Columnist
Tony Boyd
In the article, Tony talks about Australia’s economic woes and a possible silver lining solution that has been proven by companies like Atlassian who double down during crisis periods to grow share.
Atlassian co-founder Mike Cannon-Brookes says a recession is a time to invest for growth. Cannon-Brookes says Atlassian – the $65 billion software company he co-founded with Scott Farquhar 20 years ago – is repeating a strategy implemented during the global financial crisis a decade ago.
During the financial crisis Atlassian, in effect, offered one of its key software platforms used by business customers for free. Cannon-Brookes says this hit revenue in the short term but it underpinned a decade of expansion. The strategy was a “huge engine for growth” because hundreds of thousands of software developers grew up using the Atlassian collaboration tools. “2008-09 was a really interesting period for us as managers,” he said during the Morgan Stanley Disruption Evolved webcast on Wednesday. “It was the first kind of major economic cycle change we had been through and we suddenly froze almost everything for about six months and we weren’t sure what was going to happen.
Australia has clearly had a more effective pandemic response and this creates a competitive advantage — David Moloney, management consultant
“And then I believe I read one of Andy Grove’s books where he talked about the recession is a time where the scoreboard has changed. You have the chance to change the leaderboard in industries during the recession period and Intel had done that a couple of times. “Six months into that period, we weren’t maybe as badly affected as we could have feared. So what we did was … we changed our tune markedly.” “We started hiring as much as we could in a weaker environment. As other people were letting staff go we were hiring, which means we got a higher talent bar per dollar.”
Cannon-Brookes says Atlassian “sowed the seeds of success in a difficult economic period”.
Concrete choices
The company is doing the same again now. “The current crisis creates an opportunity for us, I think, to emerge stronger than everybody else,” he says. “To take advantage of that opportunity one has to make some concrete choices and then see how they play out over the years, not over the weeks or months.” Atlassian is once again offering one of its key products for free and it is hiring talent at a rapid pace because “talent acquisition is a little bit easier”. “Actually, in March and April, we had two of the strongest months for hiring in the company’s history. So some of that is playing out, which is good for the long term.”
National cabinet needs to think along the same lines as Cannon-Brookes. This is a golden opportunity for Australia Inc to invest for the future and increase its market share of global GDP. “We have clearly had a more effective pandemic response and this creates a competitive advantage,” says David Moloney, management consultant and founder of Internal Consulting Group. He points to the COVIDSafe guidelines issued by the Australian Screen Production Industry as a good example of a sector moving to take advantage of the country’s more rapid return to normal working conditions.
Not surprisingly, Hollywood is struggling to formulate a plan for safe working conditions. This gives Australia’s film and television producers an opportunity to attract investment from global players ahead of other countries.
The opening up of the economy is clearly moving ahead of previous grim forecasts and is certainly occurring faster than elsewhere.
More effective
It is clear Australia’s pandemic response has been far more effective than nations of similar size and sophistication, such as Canada. Also, the response has been more effective than the response of members of the Group of Seven richest countries, with the exception of Japan. The staggering death and infection rates in the United Kingdom and the United States and the internal bickering in Sweden over the lack of protection afforded to their citizens, are reminders of Australia’s superior virus crisis management.
If you accept the proposition that global pandemics are going to occur again, it would make sense to bake in the strategies which have succeeded in suppressing the virus. Equally important is the development of sectoral policies for kick-starting economic growth. This is where the opportunity presents itself for Australia to exploit its “pandemic advantage”.
Moloney says Australia is grouped with other countries that have had effective virus response strategies, such as Taiwan and New Zealand. But he says Taiwan and New Zealand do not have the scale or prominence that Australia enjoys. They are not as well positioned to pitch a favourable investment story to the world. “We have seen a slight uptick in companies and executives outside Australia showing more interest in how Australian organisations are coming out of the pandemic as a way to uncover best practices,” Moloney says.
He says now is the time for Australia to be selling its wares, including its attractiveness as a regional headquarters for global companies doing business in Asia.
The technology economy in Australia, the technology industry is in the best spot it’s ever been in. — Mike Cannon-Brookes, Atlassian
Education is a prime example, he says of a sector of the economy that has a competitive advantage as workplace and other restrictions are lifted in Australia ahead of other countries. For example, a foreign student coming to Australia to study would be unlikely to worry about a two-week period of isolation, whereas they would probably think twice about travelling to study in the United States, Moloney says.
Top-down approach
The national cabinet, in close consultation with the chief medical officer, has been effective in suppressing the spread of the virus. But it needs to turn its attention to the top-down approach to steering the economy out of the most severe recession since the Great Depression. Cannon-Brookes provided an upbeat message about the economy’s technology sector, which has had a stockmarket revival of extraordinary proportions in the past month.
“The technology economy in Australia, the technology industry is in the best spot it’s ever been in,” he says.
“I do think we have to be really careful about celebrating it too much. I think there are many, many countries around the world who are realising their technology industry – be it the start-ups, large technology companies and small technology companies – are really critical for their core economy’s long-term economic success.
“A lot of people in Australia are upset that we send a lot of money to Netflix and to Uber and to Apple and to Facebook, and we’re sending all our Australian money overseas.
“The answer is actually not capturing more of that money. It’s like, well, where do you expect the Netflix money to go?
“The answer is we need to create our own Netflixes and Ubers. We have to be competitive on a global technology scale in Australia, as I think every country will increasingly need to be.”