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Australia’s competitive advantage: a global perspective

Karan Bhatia (far right), vice president and senior counsel of global government affairs and policy for GE, at the Crawford Australian Leadership Forum in Canberra.

In May this year, Jeffrey Immelt, global Chairman and CEO of GE, addressed the Class of 2016 at New York University’s Stern School of Business. In his speech, he identified protectionism and populism as political trends in many developed nations, and how business must adapt with more localised approaches. Just ahead of Australia’s general election Karan Bhatia, a former US trade representative, and now vice president and senior counsel of global government affairs and policy for GE, visited Canberra to attend the third Crawford Australian Leadership Forum at ANU.

As questions of policy, trade, leadership, innovation, climate, regional tensions, and social resilience and cohesion were discussed in the university’s College of Asia and the Pacific, Immelt’s speech continued to resonate through Bhatia’s own presentation on the rise of mega-corporations. Here, Geoff Culbert, CEO of GE in Australia, interviews Bhatia on global themes raised by the company chairman :

During the conference, GE Reports caught up with Karan Bhatia and tapped into the senior counsel’s uniquely informed perspective.

GE Reports: What have your observations of Australia been over the past two days at the Crawford Australian Leadership Forum?

Karan: First of all, my observations are that the public-policy scene in Canberra, and probably in Australia more broadly, remains very impressive. I go to these kinds of gatherings in a lot of different capitals around the world and the degree of thoughtfulness and global awareness that you see here is as good as you get anywhere. I’ve often said that the Australian Government really punches above its weight in a lot of international fora, and I think the past few days have reinforced that for me. It’s been a terrific gathering here and the meetings that I’ve had have all been good.

GE Reports: How is Australia placed in international economic circles?

Karan: There’s fundamental optimism I think about Australia’s place in the global economy. I certainly see and feel that. I think the rest of the world would give its eye teeth to have the level of economic performance that Australia has sustained over a period of 25 years. And a lot of that comes down to good public policy and good economic management. So I think there are some great stories there.

GE Reports: What challenges do you think Australia faces in global markets?

Karan: There are challenges, and Australia faces public-policy challenges as well. Most importantly, it’s going to have to figure out how it will remain globally competitive in a highly dynamic environment, at a time when traditionally the sectors that have most boosted Australian growth over the past 10 years are at the very least in sort of a trough and maybe in a tough period for years to come. So the economy is going to have to continue to reform, it’s going to have to continue to remain nimble in order to be able to meet future growth targets.

GE Reports: How could we secure our competitiveness on a global stage?

Karan: So, look, Australia is probably not going to compete the way other emerging markets have: I mean, it’s got labour that is not going to be the lowest-cost labour in the world, it’s going to observe environmental laws and it’s going to observe rule of law more generally. So it’s not going to be a lowest-common-denominator kind of approach to economic development and I think that’s to Australia’s great credit.

I think it’s going to have to rely upon its core strengths, which are, number one, its people—Australia has a very talented group of folks. We see that certainly in the innovative industries, we see it in the services industries. And it has a very globally adept group; you see Australian executives work effectively inside GE and in other companies in global environments. I think that’s a huge strength of Australia’s. So, firstly, I think it’s going to have to leverage its people.

Two: I continue to believe that the future of some of the core natural-resource industries that Australia has benefitted from over the years is not … those industries are going to have to become more efficient and more competitive. And that is I think one of the ways that GE can work so effectively with the resource sector in strengthening its competitiveness and productivity; and among many other things, that’s going to be through greater application of digital technology to the industry.

Agriculture is another area where I think there are tremendous efficiencies to be gained. It’s certainly a sector that Australia is globally competitive in, and yet it is going to need to up its game if it’s going to continue to remain at that place.

And then there’s manufacturing. I know there is some discourse around here, in the context of the election, that Australia’s manufacturing industries are waning. Look, I think there is an exciting new future for manufacturing in markets like Australia, that’s going to be predicated on advanced-manufacturing techniques, so on more distributed manufacturing. And I think that’s another area where you see that some of what we’re doing in GE has applicability for Australian companies and the Australian economy.

GE Reports: You’ve said that multinationals need to radically simplify processes and bureaucracy. Does government need to simplify too? Have you seen anywhere in the world that is successfully reducing bureaucracy and advancing innovation and development?

Karan: I think this is a common challenge faced by governments. In many places around the world, governments are very slow to adopt change, to embrace new technologies and new processes. There is an inherent sort of small-“c” conservatism in government that disinclines them to undertake the kinds of risks that businesses are quite willing to undertake.

I think about our own company and the rapidity with which we’ve embraced everything from a new environmental management system, to new HR performance metrics, to how we have, in a relatively short period of time, almost completely reinvented the company’s portfolio. Those are dramatic, big changes, and for governments, those kinds of changes are extremely difficult to make.

Having said that, I think some countries have governments that are willing, and not just willing, but are hungry, to experiment with new technologies; governments that recognise the value in being innovative in their processes and working out new ways of collaborating with business.

My favourite example is Singapore. I think they have such an extraordinarily competent group of public servants. They have a strong vision of what they want to be as a society and I think they just, day in, day out, execute it very effectively. I also look at some of the poorest countries of the world, such as Rwanda, where you have none of the natural-resource strengths that Australia has, but nonetheless there’s a leadership that is committed to development based on the rule of law and understanding the importance of a good governmental transparency, and to eliminating corruption as a core driver.

GE Reports: What do you think are the key traits of a great global leader, whether in business or in government?

Karan: First of all I think a great leader asks a lot more questions than they pontificate themselves. And I honestly see this in Jeff Immelt. I’ve asked Jeff this question too, about who he admires, and he often says world leaders who ask a lot more questions than they talk themselves.

I think it’s partly because a great leader needs to take experiences and observations from one sector and one part of life and apply it elsewhere.

I also think great leaders have certain core principles and that these are obvious. I think this makes leading people easier because there’s not constant uncertainty among people as to where the leader’s direction is. Great leaders hold a few fundamental beliefs and they hold them deeply.

GE Reports: What’s a good trade strategy for a country with a small domestic market like Australia’s?

Karan: Australia’s done a very impressive job of connecting with other markets around the world. It’s developed free-trade agreements, for instance, with not just ASEAN and the north Asian countries but countries in the Americas, and Europe as well. So Australia has a track record of realising that its competitiveness is going to depend upon being able to access markets both for exports and for imports—I think it’s done a good job of that.

Going forward, the model of trade is going to involve more and more local presence. And I think in this contemporary day and age, no market is going to be geographically isolated—there’s just too much connectivity in the world. So I think Australia’s companies are probably going to have to continue to figure out ways to partner and localise in other markets if they want to grow around the globe.

GE Reports: What do you think is Australia’s most promising export and why?

Karan: I go back to what I said before. From my vantage point, Australia’s people are a terrific strength and I think it’s both an export but it’s also part of the domestic economy and it’s going to be yielding dividends for Australia for years to come. I mean, it’s a talented, well-educated and diverse—I emphasise diverse—workforce and group of people, and I think as long as Australia remains open to flows of people coming in and out, it’s going to continue to be well-equipped for global competition.

 

 

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