CHECK AGAINST DELIVERY
Good morning everyone.
I’d like to start by acknowledging the traditional owners of the lands we meet on today, the Whadjuk Nyoongar people and pay my respects to Elders past and present.
On these beautiful banks of the Derbal Yerrigan, I would like to recognise and honour the profound role that Aboriginal peoples have played as Australia's first scientists, caretakers, and stewards of this land for tens of thousands of years.
I would like to thank the AICD for the invitation to speak today on a topic that is close to my heart and never far from my mind.
I’ve been fascinated by the intersection of science, innovation, disruption, and governance for many years – and now it’s at the forefront of our work at CSIRO.
CSIRO is Australia’s national science agency, but I know not everyone is familiar with who we are and what we do.
For over 100 years, we have worked to solve the world’s greatest challenges through innovative science and technology.
We draw on every scientific discipline to create teams to work on innovation to solve wicked problems like food security, drought, and antimicrobial resistance, just to name a few.
Everything we do must be for the benefit of Australia, which is a powerful purpose.
That can - and often does - have benefit well beyond Australia.
Take for example our inventions like Wifi, polymer banknotes, or the humble can of Aerogard.
Or more recently, the CSIRO spin-out company Chrysos, which delivers faster, safer, and environmentally friendly analysis of gold, silver, copper and other elements – and the last time I looked had a market cap of about $600M.
We also manage a large and complex suite of research infrastructure on behalf of the nation, including the magnificent Square Kilometre Array and Pawsey Supercomputer here in Western Australia, the research vessel Investigator in Hobart, and the Southern Hemisphere’s highest biocontainment lab that works on the world’s most dangerous pathogens – again, just to name a few.
We operate on an annual budget of about $1.5 billion, roughly two thirds of which comes from federal appropriation – the rest is external revenue that we earn with collaborators and partners.
We have about 6200 staff in 49 locations.
Innovation is our job, and so we spend a lot of time navigating disruption.
To help enable our science and innovation, we have a team of futurists who map out different scenarios for Australia.
They pair techno-economic expertise with insights from our scientists who are working on solutions to these challenges every day.
Recently, we published their latest forecasting in a report called ‘Our Future World’, which outlines the seven global megatrends that will influence our future, providing both challenges and opportunities for business and society.
Today I’ll share some of the insights from that megatrends report, which Boards across Australia, from the Commonwealth Bank of Australia to an Indigenous-owned construction firm in Darwin, use to inform their strategic planning.
I’ll also share some direct insights from our CSIRO Board, past and present, on their view of the role of NEDs and Boards in navigating disruption.
One of our former CSIRO chairs is Catherine Livingstone.
You may have heard her speech at the AICD Australian Governance Summit last month, an extract of which was recently printed in the AFR.
She said, “Directors must have strategic situational awareness; they need to be looking for patterns and those soft signals in the ether.”
Ask a scientist to find patterns or ‘soft signals in the ether’, and they will find a way – in many ways, this is what our megatrends report does in capturing those soft signals and bottling it for us to put to practical use.
As the megatrends will show us, this is vital because the future is coming faster than most of us realise.
So let’s look at these seven megatrends.
Adapting to climate change
This is at the top of everyone’s list and every day, every hour it becomes more urgent and more apparent.
Here in WA, we’ve just experienced the hottest summer since records began in 1910.
Current climate forecasts predict that we will continue to break records and see the devastating effects of concurrent climate hazards.
Adapting the healthcare system, critical infrastructure, and settlement patterns will is a growing reality for many countries and organisations in the years and decades to come.
It’s been great to see the AICD leaning in to helping directors navigate this topic with guides such as Climate Governance Study 2024 and a Director’s Guide to Mandatory Climate Reporting.
Leaner, cleaner and greener
This megatrend is about clean tech and much more.
As the size of the global population continues to grow, every day escalating pressures are placed on finite food, water, mineral and energy resources – something we’re acutely aware of here in the minerals and energy-rich west.
These constraints are driving the imperative to innovate – to find new ways to do more with less, achieve carbon neutrality, reduce biodiversity loss and address the global waste challenge.
And this space is moving fast – even since we published the report, the penetration of renewable energy in the NEM has increased from 32% to almost 40% in 2023.
Escalating health imperative
The COVID-19 pandemic has exacerbated existing health challenges posed by an ageing population and growing burden of chronic disease, which has put upward pressure on healthcare expenditure globally.
One in five Australians report high or very high levels of psychological distress and there is heightened risk of infectious diseases and pathogens resistant to modern antibiotics.
In addition to known viruses, on average, two novel viruses are appearing in humans each year, and the proportion that give rise to larger outbreaks is growing.
This trend highlights the imperatives of preventative health and precision health in supporting better outcomes for all Australians.
Geopolitical shifts
We all know that geopolitical developments pose significant challenges for advanced economies seeking to ensure peace and stability.
The threat of conflict can also be a catalyst for innovation – and this megatrend explores the implication of these geopolitical shifts on science, technology, trade, and supply chains.
This includes of course the vexed issue of cybersecurity, which several of our board members said was issue number one, two and three for their boards.
On the topic of cybersecurity, congratulations to the AICD on your new resource for directors to help them deal with cybercrime.
Diving into digital and Increasingly autonomous
The next two megatrends – ‘diving into digital’ and ‘increasingly autonomous,’ are a pigeon pair.
The 'Diving into Digital' trend explores skills and capabilities that will be required given that the vast majority of digitisation is yet to occur.
’Increasingly autonomous’ explores how AI and related technology like Chat GPT is a double-edged sword of opportunity and risk across all industry sectors.
And we know there is a strong correlation between an organisation that takes AI Governance seriously and an organisation that deploys AI well and responsibly.
Unlocking the human dimension
And the last trend is unlocking the human dimension.
While Australia saw a record increase in levels of public trust in institutions during the pandemic, this ‘trust bubble’ has since burst, with societal trust in business dropping by 7.9% and trust in government declining by 14.8% from 2020-21.
This is a deeply worrying trend we are monitoring – and addressing – at CSIRO, as trust in our organisation and our science is our currency. I’ll talk more about this in a minute.
The CSIRO Board lens
This has just been a flying tour of the trends – and many of them may seem self-evident – but the report goes into much greater detail.
When you look at all these trends and factor in the pace of change, it can be a bit overwhelming.
So I asked our Board their perspective – what do they see as the imperative for NEDs in our disruptive world?
Four key themes emerged that they believe are particularly relevant for all directors today.
1. Create the future
The megatrends report is a useful basis for thinking about the future, and our directors stressed that we can’t slip into thinking of the future as something that will just ‘happen’ to us.
Catherine Livingstone calls this ‘path-dependence thinking’ or believing that doing more of the same is the best strategy, especially when all is going well.
In a disruptive world, it’s critical to be proactive.
This means shaping the organisation’s destiny through deliberate, clear strategic choices rather than reactive and defensive ones.
In fact, several noted an inverse relationship -- the greater the disruptive forces at work, the simpler the plan should be.
This is because it needs to be communicated many times, to many people across the organisation and used as a filter for decision making at all levels.
In fact, our new Chief Executive, Doug Hilton, has recently kicked off a piece of work to do just this with our many areas of research, representing them on one page each, to help CSIRO better articulate how we are solving the greatest challenges.
Once the strategy is agreed and set out in this way, management has scope to take proactive, considered, informed risks, without fearing they are exceeding their mandate, or falling prey to that path dependence that tends to discount disruption.
2. Not all risk is created equal
You’ll all be familiar with risk, but the feedback that came back to me is that not all risk should be treated equally in the board room.
In our disruptive world, boards should specifically consider their risk appetite for innovation and make collective decisions about what risks your board can tolerate and to what extent.
All too often, the natural instinct boards have is to focus on the down-side of risk, of an immature approach or technology failing to deliver or creating delay or cost blow-out.
What is less well recognised are the collateral benefits that flow from being a pioneer of leading-edge technologies – and in many ways, it doesn’t matter if they work or not.
It engenders deep understanding of the dynamics of the strengths, weaknesses and motivation of the organisation and its people alike, and signals to everyone associated with the organisation that this company is creating the future.
At CSIRO, our Future Science Platforms program was created to put specific parameters around risky, but potentially breakthrough, science that CSIRO wasn’t sure would pan out usefully.
This included emerging areas like synthetic biology and genomics.
To manage the risk, we ring-fenced Future Science Platforms with a set budget and timeframe to explore and experiment, and at the end of the timeframe, the work is either absorbed into the rest of CSIRO to be continued with a clear direction, or celebrated as something that didn’t work – but we learned from.
That approach has been an effective way of managing the risk associated with experimentation on a large scale.
3. The importance of character of CEOs and execs
The third theme is about how we all show up as leaders.
With the current pace of change and the resulting disruption, leaders – in particular CEOs and executives – must recognise that change and surprises will come from all directions.
That means the ability to be flexible, resilient, provide leadership, and effectively engage with external stakeholders is key.
To quote one of our current board members, character and judgment have never been more important.
When I think of doing that well, I think of David Koczkar at Medibank in the wake of the cyber-attack that rocked the company in 2022.
He was open and regular in his communication, he apologised unreservedly, and he did not throw any of his staff or cyber security providers under the bus.
He retained the trust of the Medibank Board and remains CEO today.
This highlights a leader who dealt with disruption by showing up, being accountable and displaying a high degree of integrity.
This of course links to the board’s role in setting culture and to how we really think about these things as criteria for hiring CEOs and senior executives.
4. Managing disinformation and misinformation
Finally, my last point for today is about the imperative of using data and science to combat disinformation and misinformation, which the World Economic Forum ranks as the top global risk over the next two years.
It also aligns strongly with the seventh CSIRO megatrend – the human dimension.
I mentioned earlier that I’ve been fascinated by the intersection of science, innovation, disruption and governance, and I think part of what makes it so fascinating is the symbiotic relationship between science and trust.
The scientific method can build, instil, earn and maintain trust – but when that trust is broken, and the integrity of science is called into question, it cripples the ability of that science to solve our problems and make our lives better.
I believe science can be an antidote to disinformation and misinformation – but it must be empowered by earning and maintaining the trust of our community.
Regardless of whether you are the board of the national science agency or any other board, we are now in an era where community trust and social license is as important as financial sustainability or legal compliance.
At CSIRO, we navigate the tension between allowing the science and the scientific method to speak for itself, with knowing when we need to go in to bat for it.
You may have seen criticism levelled at CSIRO in the media lately relating to our GenCost report.
It’s an annual report we develop in collaboration with the Australian Energy Market Operator and provides insights into the cost of electricity generation in Australia.
With some people advocating nuclear technology on the basis that it is a more cost-effective way forward than renewables, several politicians have openly disparaged the science – and scientists – behind the report.
I am proud that our new Chief Executive Doug Hilton – with the support of our Board – has spoken out to defend the integrity of science.
I admit find it disheartening that Doug had to do that, but as a member of CSIRO’s Executive Team, I know this is exactly where CSIRO needs to be: in the public arena and actively engaged in the conversation.
Society will not trust scientists to carry on their work in splendid isolation – we must be engaging communicators, active listeners, and equal partners with our community in shaping the future.
That is one of our best defences against disinformation.
Closing thoughts
I hope the trends and insights I’ve shared with you today have been thought-provoking and useful – from the seven megatrends that parse the disruption around us into something useful, to the four key themes our CSIRO board draws on to navigate this change.
As much as CSIRO is a unique organisation in Australia, our Board still grapples with the same challenges each of you face – except they perhaps have a little more access to the people who know how to find patterns and soft signals in the ether.
But we are your national science agency after all, so if you are interested in the megatrends, please feel free to reach out and I can put you in touch with the team that leads this important work.
Perhaps I can even ask you to consider the value of bringing a scientist into your next boardroom discussion to look for those patterns that will help you proactively shape your organisation’s future.
Thank you and I look forward to the discussion.