Transforming any organization successfully is tough to pull off. But not for David Thodey. He’s led successful change efforts across Australia’s private and public sectors. Thodey is widely credited with driving a customer-centric transformation of Telstra, Australia’s largest telecommunications provider, where he served as CEO. In 2019, he chaired the Independent Review of the Australian Public Service, winning bipartisan support for its recommendations to continue transforming the APS into a “high-performing institution.”1 For his next act, he’ll chair the upcoming audit of “myGov”—Australia’s online public services platform.
Thodey recently sat down with Roland Dillon, a partner in McKinsey’s Melbourne office, to talk about government transformations, the crucial role that “absolute buy-in” can play in change efforts, and the importance of making government “a great place to work.”
This interview has been edited for clarity and brevity.
Roland Dillon: Which government transformations in Australia really stand out in your mind as successes?
David Thodey: The one that immediately comes to mind is the New South Wales government transformation, four to five years ago. In the mid-2000s, New South Wales was really in a difficult state, and now I would say [that due to its transformation] it is consistently one of the strongest state governments we have in Australia. At the federal level, I think that the Australian Taxation Office (ATO) has done a really good job at transformation. Not perfect, but very good.
Roland Dillon: And what made these successful in your view?
David Thodey: First, political and public service leadership is really important. If you look at New South Wales government, there was a strong desire in both the elected leaders and within the public service for change. That is an absolute must for any successful transformation. I would say that would be true for the ATO, as well. I think Chris Jordan (the Commissioner of Taxation) has been very driven to get the ATO more outwardly focused and to change. He noted that support at the ministerial level for funding and capability is integral to delivery.
Second, in all instances where there have been examples of successful transformation, the articulation of the prize or the greater good that could be created has been very apparent from day one. So, tax is a difficult area because you’re taking from some to give to others. And that’s always a difficult story. However, if you change that to make it about funding and supporting the greater good of Australia, then it changes the whole dynamic of how the ATO thinks about itself. I remember when Mike Baird (the former premier of New South Wales), launched the “I work for NSW” campaign. It changed the whole dynamic of what was possible and reaffirmed the critical role that the public service plays within our society. The campaign made public service overt and positive rather than the many other stereotypical profiles you hear.
Third, there was absolute buy-in and, I think, a truthfulness about confronting the issues and the challenges within the public service, in the context of what it means to be a public servant. Without transparency and openness to addressing these issues, it’s all just words. You need to really stare into that and be willing to fund and invest in the change. This is not just cultural; it is deep-domain process reengineering, and being really clear about what you’re trying to change. You need to get all the way from purpose and values to clarity on strategy and where you fit within the system, to addressing the issues that are preventing you being as impactful as possible.
Roland Dillon: You talk about the importance of clearly articulating “the prize” and creating “absolute buy-in” to drive transformations. How do you maintain that clarity of purpose?
David Thodey: The desire for change is not enough. I feel very strongly that the citizen-centric metrics are so important. The challenge you get when you set any other internal metric, be it efficiency or employee engagement, is that it lacks authenticity in the long run. You need some externality that you’re all held accountable for. The role of the public service is to serve the citizens of the country and to give them a quality of life. And that may be affordable housing, it may be good transport systems, or a fair and reasonable tax system. I think that, to drive change, you need an external reality to which we all hold ourselves accountable. And that’s why metrics-driven government, outcomes-driven government is so important.
Roland Dillon: Beyond metrics and accountability, how do you keep yourself and others engaged in the transformation?
David Thodey: It’s got to be driven from a purpose that we feel good about. More and more, I think we all live in an environment where we work for money, but you want to feel like your work matters and it counts, and makes a difference. That’s why having clarity of purpose will drive employee engagement. You’ll never compete on salary; you’ll never compete on benefits; you’ll never compete on nine-to-five, because people are not fundamentally driven by those. They are driven to make a difference and to succeed at what they do. I think we need leaders in the public service who are realistic but aspirational. We don’t need idealists. We need aspirational realists who can appreciate the environment we live in and then drive change.
Roland Dillon: Depending on your sources, around 30 percent of workers in the Australian Public Service are looking to change jobs in the next six months. How would you address this?
David Thodey: I think this one’s probably going to need a bit more analysis to get to the heart of the issue because we’ve got incredibly low unemployment, which is leading to wage inflation. There are many challenges. But if you create a great place for people to work, you are purpose driven, the quality of the work you do is impactful, and people are valued for who they are—if all these attributes are present, then it will be a great place to work—and, in that environment, people don’t leave easily.
I was talking to someone who had left the public service—a really committed public servant. She was full of intent, bright, but absolutely frustrated because all the policy work she’d done was just ignored. Then she stepped out in the private sector. She was in a tech start-up, quite a successful one. And she said, “But they just don’t appreciate the value I bring,” which is interesting. Because the private sector doesn’t always understand the public sector. So, I would come back to the issue that the public sector needs to be a leader in creating great places to work. That’s the challenge, not trying move the salary bands to 10 percent, because it just is too high. People are far more motivated by the quality of the work they do and the environment in which they do it.
