Malone warns of iiNet's own bureaucracy

Michael Malone has warned that bureaucracy within iiNet could ‘choke’ the company because it’s stifling the internet service provider’s ability to remain innovative.

Mr Malone, who started iiNet in 1993 and ran the company up until earlier this year, said adhering to the company’s brand of being an innovator had become increasingly difficult.

“Bureaucracy has risen up [over the last few years] particularly in the development area and they now have about 80 or 90 programmers in iiNet,” Mr Malone said.

“We used to get more productivity when there was a team of ten than we did out of a team of 90.”

Speaking at a Networking WA event this morning, Mr Malone said the cost of failure had become higher as iiNet grew, which increased the need for safeguards against failure.

“That fear of getting things into development has been really hitting hard and is an immense bottleneck to the business,” he said.

“If there was going to be anything that was going to choke iiNet I would say that it’s that difficulty with our own monolithic systems that have been built in-house.

“Now the cycle to be able to get things out, which used to be weeks, is now years - that’s a bad thing for the business.”

Mr Malone said he thought the challenge came down to the culture of the business and was a stumbling block that even he hadn’t been able to overcome during his final year as chief executive.

He said iiNet needed to find a way to enable teams within the company to work alone and develop new products if it were to break the bureaucracy.

Mr Malone opted to take extended leave in November last year and resigned as chief executive in March.

He has continued his work with a number of not-for-profit boards including Autism West, which he established after his son was diagnosed with autism.

Business News reported on Monday that Mr Malone had taken on his next significant role since leaving iiNet in becoming chairman of new data security startup Diamond Cyber.

He said this morning the opportunity was exciting but it wasn’t a situation of replicating the success of iiNet, as the Diamond Cyber model wasn’t scalable.

His other investments have been “quite boring” Mr Malone confessed and included petrol stations in the north-west.