The company name may now be a verb but Maile Carnegie, Google’s boss in Australia and New Zealand, says the digital giant knows full well there will always be two girls in a garage somewhere who have an idea that could change the world.
This article is from the August 2015 issue of INTHEBLACK
Australia needs to get its act together and embrace innovation or risk getting left behind as its Asian neighbours race ahead with ambition, commercial nous and bucketloads of ideas.
That’s the blunt message of Maile Carnegie, a 23-year veteran of the Procter & Gamble “leadership factory” who is now running Google’s Australia and New Zealand arm.
Carnegie has ditched her corporate suit for the nimble, future-focused environs of the global digital giant and is thriving.
Brimming with an incredible sense of purpose, Carnegie is now urging her employees, her customers and her country to strive for “best in class”.
Step up and create a vision! – that’s her call to the nation’s leaders. Give the risk takers and rule breakers something to aim for; they are the core of invention and innovation. Failing, she says, is a necessary part of the process.
She also encourages schools and universities to do more to make STEM (science, technology, engineering and maths) subjects more attractive – the world’s businesses are in desperate need of digitally literate employees.
“We’ve got about 70 years of disruption or change ahead of us, so you cannot white-knuckle your way through it.”
Carnegie says the digital revolution that is sweeping the globe can help drive those transformations. Access to the internet unlocks ideas, provides education and generates wealth in a community.
Her desire is to see those opportunities and this wealth more evenly distributed across the population – ideally with people using Google’s huge set of internet-based tools. She spoke with Alex Malley, former chief executive of CPA Australia, about the need for leadership and innovation.
Alex Malley: Maile, tell me about this first job you had at the local fruit shop.
Maile Carnegie: Some of my friends had what I thought were very glamorous jobs working at Grace Bros [now part of Myer] and I ended up working in a fruit and vegetable shop. But it was fantastic. They were a great family, a wonderful small business and they were so generous to me.
Look at the role that small businesses play in Australia. They are a huge part of our economy – they employ almost half of the population and more than that, they’re also the social fabric of society.
We need to make sure those guys are able to thrive because we need them to thrive in today’s economy. Unfortunately, I think a lot of them aren’t set up to do that.
There is only about 16 per cent of them that are fully utilising the internet, yet all the data shows that small businesses that are really leveraging the internet are twice as likely to be growing. They are four times as likely to be hiring people.
Malley: Let’s talk about your 23 years at Procter & Gamble (P&G). It’s a company that promotes its own. It also has a strong focus on marketing. What were those combined experiences like?
Carnegie: P&G has had a label for a long time. It’s called the leadership factory. If you look at P&G alumni, they vie with GE as having a large number of chief executives globally.
Leaders in the company have to come up through the ranks and one of the unintended, very positive consequences of that is there is an immense focus on training and development.
One of the many wonderful legacies that I got from P&G is this extraordinary amount of training. There’s a focus on forensically building leadership skills, overtly having organisation as an important metric. So as a leader at P&G you won’t be promoted unless you are able to effectively manage an organisation and effectively groom leaders.
It’s a capability they built into me. It’s a muscle memory focus I will continue to have on the importance of developing organisations.
At a company like P&G, marketing is hardwired to the business deliverables, meaning that every single chief executive of the company has grown up through the marketing function. So it’s not a communications function; it is a business function. And because of that, the filter of the business leaders is very much user-centric. The assumption is that marketing is a revenue generator.
“Unless the leaders put innovation at the heart of what we do, I’m worried we’re going to be left behind.”
It’s one of the things that has helped me in transitioning into Google. At Google, the user is absolutely 100 per cent of the decision in terms of what we do. I was brought up with that bias at P&G. One of the big things that Google is focused on is how can we help businesses grow their revenue and mostly what we offer are marketing services.
The need for innovation
Malley: I’m interested in your comments around Australia having had a strong history of invention but needing to up the ante on commercialisation. Why do you think that is?
Carnegie: We have suffered and we have benefited from the tyranny of distance. On one hand it’s enabled us to be scrappy, to find solutions because we were so far away. But then on the other hand it’s allowed us, in some cases, to be quite insular and be immunised from global competition.
We are now in a place where the amount of our economy that’s becoming tradable is exploding. The trade deals being struck are wonderful and should provide a fantastic pipe out for Australian companies to service the needs of the exploding Asian middle class in particular. It’s also now an amazing pipe in.
There are some sectors of the Australian economy that are globally competitive and which are going to benefit from that pipe out. Unfortunately there are other parts of our economy which have been insulated for a long time and are now getting exposed to global best in class.
I’m also concerned that we need a vision and it has to start with the leaders of the country – for me, that is not just the government. It’s got to be the business leaders, community leaders, cultural leaders, people like yourselves: we need to believe that Australia absolutely has the right to and the capability of becoming best in class.
We have a proud history of having done that. But we’re at an inflection point that, unless the leaders put innovation at the heart of what we do and address the issues with STEM education, I’m worried we’re going to be left behind.
Innovation not only requires curiosity but, fundamentally, innovation requires people who are rule breakers and risk takers. And if I look at what Australia has somehow allowed itself to become at the most senior levels, whether it be our boards, senior management or government, we have become a nation that is excelling in rule making and risk aversion.
When you look at some of the economies that really transformed themselves they mainly did it through incentives. Lowering tax rates for small businesses is one example. But, Alex, I would start more broadly. When I look at what happens when you provide the internet to places that don’t have it, what you see is this explosion in human knowledge.
Malley: When you compare Asia and Australia, how do you map our country from an innovation point of view?
Carnegie: Unfortunately the data speaks for itself. The latest report on where Australia ranks on innovation shows we slipped yet another spot. Some of the markets around Asia are really moving forward. When I was working in Singapore I was incredibly impressed by the combination of government, businesses and the academic community.
They were very clear on what Singapore is great at and they are great at commercialising. They saw their gap was invention. They put together a plan and came out making a very big bet on STEM. Over 50 per cent of university graduates now have a STEM degree. Let’s compare that to 16 per cent in Australia and going backwards.
Look at a market like New Zealand. SMBs [small-to-medium businesses] make up more than a third of the New Zealand economy. I love the fact that the government has made a really clear choice on putting rocket fuel behind their small businesses. Their small businesses need to be global from day one. Talk about future looking! Every business in the future will be competing globally.
“Marketing is not a communications function; it’s a business function.”
Building STEM skills
Malley: On the issue of STEM education, I taught in universities for 20 years and over those years I saw less curiosity among students. And the one thing about STEM studies is it is really about human endeavour and curiosity.
Carnegie: Again, if you look at how children now are incentivised, I suggest the incentives we have in our education system are not cultivating curiosity. Great quality teachers make an immense difference in your life path. Google is passionate about not just the quantity of STEM education but the quality of STEM education.
Google is working with a university in South Australia on how can we build a curriculum for primary school students which makes STEM really interesting, and build the capability of the teachers so they can teach it with excellence.
We need people that are digitally literate. Over the past five years there’s been an explosion in the requirements of bringing talent into Australia against STEM. This is extraordinary and indicative of the fact that we’ve got to get a move on. We have to make sure that we have got the skills in Australia to rewire us to win going forward.
My concern is if the large companies aren’t able to get their skills met how the heck are the smaller businesses going to? And importantly, the not-for-profits also need to start digitising, doing more with less, increasing the impact. How are they going to get those skills?
“Innovation not only requires curiosity, it requires people who are rule breakers and risk takers.”
The “Google tax”
Malley: Another thing is the whole issue of knowledge. The distribution of knowledge, access to knowledge, is clearly where the future lies. And Google is certainly placed for that. And yet we are having these very small debates in Australia, and the tax debate, all of which make life more difficult to be a big thinker and to be strategic.
You’ve been through an experience where they’ve literally tried to name the tax after your company. You’re quite clear in your comments about it and I think your words are articulate and create good debate.
Carnegie: At the end of the day I have a great deal of empathy for why this [tax] conversation needs to be had because it cuts to the heart of what is important to everybody – prosperity, and how they can have a better life for themselves and their children. It’s important that Google is a constructive part of the conversation.
So what I’ve tried to do over the last six months is use the public debate to have an open conversation with our organisation and talk about what it is that Google does in Australia. There are so many ways a company can contribute to a community and, yes, taxation is an important part of that. But if you look at the work that we do with small businesses, we have helped almost a quarter of a million small businesses get online.
We are also putting a lot more focus on start-ups. Because of the global nature of what we do, we’re increasingly helping small, medium or large businesses who are starting to export. And increasingly, and importantly, we do work with the not-for-profit sector.
Malley: What’s also interesting is the issue of globalisation and the lack of understanding of what it is. I read with interest your comments [to an Australian Senate inquiry] that Google isn’t opposed to paying tax but is opposed to being uncompetitive. Some geographical boundaries are no longer relevant but people are not coming to grips with that. We must look at the whole rather than specific countries. What’s your view?
Carnegie: I absolutely agree with you. If you look at what is going to be required for Australia to be competitive, it is such a complex tapestry of inputs. It ranges from tax to skills. It includes things like the incentives of education, for universities to collaborate more with business, and the leadership skills of business leaders themselves. Part of my frustration is that we will take one piece of it, examine it, but not understand how it fits into the broader picture.
The other thing that I am very nervous about is I see a lot of leaders looking at some of the changes facing all economies ... but I’ll just talk on technology. It almost feels like they’ve got this belief that they can white-knuckle their way through what is going to be a five-year change.
Whereas virtually everyone I know who is working in the technology industry, their assumption is that we’ve got about 70 years of disruption or change ahead of us, so you cannot white-knuckle your way through it.
You cannot look at this and say, “I just need to get over this mobile thing and then the world’s going to go back to this happy calm place”, because as soon as we’re over mobile, there will be wearables, there will be cloud finally really kicking in.
The digital economy
Malley: When you think about building a stronger digital economy and linking that to the potential of the NBN (National Broadband Network), what do you think that could look like in five years?
Carnegie: If you look at other countries that have made investments in their technology infrastructure, whether it’s South Korea or Singapore, look at the quality and consistency of their GDP growth. The data would suggest that countries that invest in that infrastructure will benefit.
I am hopeful we are moving towards painting a positive picture of how that can be used. Increasingly, research is saying that technology is creating a value all over the place.
Australia’s digital economy is now about A$79 billion. It’s bigger than retail and agriculture. Technology also delivers a massive surplus that goes to everyday mums and dads in the form of getting information on things they had to pay for and which are now free, or cheaper or easier.
But if you look at internet penetration into households, there is still a massive gap between our wealthiest households, which are in the high 90s [90 per cent broadband penetration], to our rural and less wealthy households, where it’s around 50 per cent. I have two boys and I look at how much time they spend doing their homework online – I can’t imagine the educational gap we will see between households where the children have in-house access and the ones that do not.
Failing is encouraged
Malley: You work in a sector that moves quickly, but it is another thing to have the culture to be trusted to move quickly. How does Google drive innovation?
Carnegie: At Google we have this obsessive focus on the user. There is a disregard for legacy revenue like nothing I have ever experienced before in my career. If the right thing for the user is to change our product in a way that will negatively impact revenue, we will always choose to do the right thing for the user.
The healthily paranoid assumption at Google is if we aren’t meeting that [user’s] need, there are two girls in a garage who will meet it tomorrow. If we continue to do the right thing by our users, they will reward us for it over time.
There is also the expectation that every single quarter when you assess what you delivered versus your plan, the assumption is that you will have failed. And if you deliver more than about two-thirds of your plan, you obviously did not have an ambitious enough plan. I have worked in environments and I partner with companies where failure is not an option and I’m now in an environment where failure is expected.
And so the way I see Google managing innovation is this combination of obsessive focus on the user and having a culture where failure is expected. The only real negative that can happen when you fail is if you haven’t learnt from it.
This article is from the August 2015 issue of INTHEBLACK