NAB CEO: How to be an innovative banker and what you can learn from the people behind 'Toy Story'

NAB CEO Andrew Thorburn. Source: supplied

Ideas are important, but execution of ideas, delivery, is more important.

And everybody’s got their own story about innovation, and at NAB, we are innovating as well because we have an aspiration to be the best: the most respected bank in Australia and New Zealand.

We’re innovating because the customers that we serve and help grow, particularly in the business sector – we’re the number one business bank in Australia – those customers are innovating themselves and they’re expecting us to, and they’re expecting us to help show them how to do it so that they can be more successful.

And in my time in banking – and I’ve been in banking all my career, over 30 years. I’m very proud to be a banker, and given what we do to help customers grow and develop and manage their money and to help the economy grow, I’ve seen so many changes. I think banking has been transformed in that 30 years and now we’re on the cusp, I think, of the most significant changes of all in our sector.

Inside our bank, we say that the banking environment has been transformed to the extent that our busiest branch is now mobile. It’s a bus. It’s a tram. It’s a train. And we now are on the cusp, I think, of the most demanding – but in a sense – the most exciting era of banking, certainly in my lifetime.

Some of the things the panel earlier was talking about will make sure of that, whether it’s new competitors, faster processing speed, the cloud, big data, AI – all of these things will make sure that we need to lift to get better if we’re going to not just survive, but if we’re going to thrive.

But I think, as business leaders, it is our core job to innovate, because innovation creates opportunity and it creates growth. In large companies, this is hard because you have regulation, you have status quo, you have short term-ism, and a desire for quick fixes rather than the hard yards which create lasting and sustainable change.

In one of the fun and good books I’m reading at the moment – it’s called “Creativity, Inc” by Ed Catmull, the story of the invention, the growth of Pixar.

Now, one of my all-time favourite movies, “Despicable Me”, wasn’t done by them, but they did one of the next best ones, which was “Toy Story”. And they created a whole new series that we have in our entertainment genre today.

In this book, just to illustrate this point, that really it’s about culture in large organisations that needs to change, he says:

“We begin life as children, being open to the ideas of others because we need to be open to learn. Most of what children encounter, after all, are things they’ve never seen before. The child has no choice but to embrace the new.

“If this openness is so wonderful, however, why do we lose it as we grow up? Where along the way do we turn from the wide-eyed child into the adult who fears surprises and has all the answers and seeks to control all the outcomes?”

Now, I think that could be applied to large companies today.

So I want to make three points.

The first is that we need to redefine innovation.

The second is that we should see business as the key driver of innovation.

And third is the biggest challenge. It’s to create a sustainable innovation impact, not just a one-off or short-term phenomenon.

Redefining innovation

I believe the driving purpose of why we must innovate must be about our customers.

And inside a large organisation – in our company, 35,000 people – when you talk about serving our customers better, doing it faster for them and doing it better than others in the marketplace and taking this to a new level, I’m pushing on an open door because our people want to serve better and want to deliver for customers.

So we must innovate for customers. That must be the driving purpose.

It can’t be about anything else; that certainly must be the primary focus. To serve customers better.

Because that is why we exist and that big question of “Why do we exist beyond profit?” must be about serving our customers. So innovation has got to be oriented to the marketplace and to our customers and serving our customers better and faster than anyone else.

We know, on that basis, Australian businesses do have the potential to be innovative because in our recent NAB Labs Innovation Index, we found that 100% of large businesses we surveyed and 70% of small businesses said that they were motivated as one of their primary objectives to serve customers better.

So this point around customers is important, but it’s also important that it gets redefined because the term ‘innovation’ is often overused. It is simplified and boxed as if it’s about technology, which is a huge enabler, and it’s about big ideas. And whilst both of these are important, in my experience, it’s a lot more than this in large companies.

It is the role of everyone in our company and everyone in business to be a challenger, to push the status quo and to be an innovator. And it’s the many small improvements, the hundreds of thousands of incremental improvements that create an innovation impact.

But we can in Australia, and must, do more. We should be creating our own Silicon Valley in Australia. And we need to aspire to be up there – matching, competitive – with, the likes of Singapore and Israel in terms of ambition and innovation.

So on this point, my summary is that we need to redefine innovation from the domain of technology departments and technology companies, and a few big ideas, to innovation being about everyone, every business, and constant incremental changes which have a cumulative impact.

Business is a driver of innovation

Second point is that business – us, we – must be the key driver of innovation. Now, we’ve got the best circumstances, arguably, we could have. In my recent travels post our half-year result, to the US, to Singapore and to the UK, our economy and the broad conditions in it – notwithstanding the need for further change, if we’re going to preserve our living standards and increase them – our economy is indeed in good shape.

This morning, we announced at 11:30 our latest quarterly result, our SME business survey result, which has been running every quarter since 1989, and it indicated that the survey of business customers – broad-based and long-term – is that business conditions are the highest they have been in six years.

Also, Australia now is mainly a services economy. And services, businesses, really, this is intangibility and experience-based, these are the ones where innovation becomes more important and more possible. Over 1.5 million people work today in Australia in the health sector. It’s the biggest industry by job numbers. And almost 1 million people work in education. So it’s these services-based economies where innovation can really become unleashed.

But as I speak to our business customers, all of them are wanting to get smarter, better and more creative to be more competitive. And they’re getting on with the job and creating opportunities.

That’s important because whilst the Government is important, and I think we need the Government to explain why innovation is important, and explain the changes that are needed in our economy so that we can grow the living standards in our country for all, and things like infrastructure and education, particularly areas like digital skill sets, they’re all important. But the defining difference, in my view, is that in businesses we need to have an innovation mindset, we need to get on with it, and we need to say, “bring it on.”

Creating sustainable innovation impact

The third point I want to make is that creating a sustainable innovation impact that’s scalable – that is significant – and that is sustainable in large organisations, things that are going to move the dial, this is when the hard work really starts. And today, as food for thought, I just want to put out my views and our thoughts on the ‘A,B and C’ of trying to create that sustainability and significant impact.

Innovation first is born from ambition. A strong desire and drive to achieve success, to do more, to bust myths and to drive for personal, professional and business outperformance.

We know Australians have some ambition because surveys tell us that one in two young people want to start a business. And I think anybody who’s wanting to start a business has the basic fuel of ambition inside them. There are famous entrepreneurs around the world. We know the names – Elon Musk, Mark Zuckerberg and even closer to home, in New Zealand, Rod Drury. But in our own country we have successful entrepreneurs. Daniel Petre was here this morning – I’ll come back to Daniel, because of his comments.

But also Andrew Bassat, SEEK. And one of our own clients as well, Emma & Tom, who came in to speak to our executive group last year, and where you could see the ambition was just oozing out of them despite their business having gone into the new phase of maturing and then seeking the next growth curve.

But I think that ambition is personal. So my question isn’t, “how ambitious are your companies?” but “how ambitious are you?” Because it has to be personal.

It has to be each one of us taking into our companies, no matter what we do, and seeking to challenge the status quo, realising that will not be easy, the company may close in around you, the reasons why that can’t be done.

But that’s where leadership steps up. And leadership is behavioural – so it’s just not the CEO and the senior people, it’s got to be everyone who pushes into being ambitious for their businesses and for change.

The ‘B’ is for brave. Because the situation is that it’s got to be OK, even in a bank, to take risks and quickly learn from mistakes.

With a little disclaimer about the asterisk that was put up there before about making sure that you don’t get the big things wrong – open-heart surgery and whatever the equivalent is inside our bank. But that we need to learn from mistakes. Accept that risk taking is necessary.

Now, a bank, one of our key disciplines and key roles is indeed to take risk, to understand risk, so we are coming from a reasonable base. But inside big organisations, failing fast isn’t always seen as a good business strategy. In large companies, incrementalism and getting things right are rewarded. And this is a challenge that we all need to push into.

Our research tells us that small companies suffer from time, resources, technology constraints. And at NAB, we have endeavoured to push into these constraints and seek to make some changes inside our business for the benefit of our customers.

For example, NAB Startup, which was created recently out of our innovation campaign. It helps small and micro businesses become operational quickly. Services include ABN, business name registrations, website creation and invoicing functionality. Money’s important, but it’s about more than the money.

NAB QuickBiz loans – this is where we have a quick and easy new online process for unsecured lending up to $50,000 for small businesses. And finally, NAB Ventures, which is our $50 million innovation fund that’s going to invest in disruptive innovation technology payments companies, so that we can learn faster for the benefit of our customers.

A, B… and then C is for ‘collaboration’.

Because I think no-one succeeds alone, and the change of scale…a change in scale of change is too rapid, and the demands of technology are too great. Indeed, coming back to Daniel’s point, Daniel’s written a few books, and the book, actually, Daniel, if you’re still here, that made the biggest impact on me wasn’t your book on the internet – it was the book on how to be a better father. So, thank you.

And I think Daniel talked about large organisations that perhaps are struggling to change, and I think that is a challenge, but it’s got to be what we push into. But what we’re finding is that we are becoming increasingly a source, a destination, for talent, technology and digital people, often young people, because we have some things that really matter.

We do have money. We have money to put behind these things. We do have a brand. And we do have a very large, established customer base, and we’re profitable.

So, in a sense, a bank like ours, large companies are becoming a source of important talent, because we give them things that are really important fuel for innovation, notwithstanding that there are some challenges with complexity and hierarchy and speed that they’re gonna help us work through.

So, we have found huge benefit as a bank in tapping into the ideas and expertise of businesses, both big and small. Adobe, Telstra, PwC, are very important, close partners of ours. Melbourne Business School. And at the other end, Fishburners, Maestrano and LOKE. So I think we’ve realised that we need to embrace this by truly partnering – long-term relationships – with businesses that share our values and bring new ideas that we can learn from, so that we can innovate faster for our customers.

So, in summary, in my view, the hard work really is about the cultural change in organisations.

How do you build ambition?

How do you become braver in taking on the challenges?

And how do you willingly and openly, and without fear, collaborate with others so that you can benefit your customers quicker?

So, reflecting on those three points, what we’ve learned at NAB, briefly, is that if innovation is to be sustainable and scalable, it needs to have a system. Now, this was one of the things which wasn’t what I came in thinking, as we went through this journey. And as I sat down with a guy called Larry Keeley, who was one of the cofounders of Doblin and a very significant innovator and innovation pioneer in the US, Larry said to me something that, when he said it, I’d never thought of before.

He said, “Andrew, in all my work with companies, large companies in particular, innovation almost never fails due to a lack of ideas. It almost always fails due to a lack of discipline.” So, what we have endeavoured to do inside our company is to build a system that means that our innovation ideas can be harnessed, can be fast-tracked, can be prioritised for the benefit of our customers more quickly.

We’ve established an in-house innovation unit called NAB Labs to drive and oversee – like a best-practice centre of excellence – the innovation, although we’re wanting to unleash all our people in that process. Indeed, most of the people who work in NAB Labs are people who have come from all parts of the business, as they’ve come in to work on ideas that they’ve come up with.

We have now a six-week sprint and learn. And this agile type project methodology is very different to the way we’ve run projects before, and is causing stress and challenges in the bank. But that’s what we need to push into. And our five-step model, which we are gonna embed as part of our core DNA and IP is, “Discover, define, validate, iterate and then transition to pilot.” So this becomes a system, which means that not only do we get new ideas, like some of the ones I’ve just referred to, but we got a pipeline of ideas that keep rolling out in a disciplined, creative, fast way to benefit our customers.


In summary, innovation, in my view and experience, needs to be focused powerfully and centrally on one key aspect, and that is improving the experience for our customers more quickly.

Innovation is today one of the most often used terms, and it needs to be redefined and it needs to become a discipline.

Innovation is not just the domain of technology departments or companies, or big business, or service companies. It needs to be the domain of every person, leader and company in Australia.

To create a scalable, significant and sustainable impact, we need ambition. The setting of big goals.

Bravery, to allocate resources to new ideas that may fail, but that may also change the game.

And collaboration, because with the right partners, we can be in the market much more quickly.

Perhaps most important, and contrary to how I personally had been thinking before we at NAB embarked on this journey, innovation requires a system. This drives discipline and, through the right initiatives, we serve customers better.

So, in closing, perhaps no better way than a quote from “Creativity, Inc.”, which says, “In my experience, creative people discover and realise their visions over time and through a dedicated, protracted struggle. In that way, creativity is more like a marathon than a sprint.”

* This is an edited version of Andrew Thorburn’s opening address to the “Creative Country” conference in Melbourne, July 28.

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