ve got Facebook who used to talk about being a social utility connecting everyone. Twitter is, you know, the free... they claimed for a while (laughs)- no longer are they? - but they claimed to be “the free speech wing of the free speech party” and you know they were all about free expression, just like YouTube. [Moderator: It’s the story] It’s the story... and in some cases these stories can be quite convincing. The more convincing the story, the better off the company will be.

Audience question: What about the transition of people already in the workforce?

PS: They have deep pockets of people who understand what their users are going through. People who work in call centres. People who work in shop fronts. People who have daily contact with customers. These are probably the ideal people to retrain and turn into product managers and user researchers and designers or developers and entrepreneurs, and build new products going forward.

Question: Who’s going to do that retraining?

PS: It’s got to be the company, because the company wants to stay in business, and they won’t stay in business if they don’t do that. In the UK Government, we initially hired in a lot of people to the digital program from outside - myself included. But we realised that was not going to scale, we would have winded up sucking in all the digital talent across the country, so what we had to do was start building upward - we built an academy. We put more than 5000 civil servants through it in the course of 3 years, turning them into designers, product managers and user researchers and developers.

So that’s the way you do it - you take the people who already have the empathy for what the user is going through and who already believe in the mission (which is really important), and train them up. There will always be some people who you can’t do that with, but for those who you can, you really must.   

Audience question: What about big business entrepreneurs, who are doing what you (the panelists) are talking about? Also, instead of training staff, shouldn’t it be encouraging migration across sectors?

PS: I’d just like to add that I think this distinction between entrepreneurs in startups and people working in business is a false distinction. A company that actually is going to be successful will be full of entrepreneurial mindsets - and that mindset isn’t just the chairman or just the CEO, with everyone else being a mindless drone. It’s going to be the lifeblood of the company.

Question: Is there a fear to speak out against authority in Australia? Paul - you said we lack a bit of fire in the belly, and sometimes there is a little but too much reliance on this idea of government coming along to fix the problems.

PS: Absolutely. I’ve noticed that quite a bit. And there is that sort of mythology… Look when I got here it was different to how I expected - I grew up watching American television, and saw Crocodile Dundee, I saw these kinds of things, and thought “‘these Australians they’re anti-authoritarian, they speak their minds and they’re really free spirits”.

And… no. It’s pure ideology.

Question: What is the one attribute I need to instil in my son needs to pursue when he enters industry 7.0 in his early 20s?

PS: Competitiveness.