“This is transformation” – the challenge of leading digital change

Former CEO of Australia’s Digital Transformation Office, Paul Shetler, talks about the challenges of leading change in government and large organisations

To say Paul Shetler’s stay in Australia has been controversial would be an understatement.

After leaving the UK’s Government Digital Service in 2015, Shetler was the founding CEO of the Australian government’s Digital Transformation office. He lasted 16 months before being managed out.

In January I interviewed Shetler where he discussed the relative differences between countries, the challenges facing those trying to digitally transform governments and large organisations along with some scathing observations about the management of the Australian Public Service.

Parts of this interview were the basis for separate articles in Diginomica and the Australian Financial Review however the entire conversations is worthwhile publishing.

Some of Shetler’s answers have been lightly edited for clarity.

How do we compare the digital transformation journey of different countries?

In terms of the UK, the Government Digital Service really has done a great job. If hadn’t been for GDS we wouldn’t be having the conversation we’re having in Australia today, much less in New Zealand, the United States and other countries.

Digital Transformation wouldn’t be on the table and an awful lot of the basic ideas on how you fix government IT by looking at structural reasons for behaviour rather than just saying “let’s make a nicer interface.” they were really good at identifying those things.

Britain was the pioneer. Every country in the naughties had their own digital strategy but the UK led the way. The US right now is a mess, they don’t really have a digital strategy.

How does the US look with the new Trump administration?

They do have a lot of potential there. I do think the new administration is more likely to do something big to fix things than perhaps the Obama Administration was, because they are talking about national infrastructure.

If you to the United States it’s shocking, the physical level infrastructure is falling apart and on a digital level things are pretty much the same, if you look at the government websites many of them look like they are from the 1990s and they all look and act differently.

They are very much like the UK before Britain started the digital transformation and they’ve had several years to fix it but there’s been no concerted effort because no-one really owns it.

They do have the USDS which operates out of the White House that gets really great talent in to do fix something but they don’t have the authority across the government.

They have 18F who operate on a cost recovery basis who act like an internal consultancy… they have some extremely talented people there and we’ve learned quite a bit from them.. and they help agencies with individual things, like looking at contracts or procurement or whether it’s fixing a particular service. But there’s no vision or strategy that guides it all.

If you go to New Zealand you’ll see they’ve been doing a lot of great thinking. It really influenced us in Australia on user journeys across governments, where you want to get something done that goes across agencies.

Let’s look from the standpoint of the end user; the end user wants to send a child to school, to emigrate to New Zealand or to open up a business. What do they need to do and how can we map it out for them.

The problem in New Zealand is that the team has no authority, all they can do is propose and it depends upon other people saying ‘oh, that’s a great idea’ although there’s been a lot of great design thinking coming out of there and it difficult for that being translated into practice.

One of the things I learned here was you can have all the great ideas and talent but if you don’t have the political will and authority to drive it then a recalcitrant bureaucracy will not going along with it because their interests aren’t in alignment with their users.

What did you find on coming to Australia?

There was a lot of excitement and enthusiasm on what we could do with the idea of the DTO, particularly among the public there was a lot of goodwill as well as in large parts of the Canberra bureaucracy, generally speaking the lower you got down the ranks there was more enthusiasm.

In the UK you have two layers of governments; you have the central government and local administration.

You have the split between politics and policy, you have the politicians who just don’t spend time in their departments. When I was with the UK Justice Ministry the Secretary of State, Chris Grayling, and his ministers were in the building every day.

As a consequence they were very aware of what was going on. There were in there everyday and they could see things. It made it easier for the ministers to give direction and cover for the civil servants.

In Australia it’s much easier for public service to capture the minister, direction is spotty and politicians are easily manipulated, partly because of lack of information.

There’s also the gap between policy and delivery, the UK Department of Justice, for example, works on legal and constitutional policy but is also responsible for prisons, courts and other services. So there’s a tight feedback loop where if a policy isn’t working, you find out pretty quick.

How important are people and existing processes?

You can’t fight human nature you have to acknowledge it and live with it and make it work for you.

In Australia we did a terrible job of working with human nature. This idea we could get Australian government to magically transform itself because it was told to, that I could come here and put up some pretty pictures and say some nice words and everyone would say ‘hey we never thought of that.’

That’s not going to happen when you have entrenched interests, habits, structures and groups who are committed to doing things a particular way. It’s not going to happen and it’s vary naïve to think you can do it, it’s just not how people work.

In the UK, we didn’t focus on consensus we focused on getting things done. When I first met with Francis Maude he said ‘this is not a change management process – this is transformation.”

When we talk about change management it’s often about appeasing people who are throwing up obstacles, this isn’t about appeasing them, it’s about them doing their job. Too often here there was too much appeasing bureaucrats which I think comes down to a lack of political will and perhaps cowardice.

One of the major reasons why the UK was a successful as they were was because Francis Maude was the minister for five years. It became clear he was going to see this through and if you were going to fight, you were going to lose. People got into line.

Because they understood people were competitive they created a group called ‘Digital Leaders’, the digital leaders were the Director-Generals from various departments who were future leaders – most likely to become Permanent Secretaries – and said, “you guys will be those driving the transformation from the Civil Service side.” Of course because these people were all competitive they’d try to outdo each other.

How does the Australian political culture compare?

“It’s quite a bad culture. In Canberra you have people who think they are the intellectual elite of the nation who aren’t really, it’s a relatively mediocre elite.”

The idea you have a group of people sitting around thinking their Big Thoughts in a bubble and telling each other how great they are who then hand those thoughts down to proles who do the service delivery. It’s a very weird class system that’s been built up – you have the Big Thinkers and then even the proles you give it to, they pass it on to the states or an NGO to deliver it.

There is no feedback loop, there is none. You don’t know how much these policies cost, you don’t know what they’re delivering you don’t know what’s a success. That probably suits lots of people.

We saw that with digital dashboard where citizens and ministers could monitor public services’ performance. There was so much pushback, there were some agencies that worked with us but getting information directly from the systems was difficult.

What are the lessons from the Australian experience and for those trying to drive digital transformation?

When the DTO was set up, they had to make a series of trade-offs. It wasn’t GDS, it didn’t have the powers of GDS. It didn’t have the powers to mandate or block.

GDS had both, the idea you could kumbaya your way to transformation, no-one there believed it. That’s why they set up GDS the way they did. They could stop you from spending money, even if you had the budget approval or not, so that was a massive stake in the heart for a number of zombie IT projects.

It’s particularly hard for IT managers in departments to admit that a long running project was a failure so GDS was great. That ability to do the right thing and to have it sanctioned by authority was brilliant. The years of ass-covering were over.

Some kind of spending controls are good and some ICT procurement reform is absolutely essential. That’s potentially really, really good.

How important is finding the right people?

People coming into senior digital roles in the UK government were hired by GDS and that was massively important to get the right people in.

I was thoroughly vetted as were all the other hires and it was important because it created a community of people who thought the same way. We were all committed to the same mission and we all came in at the same time. It’s not talked about much, but there was also a general clearing out of the old leadership.

Having a common sense of mission was important, we would work together and collaborate with each other.

You need to have political will to see them through because the departments will kick and scream but if their autonomy was working we wouldn’t have this problem.

Why are Australian governments suffering IT problems?

If all major government projects were failing we’d not be having this conversation. That said, there is an unacceptable rate of failure and it has to be fixed. Again, departmental autonomy is not working.

Departments have chosen to deskill, departments have chosen to become dependent upon vendors and departments have chosen to put their own interests ahead of users – as we in the case with Centrelink. Infrastructure failures like the ATO or the Census were easily preventable. The idea you’re building data centres in 2016 is insane and anyone who tells you that should be fired.

These are all predictable outcomes and as long as you have a public service that’s not really comfortable with 21st Century technology and which still views as its own departmental in-group as being more important than its end-users then you’ll end up with these problems.

Public servants have to start operating the way a bank or insurance company would – how do I get onto the cloud, not how do I keep workloads off the cloud? How do I build around the user? It’s crazy to be asking these conversations because it’s an incredibly deskilled when it comes to IT. It’s appalling, much more than in the UK.

That’s the problem, when you talk to actual practitioners in the Australian government they acknowledge it. It’s not the guys doing the designs or those trying to use the technologies, it’s those further up the management chain who don’t have the skills or have too close relationships with certain vendors where you see these anti-social behaviours kicking in.

Where next?

I’ve spent sixteen months banging my head against a wall so I’m not in a hurry, I’m looking some opportunities in Australia and a few elsewhere in the world.

Zen and the art of digital disruption

When driving an organisation’s transformation, consensus is the first casualty warns the former head of Australia’s Digital Transformation Office, Paul Shetler.

“You can’t kumbaya your way though it,” says Paul Shetler, the former head of Australia’s Digital Transformation Office, about the task of bringing an organisation or government into the 21st Century.

Shetler, who previously worked for the UK’s Government Digital Service (GDS) and Ministry of Justice, was reflecting on how a brutal approach to change was necessary when confronted by management resistance and a recalcitrant bureaucracy.

I had the opportunity to interview Shetler two weeks ago with part of that discussion being published on Diginomica. One of his key points is when driving a transformation, consensus is the first casualty.

“In the UK, we didn’t focus on consensus we focused on getting things done. When I first met with Francis Maud he said ‘this is not a change management process – this is transformation.’”

However to drive such change forcefully strong leadership is needed and Shetler emphasised that one of the great drivers for digital transformation at the UK’s Ministry of Justice was having a committed and powerful minister.

“One of the major reasons why the UK was a successful as they were was because Francis Maude was the minister for five years… It became clear he was going to see this through and if you were going to fight, you were going to lose. People got into line.”

Ultimately a lack of strong leadership is why the Australian DTO failed, with the country’s political culture seeing ministers rotated out of positions on a regular basis – the Innovation portfolio is seeing its fourth minister in 18 months  – it’s almost impossible for any leader, however forceful, to drive meaningful change.

This raises the question of whether some organisations can culturally handle change, it may well be that some institutions are impervious to change given the nature of their management structures and the people that lead them.

Australian taxpayers may hope that their public service isn’t an institution that resists change but Paul Shetler’s experience is a worrying warning.

When does a digital strategy matter?

Some businesses are obsessing too much about their digital strategy, a UK based business professor believes.

Should a business spend a lot of time on its digital strategy? A recent article in the Harvard Business Review suggests many businesses, and consultants, are focusing too much on the technology.

Freek Vermeulen, an Associate Professor of Strategy and Entrepreneurship at the London Business School, describes how strategists may be making a mistake in responding to digital disruption. He argues many industries are learning the wrong lessons from disruptors like Amazon, Uber and Google.

In Vermeulan’s view, the world is not a globalised as we’d like to think and the network effects that work so well in internet based industries don’t necessarily translate to other sectors.

As a consequence, businesses that work on the assumption their industries will be affect the same way as, say, the taxi industry with Uber or newspapers by Google and Facebook may well be making their own strategic mistakes.

Digital is changing the nature of competitive advantage in many businesses – just like major technological developments have done before. However, the change will not be uniform across all industries. Digital technology is affecting and will affect different businesses in different ways. Miss these nuances and your strategic decisions could lead you seriously astray.

That’s certainly true and how technology or a rapidly changing economy affects each industry, or business, is far from uniform.

One of the case studies Vermeulan uses is that of a consulting firm that has largely eschewed digital platforms and focused on its human assets – primarily the skills and connections of its associates and staff.

While that’s undoubtedly true of all consulting businesses to some degree, the use of digital tools and marketing is changing that industry dramatically as well.

Vermeulan is right in that some industries may want to respond more slowly than others to digital or economic changes, however a business that disregards them or reacts too slowly may not know what hit it.

Having a culture of yes

Key to fostering a company wide culture of innovation is management’s willingness to say ‘yes’ says AWS CEO Andy Jassy

One of the biggest impressions from the AWS Re:Invent conference is the company’s rapid innovation with the firm’s executives boasting how they have offered over a thousand features on their services this year.

That sort of rapid change requires a fairly tolerant attitude towards new ideas and risk, which was something AWS CEO Andy Jassy explained at the media briefing.

“In a lot of companies as they get bigger, the senior people walk into a room looking for ways to say ‘no’. Most large organisations are centrally organised as opposed to decentralised so it’s harder to do many things at once,” he observed.

“The senior people at Amazon are looking at ways to say ‘yes’. We don’t say ‘yes’ to every idea, we rigorously assess each on its merits, but we are problem solving and collaborating with the people proposing the idea so we say ‘yes’ a lot more often than others.”

“If you want to invent at a rapid rate and you want to push the envelope of innovation, you have to be unafraid to fail,” he continued. “We talk a lot inside the company that we’re working on several of our next big failures. Most of the things we do aren’t going to be failures but if you’re innovating enough there will be things that don’t work but that’s okay.”

While Amazon’s management should be lauded for that attitude, they are in a position of having tolerant investors who for the last twenty years haven’t been too fussed about the company’s profits. Leaders of companies with less indulgent shareholders probably can’t afford the same attitude towards risk.

There’s also the nature of the industry that AWS operates which is still in its early days, sectors that are far more mature or in declines – such as banking or media respectively – don’t have the luxury of saying ‘yes’ to as many ideas as possible.

Jassy’s view about encouraging ideas in the business is worth considering for all organisations though. With the world changing rapidly, having a workforce empowered to think about new ideas is critical for a business’ survival.

Why Cyber matters

‘Cyber’ has become a buzzword, but it does have some serious meanings for managers and business owners

This is the unedited version of an article that appeared two weeks ago in The Australian.

Cybersecurity is becoming an important responsibility for executives and directors. Often shortened to ‘cyber’, it’s easy to dismiss cybersecurity as just being the latest IT industry buzzword however ensuring information systems are secure is now firmly a management issue.

Information breaches have become embarrassingly common in recent times with events ranging from Target exposing forty million of its customers’ records in 2013, a breach which cost the company $162 million dollars, through to national security embarrassments like the Snowden revelations.

Exacerbating the risks to businesses is the dependency upon information systems to normal operations and the damage from denial of service attacks such as the outage across much of the US last weekend can be debilitating and costly. The recent Australian census saga that cost taxpayers thirty million dollars, is an illustration of how costly poorly planned responses to service interruptions and security breaches can be.

Compounding the risks for Australian executives are the breach disclosure laws tabled in Federal Parliament last week which threaten 340,000 dollars fines for individuals and 1.7 million dollars for corporations that fail to act quickly on data privacy failures.

In such a high risk environment business leaders need to be proactive says Leonard Kleinman, the Asia Pacific and Japan Chief Cyber Security Advisor for security software firm RSA, “the legislation is aimed at organisations that I’d call ‘wilfully blind’ or like to employ the concept of ‘plausible deniability’.”

As that period of ‘wilful blindness’ and ‘plausable deniability’ comes to an end, executives and directors have to start taking their responsibilities in protecting data far more seriously. The challenge lies in understanding the risks.

“What a lot organisations – both private and public – haven’t done well is their ‘Crown Jewels assessment,” says Glenn Maiden, Principal Security Consultant at Canberra’s ?Shearwater Solutions. “It has to be contextualised. My crown jewels might be credit card numbers but for that may not be the interest for foreign intelligence agencies.” Then understand where the risks are for those critical data and processes.

In understanding what those ‘crown jewels’ are, it’s important to consider what is valuable within the organisation. While to the marketing team the most valuable information may be customer data, to the COO it may be ensuring continuity of service while to external parties it could be pricing details or legal correspondence.

“The things I’ve suggested in the conversations I’ve had with organisations is simple stuff; review things like your instant response strategies – can you start an investigation quickly,” says RSA’s Kleinman. “It’s probably good to review your contracts. If you have a cloud services providers that experiences a breach, how are they going to go about doing the notification?”

In a world where subcontracting and outsourcing is normal business practice, the risk from third party vendors is real and goes beyond cloud providers. The disastrous Target hack being due to an air conditioning contractor’s compromised system and Edward Snowden himself wasn’t a direct government employee.

Privacy and security breach notifications are only part of the broader cybersecurity picture though and the field is becoming more complex. Last weekend’s massive denial of service attack that compromised many US based online services was caused by the Mirai botnet, that exploits vulnerabilities in cheap internet of things devices.

With business processes becoming increasingly connected and automated, management concerns are extending to the security, integrity and reliability of devices being used in their organisation. Even if the business critical sensors being officially purchased are of high quality, everything from smartphones to connected kettles being bought into the staff tearoom could be a potential risk to the corporate network and a business’ reputation.

It would be a mistake however to think cybersecurity is purely a technology problem however. “Ultimately insider threats are about people,” says Senior Vice President of Nuix’s threat intelligence and analysis, Keith Lowry. “These are all people who used tools or technology to do what they did and they got away with it because others were focused on the technology rather than focused on the people.”

As the business world becomes more dependent upon data and connected systems, the governance of networks and their security is going to be increasingly the responsibility of business leaders.

Enshrining business stupidity

A book by two London academics looks at how organisations enshrine stupidity

“In a world where stupidity dominates, looking good is more important than being right,” writes Professor André Spicer of London’s City University in Aeon Magazine.

Spicer and his fellow author Mats Alvesson described their results of studying dozens of organisations for their book The Stupidity Paradox.

What they found is the smartest don’t get ahead in most organisations, but those who conform with the prevailing culture which usually sets a low bar.

We started out thinking it is likely to be the smartest who got ahead. But we discovered this wasn’t the case.

Organisations hire smart people, but then positively encourage them not to use their intelligence. Asking difficult questions or thinking in greater depth is seen as a dangerous waste. Talented employees quickly learn to use their significant intellectual gifts only in the most narrow and myopic ways.

The tragedy is these organisations squander the talent of those working for them. In many respects management is destroying value rather than adding to it.

Probably the most dangerous type of organisation though are those run by managers who want to be leaders.

They see their role as not just running their business but also transforming their followers. They talk about ‘vision’, ‘belief’ and ‘authenticity’ with great verve. All this sounds like our office buildings are brimming with would-be Nelson Mandelas. However, when you take a closer look at what these self-declared leaders spend their days doing, the story is quite different.

Spicer’s article is well worth a read, if only to nod in agreement with many of the organisations and managers you’ve had to deal with in the past.

It’s worth reflecting how organisations are changing in an information rich age. While it’s tempting to think better access to data will improve their collective intelligence, it may be that algorithms only further entrench poor management practices.

Connecting 400 points of voter data

US political parties are showing how organisations can use data in a targeted, sophisticated way

As the 2016 US Presidential race enters its final stages, it’s interesting to see how data is being used by American political candidates and what this means for business.

During last week’s Oracle Open World in San Francisco a panel hosted by the company’s Political Action Committee featured Stephanie Cutter, who worked on Obama’s 2008 and 2012 campaigns, and Mike Murphy, a Republican operative whose most recently worked on Jeb Bush’s primary effort against Donald Trump.

While the discussion mainly focused on the politics – “Crazy times seem to require crazy candidates” says Murphy – it was the technology aspect of modern elections that was notable.

Setting the data standard

The Obama campaign of 2008 set the standard for how modern political campaigns used social media and information, “we revolutionized how data analytics helps predict how people will vote and how they will persuade voters to turn out.” Cutter said.

“We put a big investment into it and Republicans have caught up,” she continued. “The key though was we relied on our own data and nothing that was out in the public domain. We didn’t rely on one piece of data, we had multiple sources. We had an analytics program where we were making 9,000 calls a night where we were predicting the votes.”

Murphy agreed with the political campaigns using data, “the kind of polling you see in the media has kind of vanished in campaigns where they have money to spend on research.” He said, “we don’t do telephone polling any more because we have so much data we can collect.”

Capturing everything

“We capture everything. We have about four hundred data points on the American voter and we’ll have five hundred in the next two years. We’ll be able to build massive data models without phone polling,” Murphy pointed out. “We’re waiting for the tech folk to get ahead on AI so we can predict what voters are going to do in two weeks.”

Despite the amount data collected by US political parties, the real key to success is the candidate’s organisation and management. Cutter made a strong point about the strength of Obama’s campaign team in both the 2008 and 2012 campaigns.

How the US political parties use data points to how businesses will be managing data in the future. Increasingly using information well is going to be the measure of successful organisations in both politics and industry.

Automating the back office

Walmart’s streamlining of back office processes is a warning to middle managers everywhere

US retail giant is to slash 7,000 back office jobs reports The Wall Street Journal as the company looks to focus on customer service. The process that’s seeing those jobs lost are part of a bigger shift in management.

The automation of office jobs isn’t new – functions like accounts payable have been steadily computerised since the early days of computers – but now we’re seeing an acceleration of white collar and middle management roles.

As increasingly sophisticated automation and artificial intelligence increasingly affects middle management roles, we can expect further changes to organisations’ management structures.

The opportunity to streamline and flatten management will be something company boards will have to focus on if they want to keep their enterprises competitive and responsive in rapidly changes markets.

For managers, there’s a lot more disruption to come for their roles. Those stuck in 1980s or 90s ways of doing things are very much at risk.

Digital businesses’ lost tribe of managers

Business leaders are struggling to understand their digital strategies, Forrester reports.

Are senior executives lost when discussing their company’s digital strategy?

At the Huawei Connect conference this morning in Shanghai, Nigel Fenwick, a Vice President and principle analyst of Forrester Consulting, released his company’s study titled Business and Technology Leadership in a Post Digital Era.

Forrester surveyed 212 IT and business managers across selected markets in North America, Europe and the Asia-Pacific for the survey and found only four percent of business leaders were confident they understood their companies’ digital strategy.

Even more worryingly less than ten percent of business IT leaders claimed they understood their organisation’s digital strategies.

The reason for this, Fenwick believes, is the pace of change in the technology sector as managers struggle to put digital innovations into the context of the business.

Exacerbating this lack of understanding is how companies are ‘bolting on’ digital strategies to their existing business models rather than thinking about how their industries, products and markets are being transformed, Fenwick says.

There’s little new or surprising in Forrester’s report and the small and selective data set doesn’t inspire confidence in the survey’s results. It is however a good reminder of the challenges facing today’s boards and executives in understanding the consequences of a rapidly changing economy on their businesses.

A tale of managerial hubris

The failure of Australia’s 2016 Census is due to arrogant management, not bad technology

Twenty-four hours after the 2016 Census website collapsed, the Australian Bureau of Statistics’ reputation is in tatters as the organisation blames hackers, denial of service attacks and failed routers for the debacle.

While there’s many lessons to be learned from this tale, not least the importance of getting your social media team on board, the key takeaway from this embarrassing saga is to show some public humility and not dismiss informed critics.

Technology was not the problem at the ABS, an arrogant management is what caused the Census collapse.

Given the poor accountability of Australian management it’s unlikely anyone’s career is going to suffer as a consequence of this debacle but it’s a further dent to the reputations of both IBM and the ABS. Quite frankly they deserve it, if only for their failure to listen to the community.

Forget eliminating risk

We can’t eliminate risk, but we should manage it recommends Huawei’s chief security officer

“How are you going to manage, not stop, risk?” Asked John Suffolk, the Global Cyber Security & Privacy Officer of Huawei Technologies at the company’s ICT roadshow in Sydney today.

Suffolk’s message is one that should be heeded by all business owners, managers and executives in areas more than just IT security.

One of the conceits of the late Twentieth Century management philosophies is that risk could be managed out of business, partly through technology but mainly through legalisms that attempted to push liabilities onto suppliers, contractors, resellers and customers.

That philosophy still holds true in many organisations today, particularly government agencies, and it costs them dearly.

In truth, business is risky and trying to eliminate risk is a fool’s errand. How it’s managed is the real test for leaders.

Creating alternatives to the NASDAQ

Is the NASDAQ still the place for tech companies to list? Nuix’s Eddie Sheehy doesn’t believe so.

Does it really matter what stock market a company lists on? In my interview with Nuix CEO, Eddie Sheehy for the Australian Financial Review, the question arose about where the company will list for its expected IPO next year.

Sheehy’s response was clear, “I suspect we’d get just as good a float out of Australia now as we would anywhere else. In fact better, because I think our shareholders are better known, respected and trusted, there’s nothing that I’ve seen in London or Nasdaq that makes me believe we’d get a better outing.”

Until recently most tech startups aspired to listing on the US NASDAQ exchange and the reasons were compelling as the bourse has a strong technology focus meaning deeper pools of funds, more liquidity along with a community of investors and analysts who had a strong understanding of technology stocks.

The case for other exchanges

Now other exchanges are making their case for tech companies listing with them. The London Stock Exchange making a strong argument for prospective IPOs. Singapore, Sydney and many others have similar pitches for the business.

The problem in those exchanges is the lack of depth in the marketplace. Having a small selection of tech companies listed means limited focus from investors and analysts, it also risks having one or two successful companies dominating the index, as has happened with Xero’s listing on the New Zealand Exchange.

Xero also illustrates another problem with a listing on an exchange not familiar with the peculiarities of tech stocks at the company’s Sydney AGM a few weeks ago where an investor asked ‘when are you guys going to make a profit?’

Rod Drury, Xero’s CEO, was able to deflect the question but it showed how companies listed on exchanges where the the high growth, low yield model of tech startups are unusual. On the Australian exchange, this problem is exacerbated by the investor base being dominated by big, dumb institutions.

Changing perspectives

Nuix, among Xero and a host of other tech companies, are slowly changing the perspectives of those investors but the focus on yield and safety from both retail and institutional investors will remain an obstacle for ventures launching in more conservative jurisdictions.

Other factors are the stability, legal and taxation consideration of those jurisdictions. If stockholders are facing barriers realising their investors or the the domicile puts companies at a disadvantage then that country’s stock market won’t be preferred.

Ultimately though a company’s listing is about access to capital and liquidity. If companies like Xero and Nuix can get both at a reasonable cost by listing on the Australian, Singaporean or London markets, then that’s a choice for their boards.

It’s hard though to see the NASDAQ being knocked off its perch for moment, although it the US tech bubble does pop things may change.