Xeroing in on the power of disruption

This is the first piece from StartupSmart’s newest contributor StartupAUS CEO Pete Bradd

As Australians we are well known for being early adopters of new technology. We also like the option of choice, which means our market – in particular, big business – is frequently exposed to disruption.

Deloitte’s 2012 report on digital disruption identified 13 industries, comprising 65% of the Australian economy, that will face significant disruption by 2017 – most vulnerable to disruption among these is the finance sector.

So who are the disruptive brands shaking up our industries and how are they viewing the future?

A brand that is deeply in touch with how businesses are performing is accounting software platform Xero. It has not only disrupted traditional accounting software, but it is now redefining how the Australian financial industry adapts to existing business models and creates new ones.

To understand how this disruptive brand is shaking up the traditional banking and finance model, I spoke with Managing Director of Xero Australia, Chris Ridd:

Peter Bradd: William Gibson famously said, “The future is already here — it’s just not very evenly distributed”. Can you give us an insight to how Xero looks at the opportunities of the world today compared to how others view it? 

Chris Ridd: It’s important to focus on the now. In my world I look at business leaders and some are doing amazing things with technology, while a large majority of others are still yet to catch up. There are so many opportunities to be efficient and productive and reach more customers with technology.

PB: How are you enabling big business to help your customers use data to operate more efficiently?  

CR: At Xero, we typically have more rich and insightful data on a business than anyone else. We’ve worked really hard to ensure the appropriate legal and commercial frameworks guarantee that customers are in control of their own data, including how much of it and when they collect and use it. What we’ve done with NAB is very sophisticated. They have created direct Application Programming Interface (API) connections to their core banking to enable instant and seamless live bank feeds. NAB has 35 bank account types over 200 products that can now bank feeds into their Xero, overnight.

Among others, we’ve also got partnerships with OzForex for currency conversion, Moula to enable faster loan approvals, and better rates and CGU for better targeted insurance. For example, if you’re running a seasonal business, CGU now has access to your trading history so they can create an insurance product tailored to you specifically – one that protects you when you’re busy and turns off when you’re in the off season. It’s easier and simpler to get the right tailored coverage.

We want to remain very open. We don’t want to back one particular provider, we want to create choice for our customers. This time next year we will be in a very interesting place.

PB: What are your tips for founders who have moved into the growth phase of their business?  

CR: I believe many founders hang on to their baby for too long and at some stage you have to let go and hire a good leadership team. In order to grow from 50 to 300 staff I realised I couldn’t continue to manage everything. I didn’t have the right level of skills in certain areas such as sales, marketing and human resources. In hindsight, I probably moved a bit too late.

PB: Do you have any advice for disruptive businesses? 

CR: Look for new opportunities. We currently have 60 developers in Melbourne and 20 in Canberra. Canberra was an unexpected outcome but a really good one; when the government downsized a few years ago, we picked up some great talent and there’s not much competition from other technology businesses in Canberra. It’s a dedicated team focused on building payroll. And I leave them to it.

Overall, it’s necessary for both disruptors and the disrupted to understand how they can work together. In fact, many large corporates such as NAB, Westpac, News Corp and Telstra now have innovation teams focused on specifically this. As technology develops, big business in Australia needs to identify the new opportunities for disruption and move with the times. As our Prime Minister, Malcolm Turnbull, said in his CEDA speech in September; “The lesson for all of us, and all businesses, is if you are not prepared to cannibalise your existing business model, your legacy business model, don’t worry someone else will do it for you.”

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