NRMA Chairman and president Kyle Loades’ career exemplifies a breadth and depth of experience along with effective inclusion and influence amongst a wide range of stakeholders. He has led key initiatives within the NRMA as President and Chairman, Chair of the Finance and Investments Committee, the Audit & Risk Management Committee and the Policy & Advocacy Committee. Kim Chandler McDonald recently spoke to him on the subjects of innovation, diversification, business transformation and implementation.
Question: Kyle, with such massive changes happening in and around all facets of the automotive industry, why don’t you give readers some historic background on the NRMA before we dive into its future.
Subscribe today: Sign up for Which-50’s Irregular Insights newsletter
KL: The NRMA was a business startup that was born out of policy. It began as an advocacy group of disgruntled motorists during the transition from horse and cart into building roads and the new Model T-Ford motor vehicles. They were disgruntled people unhappy with the state of the roads.
Question: They were the enraged, engaged Endusers of their day.
KL: Pretty much.
Like all startups the NRMA struggled financially, so it had to start diversifying its offering and broadening its horizons from just road infrastructure to include motorist related issues such as insurances and licensing. That brought in more members who, eventually, started paying for membership.
After that the roadside service, which is our core offering today, evolved along the way as did insurance etc. For years volunteers kept kicking in funds and finally the organisation got to the point where it could rent premises and employ its first manager. It was an absolute business startup that struggled until it got enough scale and diversification of income. It’s intriguing, 95 years ago the beginning of the NRMA was no different to any business startup in the same scenario today.
From that starting point we can roll forward to 2000, when the demutualisation happened. At that time we received some shares in the sharemarket but lost two important things: the significant dividend that every other motoring club in the world has from insurance and, secondly, any extra ‘touch points’ available via someone having one or more insurance policies.
With extra policies you have multiple opportunities during a year to engage with somebody. After demutualisation our core touch point was that time, which might only be once every four years, when that somebody’s car broke down. In the last decade or so we started diversifying. What’s driven some of our strategy has been increasing our touch points so that we do things in addition to looking after your car if it breaks down.
For instance, we put a team of 50 people onto a typical ‘Skunk Works’ project in a Redfern warehouse to create the 2020 vision of the future of NRMA. A, number of new startups came out of that, which have been implemented in the last year or so. We created a funnel of ideas and picked a couple, but there was an implementation gap of five or six years.
The world is now moving too quickly for that kind of gap so we started moving into a more perpetual innovation cycle. We looked at how we could create more products and services on an annual basis and what system was necessary to deliver on that.
HOI: As I understand it, you were one of the champions early on for the Slingshot and Jump Start program, why was that?
KL: The Slingshot Jumpstart program is driven out of our strategy to develop both more touch points of relevant services and the system to provide those services. I got that we needed to continue to evolve – to create the new products and services of the future. Of course that’s a lot easier said than done with a business that’s been around for so long and has a lot of long-term employees.
I appreciated that good work that had been done in the Transformation 2020 program but, as good as it was, it was old news. I wanted to encourage the CEO to find a way to create perpetual innovation in developing new products and services – and do it without really knowing what we wanted.
From my personal point of view, as a CEO it’s tough to prioritise new things when you’ve got so many things going on but, eventually, it became a business priority. Then we went through the process of ‘how do we do it’? Do we have the skill set to do it internally or should we outsource and partner with somebody? Which is what we chose to do and, from there, a funnel was produced.
Question: And you’ve had quite a number of successes through that funnel. Has the program met – or even exceeded – your expectations?
KL: Exceeded. I’ll give you an example. Camplify, is a businesses we – NRMA – would never have thought of in a million years. But it’s a business that absolutely matches the emerging trend of peer-to-peer, person-to-person services via technology. For our members, with so many of them having caravans or pop up vans, Camplify was just perfect – it’s been really successful, but we would never have thought of it ourselves.
In my view, if you have a funnel of a hundred plus ideas that come in and you narrow those potentials down to five or ten, you’ll be lucky to get one that’s a winner. We chose to invest in three and we’re working closely with them. Personally, I’m extremely happy with the process. We’re investing good dollars in and getting the option of investing in the businesses.
However, we also work with some businesses without investing in them; instead, we’re allowing them to trial their concepts with our members and see how it goes. I think we’re quite unique in that sense.
Question: Undoubtably, particularly as a lot of startups say that gaining access to a measurable test base is extremely difficult. Speaking of which, you must have faced your own challenges in championing the Slingshot and Jump Start program.
KL: There is always a journey with boards who, understandably, always want to back winners. But if you’re only going to back winners, then innovation is never going to happen.
Question: For both innovation and diversification to be successful team alignment and engagement are essential. How do you encourage your fellow board members and C-Suite colleagues to align behind and champion the changes being made?
KL: I’ve been lucky to be involved with encouraging the culture, at board level, to accept that we’re going to actually lose more than we win – but we only need one winner. For the NRMA that’s a big cultural change and things are continuing to evolve.
Innovation is about positive change, doing something different and evolving. The NRMA has actually always been evolving – it had to, to survive and be sustainable.
Question: What obstacles did you face when you were trying to begin the program?
KL: At the board level it was a significantly different strategy to normal M&A type activities. For instance, in the past we’ve bought the Travelodge hotel chain andThrifty car hire… businesses that have been predictable M&A activities. That was a traditional type of growth, which the board understood.
That is a complete contrast to the concept of taking on businesses that are either startups or haven’t been around for more than 12 months. Most of them have a low cost base but they also have low odds of success – so you’re going to lose more than you’re going to win. Overtime the board and staff adjusted their risk appetite to give the innovation program a go.
Question: Did you have a particular or vocabulary that you find works well when selling this change to the board?
KL: I spend a lot of time with the staff to understand and learn about what’s going on in this space. I knew what was going on in the broader world and how it could be incorporated into a corporate space that had been pretty traditional. You have to be extremely well informed when talking to board members you’re looking to influence.
Question: The NRMA team seems to be on a coherent and cohesive journey towards innovation. Are there some things that you doing differently that are enabling this?
KL: I think the culture of the board is the starting point, as is the communication of key messaging. If key staff know that something is important, then it ups the odds of that ‘something’ happening. We communicate the fact that, with the strategy, we’re all in it together and the understanding that, as good as we’ve done, we’ve got to keep evolving to be sustainable.
The Slingshot Jumpstart program was useful to see what’s going on in the world but, hopefully, its also influenced an internal, innovative culture – they go hand in hand.
Question: Of course there are the incremental innovations that are part of an organisation’s growth and evolution, but there are also ‘Capital I Innovations’, which may occasionally be demanded due to massive shifts in certain industries and arenas.
KL: Certainly the winds of change are coming. We’re virtually a monopoly now but I’ve got a view that, with any monopoly in the world, as good as you think you’ve done…. It’s a big world filled with wonderful opportunity, however, with technology we can be disrupted very quickly. People with a lower cost base and a greater ability to be agile than we have is a reality – that’s driving our strategy.
Look at the trends: an ageing customer base; more people buying new cars that don’t break down as much; technology enabling businesses to be created on an iPhone; the ride sharing businesses. It’s a very different economy and there are many, new and emerging threats to traditional businesses. We’re absolutely at risk in the future unless we start adjusting right now.
Question: So, you’re planning around short, mid and long term disruption.
KL: One of the biggest threats in the long term which, these days, is 10 years or less is the driverless car — whatever the brand, it’s on its way. It’s either going to be an opportunity for, or a threat to, us. We’ve taken the view that it’s an opportunity.
Over time it’s probably going to take the focus off of the car in our relationship with our members. For instance, we could look after a person even if they don’t own a car. Or, perhaps our core business will be about mobility – about moving people, whatever mode they choose to travel. Whether it’s linking someone with ride sharing, a bus, cycling, walking, a car or all the above – we’re developing services to be in the thick of that, offering value that no one else can and we’re pretty well positioned to do that.
One way or the other, as long as we’re seen as delivering service outcomes, how it’s setup behind the scenes – whether it’s your own business or as an alliance with someone else – doesn’t matter. That’s how you fund sustainability as a separate strategy.
Question: And how did you influence the many diverse NRMA stakeholders to work together towards this common strategy?
KL: Being Chairman of the board means setting the tone and culture at the top, but we also have a CEO that’s employed to deliver outcomes and manage the staff. It’s very clear that my role as Chairman isn’t to cut across the CEO role but, ultimately, whatever is done ‘at the top’ is highly influential all the way through the organisation.
For me, it’s setting the tone — the vision — communicating that vision and then getting out of the way. I let the CEO and staff do the ‘doing’. After that, my role is about checking in every now and again to make sure things are on track.
Because we’ve recently been through a CEO replacement process, at this point my role is a bit more hands on. I’m the common link between a CEO resigning, an acting CEO and a new CEO starting. But I’ll soon step back out and allow the new CEO to get on with doing their job, which is to motivate people, verbalise the vision and make sure it’s being delivered.
Question: So you’re acting as a Flat World Navigator: you’re building the bridges and maintaining the connections, conversations and collaborations between the different entities involved.
KL: That’s true. We have a view at NRMA that the strategy is jointly owned by the board and the CEO. The strategy is agreed on, as are the key areas that are going to be delivered over a medium term – a time frame that is shortening in terms of cycle – and then its the CEO’s job to get on with it.
I sense that in other organisations this is often it’s driven by the CEO and I think that’s riskier in terms of ownership and potential conflict. Our current strategic cycle, which was set and fully agreed to by both the board and the CEO, has evolved without dramatic change but with some transformation – and its led to some wonderful growth over the last decade.
Question: What would you suggest to people who are beginning their journey towards innovation or a culture of change into their organisation?
KL: It’s easier to create an idea of change than it is to implement it. If, ultimately, as mangers or owners of businesses we all get judged on the outcome of successful change, it’s important to spend time with all the stakeholders — internally and externally— to quickly learn how to successfully implement. You’re nothing if all you’ve got is a great idea; there are so many good ideas around but they really just stay as ideas unless you know how to implement.
Question: Execution is king.
KL: Absolutely, which becomes culture change — working with changing skill sets, managing up and down and all around. That is so important; it’s a changing world and sometimes learning on the job is going to take too long these days. You’ve got to shortcut the learning curve process if you’re taking your career seriously.
This interview with Kyle Loades, President and Chairman,NRMA Motoring & Service, is part of a series addressing the challenges facing senior decision makers driven to innovate.
This program is an outcome of the Heads of Innovation Workshop and is designed to share senior executive experiences to encourage corporate Australia to invest and re-think the way they model risk around innovation.