Westacott: fuelling innovation and impact in government supply chains

By Jennifer Westacott

May 2, 2016

The Business Council of Australia and Supply Nation have been working together for three years now to build true partnerships, between Australia’s largest employers and indigenous suppliers.

Supply Nation has played the role of innovator, and as a catalyst for others to innovate, but now Australia itself should fundamentally rethink the approach to the delivery of Indigenous programs and services. We need a mindset shift from programs and the language of deficit to a focus on investment and empowerment to unlock Indigenous imagination and innovation.

I want to contrast this indigenous innovation in Australia with observations from my trip to Silicon Valley last year. Of the amazing technologies and software solutions I saw, what struck me most was a pervasive innovation culture and mindset.

I think it was a venture capitalist who pointed out to me that Silicon Valley isn’t a place. It’s a state of mind. A state of mind that’s fundamentally about people and ideas and relationships and cultures. A state of mind that embraces disruption and discontinuity as part of an evolving process, not a threat.

The reason I was there, was to understand the impact of digital disruption and technological change. The megatrends I observed that will change the way we work and live include:

  • the rise of the consumer,
  • ‘the internet of things’, which by linking machines and objects to digital networks will boost global GDP by 11% in the coming decade,
  • the rise of artificial intelligence,
  • the fragmentation of supply chains,
  • and the importance of big data.

What matters now is how we embrace these major forces to grow our economy and improve the standard of living for everyone. For example, how do we respond to the displacement of jobs by technology and create better higher paying jobs? How do we respond to fragmentation by creating new opportunities, new sources of value, and new and responsive products and services? This is the nexus between disruption and innovation.

People, not programs, key to innovation

There are some fundamental misconceptions that dominate the newfound interest in all things relating to the word innovation.

If we are to transform supplier relationships, if we are to create entrepreneurs and enterprises amongst the people in this room and beyond, we must smash these misconceptions because they will steer us in the wrong direction.

Innovation is:

  • a way of thinking about the power of human imagination and creativity,
  • a process of constant adaptation and incremental change,
  • it is generated within an eco-system of people and communities,
  • it is a relentless pursuit to meet the needs of the consumer,
  • it is underpinned by relationships built on trust and respect.

Innovation isn’t:

  • a program we can announce,
  • a way doing things that can be simply imposed,
  • the unique domain of a technically skilled genius in their garage,
  • or just about start-ups.

The reality is that large, small and medium businesses individually and in collaboration, are all responsible for the transformation of our living standards through innovation across their supply chains. Small, medium and big businesses all need each other. We estimate that the interactions between small and medium enterprises and large enterprises generate around $440 billion dollars of revenue each year.

Irrespective of the size of businesses involved in innovation, there is one fundamental take out from Silicon Valley — it is people who innovate. Therefore, the key to developing an innovation capable economy is to unlock the potential of people, and to foster collaboration and partnerships in organisations and between organisations.

This is why the Supply Nation concept is so important. At its heart it’s about building these partnerships and mobilising the creativity of people and communities, allowing mostly small businesses to participate in larger, sometimes global, supply chains.

Supply Nation and economic empowerment cascade

To have 900 indigenous businesses registered today with Supply Nation is further evidence of the ongoing innovation and adaptation taking place across Indigenous Australia. And of the extraordinary resilience of Aboriginal people.

We have to remind ourselves that until the 1960s, many Aboriginal people could not own property, have savings or be paid an equal wage. For nearly all of our shared history there has been almost total and deliberate economic exclusion.

In 2008 there was no Supply Nation. The organisation is an innovation in and of itself. At its heart, it’s not an organisation about transactions, but about economic empowerment. And there is no doubt the organisation has played a critical role in driving the extraordinary growth of supplier diversity in Australia.

The Business Council’s biennial survey of member companies provides a powerful time series. It tells us that:

  • In 2009, there were sixteen companies using an Indigenous business in their supply chain. In 2014, there were 51.
  • In 2014, when our latest survey was conducted, our members spent $1.7 billion on contracts with Indigenous businesses and joint ventures.
  • 52% of companies told us that they encourage their own suppliers to use Indigenous businesses in their supply chains, and 53% had a supplier diversity target, a strategy, or both.

Wesfarmers, where I am a board director, has a collection of promising examples of our companies working together to imbed Indigenous providers throughout the entire group.

Firstly, by way of an introduction from Kmart to Bunnings, the Indigenous owned Young Guns container crew now has an annual 5 million dollar contract and are unloading containers at all Bunnings’ Australian distribution centres. Behind these statistics, what we hear from both companies and suppliers is that the quality of the relationship between them is hugely important.

Second, the Wesfarmers Industrial and Safety division has collaborated with the workwear supplier Geared up Culcha to increase consumer convenience. Wesfarmers realised that Geared up Culcha’s online ordering portal was very customer friendly and through a partnership, they could broaden their product offering and increase the reach of both businesses.

Thirdly is the Coles Indigenous Food Fund, established in 2001 to support Indigenous business development. The focus of the fund is largely on establishing and supporting economically sustainable Australian native bush food supply, but also other Indigenous food suppliers. It assists Aboriginal farmers utilising their own land to establish a commercial harvest including bush tomatoes, Kakadu plums, wild limes, and lemon myrtle.

The fund has provided over 2 million dollars to Aboriginal communities and enterprises in locations such as Central Australia, Broome, The York Peninsula and Cape York. The Aboriginal growers and farmers are now part of the supply chain for a number of products stocked by Coles, which have native bush foods in the ingredients. A percentage of profits from the products sold goes back into supporting growers and developing new opportunities.

Finally, an example from Qantas who worked with Dreamtime Tucker to develop a product for domestic networks. Together they developed a unique product to fit with Qantas’s goal of creating an Australian experience for customers, using native ingredients. The result is Dreamtime Tucker partnering with Sunrise Bakeries to produce 25,000 units per week of a coconut and lemon myrtle slice. The customer feedback has been overwhelmingly positive.

It’s these examples that demonstrate how a relationship becomes a partnership, and that’s the real potential of the Supply Nation offering. Partnerships that build understanding and capacity in both directions and, as a consequence, drive entrepreneurship, economic inclusion and shared value.

It’s the type of partnership model I observed in Silicon Valley, between highly successful best venture capitalists and their entrepreneurial start-ups. Between its mega-corporations and small organisations. Between universities and start-ups. All are part of a continuous loop of idea creation, prototyping, testing, launching and then scaling up.

The Business Council is very committed to further building supplier relationships with indigenous organisations. Recently our Indigenous taskforce agreed that we would encourage more ambitious target-setting among our member companies to engage Indigenous suppliers. It would be an opt-in approach for companies with a mature supplier diversity strategy.We’ll launch our model when we release the 2016 Business Council Indigenous engagement survey report later this year.

Strengthening supply relationships

I now want to share some ideas with you about how we can make supply relationships deeper, more enduring and capable of contributing to broader economic capacity building.

Firstly: we all need to think about the consumer. Never, ever forget that the consumer now has the tools of innovation. They are the designer, they are the regulator, they are the integrator. The biggest opportunities for new products and services and new value, come from tackling the pain points for consumers. This is where creative disruption takes place.

Take Uber as an example of a product that has found a way to remove multiple consumer pain points: calling a cab, waiting for a voice recognition system that doesn’t understand you, not knowing when the cab will arrive, giving the driver directions, having to exchange cash at the end of the ride. Uber has created value by chasing consumer sentiment and, making a common process less painful. The opportunities from a very connected economy are enormous. By 2020 there will be 20 billion online devices connected to the internet of things.

Therefore understanding the consumers changing needs is the ticket to a lasting and profitable business model.

Secondly: we need to contribute to building capability in Indigenous businesses. Effective knowledge and skills transfer between us can accelerate the growth of this sector. This means mentoring, training and new forms of cadetships and internships.

Thirdly: the business community has to fix our systems that create unnecessary barriers. We have our own red-tape, rigidities like payment terms and pre-qualification screening need serious work.

Finally: to be successful, we all need to think about who will disrupt us. There is fierce competition out there. We can only create durable businesses if we understand what our competitors are doing and if we are willing to fundamentally change our own business models to adapt.

Innovation in government service delivery

And, this brings me to my final theme — an area ripe for innovation and disruption: the way governments deliver services to Indigenous people.

I commend the Commonwealth government for introducing the Indigenous Procurement Policy. It signals an important shift in the way governments see their role and the way Indigenous peoples are seen by governments. It’s a real investment in indigenous wealth creation.

But imagine if we started to think about the estimated 25 billion dollar annual national Indigenous expenditure, not as a government outlay — but as an investment. Where the mindset is long-term, where the focus is building the capacity of all people. Here, we are not plugging deficits or being suffocated by the structures of programs. We accept risks and we acknowledge that failure is part of the process.

You cannot have innovation within a rigid approach designed by one group of people for another group. Where one group is forever on a well-meaning mission to design the perfect combination of programs to fix the problem of others. Always tinkering with the same model, with the same costly results. Never really giving over control, despite all the evidence telling us control is the key to genuine liberty and economic empowerment.

An empowerment model is the only model in which an investment approach can be effective. This is why, on the evidence now available, we should be giving initiatives like the Empowered Communities model every chance of success by:

  • giving it time,
  • helping to build capacity, as a number of our member companies have been doing through the pilot stage, and
  • recognising its potential as a model of regional Indigenous governance and control.

Imagination and opportunity

Supply Nation, and the system it nurtures, is not only creating economic value, it signals a shift towards economic empowerment and social inclusion through partnerships, collaboration and shared interest. This involves making room for different cultures and different approaches, and transforming and adapting mainstream cultures and power structures.

It’s about us finally starting to see and value what the British settlers could not. Which is that at the heart of innovation is the power of the human imagination.

When imagination fails us, we limit out potential, and that of others. Worse, others will imagine the future for us. Realising these opportunities will require us to embrace disruption. The trends I have outlined are only a threat if we don’t adapt.

If there is one thing that Indigenous people have shown through 60,000 years of enduring civilisation, it is the power of adaptation. Imagination and adaptation have been and always will be the pathway to enduring prosperity.

This is an edited extract from a speech Jennifer Westacott gave to the Supply Nation Connect 2016 Conference in Sydney on May 2, 2016.

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