Organisations need to set themselves up to embrace all the technological changes happening around the world, to embrace and adapt with the disruptions. The financial services industry is not immune from the trend.

Pip Marlow, the outgoing managing director of Microsoft Australia, who last week announced she would join Suncorp as its first ‘CEO of Strategic Innovation’, gave an inspirational talk to 30 financial services professionals at the latest Private Portfolio Managers (PPM) ‘Leaders Lunch’ in Sydney on December 7. The message for organisations was clear: adapt or fail.

Marlow, a New Zealand-born Australian who has been with Microsoft for 21 years – more than half of the 40-year-old company’s life – and has worked with its three chief executives, says that what drives and motivates her is not so much the latest success with ‘Windows’ or any other new platform, but rather the personal impact the company has on the world.

“For instance, a couple of weeks ago I had my CEO in town [Sydney] and we met an amazing teacher who had used our technology in her treatment of kids with autism,” she said. “I love knowing that there are hospitals which use our technology in the treatment of their patients.”

Hugh McNally, the CEO of PPM, which is a Microsoft shareholder, said that Marlow was in a particular point of advantage to comment on managing change, given the many changes in Microsoft which had been successful over several decades.

She said, however, that when she looked back at the (recently strong) share price of Microsoft “it hasn’t always been great”.

She refers to the 2000s as the “dark decade”. But in the past three-or-so years the many media headlines written about Microsoft have been increasingly positive. The company has regained its mantle as an innovator.

Marlow spent eight years with Microsoft in Seattle before returning to Australia, becoming the managing director in 2011. She was asked to join the board of the Australian Rugby Union early this year and accepted. Kiwi-born women know their rugby too.

On change and how organisations should cope, Marlow said we were living in an era which they called, at this year’s Davos conference for international leaders “the fourth industrial revolution”.

“It is the true intersection of the physical with the digital,” she said. There were two things fueling this:

• Pace of change – historically it might take 15-20 years for a start-up company to get to a market capitalisation of $1 billion (called a “unicorn” in the current jargon). Airbnb and Uber have done it in two or three years.
• Cost of innovation – not only had prices gone so low that everyone can get cheap devices, also afford higher-value systems such as machine learning, which means that innovation can come from anywhere.

“So what is holding us back?” Marlow asked. “It’s not the technology. It’s having a culture for change. Some companies challenge the status quo. Others don’t.”

She gave three examples of successful companies which had embraced change in different ways – not only through the clever use of new technology:

• Netflix adapted from a DVD rental service, which abandoned late fees by sending customers their next DVD only when the first was returned, through the post, to ‘lending’ DVDs online, to now allowing DVD downloads. “They have built a culture of constantly looking at technology to disrupt themselves,” Marlow said.
• Zara, the Spanish clothing store chain, which has demonstrated it is possible to grow a “bricks and mortar” business. Zara created a culture for change, whereby it left spare capacity available for quick manufacture. Zara set up systems to get potential customer feedback on designs and adapt with changes to its inventory. “It forced innovation into its manufacturing cycle,” Marlow said. The firm also constantly forms and re-forms its management teams.
• Red Robin, an American burger chain. The traditional cycle to bring a new burger to market was 12 months, given all the testing that is required, but Red Robin has reduced this to about 12 weeks by engaging with its point-of-sale staff – the waiters and servers – to get them to talk to customers. The company originally tried doing this on Twitter but, it seems, people don’t like much to talk about their favorite burgers online.

At Microsoft, the company has done three major things in the past few years to better enable it to embrace change:

• It has embraced One Microsoft, breaking down traditional silos of big product-related divisions. “We need to operate as ‘One Microsoft’,” Marlow said. “We are now bringing change across the business.”
• It has become customer obsessed, changing its outlook to be more customer centric. “It’s not about what is easiest or best for us as much as it is about what is the right thing to do for the customer,” she said.
• It has embraced diversity, seeking to become “more diverse and inclusive”. ”We want to help bring technology to the places that it is needed, and to do that we need to ensure we’re mirroring the market we serve. To help empower every person on the planet to achieve more, we need to represent every person on the planet” Marlow said.

“It’s all about how we create a digital dividend, not a digital divide,” Marlow said.

So, what is it that’s holding organisations back from embedding innovation in every fragment of their business? Pip Marlow would argue: “Its not technology that’s holding us back. It is, in fact, people – just like us- and the organisational cultures we create in our workplaces”.

So what will you do to build a culture fit for change? She asks

– Greg Bright