Nim­ble gi­ant Thor­burn teaches NAB to dance

Ev­ery­one’s talk­ing in­no­va­tion, but how does a CEO drive change? NAB’s An­drew Thor­burn has an am­bi­tious pro­gram to make his bank more ag­ile

The Australian - The Deal - - Front Page - Story by: Glenda Kor­po­raal An­drew Thor­burn is a key­note speaker at The Aus­tralian’s Cre­ative Coun­try con­fer­ence in Mel­bourne on July 28. cre­ative­coun­try.com.au

Big or­gan­i­sa­tions need to be am­bi­tious when it comes to in­no­va­tion, but ready to dump the in­no­va­tion quickly if it doesn’t stack up, says An­drew Thor­burn.

“It’s about fail­ing fast,” says the Na­tional Aus­tralia Bank CEO. “If we have an idea that doesn’t work we can park it, learn from it what we need to do to and move on to the next one.”

But that’s not easy for a bank­ing sec­tor where the cul­ture is tra­di­tion­ally more con­ser­va­tive, where it’s good to be risk-averse and not good to fail. Ex­ec­u­tives try­ing to drive in­no­va­tive change in a big or­gan­i­sa­tion like NAB, with 35,000 em­ploy­ees, must ac­cept that not all ideas will suc­ceed, says Thor­burn.

“It’s chal­leng­ing for a bank but you need to be pre­pared to al­low things to fail,” he tells The Deal. “You want to bring in ideas and you want peo­ple to try them but if it doesn’t work, it’s OK … that’s the real change in the cul­ture that we are try­ing to bring in.”

He quotes Peter Fuda, an Aus­tralian ex­pert on busi­ness trans­for­ma­tion, who talks about hav­ing a “burn­ing plat­form”.

“The idea is that as a com­pany if you don’t change you will die,” says Thor­burn. “But Fuda also talks about the need to have a burn­ing am­bi­tion. You have to cre­ate a burn­ing am­bi­tion for change. But to do that you have to think about why are you chang­ing and what you want to be.”

Thor­burn knew NAB needed a shakeup when he took over as chief ex­ec­u­tive al­most two years ago. He had plans to sell off the trou­bled Bri­tish busi­ness but wanted a more fun­da­men­tal cul­tural change to re­store the bank’s for­mer rep­u­ta­tion as the best busi­ness bank in Aus­tralia.

“When I grew up in Mel­bourne, NAB was a fan­tas­tic bank and it was a par­tic­u­larly fan­tas­tic busi­ness bank,” he says. “When I took over I wanted to have that as a goal for us: to be a great busi­ness bank which en­ables and equips our clients to grow their busi­nesses and cre­ate more jobs and wealth.”

A ca­reer banker, he looked around the world for ideas on how to re-en­gi­neer the bank at a time when the sec­tor was chal­lenged by fin­tech play­ers. His goal was to in­tro­duce a “startup” cul­ture within a big or­gan­i­sa­tion spread across the coun­try.

He looked at an in­no­va­tion lab op­er­ated by Visa in San Fran­cisco and vis­ited IBM’s Watson Lab in New York. He checked out Span­ish and Cana­dian banks.

He ex­am­ined the work of Amer­i­can Larry Kee­ley, au­thor of the book Ten Types of In­no­va­tion: the dis­ci­pline of build­ing

break­throughs. A di­rec­tor and co-founder of Doblin, an in­no­va­tion prac­tice in­side Deloitte Con­sult­ing, Kee­ley stud­ied more than 2000 in­no­va­tions – from the Model-T Ford to the early IBM Main­frames and Ama­zon.com – to de­fine 10 key “moves” a com­pany can use to trans­form its busi­ness.

Thor­burn re­alised NAB needed a scaleable sys­tem. “You can’t just tell peo­ple to go and in­no­vate,” he says. “You need a sys­tem in the com­pany to han­dle it. That why we have es­tab­lished NAB Labs as a sort of cen­tre of ex­cel­lence around in­no­va­tion.”

NAB Labs was set up early last year at the bank’s of­fices at 700 Bourke Street in Mel­bourne’s Dock­lands area, si­t­u­ated be­tween its old head of­fice in 500 Bourke and its new of­fice at 800 Bourke. It’s a hub charged with de­sign­ing new prod­ucts quickly; part­ner­ing with other or­gan­i­sa­tions and po­ten­tial in­vest­ments in in­no­va­tion; and de­vel­op­ing a scaleable in­no­va­tion sys­tem at the heart of the bank.

“We didn’t make it a spe­cial-pur­pose unit, we put it at the cen­tre of the bank,” Thor­burn says.

He chose his head of prod­ucts and mar­kets, Antony Cahill, to over­see the hub as part of his port­fo­lio and one of his ex­ec­u­tives, Jonathan Davey, to run the lab. NAB Labs has a ded­i­cated team of around 35 peo­ple but the num­bers can surge to 60 or 70 as bank staff move in and out for spe­cific projects.

The goal is to de­sign a new prod­uct in 12 weeks and test it on the run, says Thor­burn: “Be­fore, if we wanted to come up with a new prod­uct, we would set up a com­mit­tee and peo­ple would sit down and think about some­thing for 18 months or two years and then they’d im­ple­ment it.” It in­volves bring­ing cus­tomers into the lab and work­ing with them to de­sign new prod­ucts.

NAB also has a strate­gic al­liance with the Uni­ver­sity of Mel­bourne and its top ranking Mel­bourne Busi­ness School where MBA stu­dents spend six weeks at the lab as part of an “ex­per­i­ment team” re­ceiv­ing a credit for their work. NAB Labs will also work with the uni­ver­sity and its busi­ness school to an­a­lyse chal­lenges and share in­sights on topics such as blockchain, cus­tomer be­hav­iour and data an­a­lyt­ics.

NAB is a part­ner with Syd­ney start-up workspace Fish­burn­ers, which is also sup­ported by Op­tus, Google, BigAir, Drop­box Busi­ness and News Corp, pub­lish­ers of The Aus­tralian. It has held three “hackathons” at Fish­burn­ers, with NAB staff work­ing with young en­trepreneurs to come up with new ideas to feed into the NAB Lab process. There are cash prizes for the en­trepreneurs, who re­tain the in­tel­lec­tual prop­erty in their idea and pur­sue a po­ten­tial part­ner­ship if NAB Labs turns it into a prod­uct.

The lab has teamed up with ac­count­ing firm PwC to de­velop Air­tax, a dig­i­tal plat­form aimed at help­ing the self-em­ployed and mi­crobusi­ness cus­tomers to man­age their GST-pro­cess­ing re­quire­ments by us­ing a linked NAB Visa debit card.

NAB has also set up NAB Ven­tures with the goal of in­vest­ing up to $50 mil­lion in fin­tech start-ups. It is led by for­mer en­tre­pre­neur and dig­i­tal me­dia ex­ec­u­tive Todd For­est. Melissa Wid­ner, one of the most se­nior women in ven­ture cap­i­tal in Aus­tralia, joined this year as gen­eral part­ner.

The goal is to take mi­nor­ity stakes in small fin­tech com­pa­nies that have ideas and pro­cesses that can be in­te­grated into the bank. It will look for small com­pa­nies in­volved in ar­eas in­clud­ing pay­ments by mo­bile phone, data and an­a­lyt­ics.

“We are go­ing to be in­vest­ing in small com­pa­nies and we want to learn from them quickly,” says Thor­burn.

NAB Ven­tures made its first in­vest­ment last month when it joined with Qan­tas Loy­alty and West­pac to in­vest $10.5 mil­lion in the de­vel­op­ment and over­seas ex­pan­sion of the data ex­change com­pany Data Repub­lic. Founded by Paul Mc­Car­ney and Danny Gil­li­gan, the firm pro­vides its busi­nesses with en­hanced data about its cus­tomers, draw­ing on in­for­ma­tion from a wide range of data sources.

Thor­burn says the cross-fer­til­i­sa­tion of tal­ent is im­por­tant: “We want our team to be among the best global thinkers in the in­no­va­tion space and give our cus­tomers ac­cess to the best in­no­va­tive thought – and we recog­nise that it won’t nec­es­sar­ily come from in­side NAB.” His per­sonal chal­lenge is to “keep learn­ing”. “I keep talk­ing to peo­ple,” he says. “I talk to [Tel­stra CEO] Andy Penn about what he’s do­ing – we’re go­ing to work with them. You have to con­stantly be chal­lenged about how to go faster and how to do things bet­ter.”

But there’s a limit to how quickly you can make the ele­phant dance. “We have been work­ing at this pretty hard for a year at least but it is go­ing to take at least three years be­fore it’s deeply in­grained in our cul­ture,” says Thor­burn.

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