¹û¶³app

Nick Wailes:

Hi everybody and welcome to a special episode of the AGSM Business of Leadership podcast.

If you’re a first-time listener, my name is Nick Wailes and I’m the Director at AGSM.Ìý 

We’re putting the final touches to the next season of the podcast including episodes on the business of work, the supply chain, and AI. We’ve been speaking with industry guests from Microsoft, Mirvac, Airbnb and many other organisations and we’re looking forward to sharing these episodes with you early in the new year.Ìý

In the meantime, we’re sharing a special podcast featuring Shemara Wikramanayake, the Managing Director and CEO of Macquarie Group, in conversation with UNSW’s Chancellor David Gonski.

In a wide-ranging conversation recorded at the recent Meet the CEO event in Sydney, Shemara shared her thoughts on a huge range of topics including leadership, building a culture of purpose, the future of green investment, how to play to your strengths and take calculated risks and how to maintain a learning mindset throughout your career.

A bit about Shemara …

She holds two degrees from UNSW, a Bachelor of Commerce and Bachelor of Laws, and joined Macquarie Group in 1987. She's worked in six countries and across many lines of business, establishing and leading Macquarie's corporate advisory offices in New Zealand, Hong Kong and Malaysia and the infrastructure funds management business in the US and Canada.Ìý 

Shemara sits on the World Bank's Global Commission on Adaptation and was the founding CEO of the United Nations Climate Finance Leadership Initiative.Ìý

With a resume like that, I’m sure you understand why we felt that you needed to hear this conversation.

And now – over to David Gonski with Shemara Wikramanayake.

David Gonski, AC:

Well, ladies and gentlemen, Dr. Shemara.

Shemara Wikramanayake:

Yeah, thank you, Doctor.

David Gonski, AC:

That's an in-joke. Can I firstly say for those of you who are expecting an experienced interviewer tonight, bad luck. But I think the Chancellor has some power and I just overrode everybody else and I got the job. But I just want to quickly say that I met Shamara 37 years ago and she came as a Christmas-

Shemara Wikramanayake:

When I was two.

David Gonski, AC:

... Christmas beetle. Christmas beetle, she was, from a very well-known university and I could tell that today we'd be sitting here and I could find out a bit more about her 37 years later. It's a great privilege. Shamara, I want to go back a bit and then we'll move through if we may, to more contemporary issues. The first question I wanted to ask you is when you look at your CV, you were born in England, you were schooled in a number of schools coming here at 13. Does any of that play anything in your mind today? What was it like moving from one school to another and indeed to a new country?

Shemara Wikramanayake:

Yeah, well, certainly it's played and had a big impact in what I've done with my life because I think for all of us, we end up being a product of nature and nurture. So we are formed by the characters we're born with but also, the life experiences we have and how they develop us. As you say, David, when I came here at 13, I think I was in my fifth school on my third continent. So I was born when my dad's over here when my parents were studying as doctors or working. Dad was a doctor in England and he just had my sister, who's here as well, Mum and he. So I was shipped at three months old back to Sri Lanka, grew up with my grandparents for a bit, family came back. Then we had civil strife in Sri Lanka. We went to England and I think I moved schools three times there and then we came here.

So it could have been quite destabilizing circumstances, but I guess two things that helped me is one is our parents were a very stable, protective and empowering environment for us, through all those countries that we moved to. We had the five of us together. Mum and Dad were really making sure we not only were protected but empowered to think about we could be anything we want. So I think certainly when we were in England, we went through financially really difficult times. My sister tells me, I don't remember it, that we were in a one-bedroom flat. Mum slept in the bed with the three kids. Dad was sleeping on a couch trying to find locum work.

I was just having a ball going and being at school with West Indian and Italian kids all punching each other up in the playground. No idea that we were poor. But Dad and Mum always, every country we were in, I never ended up thinking that I'd do anything but get to go to the best universities in that country, get to have a fulfilling career.

The other thing, I think, is that Dad was very, and Mum, very gender blind. So, when we went to England, he could afford to send one kid to partly private school and that ended up being my sister, who was the oldest of the three of us, instead of my brother who was the youngest but a boy. So I think in terms of my life experience, I certainly got a lot of protection and vision, in terms of what I could do, despite moving a lot.

The other thing, I think, is your character and I am, I think, a very resilient person. So, as I say, I didn't notice we were dirt poor because things change externally, and I just accept very quickly things that I can't control that are circumstances beyond my ability to impact. I start focusing on what can I control and getting on with. When I was in Sri Lanka, I thought I'd grow up and go to uni. Then I went to England. I thought, "Oh, I'll go to Oxford and Cambridge." Then I came here and ended up at New South Wales. Lucky me-

David Gonski, AC:

Lucky-

Shemara Wikramanayake:

... that I ended up here.

David Gonski, AC:

Lucky us.

Shemara Wikramanayake:

Very blessed. But so I was resilient and also very curious. Really for me, it was fantastic moving countries all the time. I just loved the adventure of ending up in a different country, learning new cultures, meeting new people. For some people, that could have been destabilizing. For me, it was great. We also were a professional middle class family so we were given a huge choice of careers of medicine, law, finance, accounting, engineering, that sort of thing. We were not going to be James Bond or an astronaut or other things that I might have liked to do.

So my sister's a lawyer and works with people with disabilities. My brother is a doctor and he's a surgeon. I did law and went into finance. I guess the main reason I did law is because I was a bit of a rebellious kid as well, and Dad was a doctor and very associated with Sydney University. So, I thought I got to break out and do my own wild thing, which is go to New South and study commerce and study law. So that was me rebelling. The thing I loved about the degree is it just gave you such a broad range of options, so you didn't have to lock down on this is how my life's going to be. Because I just wanted to have a meandering adventure and it was a great place to go and a great degree, I found.Ìý

David Gonski, AC:

I think you're the first person that ever said it was rebellious to go to university.

Shemara Wikramanayake:

Yeah, I know.

David Gonski, AC:

But we like it. I'm sure many here have a story.

Shemara Wikramanayake:

I shouldn't tell you that my son, who was at New South, has now dropped out and he is trying to find the purpose of his-

David Gonski, AC:

No, let's change the subject.

Shemara Wikramanayake:

Well, I was thinking-

David Gonski, AC:

What I'm talking about-

Shemara Wikramanayake:

Can he just rebel and do medicine at Sydney?

David Gonski, AC:

But talking about dropping out, your legal career was not lengthy, like about a year and then you went into banking. What led you to that?

Shemara Wikramanayake:

Well, as I said, the thing about that commerce law degree we did is the range of options was massive. I've got a whole lot of my buddies who were at law school with me 37 years ago, guys, when we were about six. But they have gone on to do such a spectrum of things. People in marketing, people in business and asset management, people in the arts, a whole range of things. Lawyers, people on the bench.

So basically, we had a lot of choice, and so we bumbled our way out of uni and we all went to do different things, mostly law firms initially. For me, the reason I ended up in finance, I think, is I was always a bit of a math geek and so I did a commerce degree as well as a law degree. I loved working in corporate law. It was so stimulating and I worked for you as well, David. It was considered the prize job.

David Gonski, AC:

That was the law bit there.

Shemara Wikramanayake:

But I missed working with numbers. The other thing I liked about the role I had in banking is you get into businesses a lot earlier than when they decide they're going to do a transaction and they bring a lawyer in. I remember thinking it was a little bit, because as lawyers, we charged by the hour and they were thinking, "Oh, it costs me to have you in here." Whereas we bankers in the work I did, we got paid success fees. So they didn't really care that we were bumbling around their corridors going, "Oh, what's in here?" because they were paying us nothing.

It was just great getting into these businesses and sectors and thinking about, "Well, what's going on in retail or what's going on in energy?" and getting to learn a bit and think about, "How can I help them get to the next stage?" Then we got into the transaction but you learned a lot more about the sector. So they were a couple of things that took me there. But the New South Wales commerce law degree was brilliant because I was saying earlier, when we were discussing, we said the technical skills I got there were just amazing because I know people do these broad US degrees and things. I'm still using my law and finance learnings today.

Also, the way we were taught to think for ourselves, especially in the law school, that Socratic teaching method, we were always questioning things and thinking about what impact we can have beyond ourselves, which I loved. Then we also felt empowered with a very broad choice. In fact, I was mentioning one of the things I loved as well about the law school is the diversity of the melting pot of whole range of people. They just taught me to think very differently compared to even the schools I've been in. I've been in lots of countries, lots of different schools, and my mind got opened up even more at New South.

David Gonski, AC:

I could listen to you telling how wonderful the University of New South Wales is for hours. But let me move it. So in 1987, you set off to Macquarie Bank and I should just mention Tony Berg, who I think was the CEO then.Ìý

Shemara Wikramanayake:

Yes, he was.

David Gonski, AC:

Nicholas Moore, another CEO, is here. It just shows something about Macquarie that they bothered to turn up today. I think it's fantastic.

Shemara Wikramanayake:

Thank you. I didn't have to pay them much.

David Gonski, AC:

In front of them, tell us what it was like. In particular, there are many who talk about the absence of women in banking at the time. Was it a problem?

Shemara Wikramanayake:

Yeah.

David Gonski, AC:

How did you deal with it?

Shemara Wikramanayake:

Well, first of all, I think being at UNSW taught me not to look at all at the box I came in. So I didn't make it my problem. It was really about what impact can you go and have in the world. So I wasn't sitting there thinking, "Oh, they're thinking I'm a black short female, blah blah, judging me by this stuff." I was just sitting in the room thinking, "What can we get done?" I have to say, Tony was our CEO at the time. Nicholas was running the project and structure finance business, a very big influence on the floor I was working on.

I didn't get the impression at all that it was, "Oh, you're female. You can't come and work on this." It was really, "What can you bring? What ideas have you got?" Didn't even matter that I was basically the, excuse my language, but the shit-kicker at the time I joined. People ask you for your views, and I do that all the time as well because it's a very open environment and I think Macquarie's always got that as a services business, our key asset is people, and we have to create an environment to get the best out of those people if the business is going to do well. So it's always a business that's trying to attract diverse people from whatever areas, socioeconomic backgrounds, genders, ethnicities, that can challenge each other and come up with better views, and then empower all those people to be contributing as much as they could to the business. And that's how we did best.

So, I certainly felt very empowered.Ìý You play to your strengths. My particular case, I was putting my hand up to go and start all our offshore offices. So I think in that early period I worked in nine cities and six countries in a whole range of business lines, and we were all just given the opportunity to do what we wanted.

So I remember in New Zealand was one of our first big offshore expansions that I went to do after I moved from Sydney to Melbourne. And the boss I was working for at the time went to our one New Zealander and said, "Hey, I'm thinking of starting a New Zealand office. Do you reckon you could go?" And he said, "Why do you think I left there?" It's a small market, nothing to do. And I thought, oh, beautiful Southern Alps and all of this, I'll go. And then I turned up there and I thought, what the freak did I agree to this spot? I don't know anyone.Ìý

But there was a little team of half a dozen of us and we were so supported from the mothership and we just got on with thinking about, okay, the electricity sector is being restructured, what can we do? There's six banks here, there should only be four. What should we do? And put one foot in front of the other. And within a few years we were top of the league table. I remember we made a double digit million fee on something. It was big back then. And then Alan Moss turned up and told me I'd been made an executive director and I thought, "Oh my God, I didn't think I was ever going to be one of those." But he was just getting on with trying to have impact, I think, based on what Macquarie was like.

David Gonski, AC:

I want to get off talking about New Zealand and things because I want to know is you chose to come back to Australia.

Shemara Wikramanayake:

Yeah. Yeah.

David Gonski, AC:

And indeed, you are running a massive organization from Australia. Is there something significant both in yourself and indeed about Australia, that that decision was made?

Shemara Wikramanayake:

Well, look, the reason I came back is my parents were then in their late seventies, and we'd had our kids and I wanted my kids to grow up near my parents. And I also wanted to be there for mum and dad, because as I said, they were there for us through all of our childhood. So we came back thinking hopefully they'll make it to their mid-eighties and we can be around. But now here’s dad in his nineties, and we're very happy to have you, dad. So it's been a long stint back home.

But I have to say it's been a great place to raise kids. But it's also a great place to do business from, this Aussie culture of... it's an egalitarian sort of culture of... It's meritocratic, like Macquarie is, I think of letting people just try to unleash their full potential. So, I've loved living here. I think for Macquarie, a third of our shareholder base is Aussie retail, and they're so loyal, and they've really supported us forever. A lot of the institutions have held us since the time we listed in 1996. And we have regulated... Our principle banking regulator is based here. It's a great regulatory framework to work under, together with Canada, probably one of the best banking sectors in the world.

So, yes, it does mean time zones-wise it's a bit challenging. So we're doing management committee calls all through the night with people in the UK, and US, and early morning. But if you have a global business, if you are working in Australia for the New York head office, you're up late hours. So, I think Australia is a great place and really aligns with, I guess we are English by birth, my sister and I, and we're Sri Lankan by descent. But I say we're Australian by choice, like adoption, I guess. We took up citizenship here.

David Gonski, AC:

That's a lovely answer. According to my ¹û¶³app, you are leading 19,000 people in 34 markets.

Shemara Wikramanayake:

Yeah.

David Gonski, AC:

How does one lead one person, let alone 19,000 in 34 markets? What's the secret sauce?

Shemara Wikramanayake:

Well, I think the way you lead is very different depending on what the function and the business is you're leading. Like, imagine if I were in the Army. I would really need to be directing the troops of what needs to be done exactly when. And we all need to be very coordinated and directed. At Macquarie, I think you were saying there's an expression I've used called leading a thousand leaders or leading 19,000 leaders.

But really, what I have to do is create a culture where they're all empowered to act like a leader and get on with it. So that for me is what it's like. So, basically I sit on my desk with my feet up and they get on with things, if it's working well. But I use the example of when we went into China, I was talking about earlier offshore expansion. I was just talking to somebody who was a key part of that, but none of us said, "Let's put a flag on the map in China." Some of our real estate people said, "Urbanization is happening, they're going to need residential real estate." They went up to Tianjin and started building residential real estate.

And then what happened is as that went on, they thought, "You know what? They need shopping centers." So they went to second and third tier cities, they figured who to partner with, came and asked the house for capital and perspectives on risk. Then when the online shopping started, it started in China, way before anywhere in the world. So we went into industrial warehousing and logistics because our team in China saw that. And then we were able to take it everywhere. But you can't top-down do this stuff, because those of us sitting in Sydney had no idea what was going on in the ground in China.

We do be very disciplined on risk and funding and capital and things. So we make sure we have the funding and capitals and buffers. We think about worst case outcomes when we're giving them capital, and really understand the risk, and we think about the operating platform to support them. But apart from that, it's trying to create a framework to just unleash the potential of these people, and they get on with it. So they're all over the world doing a lot of different things in a lot of different countries, and often I follow them. Like people say to me, "What are you doing?"

I was just in Egypt, in Sharm El Sheik, in the COP27 climate conference and they were saying to me, "Oh, aren't you a great leader leading Macquarie into green stuff?" And I was thinking, "No, I'm a great follower," because I go where the teams say, "All right, we have this opportunity. We are all doing stuff in the climate transition. You need to get here and engage with these people. Help us get relationships with these partners." So, I'm pretty much doing what I'm told instead of telling people to do what I tell.

David Gonski, AC:

Well, if you're prepared to do what you're told, what's your view on mentors? Have you had mentors?

Shemara Wikramanayake:

Yeah.

David Gonski, AC:

To all those who are watching and hear, what do you say to people who say, "I think mentors are good or bad"?

Shemara Wikramanayake:

Yeah, I think definitely one of my friends' dads when I was little said, "Life is too short to learn everything to know from your own mistakes. You've got to learn from the mistakes of others." And that was great advice because I listened to people all the time, and we were just chatting with someone about the wonderful Michael Copa, who was teaching us contracts when we were at uni. And my friends might remember, there was a point where I decided I’ve had a gutful of this, I'm going to drop out.

And he came and sat with me in a stairwell. He'd been teaching me contracts, and he's just so good at playing the psychology of it all because he was going to me, "You can't drop out of uni." And I said, "But I'm bored and I want to go and do all these other things." And he said to me, "No, no, no, you should keep doing this because you're very good at it." And it was a clever thing to do. It was such great psychology, and I'm trying to do that with my dropout son now. But obviously it's not working, decades on.

But he was a fantastic... First of all, he taught contract in such a... I'm sorry. Why am I saying contracts? He was constitutional law. But he really taught us to... I loved that subject because he taught us so many different perspectives of every judge on every case and stimulated us a lot. But he played me very well. So I thought he was a great mentor. Ronni Kahn of OzHarvest I find a great mentor. She's doing community work, but the value she lives up to and the way she's prepared to challenge conventional thinking.

But even at work, we have these employee network groups now in areas like neuro diversity pride, whatever. I've learned so much from them. I remember sitting with a young colleague in one of the Pride employee networks groups where I was thinking, "What is you guys problem about your sexuality?" Because I have to wear my skin color and my gender and ethnicity and tiny height and all that on my sleeve so people can judge me based on it. Whereas, nobody knows your sexuality, so you can just get on with work. And we did an exercise where you had to talk to this person for 10 or 15 minutes but not say the gender of your partner, and it was so difficult, and it made me realize the challenge they're all dealing with, coming to work, having to tiptoe around and hide something. It impacts how good a job you can do.

So, when you say mentors, it made me realize, actually, we, Macquarie are missing out because we are letting these people be impeded in coming to work every day and not deliver. So I've had lots of experiences like that. Our neuro diversity employee network group did a video on the things going on in their heads, the challenges they face, but how they can contribute differently. So, yeah, you learn from people all the time. Kids that start new at work, well, I've sat in open plan until Nicholas dropped me in his office when I took this CEO role off him. But I used to sit in open plan until then, and the kids who were on the pod would teach me all this tech stuff about my computer, which I had no idea how to work. So, you just learn from people all the time.Ìý

David Gonski, AC:

It's clear you've got a very strong sense of community. One of the things one is definite about Macquarie, and I think that's been inculcated by many in this room as well as yourself, is that I read the other day that 500 million Australian dollars have been given by the Macquarie Foundation and staff over a period of time. You've obviously got a view on philanthropy and being involved in community. Do you want to share that with us? Because many of us focus on where we are going, it's quite hard sometimes to think about some of the other people who want to go places.

Shemara Wikramanayake:

When I was at Askham, at aged about 14 and we were studying all this existentialist literature about life being meaningless because it ends in death, and I remember thinking, well, that's the whole thing that gives life meaning is that you get this one shot and I'm going to have a jolly good time with the 60 years I thought I'd get, I hope it's now more than 60. But I just had this here for a good time, long time perspective on life.

But then as I got more comfortable and I realized having a good time with myself was easy, I was thinking, "Well, what else can I do with my limited time here," and started thinking about how I could have impact. And I mentioned because of UNSW and a whole lot of things, I realize the value of education. So, that was one of the first places I personally started getting involved in the community. And Nicholas runs a program at the moment where we help refugees from Syria, Afghanistan, et cetera, mentoring, and it's a phenomenal program. So a lot of us are involved in education.

But the Macquarie Foundation basically multiplies the impact you can have. And David Clark, who was our co-founding CEO, basically said early on in his time that businesses are part of the society in which they operate. And he said it was logical that they should work for the betterment of that society and create value, and hence be able to share in that value and create value for the business, and we should be aligned. And David set up our foundation in 1985 when we took the banking license. And what he decided is that the way we were going to run it is basically engaging our staff in the community and following them the way Macquarie operates as a business.

So the 500 million we've given isn't all Macquarie's money. It's Macquarie and staff, because what we decided is we'll let staff in their local communities figure out where they have passion, where they want to give their time, and skill, and expertise, and their money, and then we'll match them with money and putting teams together, et cetera. We do a lot of work with Raise Youth mentoring, that was started by some of our colleagues who got passionate about it. And then hundreds of our staff have been Raise mentors. We raise bazillions for it every year, but through the staff doing programs and our matching. And you've engaged with Macquarie in a few areas of our giving. So I was privileged that Nicholas at one stage asked me to take over as chair of the foundation. You asked me to do a few jobs, Nicholas, and I think that's the only one I put my hand up for happily. But they were all good things that he asked me to do. I learned a lot from them. But that was the one thing you said to me that I just went, "Yep, I'm in." But at the time, we were giving about 18 million a year, and 3 million was being given by staff. 3 mil went in matching, and Lisa George, who's still the head of the foundation, who you know who's amazing. And I thought we need to catalyse our staff even more, so we went on a big push to get the staff engaged.

And by the end of my period where I handed over to another amazing successor Mary Reems, but we had the staff giving 12 mil a year. We were giving 30 million between us and the staff a year. Now that meant we only had 6 million left for strategic giving so we had to think about how we mobilize our staff to coordinate their giving to have impact in each area, be it mental health or whatever. But that's the way the Macquarie Foundation has operated, and it was endemic to how Macquarie operated, I think, starting with David. And I think it's one of the things that people are most proud of.Ìý It's really leveraging our people as the whole of Macquarie operates.

David Gonski, AC:

Tell me, and I don't want inside information because I'll share it with everybody here-

Shemara Wikramanayake:

And then it won't be inside anymore.

David Gonski, AC:

You've become a CEO of a very well, magnificently run company with a great reputation. Where to from here? Where do you want to take Macquarie? And obviously we only want public information, but more particularly we're interested in you. What do you see as the CEO's role at Macquarie going forward?

Shemara Wikramanayake:

Yeah, well I think it's what it's always been, which is creating. The biggest role is empowering all these people and perpetuating that culture. But in addition to that, there are things in the center we're responsible for, things like making sure we have discipline, funding and capital. We're sitting on 12.2 billion dollars of surplus capital as we go into a difficult economic cycle, termed out funding, a hundred billion of cash and liquids, our risk management systems and making sure we have this independent risk management, which I think we were the first organization in the world to set up, has been critical to our survival.

And we've had 53 years of unbroken profitability and very stable returns on equity compared to global peers. And I think the risk, our operating platform and making sure the technology and things are at the latest, and then a little bit of strategic deciding what we should plan and what we shouldn't and putting businesses together or helping grow another one or getting out of something, but really based on what opportunities the troops are bringing to us.

But when you say what's next, I think we're 53 years young, not 53 years old. And when I look at... We were just doing some work on an offsite on the weekend with, we were running an Aussie digital banking, awesome offering. If you're not a Macquarie customer, you should switch your banking over there because it's the best experience. But we're 4.8% of the mortgage market. And out of our 70 billion market cap, we were saying to the guy who runs banking, you're probably worth about 10 billion, is what the... CommBank's worth a 180 billion, so get off your butt because there's just a long runway and you need to keep going with this.

Equally, the guy who runs our asset manager, and Nicholas, you originated the infrastructure business for us, but we're the world's biggest infrastructure manager, real estate, blah blah, private credit. People think we're a huge asset manager. It's probably worth 25 billion of our 70 billion, but 25 billion. Blackstone is worth 200 billion dollars, so again, we're saying to him, get off your butt. There's just a long way to go. Can you get on with it?

Similarly, with all our businesses, we're in investment banking and commodities and M&A and all of that. JP Morgan's a 580-billion-dollar business so there's a very long way for us to go there. We're sort of a little Darwinian organism that keeps evolving and adapting with the external environment changing. And I think now some of the things playing out there are that the community expects much more of business, so it's become aligned with what David said, not just money making.

But we've always looked for unmet community need. Where do we have deep expertise to impact that and make a difference? How can we create value and share in it? Things like urbanization and the need for infrastructure, whether it's urban or social infrastructure, et cetera. The energy transition, all four of our operating groups play a role in that, originating early stage energy investments or EV, business of leasing EVs, helping people through the energy disruption at the moment in Europe. Digitization, we're playing a big role in that because everything is being disrupted by technology and we do a lot in that, including our digital banking offering.

There are a bunch of thematics there that we play in. Also at the moment, the macroeconomic situation where we're having interest rates surging and, well, inflation and driving the central banks to put up interest rates, possibly recessions, what we do in our asset manager is connect the savings of individuals in the world with places where the community needs capital invested and brings some expertise to that. And that need is going to grow even more as governments are more indebted and private money's funding a lot of these community needs.

Thematically there's just so many things we're doing that we're early in, and there's some much, much bigger players so everything we're doing, we're just tiny. And so there's huge runway to grow so I'm very confident that at the end of my time there's brilliant succession under me. I'll hand over to others who will take it to the next and the next level, and so I'll get to go and sit there with Tony and Nicholas, happily, and watch and say, "Aren't you doing well? You've all done very well."

David Gonski, AC:

No, they'll be saying, "Get off your butt and do it."

Shemara Wikramanayake:

I'll be sitting on the beach having cocktails.

David Gonski, AC:

Can I just warn the audience, there will be time for a few questions. I'm going to do some rapid fire, which I'm against rapid fire. It's like multiple choice, it never works. But can I just try it on you? Because I've been asked to do that. But when I finish the rapid fire, we're going to ask the audience if they have some better questions than me.

Shemara Wikramanayake:

Okay rapid fire.

David Gonski, AC:

The first one is, we want three things you regret that you wish you could have done better.

Shemara Wikramanayake:

Three things I regret.

David Gonski, AC:

Three.

Shemara Wikramanayake:

I don't have any, basically.

David Gonski, AC:

You have to say that three times.

Shemara Wikramanayake:

Okay. I live a no regrets life. No, basically my view is the past is a sunk cost and it's just not worth saying, "I wish I..." The lessons you can learn from it are very useful, but what happened, happened. And as I say, I accept things outside my control, so that's history.

David Gonski, AC:

Well, that's a rapid fire answer. The second one, what's the best advice you've ever been given? And if it came from somebody here, that'd be really good.

Shemara Wikramanayake:

No, I said earlier that listening to all the advice you're given is useful advice. And I think I'd go with that. I've just learned from so many people that I'd be daft to say any one of them was more valuable than others. Even my kids tell me stuff now that challenge me completely.

David Gonski, AC:

Now if you weren't a CEO, what job would you be doing?

Shemara Wikramanayake:

I would probably still be working in the finance sector because I'm sort of a numbers geek, but with really smart, stimulating people who stretch me and come to work to change the world every day. I'd go and find somewhere else like that, so I'd have to find another Macquarie somewhere I guess, if this one didn't want me.

David Gonski, AC:

And apart from get off your butt, what is the advice you'd give to your younger self?

Shemara Wikramanayake:

Oh, just to any young self, I'd say, like I said, nature, nurture, you've got to play to your strengths. The life I had was so fun for me and I'm really enjoying it. Other people would've been apoplectic about going and living in nine cities in six. There's so many choices of what you could do with your life so you've got to understand what are your passions and values and strengths and development areas you compliment yourself with, and then just go and play to your character and all of that.

David Gonski, AC:

Final rapid fire question, you admit that you're an optimist and you clearly are. Is that the right way to be?

Shemara Wikramanayake:

It is for me.Ìý

David Gonski, AC:

Good answer. We have a live stream audience as well. And I'll start with one of those and then I'll ask if there's anyone here. The question one from the live stream is, what do you think will be the most challenging aspect of the green energy transition?

Shemara Wikramanayake:

Right now, you said I was an optimist, and sadly I'm going to say on the other side of every challenge is an opportunity. I actually say, what are the most wonderful opportunities from the green energy transition? And it's that basically we can save our planet, which is wonderful. But there's so many ways we need to move on to save our planet so we've got to find solutions in energy. We've got to find solutions in transport. We've got to find solutions in agriculture. We've got to find solutions in buildings and heat. We've got to find solutions in industry. And our teams are working across all of those. There's no end of stuff to do.

I actually think it's a massive opportunity, and Macquarie's certainly finding that, that we're building great businesses off the back of it, so I'd be saying to people, get on board. There's just a lot of change we need to do to stop our planet from burning. It's not going to happen overnight, but there's just a ton of stuff to do so I think it's opportunities, not challenges. On the other side of every challenge is an opportunity.

David Gonski, AC:

You've just proved you are an optimist. Excellent. Second question coming through is, Macquarie is often regarded as a benchmark for risk management in the industry. What do you look for to help aid informed decision making?

Shemara Wikramanayake:

Well, the first thing we do is we say business owns the risk. Our principles, I think you chose these three words, Nicholas, opportunity, accountability, integrity is we say you are empowered with going and looking for the unmet need and the opportunity to make a difference, but then you've got to be accountable for the disciplined execution of that. And you've got to act with integrity, which is thinking about the long-term impacts on all stakeholders and social license. First thing is if you want to go and do something, you've got to think through what can go wrong? What have I got the skills to manage? And what should we risk upset? What do I not have the skin? What should we pivot away from? And take small bets early on.

Then we have an independent risk function, which is a second line who's charged with challenging you and looking at worst case outcomes as you correlate. I have to say, I think one of the best risk management approaches is, I call it swim lanes. It's my expression. But basically if you're good at something and you've built expertise, take big bets and double down there. If you're doing something new, then really focus. Take a small bet, learn a little. If things go wrong, either pull away if you can't sort it out, or pivot or learn.

But I know my dad said when he got married, the priest said to him, "May his mistakes be little ones." And he said he had three of us. But that's an expression I use a lot, is may our mistakes be little ones. Where we're taking the big risk, it's in small things. We were taking the little risks, sorry, the patient adjacent growth is down the fairway.

David Gonski, AC:

Excellent. We have a little time for a couple questions from the floor. Here we go.

Tony Frost:

Yes. Tony Frost, I'm on the faculty at the business school. Shamara, you've joined us from Cop27. You're an optimist. Can you tell us briefly your view about the leadership of the countries of the world and business to solve the climate challenges? What is the vibe you bring us from Egypt? 

Shemara Wikramanayake:

Yeah, as I was saying, it's a big challenge because the level of carbon and greenhouse gases in the atmosphere now just dwarf anything we've had in 800 million years. And taking it out is not going to happen quickly. All these transitions take a long time. It took us years, decades to build the infrastructure for the Northwest Shelf or the Pilbara. It's going to take decades, so I think we have to pace ourselves in the journey and hopefully it's going to accelerate as we go. But I always say we're focusing a lot in what we did before and saying let's get off gas and oil and all of that.

The bigger problem is what are we going to get onto? Because if we get off all of that and we don't have solutions, whether it's in transport or agricultural, whatever, do we want to go back to cooking with wood? I don't think people are going to take that so we need to be coming up with... And human innovation is phenomenal. We've got the cost of solar down and the cost of wind down to where new build solar and wind are the cheapest form of energy anywhere in the world. But the problem is they're intermittent, and we need firming solutions and base load renewables so we're investing in things like hydrogen biofuels, battery technology, et cetera. I have no doubt human beings will sort this out because we're an innovative race and we always save ourselves. To do it, we need to collaborate as well. So the public and private sector need to work together. And there's places where the Northwest Shelf, the Pilbara, the public sector had to go there and create a framework to de-risk it, to bring the early private money. And then hopefully you catalyze the private money and it just gets going.

So, when we did our first UK wind farms, they gave us this contract for difference offtake. We couldn't have gone in there without it. The last round we bid, it was her Majesty Queen Elizabeth but now King Charles was making £100,000,000 a year from what we've all paid for annual seabed leasing. And the treasury is making another £100,000,000 a year because there were enough of us corporates who were confident enough to come and pay massive amounts to go through the pleasure of a six year program of getting habitat renewable approvals, of doing the development, the construction, knowing that there's a market there where we can make money. The cost of offshore wind come down 70% by this fourth round, which is bid on.

So it's just an example of the benefit for public sector in partnering early on with bringing the private sector in. And then governments have a lot of debt at the moment; there's a lot of money in the private sector catalyzing us to run with it. But there's so many aspects to work on. We held workshops with the MDBs on how they can play a role in developing countries, that's where the biggest emissions are going to be in the world. There was no end of stuff. We had sessions on transport. We had sessions on energy. So there's a lot to get done and I'm really proud of our teams that they're just getting on with so many things. We're about to do our net zero targets and reporting in December and we keep finding more gigawatts of projects that they're doing around the world. So we need to get this settled by December, but it's over 100 gigawatts of things that we are working on in operations, construction or development all over the world, teams everywhere. And that's just in energy. So yeah, as I say, it's a big opportunity as well as-

David Gonski, AC:

Good question, Tony, your course is also very good. Any other questions in the room? 

Jane Lim:

Hi Shemara, my name is Jane. I'm part of the full-time MBA cohort.

Shemara Wikramanayake:

Oh cool.

Jane Lim:

My question is, as a breadwinning mom with a stay-at-home husband, how has this impacted your family dynamics and how do you reconcile the two perspectives between east and west? And has this affected the way you raise your children, if at all? Thank you.

Shemara Wikramanayake:

Yeah, well I mean the beauty is there's so many different models now of how we can raise kids in the western world. And some people, my girlfriends have kids, some are elected to stay at home. Basically it's accepting, it's a tradeoff; there's a spectrum of things you can do, but every one of them is a tradeoff. Some have stayed home all through their kids growing up, some have worked and been primary carer, God knows how they do it. Some like me have said to hubby, "Here's the kids, I'll be back in 18 years." Not quite, not quite, but it's different role modeling. And we joke a lot, I don't know where hubby is somewhere in the back of the room. But our son, when he was little, we said to him, "What are you going to do when you grow up?" And he said, "I think I'm going to be a normal person like my daddy." And we said, "Well what will you do for money?" And he said, "My wife will work."

And so when he dropped out of university and he'd heard us tell this story and my husband goes, "Alex, what are you going to do with your life?" And he said, "Nothing, I'm going to be a normal person like my daddy," sarcastic so and so. But I mean the kid's okay and there's probably things about them that drive us mad, but they ain't axe murderers. So they basically can grow up with a working mom who's a bit of a loop head the way I am, a psycho working mom. I've been on the road a lot, but we still get on very happily. And the choices of things, they're on their journey, and they are their own person and they have to go their own way. So yes, it was very confronting when my son dropped out of university, but I had to accept it's his life, not mine and he's not going to live it the way I want him to live it. He's going to live it the way he wants to live it and I'm just going to have to get over it because ultimately I have no recourse anyway. I'm not going to throw him on the street. But he's a lovely kid and he'll find his path. And so I think that's what families, it's about compromise and learning as you go, but I think we're all quite blessed in the spectrum of choices we get.

I know I have friends who are parents and they're racing around doing stuff, and I know when my husband's been away, and I've had to sole parent and it's just a nightmare. My daughter's school lunch doesn't turn up. I have to go home, and I had a dinner with Malcolm Turnbull once when his primary started going to turn a shower on. He's going, "What are you doing? I'm supposed to be at this dinner with the prime minister." She said, "Daddy's much better at doing the chores than you are." But then we hit a stride by the end of his ski trip of two weeks where he was off on the snow and when he came home she wanted to get a puppy and daddy's allergic to dogs, and she said, "No, mom, when daddy gets back you could divorce him and then we can get a puppy."

So they're just operators. So sometimes yes, I feel bad, but ultimately they've got a loving, loving dad who's been a full-time parent to them. And on the spectrum of kids, yes, we're all, my friends here in the front row, we're all dealing with the joys of now adult children and you think, "Oh, mine are doing my head in." And then you go and talk to your friends, you go, "Okay." I mean some people do have a doctor, a lawyer, a banker, and they're all thinking, "Oh that's not fair." But the rest of us are just beating our heads against the wall trying to figure it out, bumbling our way through just like we did when we were at uni, now it's the parenting stuff and yeah, it's the next chapter of challenge.

David Gonski, AC:

No, well we can't give advice on that, but just the University of New South Wales has courses way beyond I know what you've just said. Can we take one question over there? I think there's somebody right over there.

Kristle Romero Cortez:

Thank you. I'm Kristle Romero Cortez also at the UNSW Business School. My question relates a little bit to what you've talked about collaboration and education and how it can empower change. And I actually wonder about this often, how as an academic can I make sure that my research can make it to the people who are making these decisions? Because it is something that we talk about, it's something that we try to work on, but at the end of the day, it is not often the case that we get to bridge those gaps.Ìý

Shemara Wikramanayake:

Yeah, it's a good question. And I was asked last year by the liberal government to go on a university research commercialization panel with them and I thought, "I don't know anything about this," but they said, "You should do it." I believe in education, so on. It was eye-opening because Australia spends $35 billion a year on research. About 20 billion of it is from business, about 10 billion from universities and about 5 billion from government. Not quite, maybe it's 18, 12 universities and business. It's completely uncoordinated, right hand, left hand, et cetera. And so we've started thinking about how do we make this all come together because universities are coming up with brilliant stuff. Michelle Simmons was on this with me where we're not commercializing it. Equally, we business need a whole lot of stuff researched and developed like our technology for our operating platforms, identification, authentication software, investigation software. And we're not working with the universities saying, "Can you help me?"

So we started putting together a whole lot of things and I'm very pleased to say the labor government's actually looking at taking and running with this. We looked at lots of models around the world where it's worked in Singapore, some of the things in Canada. So watch this space but I do think it's a very missed opportunity. I was going to say a big problem, but everything's an opportunity for me. So

David Gonski, AC:

That's what we'll take from this. I've just got time for one more question and I'm conscious we haven't had one from over there. There's a lady over there.Ìý

Speaker:

Hi Shemara, my name is Nishmi. I'm currently a student with the business school. So my question is, so how do you, I guess think about future technological advancements and how that I guess affects the overall finance and banking industry? And I guess a couple of technologies that are becoming a little bit more relevance, probably blockchain or quantum computing, or how does that actually affect your role in finance and banking?

Shemara Wikramanayake:

Yeah, and look, in our banking offering, as I said, we are probably leading Australia in terms of a digital banking offering. I should respect that the Commonwealth Bank also in terms of user interface, has a very good offering. We are bringing it through end-to-end now in terms of how we do everything behind the scenes as well. But ultimately, as I said, it's a sort of a led at the coal face business. We've hired 2,700 people in the last couple of years, the bulk of them in technology and operations. And we have all these engineers who are getting on with importantly understanding the customer or the community need in each of our businesses and then how can they bring technology to that. But it's super important to be understanding what's the problem you're trying to solve. But not just in banking, but every sector we are in; healthcare, education, everything, infrastructure, even technology is disrupting it, which I think is amazing.

I know there was a view that technology would mean that there would be no jobs, and you've seen where the unemployment rate now is in the world; we're just hiring more and more people. It's driving value for us. We just shared our results that our operating costs have gone up from 1.3 billion, 1.5 it was billion a year to 2.7. So we're spending $1.2 billion a year more over the last three or four years in big areas like tech and our platform, non-financial risk and red compliance for another two. Despite that, we've managed to grow our earnings from in the 2 billion to 4.7 billion. So it's actually creating value. So it's false economy to save on challenging ourselves with how can we do things differently and have our businesses it, as I say, it's a Darwinian principle evolve or die, extinction. So we are very excited about continuing to respond with the blockchains, et cetera.

David Gonski, AC:

That's a very good way to end this. Ladies and gentlemen firstly, thank you for your questions. It is quite obvious to me that no matter how bad I am at this job, I've managed to make Shemara look how wonderful she is, and there's just no doubt about it. So thank you Shemara.

Nick Wailes: 

If you enjoy the podcast, please share, rate and review and subscribe to AGSM’s leadership podcast on your favourite platform.Ìý

You can also follow AGSM at UNSW Business School on LinkedIn and Facebook for more industry insights or find us at agsm.edu.au.