Lloyd Kavanagh says attitude and optimism are important.
Most New Zealand businesses are operating in a climate of significant digital disruption and technology change, whether they know it or not.
What matters is how businesses respond to the challenges. And that depends on the attitude of the people in the business from the front line to the CEO.
For those operating in regulated sectors, additional challenges include getting buy-in from the regulators to allow adaptation at a speed faster than was traditionally required.
The list of tech innovations disrupting traditional businesses has many well-known examples — video streaming replacing video stores, Uber challenging taxis, Airbnb challenging hotels, blockchain and cryptocurrencies used for financial services such as payment systems.
Changes for legal services are coming too. What makes the difference in terms of who prospers in the incumbent businesses, is the people's openness to change and their adaptability — rather than defending old models and seeking stability.
For example, blockchain has spawned hundreds of startups funded by billions of investment dollars with diverse applications. There are now bitcoin ATM machines around the world, and in New Zealand.
The banks and financial services providers are moving quickly to learn and harness the power of blockchain technology as a safe and transparent way of handling financial transactions. Entrepreneurs are proposing blockchain-based solutions to help customers satisfy increasing requirements to establish and verify identity. Those who are not engaging find themselves left behind.
To succeed in such a climate takes courage, adaptability, and an optimistic mindset. Leaders need to acknowledge and accept the reality of change, and its pace, personally and within the leadership team.
This requires not being defensive of "the old ways" (which are still generating cash flow) while not being too starry-eyed about new technology — acknowledging that many new ventures will fail to capitalise.
Leaders must understand and empathise with those fearful of the change, without allowing fear to stifle progress. It's important to instill a deep optimism and resilient culture, as it will provide the best prospect of adapting and prospering.
Regulators face similar challenges. The need remains to protect consumers from the threats that have always existed, for example facilitating competition, ensuring misleading or deceptive conduct is prohibited, protecting privacy and that food and personal safety standards are met.
But regulators must also allow New Zealand business to be at the forefront of innovation by ensuring regulator frameworks are not barriers.
The challenges facing the leaders of regulators are largely the same as for business — except the challenge to create a climate which supports innovation may be less obvious than for those directly engaged in the market. But the stakes are higher as regulators decisions affect whole sectors.
An example of a good approach is the Financial Markets Authority's facilitation of robo-financial advice. However more needs to be done in the regulatory "sandboxes" created between competing jurisdictions to facilitate FinTech.
Legal services are not immune to disruption — they are ripe for the picking by innovative legal tech startups with no geographical boundaries. Around the world and in New Zealand, we're seeing large shifts through innovation such as new contract lawyer models, "robo-advice", and artificial intelligence.
Among others in the industry, MinterEllisonRuddWatts has been exploring this legal disruption to better understand the innovations and applications of this new technology.
We'll need to bring those to the market to add value for our clients to stay relevant.
Working away for over a year, we are now testing what we believe is one of the most advanced AI legal offerings in the world.
Of course, the legal industry is heavily regulated, and for good reason — clients need to be protected and confident in the advice they receive. Like others, our profession is on the cusp of major change and innovators are struggling with antiquated legislation and regulators who are having to react to a fast-changing environment.
New Zealand is a place of innovation. It's part of our national psyche, a point of pride — tell a Kiwi it can't be done and they'll find a way. Historically, we have also been well served by light regulation.
However, a recent report by The New Zealand Initiative and InternetNZ said that "Trying to shoehorn new services into old regulatory models hurts everyone except old incumbent producers." If the regulators can't keep pace with the swift changes brought about by technology, then New Zealand businesses can't lead the world.
We're at a critical point for our country's economy. Digital is no longer the shiny front-end of the organisation — it's integrated into every aspect.
It's undeniable that while digital technologies are transforming the economy, many businesses are struggling to work within or remove the barriers that restrict them from using or delivering new digital technologies.
Regulators should not clamp down on technology because they do not understand it or because it's disruptive. Instead, regulators should facilitate innovation — engaging with stakeholders working with various technologies to learn more.
- Lloyd Kavanagh is Chair, MinterEllisonRuddWatts