Business First Magazine - May/June 2017

BUSINESSFIRST for Business Leaders

May/June 2017

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GRANT PATTERSON How Providence Wealth has Embraced Emotional Investing

Change is about the courage of conviction for Strategic Reform CAN BRISBANE BECOME ONE OF THE WORLD’S BEST DIGITAL ECONOMIES?

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THE UNIVERSITY OF TASMANIA

Developing global business leaders

Investing in new and emerging markets

NEW BUSINESS OPPORTUNITY The rise of medical marijuana

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Dine in delight in Peru ASIA FOCUS PROPERTY HEALTH FINANCE LEADERSHIP TECHNOLOGY and more

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CONTENTS REGULARS

FEATURES 24 Creating a natural workplace 26 IoT security from the outside in and inside out 28 Latest neuroscience transforms business leaders into expert decision-makers 30 Rockstar Leadership Advice 32 Why social media is now traditional media 82 The why in Wi-Fi 84 What entrepreneurs can learn from a heavy diesel auto-electrician

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SPECIAL FEATURE

– MEDICINAL MARIJUANA

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40 Expand into new markets with confidence: Partner up

By Andrew Wood 42 Medicinal Cannabis Stocks under the microscope

By Gabriel Yi 44 Getting a better position – tips and tricks for traders

By Ric Spooner

78 Property industry too often under attack

By Nidal Rasheed 80 Apra’s wide net

By Francis Farmakidis

LIFESTYLE

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BUSINESS FOCUS 50 How Effective CEOs Implement Culture Change

By Corinne Canter 56 Do CEOs need empathy to be a successful leader?

By Ryan Makris

INVESTMENT FOCUS

PROPERTY FOCUS

16 Medical cannabis: the introduction 18 The business of medical cannabis 20 Medical cannabis products hit the shelves 21 Medicinal cannabis: the market opportunities

8 A deeper look into Japan’s debt problems By Yu Ming Wang 12 The real trade way

By Yu Ming Wang 14 South East Asian mining and gender diversity issues

Boutique investing starts with building relationships Jonathan Jackson speaks with Providence Wealth founder Grant Patterson about the emotion behind a successful wealth management plan.

58 It’s a great economy… so why are your profits poor?

By Roger Mendelson 64 New leadership needed for crisis management

By Tony Jacques 68 Helping staff with their personal development

By Stephen Zuluaga 72 Why 2017 is the year of the tax audit

By Murray Howlett 76 Cloud Technology is an Enabler of Change

By Danise Tan

4 Editor’s Desk 5 Business Snapshot 94 The Leader’s Bookshelf

ASIA FOCUS

COVER STORY

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86 Mental Health - Why workplace mental health and wellbeing must be taken seriously and how to take action to create a mentally healthy workforce 88 Meditation - The secret weapon available to all entrepreneurs 90 Destination - A taste of Peru 92 Health - Health Spectrum: The 9 Levels to Peak Performance 96 Fast Lane – Alfa Romeo’s Guilia

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46 46 Polishing Curriculum to Obtain Global Merit

How do you meet millennial expectations in a global economy?

According to Professor Chris Earley, those expectations must first be met in the classroom, with an outlook to working collaboratively with business to better serve the community.

52 The expertise of top tier consulting firms without the price tag

For Strategic Reform, a specialist in ICT provision, the core of business success is cultural.

Managing Director Trent Gale explains why.

60 Preparing for the digital future

Marek Kowalkiewicz has an agenda: to create a thriving future for his children. The foundation of this future is a digital economy that drives cities and businesses to be competitive on a world stage.

66 Ready to go software streamlining business

Praveen Reddy, the manager of client relations at enterprise management software firm Periscope Corporation focuses on putting the clients in the box seat. That, he tells Business First, is why Periscope so unique.

70 A commitment to understanding

Running a boutique, highly-specialized, highly-focused, hightouch business is what sets recruitment agency Carrera apart from its competitors.

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74 How Sydney Seaplanes overcame its setbacks Sydney Seaplanes CEO Aaron Shaw speaks with Business First and reflects on the growth of his business and the pitfalls it has overcome.

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BF | EDITOR’S DESK

Business diversity and change As we hit the middle of a year that seems to have put on the afterburners and looks to be moving faster than a bullet train through China, there’s a lot to reflect on.

We could easily talk about the effect of ‘Trumponomics’ and how a Tweet can influence market forces. There’s the stability of gold, which has fuelled a small-cap mining boom. Furthermore, the rise of commodities such as lithium and graphite are being used to fuel the new energy revolution, sparked by Tesla’s move into battery-generated power.

Meanwhile our own Prime Minister is finally making a move to address the East Coast gas crisis and place some serious caveats on gas exports. There’ll be some backlash from the major players mining offshore East Coast oil and gas, however it’s a good move by the government and should help many small businesses dealing with the rapid costs of running a business.

We’ll deal with many of these issues over the coming months, but we’ll start this second half of the year with a look at how medicinal marijuana is now an industry unto itself in Australia and why several businesses are looking to create products and export goods that will meet expected demand.

A snapshot of the North American marijuana market will give you some idea of the direction we are heading. The market posted $6.7 billion in revenue in 2016, up 30% from the year prior, and according to a new report from Arcview Market Research, a leading publisher of cannabis market research; sales will grow at a compound annual growth rate of 25% through 2021, when the North American market is expected to top $20.2 billion.

The growth may not be as large in Australia, but it is certainly something we should be keeping our eye on.

As for the businesses covered in this May/June issue, we have some excellent diversity. Carrera’s Michael Floyd says he was trying to fill a massive gap in the recruitment space by setting up a tightly focused, value accretive business that could deliver with speed and not try to be all things to all people.

Dr. Marek Kowalkiewicz is a man who loves Brisbane and is striving for it to become the leading place in the world in the digital economy.

With Providence Wealth, Grant Patterson wanted to create a truly independent investment advisory that did not manufacture product, was not owned by any institution and would rebate fees and commissions to clients.

Praveen Reddy, the manager of client relations at enterprise management software firm Periscope Corporation tells Business First, why Periscope is not just about making organisations more efficient.

It’s about making them more effective.

One of the strengths of Strategic Reform, led by Trent Gale is its ability to meet an organisation’s cultural requirements.

Finally, we speak with Professor Chris Earley Dean of Business and Economics at the University of Tasmania about how to meet millennial expectations in a global economy.

There’s some extraordinary insight in this issue delivered by some highly successful industry leaders, and as usual it has been a pleasure discovering what makes them tick.

For a little lighter reading, you can test drive the new Alfa Romeo and sample the culinary delights of Peru.

It’s another big issue, so we urge you to put your feet up for a short amount of time and enjoy the read.

Jonathan Jackson

Jonathan Jackson Editor, Business First Magazine

BUSINESSFIRST MAGAZINE

www.businessfirstmagazine.com.au PUBLISHER Alan Hyman EDITOR Jonathan Jackson SUB-EDITOR Judy Hyman MEDIA & Jake O’Donnell COMMUNICATION Gavin McCullough WRITER Leon Gettler DESIGN Gino Hawkins PRODUCTION Caitlin Lacy Bonnie Weigang Head Office Level 1, 33-35 Atchison Street St Leonards NSW 2065 Advertising enquiries Phone: 02 8416 5294 Email: bfadvertising@amgroup.net.au Subscription enquiries Phone: 02 8416 5294 Email: bfsubscriptions@amgroup.net.au Contributors Jo Formosa, Francis Farmakidis, Marc Gordon, Victoria Hamilton, Murray Howlett, Tony Jacques, Ryan Makris, Paul McCarthy, Roger Mendelson, Nidal Rasheed, Ric Spooner, Danise Tan, Yu-Ming Wang, Andrew Wood, Gabriel Yi, Stephen Zuluaga Associated Media Group Pty Ltd ABN 68 123 058 926 Copyright ©2017 Associated Media Group amgroup.net.au DISCLAIMER Readers are advised that Business First Magazine and Associated Media Group (AMG) cannot be held responsible for the accuracy of statements made in the advertising. Opinions expressed throughout the publication are the contributors own and do not necessarily reflect views or policy of Business First Magazine or AMG. While every reasonable effort has been taken to ensure the accuracy of the information contained in this publication, AMG takes no responsibility for those relying on the information. AMG and Business First Magazine disclaim all responsibility for any loss or damage suffered by readers of third parties in connection with the information contained in this publication.

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BUSINESS SNAPSHOT | BF

Cyclone Debbie curtails Aussie coking coal exports In the April edition of Efic’s World Risk Developments, Efic looked at the impacts of Cyclone Debbie on coking coal exports.

Coking coal prices doubled in the last few weeks driven by supply disruptions in Queensland due to tropical Cyclone Debbie. “Key rail lines have been damaged reportedly forcing BHP and Glencore to declare force majeure on coking coal shipments outside of Australia,” says Cassandra Winzenried, Chief Economist at Efic.

Winzenried says that estimates suggest about 12m tonnes of coking coal could be affected, with China likely to look at other markets to fill the supply shortfall.

Meanwhile, robust industrial activity is providing the impetus for stronger global trade, which should support Australia’s commodity exports. “When you strip out the impact of volatile commodity prices, trade volumes growth has improved significantly,” says Winzenried.

“This is supported by robust manufacturing output in both advanced and emerging economies.”

Where does this leave Australian commodity producers? Winzenried says Australia’s export data has been robust, with export receipts growing at dou-

ble digit pace, led by stronger resource exports.

“Upbeat sentiment data suggests the improving global trade trends should continue over the coming months.”

In the US, the Treasury told Congress this month that China does not meet the criteria for currency manipulation.

“Specifically, China does not meet Treasury’s third benchmark, which is repeated purchases of foreign currency that amount to more than 2% of GDP,” says Winzenried.

As such, Winzenried says the Trump administration’s trade agenda is expected to diversify to other countries, with the latest Executive Order to probe the cause of significant deficits with 16 trade partners. “Australia should avoid attention given the persistent trade surplus the US has run with Australia for several decades,” says Winzenried. BFM

Australian Ethical passes $2 billion in funds under management Leading ethical investment and superannuation provider Australian Ethical Investment Limited (ASX: AEF) has announced it has exceeded AU$2 billion funds under management, a 100% increase since 2015.

March 2017 was a record month for the superannuation fund with net inflows of $32.1 million and record new members of 1,053.

“This is a significant milestone for Australian Ethical and for ethical investing in Australia,” said Australian Ethical Managing Director Phil Vernon.

“It clearly demonstrates the rising tide of ethical investment and that Australians are increasingly seeing their investment decisions as powerful levers for effecting change.

“People are also coming to understand it is possible to have professional investment management that actively addresses widespread ethical concerns.”

The company also announced a forecast Net Profit after Tax (NPAT) for the 12 months ending 30 June 2017 of between $2.2 and $2.6 million. Underlying Profit (UPAT) is expected to be between $3.9m and $4.3 million. BFM

Telstra Awards shine spotlight on business women Telstra is encouraging successful business women across Australia and Asia to stand up and be recognised for their efforts through the 2017 Telstra Business Women’s Awards.

Entries are now open for the Awards, now in their 23rd year, which champion women from diverse industries and ensure their achievements become part of the national conversation.

Telstra Group Executive and Awards Ambassador, Ms Joe Pollard, says the Awards are one part of Telstra’s wider commitment to promoting gender equality in the workplace.

Ms Pollard said for the second year the Awards program will include a Business Woman in Asia Award category, a reflection of Telstra’s growing presence in the Asia-Pacific region.

“The Telstra Business Women’s Awards exist because exceptional business women deserve to be celewww.businessfirstmagazine.com.au

brated,” she said.

“Every year we see exceptional business women challenging the status quo across all industries and from throughout Australia, and more recently, across Asia.

“Through the Awards we aim to provide finalists with a unique platform to be seen and heard and use this as a springboard to achieve even greater success.”

Ms Pollard said a survey of Telstra Business Women’s Awards Alumni shows that fewer than 20 per cent of finalists self-nominate, compared to 40 per cent of male and female finalists in the Telstra Business Awards.

“We are encouraging business women to stand up and be recognised for their hard work and effort and to nominate themselves or their peers to enter the awards program,” she said.

2016 Telstra Australian Business

Woman of the Year, Andrea Mason, CEO of Ngaanyatjarra Pitjantjatjara Yankunytjatjara (NPY) Women’s Council encouraged women to back themselves by self-nominating.

“When opportunities are given to you which stretch you and even make you feel vulnerable, this is the time to step up and to take the opportunity to learn and grow,” she says.

“The Awards allowed NPY Women’s Council to be aligned with success and influence at a national level.”

Participation in the Telstra Business Women’s Awards starts with a nomination. Nominees then submit a completed online entry form. Nominations are open year-round and entries open on 26 April 2017.

To nominate yourself or an inspiring business woman you know, visit: telstrabusinesswomensawards.com/ nominate. BFM

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BFM | BUSINESS SNAPSHOT

THE ONE BOX SERVES DISADVANTAGED FAMILIES One thousand disadvantaged Australian families will receive a weekly box of fresh food basics, under a new Fruit Box Group CSR initiative launching this May. Called ‘The One Box’, this initiative aims to provide ongoing, sustainable support to help families live better.

Around 5% of Australians experience food insecurity and healthy food habits are especially financially challenging for low income families who need to spend a third of their income to eat well (Australian Institute of Family Studies*).

Under the initiative, The Fruit Box Group will donate 25,000 boxes of fresh fruit, vegetables, milk and bread over the course of 2017. The group is investing up to $400,000 in the pilot program in Melbourne and will assess its impact as it is rolled out, with a view to a national program and a public charity in the future.

Wellbeing is at the heart of The Fruit Box business, which was founded on the idea that fresh fruit in the office would encourage healthy snacking. In 2007, The Fruit Box began to explore ways to give back to the community through food rescue programs – it currently donates 3 tonnes of fruit (15-20,000 pieces of fruit) per week to organisations such as Fareshare and Oz Harvest. But CEO and founder, Martin Halphen, felt there was still more that could be done.

Strong business growth – which has seen the company go from a fresh fruit domestic delivery service with around 300 customers in 2000, to a national

Martin Halphen Fruit Box Group Founder

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workplace delivery company with a current turnover in excess of $50m – is now enabling ‘The One Box’ initiative.

“As our business grows, so does our corporate social responsibility,” Halphen says, “In a plentiful country like Australia, it’s shocking that so many families are going without. We believe that one box of fresh produce each week can make a real difference to families in need, hopefully creating a healthy foundation for children now and having a lifetime influence on health.”

The Fruit Box Group has worked closely with local community agencies to identify the initial 1,000 families.

Key collaborations with Fareshare for distribution of the boxes and La Trobe Business School – which will collect and analyse impact data over the program’s first 25 weeks – strengthen this innovative CSR program.

Sharee Grinter of West Footscray Neighbourhood House, one of the partner agencies involved says, “This kind of valuable support from businesses to services like ours gives us greater capacity to offer tangible support to more families.

“With fresh food so expensive it’s often the first to fall off the list when resources are stretched, so a weekly box of good quality nutritious food will have a huge impact on the health and wellbeing of families in need,” Grinter says.

The One Box will be launched officially on 18 May 2017 at The Fruit Box Group’s Melbourne Headquarters in Kensington.

BFM

Former NAB CEO Named Chairman of Whitecoat

Australia’s most comprehensive online healthcare provider directory and patient review site, Whitecoat, has announced the appointment of former head of National Australia Bank, Cameron Clyne, as their inaugural Chairman.

Clyne is one of Australia’s most respected business leaders, and joined the digital healthcare start-up in April.

Clyne served as CEO of the National Australia Bank from 2009 until 2014 – guiding the bank through the most difficult years of the global financial crisis.

Announcing Clyne’s appointment, Whitecoat CEO Matthew Donnellan says, “Cameron Clyne’s experience and passion for improving the transparency and decision-making of every day Australians is invaluable to Whitecoat and this will have a significant impact on the healthcare journey of millions of Australians.”

Founded by nib health funds, Whitecoat now counts Bupa Australia and HBF Health as partners who together make up approximately 43% of the private health insurance market.

Clyne says he is enthusiastic about the future of Whitecoat and he is “attracted by the potential of the Whitecoat platform to empower all Australians to better understand their healthcare options”.

The Whitecoat platform aims to help consumers understand what their best options are when it comes to healthcare providers and how much things will cost, as well as inviting patients to share their experiences. Whitecoat recently expanded the platform to include medical specialists. To date more than 2.2 million users have visited the site to search, book, compare and review their healthcare experience.

“I am looking forward to being part of an innovative healthcare start-up that allows many Australians to make better and more informed decisions about their treatment and providers,” continued Clyne. BFM www.businessfirstmagazine.com.au

BUSINESS SNAPSHOT | BFM

Project managers need to skill-up to thrive in the “transformation economy” The professional project manager might become a thing of the past – unless he or she evolves to embrace the new transformation economy, a new survey has found.

New research by AXELOS suggests that the project manager of the future will be valued above all for creativity, flexibility, agility, emotional intelligence and alignment with the strategic goals of the business or organization. 90% of PMs currently say they need a stronger strategic vision that aligns with the goals of the business.

Over 1.8 million people are employed in project management roles across Australia, covering the public sector and commercial sectors such as IT, financial services, construction, engineering, pharmaceuticals, health and manufacturing. The numbers are set to increase dramatically over the next 10 years, according to 76% of project managers, as project management moves from being a specialist discipline to a generalist business skill.

For full-time PMs who are able to skill up and bring agility, creativity and flexibility to projects, the rewards

will be great: they will benefit from higher earnings as they tap into the gig economy, while professionals who can drive the strategic organisational vision and achieve business transformation will be rewarded with senior management roles and even welcomed onto the board.

The methodology has been updated to reflect developments in business practices over the past decade and now places an unprecedented emphasis on tailoring projects to the specific needs and objectives of an organisation and its environment. It is also now better aligned with the wider AXELOS Project and Programme Management (PPM) portfolio, including MSP® (Managing Successful Programmes) and M_o_R® (Management of Risk) The survey covered 187 senior project managers, representing such organizations as NHS Blood and Transplant, the Crown Prosecution Service, VISA, Meggit PLC and the Ambition Group. Most of them (76%) feel that the job title ‘project manager’ will, over time, be superseded by ‘business manager’, while the title ‘transformation director’ will define the

supercharged PM of the future.

Six out of ten believe that artificial intelligence and machine learning will have a profound impact on the profession: 59% say that automation will replace many routine PM tasks, while 90% predict that project risk will increase, requiring PMs to develop new skills to overcome this challenge.

At the moment, PM’s too often seem to lack the strategic skills and vision required to accelerate their career: 90% of respondents say that they need to be better at understanding and aligning themselves with the strategic vision and goals of their organization. If they want to survive and thrive in the brave new world of business, they need to sharpen their skills in key areas: strategy, business analysis, change management, organization[al] diplomacy, influencing and relationship-building.

Eight out of ten PMs (84%) agreed that agile working practices will only grow in importance, becoming standard across all industry sectors, not just software development and IT. With clients and stakeholders already wanting to achieve results faster and more flexibly, 89% of PM’s are aware of the need to up their game. BFM

TechnologyOne Foundation to get 500,000 children out of poverty Australia’s largest enterprise software provider TechnologyOne (ASX:TNE) has announced an annual grant to Opportunity International Australia, through the TechnologyOne Foundation, which looks to microfinance 500,000 children out of poverty over the next 15 years through an innovative entrepreneurial approach.

The TechnologyOne Foundation is looking to break the poverty cycle for generations by supporting an innovative microfinancing approach to charitable giving through Opportunity International Australia (Opportunity Australia).

Opportunity Australia, a pioneer of socially-focused microfinance, was established by Australian entrepreneur David Bussau more than 40 years ago.

David was living in Indonesia and he recognised one of the main causes of poverty was lack of access to credit. He observed how farmers would borrow money from loan sharks or land owners with no hope of paying it back, getting into a spiral of debt not only for themselves but their whole family. In www.businessfirstmagazine.com.au

many cases their children would need to work to support the loan, forcing them to leave school at a young age and not complete their education.

The TechnologyOne partnership with Opportunity Australia will provide small loans to enable families to grow businesses, earn regular incomes and create safety nets for the future. Since 98% of these small loans are repaid and then re-lent to other families, the impact creates a ripple effect within communities.

The focus for the TechnologyOne Foundation is to work with grassroots charities that make a tangible difference to disadvantaged communities, focused on underprivileged youth. The downstream benefits of this microfinancing endeavour will see the translation of multiple small investments, into a regular income for thousands of families, with a newfound ability to obtain nutritious food, safe shelter, medicine and a better education for children.

“With this partnership, we’re looking to create a sustainable change, with a

goal of getting more than 500,000 children out of poverty.

“Investing in helping people to help themselves and their families, through small, structured finance, is a hand up rather than a hand out, and creates a long-term, sustainable path out of poverty.

“I am excited about supporting an initiative that resonates with me on a personal, entrepreneurial level, aligns so closely with the core goal of the TechnologyOne Foundation and that can have such a significant impact over the long-term.

“We’re making this commitment because it is the right thing to do. As a large, successful company we have the capability and capacity to make a difference, and to encourage those in our community to do the same” Mr Di Marco said.

Small loans in combination with creativity, perseverance, determination and skills can enable families living in poverty to kick start and grow businesses,” Mr Dunn said. BFM

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A DEEPER LOOK INTO JAPAN AND CHINA’S DEBT PROBLEMS The prevailing market view on the region remains negative, mainly centering on China’s debt problem and general doubts about Abenomics. In this article, Yu-Ming Wang, Global Head of Investment and Chief Investment Officer, Internationalfocus of Nikko Asset Management reflects on some aspects of this negativity from a sovereign balance sheet perspective and concludes that the potential dangers are overstated.

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ASIA| BFM

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have previously written about investing in the Asia Pacific region and why it is crucial that investors take a balanced and comprehensive long-term investment view (see ‘Capitalising on the Pacific Decade’). The prevailing market view on the region remains negative, mainly centring on China’s debt problem and general doubts about Abenomics. This article focuses on some aspects of this negativity from a sovereign balance sheet perspective and concludes that the potential dangers are overstated.

When analysing stocks, investors consider both balance sheet and income statements.

But when it comes to sovereign analysis, analysts often focus more on the latter, which consist of ‘flow’ related economic data (such as GDP, trade, employment, production, capital flow, government budget) but place less importance on the former.

Regarding a sovereign’s balance sheet data (national debt, current account), there is a tendency to focus solely on the government itself, ignoring the household or corporate sectors. Focusing on flow data makes sense for an open economy such as the US, where most of the productive sectors of the economy are held in the private sector via capital markets. The government plays a limited role on the asset side of the aggregate balance sheet. However, it can lead to incomplete or misleading conclusions in the cases of Japan and China.

JAPAN: THE MISCONCEPTION OF TOO MUCH DEBT One of international investors’ major concerns regarding Japan is the government’s high debt level, without taking into account the household and corporate sectors.

However, Japan’s national wealth largely resides in the household and corporate sectors, which makes the government’s heavy debt less of a concern. It also means that Japan is much less vulnerable to the sort of capital flight by offshore investors that often triggers financial crises.

As of 2014, the household sector’s financial net worth stood at 280% of GDP1, which

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represents one of the highest levels globally and compares well with US at 260%. In contrast, the government’s debt to GDP ratio has risen significantly over the past two decades, from 67% in 1990 to 248% in 20152. In effect, the government has been forced to borrow to stimulate its economy because the household and corporate sectors refuse to consume and invest, instead choosing to save. So while the income statement of the country has remained flat for the best part of a decade, the national wealth is strong and Japan is able to export those savings to finance other countries’ deficits3.

It’s not just the household sector that has accumulated significant wealth, the corporate sector also has a significant savings glut.

Japanese companies are well known for sitting on large cash positions and being reluctant to invest. Japan’s listed companies hold over USD 1 trillion in cash and 56% of these companies are totally debt-free, i.e. net cash4.

Japan’s economy has effectively become similar in position to a wealthy, ageing rentier, living off years of accumulated savings. The country’s strong balance sheet position allows the government room to experiment as it aims to change the deflationary mindset of an entire population and stimulate private demand. A bank run scenario is highly unlikely in Japan, which is why comparable debt analysis for heavily indebted countries is not relevant.

Most sovereign analysis on Japan ignores the wealth residing outside the government sector and overemphasises the government’s deficit spending. The push for a higher sales tax, due to concerns about the government’s high debt ratio, was the wrong prescription for Japan. Prime Minister Abe’s first consumption tax hike was a costly policy error for Abenomics as it unwound the momentum and positive early effects from the government’s stimulus programme. The recent decision to postpone the second hike was the right call.

The country’s strong balance sheet also explains the ‘safe haven’ status of the Japanese Yen and its

recent strength. Other reasons for Yen strength include the country’s surging current account as a result of a significant change in the net trade balance from 2014 to 2016 due to lower oil imports and because declining inflation expectations, not nominal interest rates, are driving foreign exchange rates. Real interest rates in Japan have actually been rising more than the US, because expected inflation rates are collapsing5.

Abenomics was initially quite effective for the economy and the Nikkei until the first sales tax hike took place in 2014. The BOJ’s ‘Halloween easing’ in 2014 further pushed the Yen from USD 110 to 120 and the Nikkei up to 20,000. However, without further action, the Yen strengthened for the reasons stated above and the Nikkei retreated to 2014 levels.

In our view, the Yen will tend to strengthen unless BOJ Governor Kuroda’s resolve to raise inflation expectations regains credibility.

Unfortunately, the BOJ’s monetary policy has been doing much of Abenomics’ heavy lifting over the past couple of years and has few bullets left. Further bond buying and even more negative rates have lost their potency because these monetary signals are not affecting the demand side of the economy. What is required now is even stronger fiscal policy. The combination of strong fiscal and monetary policies should help to raise inflation expectations and lower the Yen. The question is not if the BOJ and the government will act, but when and how. Recently, market participants have been openly debating the possibility of debt monetisation or ‘helicopter money’ in Japan. In my view, when quantitative easing and NIRP are coordinated with a stronger stimulus programme, the effect on the economy and general inflation expectations will be similar to more controversial forms of monetary policy. The difference between this and the BOJ deciding to directly underwrite the debt incurred by the Ministry of Finance is merely a matter of semantics.

China saves too much, which leads to poor asset allocation decisions

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The market has been deeply worried about China’s ongoing debt problem and rightly so. China’s total debt to GDP has risen to 240%, up from 160% a decade ago6.

Given the speed of the increase, many analysts fear that it will lead to financial turbulence. However, they are ignoring the asset side— the problem of too much debt also can also be interpreted as a problem of ‘too much savings’7.

China is one of the world’s largest savers, with an extraordinarily high savings rate of almost 50% of GDP8. It is the high savings nature of the Chinese economy that is the source of its over-investment and over-lending. Because the capital system is closed, investment flows out of China are strictly controlled.

Fears of a hard landing based on a debt crisis are, in my view, overexaggerated and misunderstand how China’s economy operates.

Because of this gigantic pool of savings, China is able to finance its investment programmes itself with little assistance from foreign capital. Currently, foreign participation in domestic equity and bond markets is fairly limited.

Since most of China’s liabilities are domestically held and matched by domestic assets and the financial

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system is not market-driven, a Lehman scenario is highly unlikely.

This is particularly true because the majority of corporate debt lies with the centrally controlled stateowned enterprises (SOEs).

Much of the increase in corporate debt has been directed by the central government as part of its execution of fiscal policy. Due to poor asset allocation decisions, there are a significant number of ‘zombie’ enterprises. However, rather than remaining in denial, Beijing is at least acknowledging the problem. Although progress is slow, it has embarked on a process of improving the competitiveness of SOEs by reforming those burdened by debt, mismanagement or overcapacity. In an effort to reduce excess capacity, the government has stated that it will close some of the ‘zombie’ enterprises (with a primary focus on the coal and steel sectors) that it believes are weighing down the economy.

Another area of focus for Beijing is non-performing loans (NPLs).

Analysis conducted by Peter Monson, a senior equity analyst on Nikko AM’s Asian equity team, suggests that China’s NPL ratio could actually be significantly

higher than official numbers suggest, at somewhere between 10-15%. Chinese banks are still amongst the most profitable in Asia on a pre-provision basis and, as such, their ability to absorb fresh NPLs remains relatively robust. At the lower end of our range, we estimate that it would take Chinese banks two years of pre-provision operating profits to cover the losses, or fresh capital equivalent to 15% of GDP. At current levels, Chinese banks do have the earnings capacity to absorb up to 20% NPL formation over a five-year period.

However, in this event it is likely that earnings would come under pressure from other drivers such as slower loan growth, interest spread compression and/or lower non-interest income. Under this scenario, we would likely see some form of state bail-out or capital injection. To put this in perspective, the 1999 banking bailout required the central government to provide a cash injection equal to 25% of GDP. Although the NPL situation is hardly ideal, we do not expect it to lead to a Lehman-type scenario.

With its strong liquidity, current account surplus and centrally www.businessfirstmagazine.com.au

ASIA| BFM

controlled credit system, China can well afford even the more pessimistic of our scenarios and ensure the pace of NPL formation remains manageable.

Beijing is still trying to figure out the path forward but it is clearly focusing on reform as its main tool, trying a number of solutions simultaneously, such as a debtfor-equity swap, SOE clean-up, securitisation of NPLs and selling bad loans to asset management companies. In the meantime, however, defaults are ticking up and bankruptcy is happening with higher frequency. The extent to which China is successful in implementing structural reforms will be a decisive factor in terms of its debt resolution. It needs to be proactive in dealing with rising bad debt, rather than ignoring or hiding it. Pursuing supply-side structural reform rather than further stimulus policies should provide more sustainable growth in the long term, although the road may be longer and harder.

It is also important to note that the government must balance social stability alongside this supply-side reform and this is one of the main reasons why there cannot be any quick and easy solutions. Beijing will want to avoid the sort of wide-scale unemployment that occurred in the last round of major structural reforms in the late 1990s and early 2000s. Nevertheless, if the government is able to achieve these necessary, but painful reforms and resolution of NPLs, it would be a positive catalyst for China’s markets.

IF INTEREST RATES RE-PRICE HIGHER, EQUITY MARKETS IN JAPAN AND CHINA MAY SURPRISE Many countries in Asia Pacific, including Japan and China as highlighted in this article, benefit from having strong national wealth and household balance sheets. Developed countries with sufficiently strong balance sheets have been experimenting with monetary policy in a manner and to an extent that was unimaginable even a few years ago. However, what central bankers may be starting to realise is that these www.businessfirstmagazine.com.au

policy experiments have reached a limit. No matter how low rates are, corporations and household sectors alike continue to save.

Worse still, these extreme forms of monetary policy have distorted wealth distribution and caused such income inequality that voters are revolting. The UK’s ‘Brexit’ referendum result should serve as a warning that political risks may be starting to dominate economic considerations.

Current political debate ranges from the need to provide a coordinated fiscal response to the global slow growth problem to more populist and isolationist movements in a number of countries. Given the combination of this geopolitical instability and slow global growth, market consensus is that interest rates will remain low to negative for a long time to come. This belief is driven by deflationary fears and the saving-over-spending mindset seen in many of the world’s households and corporations, compounded by central banks’ market-distorting behaviours. This uncertainty is leading to questions over the ‘cost of money’, which is fundamental to all asset-pricing decisions.

The fragility of the global economy’s unstable equilibrium has been made clear in 2016 as fears about China in January and the Brexit result in June unsettled the market. The uncertainty of Japan’s next policy move, China’s resolution of its NPL problem, Europe’s solution to its identity crisis, and America’s choice of leader all reinforce the ‘cost of money’ conundrum facing investors. In this environment, I’m wary of duration risk from long bonds, which are pricing only one outcome, while the opposite scenario may be increasing in probability.

If interest rates do start to reprice higher, it may mark an end to the 35-year bull market for bonds.

The implications for equity are not as straightforward. Normally, when the discount factor in the present value calculation of future earnings rises, the stock price will decline.

But, if the market concludes that the unstable equilibrium and

slow growth are actually a result of artificially low rates and that higher rates will lead to more normal inflation expectations, higher consumption and better corporate earnings, then it may actually lead to a stronger bull market in equities. That would be especially true where inflation expectations are lowest (Japan), or earnings prospects and valuations most depressed (China). This is why, in my view, we should be prepared for higher equity prices in Japan and China if we start to see success from Japan’s fiscal measures and China’s bad debt resolution programme. BFM Yu-Ming Wang Global Head of Investment and Chief Investment Officer, International Yu-Ming Wang has a wealth of experience in the asset management industry with a notable track record particularly in managing global fixed income. As Nikko AM’s Global Head of Investment, he orchestrates the work of Nikko AM’s global investment team, which covers staff in 9 countries.

He joined Nikko AM as international CIO in January 2013. He assumed the position of Deputy President in addition to his roles as international CIO in April 2014.

Footnotes 1 Household financial net worth and GDP per capita data sourced from OECD and IMF, respectively.

2 IMF Japan general government gross debt as percentage of GDP, sourced from Bloomberg.

3 Japan has the second-highest net international investment position, according to a BCA report, 8 January 2016.

4 Data as of end of FY 2015, according to a report by Nikkei Asian Review, 11 June 2016: “Japan Inc.’s cash holdings expand to record $1tn”.

5 Measured by JPY Inflation Swap Forward 5Y5Y, as tracked by Bloomberg. Expected inflation declined from 0.71% at the beginning of 2016 to zero on July 6.

6 China’s total debt as a percentage of GDP as tracked by Bloomberg.

7 Similar views were expressed in an article from BCA’s China Investment Strategy, 15 June 2016.

Gross savings (% of GDP) data sourced from the World Bank.

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BFM | ASIA

The real trade war

There has been much concern lately about the new US administration’s trade policy.

Taking a step back and looking at global trade numbers, we can draw a number of conclusions that might explain America’s new thinking on trade.

By Yu-Ming Wang, Global Head of Investment and Chief Investment Officer, International

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here has been much concern lately about the new US administration’s trade policy.

Under Trump’s ‘America First’ ideology, the US has pulled out of the Trans-Pacific Partnership (TPP) and is looking to re-negotiate the North American Free Trade Agreement (NAFTA). What other changes could a more inwardlooking America make to its trade policy, and why are global trade deals suddenly falling out of favour?

Taking a step back and looking at global trade numbers, we can draw a number of conclusions that might explain America’s new thinking on trade. First, the US accounts for a shrinking portion of global merchandise trade, while China has surpassed it as the world’s #1 exporter.

Chart USA, exports – Chart 1: USA,1: China exports China – share of global total

Chart 2: Imports – share of global total Chart 2: Imports – share of global total

China receives 44% of all Asian merchandise exports and is by far the largest export destination. The US is a distant third, with a 20% share of Asian exports.

Chart 4: Asia’s main export markets

Source: World Trade Organization, 2016

In fact, China already holds the #1 importer spot if trade within NAFTA is excluded.

Source: World Trade Organization, 2016more Another interesting observation from Chart 2 is that China imports significantly

from Emerging Markets than EU or North America. China has also caught up to rival the US as the largest importer of services.

In fact, China already holds the #1 importer spot if trade within NAFTA is excluded. Another interesting observation from Chart 2 is that China imports significantly more from Emerging Markets than EU or North America.

China has also caught up to rival the US as the largest importer of services.

Chart 3: Service imports – share of global total

Source: World Trade Organization; India, Indonesia, Korea,India, Malaysia, Philippines, Singapore, Source: World Trade Organization; Thailand, Vietnam trade with China as of 2015

Indonesia, Korea, Malaysia, Philippines,

Singapore, Taiwan, Thailand, Vietnam trade

When we see the numbers in this light, the protectionism of the Trump admin with China as of 2015 is perhaps less surprising. Faced with the threat of an increasingly dominant

the new US trade stance could be a last-ditch attempt to seize back influence

Source: World Trade Organization, 2016

Source: World Trade Organization, 2016

with China is shrinking.

Within Asia, the waning trade profile of the US is even starker. China receives 44% of all Asian merchandise exports and is by far the largest export destination. The US is a distant third, with a 20% share of Asian exports.

share of global total While the US remains the largest market for global merchandise exports, the gap Source: World Trade Organization, 2016

Chart 3: Service imports – share of global total Source: World Trade Organization, 2016

While the US remains the largest market for global merchandise exports, the gap with China is shrinking.

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Chart 4: Asia’s main export markets

we see the numbers in the When global arena. this light, the protectionism of the Looking beyond the trade numbers Trump administration is perhaps Trade numbers don’t tell the full story, however. Let’s examine the supply cha less surprising.

Faced withproducts the ever made. The iPhon the iPhone, surely among the most profitable retails at USD this, USD 257 or roughly 40% goes to Apple, other US threat of658. anOfincreasingly dominant companies take home USD 70, Taiwan, Korea and Japan pocket between 5% China, the new US trade stance 10%, and China, as the assembler and shipper, nets less than 3% of the reta could be a last-ditch attempt to price . seize back influence within the global arena.

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Within Asia, the waning trade profile of the US is even starker.

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ASIA| BFM

LOOKING BEYOND THE TRADE NUMBERS Trade numbers don’t tell the full story, however. Let’s examine the supply chain of the iPhone, surely among the most profitable products ever made. The iPhone 7 retails at USD 658. Of this, USD 257 or roughly 40% goes to Apple, other US companies take home USD 70, Taiwan, Korea and Japan pocket between 5% and 10%, and China, as the assembler and shipper, nets less than 3% of the retail price 1.

Apple iPhone 7 Retail Price = USD $658 Apple iPhone 7 Retail Price = USD $658

Source: Nikko AM estimates, 2017

Source: Nikko AM estimates, 2017 This quick analysis reveals where the real value in today’s global economy lies. It is not within the components, the assembly, or the transport of a product. In fact, the

real gold lies in the Intellectual analysis Property (IP) portion of the supply chain,where which in the This quick reveals case of the iPhone, mostly sits in Silicon Valley. It is, thus, not surprising that San the real value in global Francisco and the Bay Area are the mosttoday’s expensive real estate markets in the US today. economy lies. It is not within the The real competition is for Intellectual Property components, the assembly, or the Currently, the US still dominates the global economy value chain. It continues to be a leading IP originator in various from smartphones, In to shale oil, to artificial transport of afieldsproduct. fact, the intelligence. That said, we shouldn’t discount China’s capabilities on this front. It has recently surpassed US in terms patent filing . Its research and development real goldthelies inofthe Intellectual (R&D) spending already exceeds that of Europe, and is closing in on the US. Property (IP) portion of the supply In its ‘Made in China 2025’ initiative, Beijing has set out clear plans to upgrade its industries and move up the global value chain. Key sectors it is targeting include chain, which in the case of the semiconductors, robotics and biopharmaceuticals. iPhone, mostly sits in Silicon Valley. It is, thus, not surprising that San Francisco and the Bay 2

3

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Area are the most expensive real estate markets in the US today.

THE REAL COMPETITION IS FOR INTELLECTUAL PROPERTY Currently, the US still dominates the global economy value chain.

It continues to be a leading IP originator in various fields from smartphones, to shale oil, to artificial intelligence. That said, we shouldn’t discount China’s capabilities on this front. It has recently surpassed the US in terms of patent filing2. Its research and development (R&D) spending3 already exceeds that of Europe, and is closing in on the US. In its ‘Made in China 2025’ initiative, Beijing has set out clear plans to upgrade its industries and move up the global value chain.

Key sectors it is targeting include semiconductors, robotics and biopharmaceuticals.

IT’S ALL ABOUT THE PEOPLE Many US brands first found success in the large domestic market before going on to become multinational giants. In the same vein, the sheer size of China’s population could underpin its success in the competition for intellectual capital.

The rapid rise of the Chinese middle class has created a huge domestic market for cars, smartphones and internet. If Chinese firms capitalise on this, the emergence of new

Chinese global brands would be inevitable in the near future.

I remain bullish on the prospects of China and the wider Asian region.

Looking past the noise surrounding US protectionism, we see that Asia is less dependent on US trade than we would expect. And looking past the noise surrounding global trade numbers, we see that the real trade war is for IP, innovation, and talent, to be fought on the turf that is Asia’s burgeoning class of middle income consumers.

In this arena, I believe that Asia’s population advantage and its sizeable domestic market position it favourably within the shifting global landscape. BFM This text was presented in a speech at the Nikko AM sponsored ‘Global Interdependence Center Conference’ in Singapore on February 20, 2017.

Footnotes 1. Source: Nikko AM; estimates based on proprietary research; proportion of non-material cost components based on assumption that proportions would be similar to those of the iPhone 4 2. Source: World Trade Organization, 2016 3. Source: World Trade Organization, R&D spending as a percentage of GDP, 2016

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BFM | ASIA FOCUS

SOUTH EAST ASIAN MINING AND GENDER DIVERSITY ISSUES South East Asia’s largest mining investment conference, was successfully held in Marina Bay Sands, Singapore from 28 – 31 March, bringing together more than 300 global and regional investors, miners and service providers for networking and business partnerships.

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ining Investment Asia is a premier global mining event where developers, explorers & miners showcase projects to investors from around the world and mining technology, equipment and services companies exhibit their solutions, create demand and launch new products.

Here is a snapshot: South East Asian Focus At the conference, with more than 60% of attendees based within South East Asia, mining issues from this region were at the forefront of discussions.

Key regional players clarified misconceptions and provided first hand insights into current issues such as mine closures in the Philippines, Freeport-McMoRan disputes with the Indonesian government as well as coal and nickel policies in Indonesia.

Besides the South East Asian centric focus, attending investors and analysts also shared their insights on global commodity trends and investor outlook.

On a wider pan Asia Pacific perspective, the Mongolian, Indian and Australia mining industries were also in the spotlight with presentations by various governmental representatives from these countries.

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ASIA’S INAUGURAL ‘WOMEN IN MINING DAY’ ‘Women in Mining Day’ was launched on 28 March as part of the Mining Investment Asia to relook at the issue of gender diversity in the mining industry, especially within the Asia Pacific region. A macro view on this issue, in light of the 2016 announcement by BHP Billiton for 50% female workforce by 2025, was shared by Ms Yvonne Tan, HR Business Partner at BHP Billiton (Singapore) and Chairperson of the Diversity Committee at Women in Mining and Resources (WIMAR) Singapore.

Initiatives to improve the role of women in mining were also shared by speakers from the Philippines, Australia and China at panel discussions and presentations. With an audience of 50% men, ‘Women in Mining Day’ underlined the importance of close cooperation between both genders for long term progress on the issue of gender diversity.

Mining Investment Asia team would like to extend our sincere thanks to the International Women in Mining (IWIM) and Women in Mining organisations from Singapore, Mongolia, Philippines

and British Columbia, Canada for their support in making this inaugural ‘Women in Mining Day’ a success.

Global Profile of Attendees Mining Investment Asia seeks to attract global mining and investment players to South East Asia, in particular Singapore, and this is evident from the diverse profile of attendees seeking new business opportunities here.

Besides Asia, exhibitors and representatives from the Middle East, Africa, Europe, Latin and North America were also present at Mining Investment Asia to raise awareness about new exciting business opportunities in their home countries and seek fresh capital through this event.

This is part of the Mining Investment Series which has been organised by Spire Events annually in Singapore since 2015. This series has expanded beyond Asia and was successfully launched in Nigeria, Panama, Oman and Botswana with new upcoming conferences to be held in Germany, China, Canada and Argentina.

More details on the various Mining Investment Conferences can be found at www.spire-events. com. BFM www.businessfirstmagazine.com.au

ASIA FOCUS| BFM

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BFM | FEATURE

MEDICAL CANNABIS: THE INTRODUCTION

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FEATURE| BFM

Cannabis is currently being liberated across the globe as government departments move to legalise medicinal cannabis having recognised its health benefits.

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ecreational cannabis, like medicinal cannabis, has also been on governments’ agendas.

In America in 2016, California, Nevada and Massachusetts all voted to legalise recreational cannabis, paving the way for increased commercial expansion there.

However for the purpose of this feature, over the next few pages we’ll concentrate on medicinal cannabis and the commercial opportunities legalization open up.

Let’s first look at what medicinal cannabis is.

MEDICINAL CANNABIS: THE FACTS The term medical marijuana refers to using the whole, unprocessed marijuana plant or its basic extracts to treat symptoms of illness and other conditions.

In the US scientific study of the chemicals in marijuana, called cannabinoids, has led to two FDAapproved medications that contain cannabinoid chemicals in pill form. Continued research may lead to more medications.

After being used worldwide for centuries, cannabis was targeted heavily in the US in the 1930s. Part of the motivation for this was due to the threat hemp posed to cotton and other established crops used in fabrics, ropes, paper etc., due to its superior qualities as a base material for these goods.

It was also targeted as the THC effects in cannabis were causing serious health issues. THC is responsible for the mind-altering effects of cannabis. Yet the other prime active ingredient is CBD (cannabidiol), which has proven to have wide-ranging health benefits.

With this in mind, governments around the world are now opening their minds to the benefits of medicinal cannabis and its naturally occurring and very medicinally-promising active ingredients.

Fast moving companies such as MMJ Phytotech, MGC Pharmaceuticals, Creso Pharma and Auscann now front and centre of the medicinal cannabis movement as they look to profit from these changes in legislation and impact a pharmaceutical industry that today stands at $916 billion globally.

When you consider that recent studies show exceedingly promising therapeutic potential of the cannabinoids in the treatment of devastating diseases such as Alzheimer’s and cancer, then there is every chance that medicinal cannabis could be the next big industry.

“We want to make supply available but it has to be legal,” Mr Hunt said.

“It has to be safe and we want to make sure this medicinal cannabis is available but on the same basis as any of the serious drugs and medicines that can only be dealt with through prescription and through a very rigorous medical process.”

So what does this mean from a commercial perspective?

Essentially, those businesses with a first to market approach could reap serious rewards if their products serve a wider community purpose.

Through the following pages, we’ll look at why medicinal cannabis is gaining traction, who the emerging players are and what we can expect from this burgeoning industry. BFM

MARKET OPEN On February 22 this year, Federal Health Minister Greg Hunt announced the government would boost local supply and loosen importation laws around medicinal cannabis and means patients will no longer have to wait months to access it for medical use. www.businessfirstmagazine.com.au

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BFM | FEATURE

The business of medical cannabis A raft of new Federal legislation that initially legalised the use of medical cannabis and recently approved the importation of the product to fill a supply gap will benefit a number of ASX listed companies that have been active in growing and distributing the product in overseas regions.

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nly a limited amount of medicinal cannabis is currently being produced in Australia, and with the new legislation coming into effect immediately it is anticipated that demand will substantially outstrip supply.

Investors have already picked up on the story with some stocks surging in anticipation of positive news and others just recently rerating sharply, particularly those that are equipped to immediately export into the Australian market.

It should be noted that share trading patterns should not be used as the basis for an investment and past performance may or may not be replicated. Those considering the two stocks mentioned in this article should seek independent financial advice.

One such company is MGC Pharmaceuticals (ASX: MXC).

MXC is a European based specialist medical cannabis group. The company’s founders were prominent figures in the Israeli medical cannabis industry and the core business strategy is to develop and supply high quality phytocannabinoids resin extract for the growing demand in cosmetic and medical markets in Europe, North America and Australasia.

While the company’s share price movement following the announcement of changes in legislation was substantial, MXC’s run began at the start of February with news that MXC had completed the acquisition of Czech based medical cannabis company Panax Pharma, immediately enabling it to conduct medical cannabis breeding research.

In mid-February the company commenced a clinical study to assess the efficacy of a medical cannabis formulation in children and adolescents with treatment resistant epilepsy. Results from the study will be instrumental in the company’s development of its own proprietary pharmaceutical grade product for epilepsy treatment.

This is a substantial market given that in Europe alone there are close to 1 million children and young people with epilepsy, and a further 2 million people

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FEATURE| BFM

aged between 20 and 64 suffering from the condition which is either uncontrolled or inadequately controlled by prescription pharmaceuticals.

On the distribution front, MGC Derma is in advanced discussions with cosmetic distributors, retailers and e-tailers in the UK and Europe with former Revlon Director, Malcolm Kemp looking to commence sales into these markets at some stage in 2017.

The company received its first major sales order and commencement of revenues from its Czech Republic distribution deal for its MGC Derma cannabidiol-based cosmetic products with Czech Medical Herbs s.r.o.

(CMH).

The sales order was expected to generate revenues of $65,000, part of the entire distribution agreement valued at circa $500,000 in annual gross sales.

Having experience with supply chain management, including adherence to proper distribution protocols should provide MXC with an added advantage in terms of being accepted into new markets such as Australia.

CRESO PHARMA Creso Pharma (ASX: CPH) is another company with a unique take on the market that is currently keeping investors happy.

On February 14, Creso announced it had achieved solid progress with the first fully plant-based cannabidiol nutraceutical product which assists in the management of anxiety and stress.

From a broader perspective, the anxiety and stress management industry is an important one for CPH as 2015 data indicates the market was valued at US$3.5 billion.

CPH develops cannabis and hemp derived therapeutic grade cannabidiol nutraceuticals and medical cannabis products with wide patient reach for human and animal health.

The group has registrations in Switzerland for its products and worldwide rights for a number of unique and proprietary delivery technologies which enhance the bioavailability and absorption of cannabinoids.

CPH is already generating revenues via its subsidiary, Hemp-Industries.

CPH is targeting Switzerland, Europe, the Middle East, the Gulf region and Latin America with its commercialisation partners. It is estimated that this market will be worth US$39.7 billion by 2021.

It seems the public perception surrounding cannabis is shifting as people become educated on the benefits the plant heralds in the medical space, let alone all the other benefits it offers in other industries, such as the use of hemp, biofuels and food.

Clinical trials around the world are providing strong evidence that cannabis helps patients dealing with chronic pain, epilepsy and cancer with little to no side effects.

It is any wonder then, that commercial opportunities are opening up for companies who can find their own market niche. BFM

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BFM | FEATURE

Medical cannabis products hit Victorian shelves Tilray, a GMP-certified global leader in medical cannabis research and production, has successfully exported medical cannabis products to the state of Victoria in Australia.

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ccording to the government of Victoria, 29 critically ill children will become the first patients in the Australian state to legally access medical cannabis when the Tilray products are distributed. Tilray products are currently available to certain patients in other Australian states and in New Zealand under special access pathways for unapproved medicines.

“This is too important to wait. That’s why we’re doing everything we can to make sure those families in the greatest need can access this life-changing treatment for their kids as soon as possible,” said Premier Daniel Andrews of Victoria, Australia. “This is the first time in Victoria kids with severe epilepsy will be able to legally access medicinal cannabis.”

“We know this medicine can dramatically change the quality of life for some of Victoria’s very sick kids,” said Victoria Minister for Health Jill Hennessy.

“This means families will no longer have to make the heart-breaking choice between breaking the law or watching their kids suffer.”

“We are proud to be able to offer patients in need access to high-quality, pharmaceutical-grade medical cannabis products,” said Dr. Catherine Jacobson, Tilray director of clinical research. “In this case, the government of Victoria has elected to fast-track the introduction of a medical cannabis product containing a specific cannabinoid, cannabidiol (CBD), for the treatment of seizures in children who have not responded to formally approved anti-seizure drugs. We welcome the opportunity to provide this potentially life-saving treatment to patients in need.”

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Tilray currently supplies pharmaceutical-grade medical cannabis products – including whole flower, oils and capsules – to thousands of patients, physicians, pharmacies, hospitals, governments and researchers around the world for commercial, compassionate access and research purposes.

Tilray became the first medical cannabis producer in North America to be certified in accordance with the European Medicines Agency’s (EMA) Good Manufacturing Practice (GMP) standards in December 2016. GMP certification is the most rigorous standard that manufacturers of pharmaceutical products must meet in their production processes, and it provides regulators and health care providers in countries new to medical cannabis.

GMP certification is enabling Tilray to expand international distribution of its products for commercial, clinical research and compassionate purposes. In 2016, Tilray made history by becoming the first company to legally export medical cannabis products from North America to Australia and the European Union. In 2017, the company is focused on expanding distribution of its products to additional countries in Europe and Latin America.

Tilray is currently partnering with hospitals and universities to supply three clinical trials focused on pediatric epilepsy at Toronto SickKids Hospital in Canada, post-traumatic stress disorder at the University of British Columbia in Canada, and chemotherapy-induced nausea and vomiting at the University of Sydney in Australia. BFM www.businessfirstmagazine.com.au

FEATURE| BFM

MEDICINAL CANNABIS: THE MARKET OPPORTUNITIES The following article which first appeared on finfeed.com, offers excellent insight into the growing medicinal market in Australia and around the world and what we should expect as it flourishes into a full blown industry.

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s Australian laws prohibiting the use of medical cannabis start to lift, some companies see Australia as a base for supplying cannabisbased product not just to the Australian market, but also as a springboard into the Asia-Pacific.

Earlier this year the Australian parliament passed laws which made the cultivation of cannabis for medicinal purposes legal.

The bill was implemented with bi-partisan support from both the House of Representatives and the senate – an all-too rare feat.

In addition to several laws passed by state legislators, the outlook for medical cannabis in Australia continues to look rosy.

Earlier this year MGC Pharma (ASX:MXC), which manufactures a number of dermatological and beauty products using cannabidoil (which is derived from cannabis), set up shop in Israel and Slovenia to work on using the active ingredients of cannabis to help treat epilepsy.

However, it has also made its intentions clear, outlining a plan to enter the Australian market with a ‘five pronged attack’.

MXC managing director Nativ Segev spoke to Finfeed about the Australian market, regulatory changes and what it hopes to achieve in future.

Finfeed: Nativ, thanks for taking the time to talk with us. Let’s start by looking at your entry into the Australian market. Obviously you’re a listed Australian company, but surely it’s a pretty small market to focus on? Is there a sense that the Australian market is a ‘frontier’ opportunity with few entrenched players?

Nativ Segev: There are many reasons why MXC is focusing on Australia, both as a large market for our products (cosmetics, supplements, medicinal), but also as an operational base of growing, production and manufacturing for the entire southern hemisphere including the Asia- Pacific market (Thailand, China, Japan, etc).

Furthermore, we are listed here, so we have a strong desire and responsibility to serve our home market; www.businessfirstmagazine.com.au

we are big believers in being first to market and being leaders in the Australian market.

We have gained significant experience in Israel and Europe that few other companies have in Australia, and so we are hoping the moves we make as a business will inspire and facilitate the growth of a larger, national industry that can start to positively impact Australia’s tax revenue and hard currency (export) revenues, in a very short time.

This includes access to the very interesting and potentially lucrative Asian market, which could be great for Australia, increasing value of trade.

Additionally, Australia encourages entrepreneurship and innovation, two of MXC’s most important standards. We’d be foolish to miss the opportunity as it presents itself to be the leading medical cannabis company in our own country.

FF: It’s amazing to see some of the progress made in North America around medical cannabis, for example in states where it’s legal the use of prescription drugs has gone down – why do you think there’s been a groundswell of support in the US? NS: The support has been rising for the last 10 years worldwide, and especially during the past 4 years.

The reason is simple; Cannabis is saving lives and improving people’s quality of life on a daily basis.

The numbers you are seeing from the US are only the beginning; there is a decline in people using overprescribed and conventional drugs, due to scientific evidence emerging in the US and globally, which support Cannabis treating major illnesses including major Neurological and Oncological ailments with significantly less side effects.

FF: Do you think there is the potential for broad support in places like the US and Canada to have a positive impact on the Australian perception of medical cannabis?

NS: Absolutely. Most of the world looks to the west as leaders in these cases. We are already seeing a shift in the way politicians, doctors, pharmacists and other professionals are looking at the market.

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BFM | FEATURE

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FEATURE| BFM

FF: Are we at a point where it’s generally accepted in Australia that cannabis has a role to play in the medical sphere – or are we still a while away from that point?

NS: I think we are at the tipping point. It’s happening around us, but like any other country it’s a process which still needs time to implement the science and evidence behind ‘Medical Cannabis’. The pace of this progress will be determined first by proper scientific research, then the education of the public and various other stakeholders. As long as the evidence supporting Cannabinoids continues to flow, the fear of the unknown will be eliminated.

FF: Is a lot of the work you’re doing in Australia about articulating to legislators and the broader community the opportunity here?

NS: Indeed. We are focusing a lot of our energies and working with many partners such as Sydney University, where our student cohort created the first Medical Cannabis White Paper. We are working with different organizations to facilitate legislators understanding the importance of a responsible cannabis community in Australia, which will have impact on national public health, revenue generated for taxes, medical advancement and developed technology.

With that in mind, we are working at the highest levels, connecting with Australian politicians and lawmakers, thought influencers and multiple communities of doctors, pharmacists and patients, all of whom will impact the way public and the government think about cannabis and its value as a medicine.

FF: How much of your job now is about creating products – and how much is it about advocacy/ industry leadership and getting that strategy right?

NS: My job is to manage MGC Pharmaceuticals, as a strong, reliable and profitable company. This means overseeing MXC and its various divisions, putting the right effort in the right places, and determining what resources are needed in each of these fields according to its specific demands.

From our experience, in this unique space, you need to spend lots of time in advocacy and education but nevertheless, as a commercial company we need to have products on the shelves, alongside constant research & development to be in the forefront of the industry in all time.

FF: Do you think we’ll see a point where you won’t need to advocate, that it will just be about creating products?

NS: I think we at MXC will always be advocating and actively supporting this idea of responsible cannabis industry, but I think that from certain point it will be called educating and not advocating. More effort will www.businessfirstmagazine.com.au

be on keeping up the awareness and the responsibility of this industry, and therefore we will always have the responsibility to the public, to provide the safest products with the supporting information.

FF: How important is it to grow support within the academic community in Australia?

NS: It is absolutely crucial. We are ahead of the curve as MXC is working in collaboration with University of Sydney and their Community Placement Program to engage in important research on the global and local impacts of Cannabis as a medicine.

Our first cohort published a white paper, which is essentially a state of the union of Cannabis in Australia and an outlook towards the future. Additionally, we are putting out a paper soon that provides a wide look at all clinical studies that have taken place globally using cannabis as the active ingredient. This will give doctors, legislators and researchers a place to start when figuring out the actual implementation of a Cannabis regime here in Australia.

FF: Is part of the issue here in Australia that there appears to be a mix of state and federal legislation in play with seemingly different approaches to the subject – do you think that’s a problem which should be looked at?

NS: I think it will work itself out in the long run.

Unlike America, where this confusion has caused a complex situation as there’s no federal law in place, in Australia it now has a clear foundation set with Federal legislation. Also there seems to be more effort and planning to figure out who is going to lead the way in Australia, which several states are taking into their own hands. At the end of the day the goal of all sides is to provide safe medicine to the public under federal regulation. Such things take time, but we are definitely going the right way to get there.

FF: What should investors be on the lookout for in the next few months?

Many things are going to happen in the next few months, from international operations to the home market, as we are placing the Australian Strategy into motion including commercial regulation and educational programs.

MXC will enter into multinational clinical research in Oncological patients, severe epilepsy and other conditions, moving forward with its Dermatological OTC research as we recently announced with our cbd patch tests for acne and psoriasis conditions in Slovenia. Furthermore, we see an increase in our product lines and market opportunities, and we will increase our cultivation farms to support these operations.

FF: Nativ, thank you for your time. BFM

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BFM | FEATURE

CREATING A NATURAL WORKPLACE Jeff Rodman, Co-Founder and Chief Evangelist at Polycom, Inc. discusses how new ways of working liberate collaboration and creativity.

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n a recent visit to Australia, I had the good fortune of spending time with some local businesses. We discussed digital transformation, innovation and the sweeping changes that companies of all sizes are seeing inside their own workplaces: changes driven by the globalisation of commerce and enabled by the rapid acceleration of technology. In Australia, the pressing need for transformational change is a common issue shared by many companies. This is not surprising, when you consider that a major focus of the government and its Innovation Agenda is identifying new ways to accelerate economic growth, largely driven by advances in technology.

With this influx of technology and connectivity, it’s undeniable that workplaces are moving from the traditional idea of what most of us know as ‘the office’ and this is accelerating worldwide. One of the major effects of this change in the workplace is paradoxical in a way, because it’s also one of the major causes: it represents a migration from artificial, made-up and often inefficient workplaces to natural ones that free people to excel at what they do, independent of their location.

Let’s explore this in more detail.

REDESIGNING THE TRADITIONAL OFFICE There used to be a time when a person’s career path or seniority in an organisation could be tracked by their progression from cubicle to private office. But the way we work today is different – organisations are actively creating more open, more natural and agile workplaces in order for teamwork and collaboration to thrive. They find people are more empowered by working how and where they want, so the focus of workplace design becomes to serve and connect these people rather than merely to contain them Workplace transformation includes fragmentation of the typical design and layout templates of offices, cubicles, and conference rooms into a vigorous diversity of working environments. There are individual workplaces, where we don’t need to have anyone physically nearby (although we can, but we just don’t need them for the task of the moment) and there are group workplaces, where having more people right next to us is part of the experience. In either case, we can be collaborating with other people in multiple locations from a choice of devices.

Each kind of workspace has its advantages, but one of the challenges added by open-office and

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open-group settings is that extraneous noise and distractions increase as partitions are lost and the spaces are opened up. It’s for this reason that workplace innovations are needed that prioritise the user’s experience and this can mean developing new technologies to restore a worker’s quieter and more productive personal environment even when they’re sitting in a busy open area. Once this has been addressed, the worker is once again free to concentrate, whether the choice of work location is a modern open-plan office or local coffee shop.

THE RISE OF SMALL GROUP COLLABORATION As we see, individual workspaces have been shifting from the old-fashioned private office to partitioned open spaces like cubicles, and more recently to fully agile workspaces. In recognition of these changes, we’ve also seen a number of collaboration innovations come to market, such as powerful personal and small-group video solutions and noise cancelling technologies, which are especially valuable in isolating personal interactions and collaborations from the often-distracting places they occur.

I just mentioned the small group; what’s happening in group workplaces is interesting, but it’s a little more subtle in its way. For many decades, groups have gathered in a conference room, most often with a long table running down the middle of a rectangular space and people seated along both sides – often, with the boss or supervisor looming at the end of the table in the ‘power seat’. This has become a kind of standard for many videoconference rooms because the camera is often mounted directly opposite that power seat so it sees the boss best. Unfortunately, this staging is not conducive to group collaboration, because when participants sit in lines, it’s harder for each of them to hear or see anyone but their direct neighbours.

One remedial trend emerging is that on average, conference rooms are getting smaller, as companies take advantage of distributed workplaces and link www.businessfirstmagazine.com.au

FEATURE| BFM

together more smaller groups by taking advantage of interactive collaboration technology, including voice, visual imaging, and data. Over the next few years, advanced audio, video and collaboration products and services will make their way into millions of these smaller meeting rooms (now commonly known as huddle rooms) and into open collaboration environments, making these spaces newly valuable hubs for collaboration. One consequence of this increased usage is that the technology in these areas should support its users’ productivity by providing a high standard of audio and video to enable natural collaboration, both for onsite and remote participants.

Wainhouse Research estimates that there are 30-50 million huddle rooms (defined as a space for 6 or less attendees) around the world. These spaces will play an increasingly important role in group collaborations, and they represent enormous potential for organisations of all sizes.

PROVIDING FLEXIBILITY IN THE WORKPLACE I believe that when a workforce is provided the flexibility to work how and where they feel most effective, it brings creativity and natural communication back into focus. So whether it’s from an armchair or from a standing desk, an agile and flexible workplace becomes about creating the right environment for individuals and teams to work together in order to deliver great results. Incorporating the right technology will provide the seamless communication experience which people in any workplace ultimately require for effectiveness and productivity.

Accounting software and business solutions company, MYOB in Australia offers new insight into what can be achieved with this type of flexibility, having created a dynamic ‘Workplace of the Future’ on the premise of agile working and innovation.

Every day, over 200 engineers and developers across Australia and New Zealand meet to share code, create software, and do all the numerous tasks needed to www.businessfirstmagazine.com.au

keep MYOB humming. What is so phenomenal about their use of technology is that it is not confined to any one meeting room or space – instead, developers and workers are free to walk up to a mobile cart, wheel it to their preferred space and instantly collaborate.

No meeting rooms to be booked, no calendar appointments necessary, and these creative minds are enabled to exchange ideas and plans as they require!

BIG IDEAS FROM SMALL SPACES I’ve often been quoted as saying that there’s a big advantage in starting small – in fact, the company I co-founded first established roots in a San Francisco basement back in 1990!

What we’ve demonstrated, as have many others, is that big ideas can grow from small spaces merely by providing the flexibility and tools for people to connect, share, and come together as teams. As office configurations evolve to meet specific needs, perhaps the desire for that pointless old corner office will fade.

After all, no space is too small for great ideas and teamwork to happen! BFM 1

Australian Government: http://www.innovation.gov.au/

page/agenda 2

Wainhouse Research: http://www.polycom.com/content/

dam/polycom/common/documents/analyst-reports/ wainhouse-research-understanding-the-huddle-room-arenus.pdf

Polycom’s Co-Founder and Chief Evangelist Jeff Rodman, an engineer, writer, pianist, and Polycom Fellow, has been at the forefront of audio and video innovation for most of his career. The holder of over 40 patents, he has taken leadership and entrepreneurial roles in solution development organisations since 1977 with a strong emphasis in human audio and visual communications for broadcast, business and specialised applications. He is a popular participant in industry events and has been featured in numerous keynotes, talks, and panels.

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BFM | FEATURE

IOT SECURITY FROM THE OUTSIDE IN AND INSIDE OUT The Internet of Things (IoT) is a confusing concept. It implies that interconnecting devices is a new concept (it’s well worn), IoT devices are always connected to the Internet (they’re not), and the centre of attention is the IoT device (it’s not). IoT is about converting data to action by extracting and exploiting information from devices around us. That means the integrity and trustworthiness of the data must be beyond reproach, otherwise the results and processes are at risk of being manipulated, intentionally or otherwise writes Anthony Smith.

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ecurity must play an integral role throughout the lifecycle of IoT data, while the data is in motion and at rest. And it is here that we hit the ‘Achilles heel’ of most IoT implementations: they’re untrustworthy due to poor or no security. That’s why IoT network penetrations and data breaches arise in every industry – enterprise, retail, healthcare and consumer.

A recent global study, ‘The Internet of Things: Today and Tomorrow’, commissioned by Aruba, a Hewlett Packard Enterprise company warns that connecting thousands of things to existing business networks will open up new security challenges. Signs of this are already evident, with 42 per cent of Australian businesses currently leveraging IoT admitting to suffering a malware security breach in the past.

The reason is simple. The engineers who design IoT devices are typically trained on process reliability and application-specific architectures. These fall under the remit of operations technology (OT), the goal of which is to make products work as reliably for as long as possible. Cybersecurity expertise sits with information technology (IT) engineers.

The study also found that 88 per cent of organisations in Asia Pacific have experienced at least one IoT-related security breach, the highest in the world. More than half of respondents in Australia (51%) declared that external attacks are a key barrier to embracing and adopting an IoT strategy. This confirms that a holistic IoT security strategy, built on a strong network access control and policy management, will not only protect enterprises but also simplify the security approach for IoT. Until IoT security can shift from the devices that generate the data to the applications that consume them, neither the devices nor the data should be trusted. And if they can’t be trusted, then they shouldn’t be used for business applications.

That lends some urgency to the task of IoT security.

According to Gartner, by 2020, IoT devices will outnumber users with laptops, tablets or smartphones by more than three times. It is predicted that there will be 21 billion IoT devices in use worldwide by this time.

But addressing the shortcomings isn’t a trivial task. The diversity of installed legacy devices is vast, and finding suitable replacements may not be either technically or economically viable, not to mention the disruption that upgrades would cause to on-going operations.

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FEATURE| BFM

The solution is to build trust where it doesn’t exist today by incorporating security features into new IoT devices, and by enveloping legacy devices within a protective bubble. This task can be accomplished by moving the demarcation point for trust as close to the origin of the data as possible by applying layers of protective services within and/or around IoT devices.

Essentially, you want to create a defensive framework in which no device or user is trusted until proven otherwise. The framework should leverage contextual information from a multitude of sources to scrutinise user and device security posture before and after they connect. Doing so helps overcome the limitations of fixed security perimetres tied to physical boundaries, which break down in the face of IoT devices that can connect and work from practically anywhere.

The IoT security framework should include the following protective mechanisms:

• Authenticating source/destination devices and monitoring traffic patterns; • Encrypting data packets using commercial and, where applicable, government encryption standards; • Enveloping the packets inside a secure tunnel to ensure they go only to their intended destination; • Fingerprinting IoT devices to determine if they are trusted, untrusted or unknown, and then applying appropriate roles and context-based policies that control access and network services; • Inspecting north-south traffic with application firewalls and malware detection systems to monitor and manage behavior; and • Leveraging enterprise mobility management (EMM), mobile application management (MAM) and mobile device management (MDM) systems to monitor behavior and protect other devices in the event of a policy breach.

Legacy IoT devices can be identified as known or unknown upon connecting to the network using their MAC address in an external or internal database. The profiling data should flag if a device changes its mode of operation or masquerades as another IoT device, and then automatically modify the device’s authorization privileges. For example, if a Programmable Logic Controller tries to masquerade as a Windows PC, network access should be immediately denied.

Policies are only as effective as the information used to build them, and the enforcement tools available to protect them. Applying a systems approach to the problem will help identify the IoT threat vectors and the security technologies needed for remediation.

In time-critical IoT deployments such as oil platforms and industrial pumps, it’s necessary to collect IoT data and process it instantaneously on site to avoid unacceptable latencies that come from backhauling to a data centre for analysis. These edge IoT processors also need protection, because like data center servers, edge processors are often the targets of attacks.

VPNs and firewalls provide some measure of protection, but do little to addresses attacks targeting an edge processor’s BIOS and operating system. Here, a secure boot feature will ensure that each component launched during the boot process is cryptographically signed against a set of trusted certificates embedded in the BIOS. Secure boot also validates the software identity of the drivers, shell applications, and boot loaders. If a violation is detected, then a secure backup copy will be loaded and the process restarted.

The end game with IoT is to enable business transformation by exploiting the rich sources of data locked inside of IoT devices. Most IoT devices and the data they generate are untrustworthy, but with the right security measures you can level the playing field so the extraordinary benefits of the Internet of Things can be realised without incurring unacceptable risk.

With three out of four Australians businesses expecting to use some form of IoT by 2019, according to the Aruba study, now is the time to embrace this immense change, but do so with caution and with appropriate security measures in place. BFM Anthony Smith, General Manager South Pacific at Aruba, a Hewlett Packard Enterprise company.

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BFM | FEATURE

LATEST NEUROSCIENCE TRANSFORMS BUSINESS LEADERS INTO EXPERT DECISION-MAKERS The business and corporate world is constantly changing and more and more leaders are finding it difficult to navigate the decision landscape. One Australian based behavioural expert is transforming business leaders into expert decision-makers and it’s all down to the latest neuroscience.

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ill Lee-Emery is using a new field of leadership development and coaching known as mBIT (multiple Brain Integration Techniques). This new approach is all about using your three brains, namely your head, heart and gut brains and making sure all three align when making decisions. Based on the work of Grant Soosalu and Marvin Oka in their ground breaking book, ‘mBraining – using your multiple brains to do cool things’, mBIT offers fascinating insights into how our 3 brains can work collaboratively and powerfully.

“The latest neuroscience demonstrates you have three neural networks, brains or intelligences in your body,” said Mr Lee-Emery. “These are our head brain, heart brain and gut brain otherwise known as the Cephalic Brain, the Cardiac Brain and the Enteric Brain respectively. They all have different roles but need to be working in tandem to make sure we make appropriate decisions. The head brain is best at creating, organising and analysing, your heart at

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connecting, holding your deepest values, aspirations and dreams and our gut oversees our identity and selfpreservation,” he said.

TRAINING LEADERS TO BE BETTER DECISION MAKERS Bill Lee-Emery uses the mBIT principles to train business leaders to be better decision makers. Mr Lee-Emery said some of the world’s best companies are guided by leaders who can tap into the intelligence of their head, heart and gut brains. “There is a growing body of leadership literature showing that top companies are guided by leaders who use their multiple brains for decision-making,” said Mr Lee-Emery.

This new form of leadership development involves leading with compassion, creativity and courage.

“These are the three core skills for effective leadership and are mediated through our head, heart and gut brains,” said Mr Lee-Emery.

It also involves bringing wisdom to leadership decisions by gaining clarity, confidence and trust www.businessfirstmagazine.com.au

FEATURE| BFM

in your decision making. “Dealing effectively with change is another important element of being a great leader and decision maker. This leadership development ensures that by adopting a sense of calm and certainty in dealing with even the most complex and difficult situations,” said Mr Lee-Emery.

The mBIT training incorporates all these elements to ensure leaders become expert decision-makers by ensuring all three brains are contributing fully and working together.

WHAT WE CAN LEARN FROM THE US MARINES In an ever-evolving corporate world, business cannot afford to adhere to out-dated decision strategies. “The corporate world is constantly changing and marked by volatility, uncertainty, complexity, and ambiguity (VUCA).” The term VUCA originates from US Marine training and is the training framework which helps them stay alive. It’s centred around the belief that you cannot use the old tried and tested decision making tools when you’re in a combat situation. You need more; you need to be agile, fast, accurate and highly intuitive just to stay alive.

“The massively accelerating rate of change in the business world is very similar,” said Mr Lee-Emery.

“Even the most seasoned executives and leaders are finding it difficult to adapt to such an ever-changing business environment. That’s why it’s time for a new approach to ensure leaders can still be effective decision-makers in this volatile, uncertain, complex and ambiguous environment,” he said.

IS YOUR ORGANISATION DEVELOPING COMPLETE LEADERS? This new approach is all about using your multiple brains for wiser leadership and decision-making.” You can www.businessfirstmagazine.com.au

adopt mBIT principles in a variety of key areas of the organisation, including decision making, relationship building, internal coaching, and towards developing all the people skill sets that mark truly great leaders.

Mr Lee-Emery believes that leaders who can access and capitalise on the combined intelligence of their multiple brains will have a distinct advantage. “The best companies develop complete leaders, and with mBIT training, those leaders are able to tap into and harness the intuitive intelligence of their multiple brains to know how to wisely guide and evolve their people, their relationships, their decisions and their organisational worlds.

“Some of the greatest gains will emerge from the combined generative wisdom of leaders and their teams, so that organisations can truly evolve and adapt to manage rapid change amongst a complex and volatile business milieu. We’re living in a world of great social, political, economic and technological change. Business today cannot afford to be mired in old-world thinking and out-dated decision strategies. So, our leaders need to be capable of engaging their head, heart and guts while also using the core skills compassion, creativity and courage to become effective decision-makers,” said Mr Lee-Emery. Further information on mBIT leadership training can be found online mbitcoachtraining.com/ leadership BFM Bill Lee-Emery, an Executive and mBIT Coach, has been a personal development trainer for over 30 years. Author of 4 books and an international speaker, he is an early adopter of the mBraining coaching modality. He is an mBIT Master Trainer and facilitates a 2 Day Leadership and Decision Program for aspiring and emerging leaders. You can download a free report at www.mbitcoachtraining.com/ leadership

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BFM | FEATURE

ROCKSTAR LEADERSHIP ADVICE Executive coach Phil Lee discusses leadership principles and the traits of ‘rockstar’ leaders.

I

was very fortunate to spend an hour over breakfast a few month’s ago with Dr Marshall Goldsmith.

For those not familiar with Marshall, he has been named by Harvard Business Review as the World’s #1 business thinker. He is the author of 35 books, several of which have been NY Times best sellers.

His seminal work, What Got You Here Won’t Get You There, was named #1 business book by Wall Street Journal.

Marshall coaches some of the world’s top CEO’s.

His fee is US$50,000 per day.

You can imagine how fortunate and privileged I was feeling to be able to spend an uninterrupted and very pleasant hour with him as his breakfast guest.

We discussed many things and had a really interesting chat.

Marshall was particularly interested in the five Rockstar Leadership Principles I talk about in my keynote presentations and teach in my workshops.

Of course, in this context, being a Rockstar is a metaphor.

It’s not about the music or performance. Being a Rockstar leader means that you are fully engaged and enthusiastic about your role and you are turning up consistently as the very best leader you can be.

It’s also about your clear intention to not only improve your own life but to make a positive contribution to the lives of the people around you; your employees, your customers, your stakeholders, your family and community.

The very same principles that all admired and successful Rockstars use are the same principles that all admired and successful leaders use and that ANYONE can use if they know what they are.

If you take a moment to think about your very favourite Rockstar performer (band or solo artist) I’m confident they would personify all of these principles.

Space restriction does not allow me to detail all five here so I’ll just mention Rockstar Principle #1, Rockstars Don’t Hold Back.

Do you know the opening lines of Elvis’s Blue Suede Shoes? “Well it’s one for the money, two for the show, three to get ready, now go cat go!”

The problem is that not all leaders are performing their role like the opening lines in the song. Sometimes they’re turning up to work in this way... “Well it’s one for the money, two for the show, three to get ready, four to get ready, five to get ready...you get the picture!

Rockstar Principle #1 is about not holding back and commitment. It’s about knowing where you are heading, why you are heading there and taking decisive action that you believe will get you there (even if it may be unpopular).

I want you to think about this for a moment. Are there decisions and actions you have been holding back on lately because of a wavering of commitment? What would you do

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FEATURE| BFM

if you knew you could not fail? What would you do that you know must be done even if you COULD fail?

Marshall loved the idea of getting out of “getting ready to get ready” mode and into “go cat go mode”.

We joked about Mick Jagger and Bruce Springsteen and other legends who personify commitment.

If this article resonates with you may I suggest that you make “go cat go” mode your new mantra. And, while you’re at it, turn up the volume dial to as loud as

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it will go. Given what research tells us about current employee engagement levels if you wake up the rest of the office that’s probably a good thing. BFM Phil Lee is an in demand Conference speaker and Executive Coach. His keynote presentation, Rockstar Your World, has been described as “inspiring”, “motivating”, “moving” and “awesome” by Corporate attendees.

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BFM | FEATURE

WHY SOCIAL MEDIA IS NOW TRADITIONAL MEDIA 48% of small businesses and 79% of large companies are currently using social media to promote their brand, and of those that don’t currently have a social media presence, a significant number expect to add at least one platform in the coming year. So with social media such a prevalent business tool, why are many companies still getting it wrong?

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lobal futurist, innovation strategist and author of Seamless: a hero’s journey of digital disruption, adaptation and human transformation, Anders Sörman-Nilsson (LLB / EMBA) says, “When it comes to engaging with consumers on social media many businesses don’t have an effective strategy. Although in the past there was a division between ‘traditional’ and ‘social’ media approaches, brands who still believe there is that separation, aren’t taking this business tool seriously enough.”

Mr. Sörman-Nilsson adds, “In today’s market, understanding that social media is now considered traditional media is more important than ever for businesses. The customer journey is no longer linear and a large chunk has already been completed by digital due diligence by the time they interact with a brand’s sales representative, making well-executed online touchpoints absolutely essential.”

To help companies effectively utilise social media as a business tool, Mr. Sörman-Nilsson shares his expert tips: 1. A picture says 1,000 words.

While keywords and great, engaging content is still important for the SEO algorithms in Google, the way to success is through HEO (Human Engagement Optimisation). Imagery, both still and moving can capture both mobile minds and analogue hearts to build brand equity.

2. Video is king.

Mobile video distribution is growing exponentially and for good reason. If a picture says 1,000 words, video says 1,000 pictures. Facebook prioritises native video, and Instagram is giving prime real estate to Instagram stories because videos, both edited and documentarystyle are very captivating content pieces.

3. Radio isn’t being killed by the videostar.

Podcasts are seeing a renaissance and are a great way to tune into audiences who are on the move. A mobile person on a commute, at the gym or in traffic, may not be able to view a video, but they will gladly listen to inspirational or mind-shifting content, interviews,

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and rants. It is also an unexplored opportunity for B2B, as much as it is for B2C. 4. Order, discipline, and a bit of cheekiness.

Tools like Hubspot, Hootsuite and Buffer enable companies to schedule tweets, LinkedIn Updates, and blog promotions in a disciplined fashion. Social media messaging should be operated just like traditional media - in an organised fashion - while still allowing for humanity and responsiveness.

5. Don’t divide digital and traditional market budgets.

Don’t create internal friction and politics by having digital and traditional silos who are adversaries. The two need to play together - seamlessly. The CMO or www.businessfirstmagazine.com.au

FEATURE| BFM

marketing director should oversee all aspects and ensure the digital and analogue channels complement each other.

6. Seamlessness.

Customers are expecting brands to connect with their digital minds and offer experiences to their analogue hearts. Social media is only one aspect of the deeply empathetic design of customer journeys, which should be moving customers and prospects from 1. Awareness to 2. Engagement to 3. Evaluation to 4. Decision, and finally to 5. Usage and Loyalty, whereby both digital and analogue media augment each other.

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7. Make it strategic and inspirational.

Whether B2B or B2C, as customers, consumers all crave transformational and deeply empathetic content that educates and empowers businesses to make smarter decisions. So, to ensure that this is the case, the company’s inbound content strategy needs to be both strategic and inspirational. BFM Swedish-Australian Anders Sörman-Nilsson (LLB / EMBA) is a global futurist, innovation strategist, keynote speaker at TEDx and author of Digilogue: How to win the digital minds and analogue hearts of tomorrow’s customer, and Seamless: a hero’s journey of digital disruption, adaptation and human transformation.

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BFM | PROFILE

Grant Patterson

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PROFILE| BFM

Successful investing starts with understanding the emotion behind the decisions Jonathan Jackson speaks with Providence Investment Advisory founder Grant Patterson about the emotion behind a successful wealth management plan.

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any articles have been written about wealth management and the disconnect between rational and emotional decision-making. Ageold questions of how to invest and create wealth are indeed based around whether you enter a wealth-building situation with a cool heart and sharp mind, or if other motivating factors are involved.

Of course, neither emotion nor rationality are mutually exclusive.

In real terms, asset management will always have an emotional foundation based on personal requirements relating to estate management, family dynamics, or even something as basic as a desire to travel to Italy or some exotic location far away from the global eye.

It is in discovering these emotional ties where Providence makes its most significant impact.

Founded in October 2000 by Grant Patterson, who has enjoyed over thirty five years in investment markets including senior positions with ABN Amro Investment Bank, www.businessfirstmagazine.com.au

Providence is more than just a fund manager.

Patterson founded Providence as an independent investment advisory business that caters for individuals, families and not for profit organisations with offices in Sydney, Melbourne and London.

“Although the industry has evolved, there were not enough truly independent investment advisories when I started Providence,” Grant says. “I wanted to create a company that did not manufacture product, was not owned by any institution and would rebate fees and commissions back to clients.”

In Providence, Grant has built a business that he says is totally aligned to the best interests of the company’s clients.

“The key for us is to understand the purpose of their wealth,” Grant says.

In doing this, Providence has remained a boutique operation with a team of loyal staff looking after client’s needs by focusing on best practice.

This is at odds with most

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“I can’t change the direction of the wind, but I can adjust my sails to always reach my destination.”

Independent expert advice for high net worth individuals, families and non-profit organisations.

SYDNEY Grant Patterson / Michael Ogg Level 9, 20 Martin Place Sydney NSW 2000 PO Box R536 Royal Exchange NSW 1225 T +61 2 9239 9333

MELBOURNE James Smith Level 27, 101 Collins St Melbourne VIC 3000 T +61 3 9653 6406

LONDON Will Porter 97 Jermyn St London SW1Y 6JE T +44 7465 975 852

Providence Wealth Advisory Group Pty Ltd | ABN 42 003 224 904 | AFSL 245643

Safe Passage W providencewealth.com.au E info@providencewealth.com.au F +61 2 9239 0355

PROFILE| BFM

mainstream practice where a single advisor looks to amass clients and may be the sole point of contact for the client.

The benefits of this model are readily apparent.

The client and family has a relationship with a team who know and understand a family’s needs across various functions.

It is important to note here that Providence offer comprehensive wealth management and investment strategies to high net worth individuals, families and non-profit organisations.

While we’ve focused predominantly on families for the purpose of this article, the same principles apply across each of its target markets: long-term relationship building, independent advice without the conflict of financial product sales, honest, professional, and unbiased advice and a high level of personal service.

By following these principles, strong investment performance generally ensues which is aligned to a client’s needs, because it is easier to manage a client’s wealth when you know their motivations and understand the emotion behind their investment decisions.

It really all comes down to tightknit relationships, which only a boutique operation can provide.

“When you entrust someone to look after your wealth, you develop a close relationship,” Grant says.

“It takes a number of years to build up trust, but through our model if an advisor happened to leave, the team based approach sustains the relationship and essentially clients become a part of the Providence family.

Indeed, Providence is modelled around a prototypical family business; it is not just about the financial aspect, but a much broader approach to understand what lies behind a family’s issues and intentions.

“We invest a lot of time up front to understand a family’s motivations. If someone comes to us initially with a certain amount of wealth and asks us what we will invest in, we tell them we won’t know until we take the time to understand the purpose of the www.businessfirstmagazine.com.au

wealth to them and their family.

What to invest in is the last thing we look at.”

It is a very human approach to wealth management, designed to understand the emotion behind a wealth management decision.

For instance, Grant says his team must understand how a client’s wealth has been created, what are the family dynamics, what is the purpose of the wealth and is there a testamentary or philanthropic motivation.

Through this discovery, it is evident there is no one size fits all solution because everyone’s motivations and emotions are different.

“Wealth can have a burden attached to it: it’s about how to make decisions and the emotion behind those decisions, how do I treat the kids without spoiling them, how to retain family cohesion, and who inherits what without fighting. For those who inherit wealth, there is the pressure of not losing it or destroying the family legacy.

The bottom line here is that

different experiences, traits, professional biases all impact how people emotionally invest.

Take the experience of a surgeon for instance.

“Surgeons study their craft for many years and when they make an incision they know what the potential outcomes will be with a reasonable level of certainty.

It is a logical approach to their profession, but when it comes to investing and wealth management they don’t understand why markets aren’t logical or why there is so much volatility.”

Of other professions and what drives them, Grant says lawyers who earn a lot of income focus very much on tax when investing, whilst property developers tend to take higher risk and have more leverage than what may be necessary in a balanced portfolio.

SMEs who have made a lot of money have a sometimes inflated view of their own ability and that could prove dangerous in investment markets.

So again, it comes down to understanding, which builds

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BFM | PROFILE

trust that creates long-term relationships and thus better portfolio management.

What we do is go through a process to understand the true motivation behind a client’s wealth goals. We believe there are five issues for consideration: 1. Aspirational goals.

2. Income requirements.

3. Security. Maximum drawdown acceptable 4. What do you want your legacy to be?

5. The fun bucket – what you will spend the money on.

“We go through those buckets and see if the expectations match up. If someone wants a 12% return, 6% income, is able to leave capital for the kids and have 5% for fun, we put that model through its paces and discover whether it is achievable, or if any trade offs are required.

“We have a conversation about how we should structure a family’s wealth and what it is attempting to achieve in the long-term. So we invest a lot of time up front to understand a family’s motivations and emotional ties and once we do that we can look at investment strategies.”

What also sets Providence apart is its immersion in family affairs.

“We invest a lot of time and capital in educating the kids and spending time with couples and individuals about emotional motivations such as retirement and and how it will affect other family members.”

PROVIDENCE GIVES BACK The Providence Philanthropic Foundation is also based on relationships and facilitates planned giving for clients to give back to the community.

The Foundation and the sub-funds created by its clients have supported several charities since inception in 2015.

“We do have a focus on mentoring youth and this extends to not only the families of our clients but also supporting other youth based charities including with the Reach Foundation the Duke of Ed Award and The Smith Family Learning for Life.

This is part of our commitment to future generations and the clients we serve.”

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According to Grant, wealth is also about how you manage your money emotionally, it’s not just financial.

There is no point having wealth that worries you to your grave, wealth should give you options. It shouldn’t be a burden. If we have an honest conversation, people will be prepared for guidance and that is when a relationship is formed.

Grant offers the following example of how Providence builds trust and relationships.

“We had a client who passed away tragically. He had six adult children and a spouse of many years and they had no concept of his wealth. We were concerned about the dynamics of how the family would cope and how they would manage the estate. I took the family away for a week to a health retreat and we went through the education process of what the wealth was and how everyone was going to communicate, how the wealth may be managed and what role everyone wanted to play in that. We discussed how they would interrelate, how to cope emotionally and how his wife and the mother of his children was going to be protected. That went for a week. We did everything from horse whispering, drawing, and counselling, to financial education.

I am pleased to say a few years on, the family is successfully running the funds and the spouse is secure.

In fact the family are as close as they have ever been and we played a fairly big part in that. Despite the tough time the family was going through the mother commented to us that it was the most extraordinary thing the family has done together.”

To Grant, those relationships are more important than the financial return. Clients are greeted by their first names, deep relationships have been developed and this is what differentiates the boutique ‘family-like’ model from the product focused big business models that still dominate.

“Investments are investments, but our focus is not only the protection and preservation of our clients’ wealth but also in depth personal relationships that lead to better wealth management and intergenerational longevity.” BFM www.businessfirstmagazine.com.au

PROFILE| BFM

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BFM | INVESTMENT

Expand into new markets with confidence: Partner up You have a great core business offering, and after listening to your customers and analysing the market, you want to expand. Andrew Wood, business development manager, Institutional Business CMC Markets, discusses the ways to identify an opportunity and capitalise on it.

E

xpanding your key business offering to new and existing customers is a straightforward way to boost profit and success, grow your team and expertise, as well as show your customers you’re listening and responding to their needs.

Furthermore, investigating and identifying this desire for new products and offerings showcases your business’ innovative side, with its finger on the pulse of the latest trends and movements.

With the diversity of offerings and players in Australia’s financial market, there are great business opportunities within this space.

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IDENTIFYING THE OPPORTUNITY As one of the world’s largest online trading providers, CMC Markets recently identified a rising wave of interest from investors, as trading becomes more prevalent in the public discourse, through news attention on global market happenings, such as Brexit and ‘The Trump Effect’.

With demand and interest growing, we recognised the importance of servicing our key partners – institutions – through an Application Program Interface (API), grey or white labeling offering. By creating this platform, we enable these partners to provide access to reliable liquidity among

financial institutions while offering global market trading for their clients, meaning institutions are better equipped to service this growing trading segment.

NEW AND EMERGING MARKETS The truth is, as a mature market, Australia is a crowded marketplace for finance players, but much is reported on the growing middle classes in Asia and the tremendous opportunity this affords.

With a less mature financial market, there is a growing demand from traders across Asia-Pacific for access to global market trading, CFDs and Forex, meaning local institutions are looking for the

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INVESTMENT| BFM infrastructure and technology solutions to provide this access to their clients.

By leveraging Australia’s established financial market as a clear benefit, together with our close proximity to the APAC region, existing partnerships in more than 20 countries, we demonstrated our expertise and experience. This enabled the expansion into new markets, offering innovative products for clients, while providing the technology, execution and support to institutions.

UNDERSTANDING THE LANDSCAPE Predicting a new market opportunity is one thing; assessing its viability is another.

Understanding local market context, regional legislation and cultural nuances is vital before forging into an untested space.

Once you’ve identified a potential market, you then need to evaluate your ability to sell and operate in it, as well as understand the upside.

Finding a local partner who has market expertise and a strong local client base can provide you with immediate access to the knowledge and customers that you need.

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On the horizon, we see the emergence and growing size of the fintech sector in Australia as an area with great potential: a burgeoning space where players often look for quick, flexible solutions to complex financial market problems.

As a large, stable platform provider that invests regularly in the innovation and improvement of our infrastructure, CMC Markets is an influential partner for these smaller players.

Our significant investment in technology and focus on innovation means we keep a step ahead of fastpaced changes and evolution in the trading market. CMC Markets’ Next Generation platform gives market access to proprietary solutions, and local specialised products.

ENSURE YOU HAVE THE TECHNOLOGY IN PLACE Key to servicing new market segments through an API, greyor white-label product is your capability to provide smooth and seamless connection for customers.

CMC Markets offers efficient and cost effective access to global markets, through a market-

leading infrastructure that easily plugs in with our partners’ existing platforms. We have the size and capability to provide the infrastructure for global trading, the risk management systems and back-office supporting systems at the click of a button for customers.

Keeping across shifting customer demands and macro market changes will allow you to identify new opportunities for your business. If you have a strong offering, looking at ways to capitalise and target new audience verticals can ensure your business has longevity and relevance into the future. BFM CMC Markets is one of the largest online trading providers globally, offering over 10,000 trading products in forex, commodities, indices and shares via multi award-winning platforms. Recently the Australian business launched an offering specifically for brokers, funds and trading desks in APAC, giving institutional players access to tierone liquidity and pricing, and CMC’s leading technology infrastructure through an Application Program Interface (API), grey or white labeling offering.

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BFM | INVESTMENT

MEDICINAL CANNABIS STOCKS UNDER THE MICROSCOPE It’s been a sector that has experienced triple digit rallies in recent months. There have been unprecedented moves in intra day share prices of certain companies like Stemcell United (SCU), which exploded 3000% in one day. Why?

By Gabriel Yi, Managing Director of M3 Investment Group

T

hey announced the appointment of the “King of Cannabis” Nevil Schoenmakers as Strategic Advisor to “pursue opportunities in (the) Medicinal Cannabis sector”. These dramatic price movements on simply the possibility of entering the Cannabis space show signs, on face value, of a bubble about to burst. However, there has certainly been investor interest and media coverage into the space, so it would be appropriate to look past the smoke and hype, and evaluate the investment case for Cannabis stocks.

Medicinal Cannabis is used to treat Chronic Pain, nausea resulting from chemotherapy and painful symptoms caused by conditions such as Multiple Sclerosis (MS) and Epilepsy.

The chemicals within Cannabis that provide the most medical benefit include Cannabidiol and Tetrahydrocannabinol.

The US market is widely considered the global leader in the use of medicinal cannabis, with 29 states having legalised the use of marijuana for medical purposes.

The value of the global medicinal cannabis industry has been estimated to be as large as US$250 billion in 2016. So it’s clear that the addressable market is substantial and there exists significant growth opportunities for established global players to cultivate, service and/ or supply the product. However, the majority of ASX listed stocks in the medicinal cannabis sector are in their infancy stages with only a couple names actually generating any revenue, let alone a profit.

So what has changed in the Australian medicinal cannabis

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environment to create such invigorated interest in the space?

The Australian government has recently announced that companies are now able to cultivate, import and sell medicinal cannabis to meet demand. This has lit a rocket under many ASX listed stocks that have any association with medical marijuana. Some of the key stocks to watch in this space include: 1. AusCann Group (AC8) AC8 aims to produce high quality and clinically validated cannabis medicines in Australia for domestic and export markets. Their first harvest in Chile is expected to be completed by April 2017, which is intended to be sold to third parties for various clinical trials.

Successful trial results could lead to product registration and commercialisation.

2. Creso Pharma (CPH) CPH is involved in the development, registration and commercialisation of medicinal cannabis and hemp-based therapeutic grade products and treatments. The company comes fresh off an $8 million placement which it says will enable them to fast-track the commercialisation of its animal and human health nutraceutical products. CPH has also recently announced it had signed a commercial agreement in Brazil for the marketing, sale and distribution of its products in the Latin American country.

3. MMJ Phytotech (MMJ) MMJ aims to develop and commercialise cannabinoid based therapeutic products to treat a range of clinical symptoms across

different international markets. The company runs three subsidiaries with operations across the entire medicinal cannabis value chain.

MMJ have recently announced that their Australian distribution partner, HL Pharma, has received approval for a medicinal cannabis importation license from the Department of Health.

4. MGC Pharmaceuticals (MXC) MXC is a medicinal cannabis company aiming to establish full vertical integration across the whole medicinal cannabis value chain. The company has a combined Israeli, European and Australian clinical research strategy to take advantage of rapidly changing regulatory environments. MXC aim to develop and supply high quality cannabidiol resin extract for the European cosmetics and medical markets.

It’s clear there is a significant addressable market for medicinal cannabis and if there are further eases in regulation, an investment opportunity may exist. However, the medicinal cannabis stocks which have experienced substantial rallies are all still in their infancy stages, and with this comes high execution risk. Although there is potential for growth in the industry, companies should establish a track history of positive earnings so fundamentals have the opportunity to catch up to the hype. BFM This content has been prepared without taking into consideration any individual’s particular objectives, financial situation and needs. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances. www.businessfirstmagazine.com.au

INVESTMENT| BFM

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BFM | INVESTMENT

GETTING A BETTER POSITION – tips and tricks for traders Inspired by CMC Markets’ renewed partnership with NSW Waratahs, the below piece provides traders with tips and tricks on getting a better position. By Ric Spooner, Chief Market Analyst, CMC Markets Australia

T

aking a new trading position is usually a pretty positive experience. We traders tend to get into the market with a degree of conviction about our insights and with a nice profit firmly in mind.

Getting out of trades can be more fraught, especially if we are operating without a plan. When it comes to quitting positions, traders often find themselves exposed to the two most harrowing aspects of the pursuit – dealing with loss or facing the fear of missing out and leaving large profits on the table.

ENTRY AND EXIT STRATEGIES THE KEY Logically, where you get out of a trading position is just as important as where you get in.

After all, the outcome of a trade is determined by the difference between where you buy and where you sell.

I know this seems a trite point but the reality is that a lot of people struggle with trading because they go about things in a way that doesn’t recognize this simple reality. They don’t plan exits.

Instead, they approach each trade with a conviction that something is a “buy” and a loose idea that they will sell for a profit at some stage.

This might work for the Sydney property market but it’s unlikely to achieve the consistent results needed to succeed as a short-term trader.

Trading is about developing a set

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of repeatable strategies for position entry and exit. So, tip number one for getting a better position is that it must make sense based on where you plan to get out (either for a profit or a loss). Let me explain.

THE ELEMENTS OF TRADING SUCCESS Trading is not about capital gain, rental income or dividends. It’s about relatively high turnover and frequent short term profits and losses. There will be plenty of losses but successful traders finish most years with a lot more profit than loss.

At a basic level, achieving profits over time is about two key ratios. Your percentage of winning to losing trades (success ratio) AND the average value of profits compared to losses (pay off ratio) The key to success is how these ratios combine. For example, for every 100 trades: • A 60% success ratio with an average profit of $1000 and an average loss of $1000 will net an overall $20,000 profit • A 40% success ratio with an average profit of $2500 and an average loss of $1000 will net an overall $40,000 profit • A 60% success ratio with an average profit of $1000 but an average loss of $2000 will net an overall loss or $20,000 You won’t necessarily succeed as a trader by simply having a lot of winning positions. It’s also going to depend on how big your losses

are. The opposite also applies.

Simply “letting your profits run”, as the trading texts often advise, isn’t necessarily enough. If you hit the ball out of the park every now and then but have too many losses in between, you’ll finish in the red.

THE PROBLEM One very useful observation about market reality is that over the long run, there’s usually a trade off between the success and pay off ratios.

You can usually get your success ratio up over time by taking small profits quickly but hanging onto losing trades, waiting for them to come good eventually. Taking small profits and not letting positions run, cuts down the number of positions that start off well but eventually turn into losses. Riding out losing trades will also reduce the number of losses. There will be plenty of times that positions will eventually come good.

The problem can be that while these techniques can give you more winning trades, they might also result in a very poor payoff ratio. You might end up with a lot of small wins but have some very large losses on the occasions when bad positions don’t come good but the loss just keeps getting bigger and bigger. The payoff ratio can be so bad that it becomes virtually impossible to make money even with a very good success ratio.

In fact, this kind of approach www.businessfirstmagazine.com.au

INVESTMENT| BFM

describes a common problem for traders. When it comes down to it, once they are in a position their primary motivator is the fear of losing. They try to make every trade a winner, and in the process, wind up losing overall because the average size of their losses will be too large compared to their wins.

THE SOLUTION By now you may be thoroughly depressed. However, recognising that this is how trading works is the key to success.

The real trick to taking a better positions is to put together plan for when to buy and when to sell that will deliver profit over every 30; 50 www.businessfirstmagazine.com.au

or 100 trades. Each separate trade, whether it wins or loses, is part of a consistent strategy.

You can fit a set of trading rules with a winning combination of success and pay off ratios to a lot of trading ideas. It’s a matter of experimenting a bit until you find something that works.

A good way to begin is by looking at entry and exit rules that might give you a lot of profits and not too many losers. Take profits quickly and allow a bit of width on your stop loss to reduce the number of “whipsaw” losses.

Then do the opposite, apply a set of rules to your trading idea that might give you a good payoff ratio.

Aim for large profits and place your stop loss close to the first point of failure.

If one of these approaches works; great. If not, look at strategies that fit somewhere in between to find a winning combination of success and payoff ratios.

Good traders tend to be process driven. Their aim is to make money at the end of the period and they are relaxed about the fact that this inevitably involves taking losses along the way. It doesn’t really matter if the route to success is a lot of small profits or a few large ones with a lot of small losses. It’s the money in the bank at the end of the year that counts. BFM

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BFM | PROFILE

Polishing Curriculum to Obtain Global Merit How do you meet millennial expectations in a global economy?

According to Professor Chris Earley, those expectations must first be met in the classroom, with an outlook to working collaboratively with business to better serve the community.

P

rofessor Chris Earley, the Dean of the Tasmanian School of Business & Economics has a unique view of business, which for the past two years has been reflected in the way he leads this up and coming school.

According to his biographical detail, Professor Earley is a Professor of Organisational Behavior, studying the dynamics of people within organisations and in particular concerned about how managers can work more effectively across cultural boundaries.

His research has found that if teams are managed effectively, over time they don’t see each other’s differences, they become united. The approach focuses on the common values that exist within humanity irrespective of culture.

The same can be said of any organisation or learning institution and it is a point Professor Earley attempts to get across as he manages the staff and students of the Tasmanian School of Business & Economics.

It is this approach that has enabled him to, as Professor Earley says, “polish the diamond in the rough.”

Indeed, that is what he was tasked to do when he first joined the institution in June 2015.

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“We have tremendous talent and we have some really exceptional staff. The students are excellent.

But we haven’t yet taken that bold step of bringing things together in a fully synergistic fashion. And my job is to take all of these wonderful individual elements and work with everyone here to bring them together so that we develop that synergy.”

The university’s strengths are its senior leadership and its endeavour to be relevant in a changing global economy. Marine sciences is an area the University is known for. However, Professor Earley is striving to bring recognition of the business school to future students and the business world at large.

The catalysts to take a university from good to great are the same processes and strategies organisations employ to improve their stature. And it is an understanding of these processes that Professor Earley brings to the University of Tasmania. The goal is to be a global presence and in an ever-changing business world: a great Australian, Asian and world class Business School.

Bringing synergy to the business school is a work in progress, but development is tracking well for the new business school model Professor Earley has implemented.

The next phase for the school is

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PROFILE| BFM

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BFM | PROFILE

worldwide research and outreach (impact). More research essentially means more relevance and the opportunity to make a difference economically and culturally. It is attempting to bridge the gap from University to the business world and achieving real consultancy to create an avenue between the two. Universities have found it difficult to bridge the gap and some have failed to fully transition from pure academia into business organisational change. However, a direct conduit into organisations and the business community could give graduates the opportunity to make significant and tangible change that creates real global impact.

Designing a new practical MBA in Entrepreneurship and Innovation that millennials desire with tangible, practical and modern techniques which exposes students to developing a business plan, venture capitalists, crowdfunding and angel investors is what Professor Earley hopes to achieve.

Professor Earley believes internship is good, but taking it to the next level is far more beneficial for today’s students. Real time education enables students to create their own pathways.

As such the University of Tasmania is transitioning to application type learning for the next generation of students.

This means there will be a real time practical business focus that challenges and develops the student body.

Tools are important, but students also need a higher purpose.

Practical learning in teaching is the area in which the University of Tasmania can develop a stronger delivery process supplementing current revised subjects with external business intern opportunities within the business community, which will be most valuable to students entering the workforce.

The University of Tasmania is mindful of generational change and is pressing for all students to have a positive contribution to global community and economy.

“I think this next generation will have the real world skills and

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practicality to take idealism and operationalize it.”

Professor Earley says the University’s short-term goal is to obtain international accreditation of the business school.

Throughout the interview Professor Earley notes three very important concepts, which encapsulate his vision for the business school: • TEACHING • LEARNING • IMPACT Certainly Professor Earley has the extensive credentials to implement these concepts.

Prior to commencing with the University of Tasmania in 2015 he was the Dean of three previous Universities including the University of Connecticut, the National University of Singapore, and Purdue University.

Having held many University roles within Asia, UK and United States, Professor Earley believes that the University of Tasmania is well placed to develop a curriculum which includes business relationships with organisations that benefits not only the University, students and business school but the organisations involved in the initiative.

“Generating new knowledge is so important in reinvigorating the student and the teacher,” he says.

Which brings us back to where we started.

Professor Earley has a passion for economic decision making, cross cultural research, motivation, teams and leadership: how people communicate in different countries within different cultures.

He says the university’s job, or part thereof, is to balance all of the above so that students can integrate into any cultural business setting in a moral manner.

“It is so important to develop collaboratively and that development comes between students and teachers and students and businesses, and the school and those businesses. And that collaboration builds moral character.”

“I get the impression from this next generation – the millennial generation – that they have a lot

Professor Chris Earley

of concerns about the community.

And it isn’t just simply an issue of getting ahead or getting that next promotion. That’s not to say that they don’t want those things, but what I’ve seen with our students here is there’s a lot of concern about making sure that what they do will add value to the larger community.”

A university’s goal is to create graduates that can not only fill the roles of today, but also look forward to tomorrow in an ever changing interactive, dynamic and digital business landscape.

“We are creating problem solvers that can find solutions to complex problems, that keep up with the fast moving business world in a moral way that is culturally relevant.”

Professor Earley is working to develop a single unit or course that is customised to the student’s specific journey more comprehensively and seamlessly.

He is creating flexible units or modules including modules such as a master class for business managers.

These modules are designed to create generational change across the way students study and their expectations in their work life. As such the University of Tasmania is creating students with the tools and desire to make a difference in whatever community they work and which complements the global economic climate. BFM www.businessfirstmagazine.com.au

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TASMANIAN SCHOOL OF BUSINESS AND ECONOMICS

BFM | CULTURE

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CULTURE| BFM

HOW EFFECTIVE CEOS IMPLEMENT CULTURE CHANGE Rightly or wrongly, CEOs are judged on everything they do as well as everything they don’t do. They are on stage 24/7 and are continually critiqued on their voice, their tone, their turn of phrase, their body language, what they said, and didn’t say. While it is all part of the job description, being the one in charge has its burdens, is challenging and not for the feint hearted. All that judgement is a lot to deal with, so clarity of role and knowing what ‘effective’ looks like in action is important. Corinne Canter explains.

O

ver the course of a decade working for Human Synergistics, I have talked with many CEOs who have been successful at turning an organisation around culturally. They have all shared some common behaviours.

1. Authorise and back the change.

This includes everything from “walking the talk”, to being honest about their own challenges, to signing off on the resources required (time, staff and dollars) as well as visibly advocating for culture. They talk about it and make space in their daily routines to back the rhetoric with action.

2. Explain clearly why change is needed in a way that makes sense.

They explain not just how it will help the organisation but also how it will help their people and their stakeholders. Effective CEOs communicate why it matters to each person in the organisation.

In addition to rational reasons for change, they address emotional reasons, beneath the surface, as to why some might resist it.

3. Emphasise growth/aspiration.

The uncertain language of “change” can make it sound like everything we have ever done up to this point has been ‘bad’. Effective CEOs talk about the opportunity to grow. It’s the burning ambition instead of the burning platform.

Growth is more inclusive and it offers a home for everyone while honouring past achievements.

4. Demonstrate “3 Zone Consciousness”.

While they are grounded in the present and have taken lessons

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from the past, effective CEOs are essentially about creating a better future. Helping their people to reimagine the future.

5. Create and capture sustainable value.

While employees understand the need to do well for their company’s shareholders, few employees jump out of bed to ‘increase shareholder value’. Effective CEOs understand the need to create and capture value in a way that is socially responsible.

People need their leader’s goals to be in service to something bigger than their own self- interest!

6. Are open-minded and openactioned.

Effective CEOs seek and accept feedback (even when it hurts; maybe especially when it hurts).

They involve others in developing their thoughts, and regulate their emotions so that they can rise above the heat of the moment to provide a measured and considered response.

7. Are congruent and consistent.

CEOs become trustworthy and credible when they say what they mean, and do what they say. They don’t try to talk their way out of bad or variable behaviour. Actions speak louder than words, and people listen to action.

8. Admit their mistakes and are prepared to say “I got that wrong”.

There is a humility in CEOs that are not falsely modest or political – it’s just owning up to the fact that they too are human and will not always get it right.

9. Manage out leaders who don’t support the vision.

Effective CEOs recognise and manage detractors. CEOs must be clear and unambiguous about their expectations and actively manage them. It may not be ‘one strike, you’re out’ however, if negativity persists CEOs must be prepared to manage-out staff if their behaviour and is at odds with the organisation’s values.

10. Understand that they require willing advocates, not reluctant prisoners.

The notion that people will do what they are told is only true to a point.

Effective CEOs cannot demand discretionary effort, people will choose whether they want to gift it. When discretionary effort is provided, effective CEOs know that it needs to be respected and not taken for granted.

These actions and commitments collectively provide the level of ‘psychological safety’ and stability required to help people choose to join the path of change - the path of difference over comfort.

If CEOs can apply these principles to how they lead, it makes a tremendous impact.

People don’t expect perfection, just congruence. BFM Corinne Canter works with leaders and their teams to increase organisational effectiveness and business performance.

Her expertise has been gathered over more than 25 years of challenging executive leadership roles in operations and human resources. Corinne’s experience at operational and board levels and collaborative approach to change enables her to produce effective roadmaps that relieve organisational pressure points, enhance performance and drive sustainable results.

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BFM | PROFILE

Strategic Reform’s Managing Director Trent Gale

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PROFILE| BFM

Complex transformation with a simple style Transforming an organisation is not simple. Strategic Reform, a management consulting company specialising in major change projects, intimately understand the sensitivities.

All facets of an organisation must be considered and aligned – from political drivers, technology capabilities, and operating and governance models, through to individual personalities and the organisational culture. Strategic Reform’s Managing Director Trent Gale explains why even in a complex environment, a back-to-basics approach is essential.

W

ith over 15 years’ experience in management consulting, Trent Gale founded Strategic Reform in 2010 to counter what he saw was an industry driven by methodology over practicality.

Gale believes the key to effective consulting and meaningful transformation comes down to two key factors: real people and a personal style.

It is these factors, which are intrinsically linked, that underpin what Strategic Reform do and why the company stands out in a competitive ICT transformation market.

In just seven years, the ‘personal approach’ that underpins Gale’s business has in his words, “put Strategic Reform at the forefront of the transformational advisory market.”

In fact, in this time Strategic Reform has become the leading Cloud transformation advisors to the Commonwealth and its reputation is well established and rapidly growing amongst large private organisations.

Before starting Strategic Reform, Gale had a roll call of experience across the Federal and State governments and large multinational companies, as have many of his senior leadership team. www.businessfirstmagazine.com.au

In starting Strategic Reform, Gale wanted to take this high-end consulting experience and refine it – offering clients a simplified, pragmatic and tailored approach to change management and consultation.

Through starting a smaller company with lower overheads, Gale could focus effort on listening and being responsive to client needs, rather than just achieving economies of scale.

“By taking a personal and not templated approach, it gives us an opportunity to gain deep insight into the change that our clients require. We are able to take the time to discover the fundamental challenges for the organisation, what the likely pitfalls will be, and can use our extensive consulting experience to create quick wins while working towards long term goals.”

Gale maintains it is important not to act like the most knowledgeable person in the room, which is a fault of many consulting companies.

“We are not the smartest people in the room, our clients are. They understand their context, they understand their needs. The objectives are their objectives and should stay that way – we just bring it together for them in a way that is easy to understand and act on.”

“Yes we are highly skilled and experienced and we can stand our people against anyone in the market, but we also have personality. We are relatable.” Gale says.

To reiterate the point Gale says, “It is important to take your work seriously, but not yourself.”

It is this almost humble, yet confident approach that resonates with clients. It is why the company has grown so quickly.

Trent continually brings it back to his people – the consultants who live the culture and the principles of the business he has worked hard to create.

So what defines Strategic Reform’s people?

“When we hire we look for a cultural fit, people who will take our internal culture to our clients.

We want consultants with a bit of character and who aren’t afraid of taking themselves and their clients on a complex journey.”

“In our context, the ability to evolve is essential”.

What this engenders is deep peer support for each other, where emotional intelligence is high and heirarchy is out of the window.

“We try to employ a less traditional top down management approach. We maintain that everyone in the business is equal in terms of being able to set agendas

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and contribute to growth.

“The culture of Strategic Reform is very important to us.

We work continually to create an environment where everyone is accountable, courageous and willing to put skin in the game and their reputation on the line.”

Gale maintains that this internal culture and approach enables Strategic Reform’s staff to be able to strip back layers of complexity with their clients, and to pass on the courage to meet significant challenges head on.

“Take Cloud migrations and transformations for instance. If, as a client, you want to move to the Cloud but you want to go delicately, you are not going to receive the benefits you would if you made significant changes.

“If you have courage and take informed and calculated risks, you will more often than not be rewarded.”

“Unfortunately, rational arguments are not always as

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persuasive as emotional arguments and advocates for change face barriers much greater than just limited funding. So we explore cultural and political challenges too.”

In other words, what clients can’t see or can’t usually discuss openly.

“At the end of the day, most engage us externally for what they can’t fix internally.”

In unpacking this approach, we can surmise that a core strength is that Strategic Reform staff can read between the lines, and develop solutions that work within complex contexts.

“Those factors normally encompass cultural or political issues or staff capabilities,” Gale says.

“We make sure when we go into a business we understand the problems, the complexities and trends so that we can help our clients do the same. What we don’t do is recommend solutions before

the problem is understood.”

It’s an approach perfectly tailored to both the private and public sectors.

“Both sectors have the same issues and similar opportunities.

In many instances the government is trying to model itself on private commercial models, and often in our experience, larger private companies are just as complex, political and risk averse as the government.”

Which fits Strategic Reform’s goals perfectly, because while clients receive a unique service and bespoke solution, the approach to discovering and understanding complexity is the same for both the private and public sectors.

“They have opportunities to learn from another, and as Strategic Reform work across both, we have the ability to crosspollinate insights,” Gale says.

The fact that any one of Strategic Reform’s staff can go into a business with a consistent philosophy and approach is paramount to the company’s past and future success and key to the continued growth the company is enjoying.

Yet, the journey has only just started for Gale as he looks to improve Strategic Reform’s reputation further.

“A consulting business is the hardest to build: we are in the business of selling people to people. We sell to emotion, and to be able to do that and have clients pay is what we have fought long and hard for. Now it is time to take Strategic Reform to the next level.”

While the company has targets around revenue and size, Gale is adamant that these objectives not come in the way of the company’s core approach and culture.

“We have been very selective in our growth so far, but now it’s time that were known as being the market leader in the technology transformation space.

“We want to be seen as a credible alternative to any major consulting company and for it to be known that we can compete on capability, but win on price and quality of service. We want every CXO in every government department in the Commonwealth to know what we are able to do.” BFM www.businessfirstmagazine.com.au

REDEFINE, REFORM, REALISE Strategic Reform assist our clients to achieve transformational business and ICT change

From strategy development through to benefit realisation – we’re on the journey with you OUR CORE COMPETENCIES Strategic Leadership and Management Business Systems and Enterprise Analysis Project and Program Management Change and Communications Management Risk, Security and Quality Advisory and Assurance

OUR SERVICE AREAS Enterprise and Solution Architecture Cloud Migration Advisory and Execution Data, Information and Analytics Digital Service Development and Improvement Information Security Advisory Strategy and Business Case Development Value Management and Benefit Realisation Organisational Change Management Shared Service Design and Implementation Procurement Strategy and Management Program and Project Advisory Services

CONTACT US TO DISCUSS YOUR BUSINESS CHALLENGE, AND SEE HOW WE CAN TRANSFORM IT INTO AN OPPORTUNITY. WWW.STRATEGICREFORM.COM.AU | 02 6257 0647 | ADMIN@STRATEGICREFORM.COM.AU

BFM | CEO

DO CEOS NEED EMPATHY TO BE A SUCCESSFUL LEADER? Empathy is a basic trait of leadership that many executives have an appreciation for, but which is not fully utilised writes Ryan Makris.

D

oes an executive need a high level of empathy to make a difference to the business bottom-line? The short answer is yes.

A leader must genuinely want to make a difference and develop staff to grow, yet many leaders are purely in the control game.

They are not in the team to benefit others, but rather than their own self-interest, while the minority has the time and patience to show the team the operational challenges and lessons from their experience that will add value as a coach.

EMPATHY IS THE HOTTEST TREND IN LEADERSHIP Recent research from the 2016 Empathy Index indicates that: “Empathy has never been in more explicit demand from corporate leaders — particularly after a divisive US presidential election, and amid continued economic uncertainty around the globe.

As the newly released 2016 Empathy Index demonstrates, empathy, which is about understanding our emotional impact on others and making a change as a result, is more important to a successful business than it has ever been, correlating to growth, productivity, and earnings per employee.

Results showed the top 10

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CEO| BFM

companies in the Global Empathy Index 2015 increased in value more than twice as much as the bottom 10, and generated 50% more earnings (defined by market capitalisation). In our work with clients, we have found a correlation as high as 80% between departments with higher empathy and those with high performers.”

Scientific research by Daryl Cameron, an Assistant Professor of psychological and brain sciences at the University of Iowa, as well as research conducted by Michael Inzlicht a Professor of psychology, and William A. Cunningham an Associate Professor of psychology, both at the University of Toronto states, “Two decades ago, the psychologist Daniel Batson and colleagues conducted a study that showed that if people expected their empathy to cost them significant money or time, they would avoid situations that they believed would trigger it. More recently, one of us, Daryl Cameron, along with the psychologist Keith Payne, conducted an experiment to see if similar motivational factors could explain why we seem more empathetic to single victims than to large numbers of them.”

EMPATHY IS ACTUALLY A CHOICE Empathy is a deep emotional intelligence. It is not evenly distributed through all levels of management among many companies that need empathy to facilitate change. Empathy is essentially placing yourself in someone else’s shoes. A successful leader’s emotional foundation is able to influence empathy on a daily basis to encourage and support their team to grow and develop.

Businesses invest in retreats for executives to training for staff in empathy to help managers become improved leaders and develop betters products and services for their many customers like Ford Motors. According to the consultancy Development Dimensions International, www.businessfirstmagazine.com.au

roughly 20% of employers in the US now offer empathy training for managers, a sizable increase from 10 years ago, reports the Wall Street Journal. Listening and responding skills outranked all others in producing the most successful leaders, according to a DDI study of more than 15,000 leaders in 18 countries released earlier this year. The 10 top performing businesses from among the 160 included in The Empathy Business’s “Global Empathy Index” generated 50% more net income per employee than the bottom 10 performers.

TRUE EMPATHY DISPLAYED BY THE LEADER WILL INSPIRE THE TEAM TO BE THEIR BEST Brown University states, “There is a recent groundswell of interest in empathy; CEOs, best-selling authors, and international leaders have identified empathy as one of the most important leadership skills of the 21st century. Generally understood as “the ability to understand and share the feelings of another,” empathy will play an increasingly important role in our interdependent and hyperconnected world. Whether your challenge is to build a collaborative team, become a skilled professional, or advocate effectively for social justice, empathy is a vital leadership capacity.”

Leadership consulting firm Service Desk Coaching agrees that empathy is a skill that should be strengthened from the c-suite to all departmental leaders to ensure that staff are engaged consistently and correctly and have support where needed in all business operational duties.

Empathy is choice every leader needs to be confident in using to create a culture of collaboration and care in the workplace. A leader, that doesn’t exhibit empathy has omitted one of the most important skills that make a real impact on staff, team and business success. BFM

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BFM | FINANCE

IT’S A GREAT ECONOMY… so why are your profits poor?

Australia is one of the best performing economies in the western world, yet new research shows many businesses are struggling with profitability. While these concerns are valid, there are ways to improve your cash flow and secure your finances writes Roger Mendelson.

O

n most measures, Australia’s economy is performing brilliantly. We have sound economic growth, low unemployment, low inflation, low wages growth, low interest rates and the price for our major exports has jumped substantially.

However, you probably have some major concerns about your business and, if you do, you are not alone.

Our regular Canary in the Coal Mine Survey of Prushka’s 55,000 SME client base across Australia provided some alarming concerns of SMEs. Most concerning is that 47 per cent of respondents indicated that the state of the economy has had a negative impact on their business over the last 12 months. This is despite the fact that the economy is arguably performing as well as it ever will.

A bright light is that 65 per cent of respondents rate their business confidence from “somewhat confident” through to “very confident”. Only 15 per cent said

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they were “not confident”.

Despite this, 51 per cent cite their biggest concern over the next 12 months as being lack of profitability.

The issue of profitability is a concerning one, but there are some simple but fundamental ways you can improve your cash flow to make your business more financially secure.

DON’T BE A PRICE TAKER Reduced profit margins have been a big problem for many SMEs recently and this is largely due to intense competition.

You will never be able to fully compete on price because there will always be a business that will try to undercut you. Every business that has been exposed to intense price competition already understands this.

If you can’t compete on price though, what can you do? Stick to things that you have control over, namely customer service. Providing high quality service to your customers is now more important

than ever and this starts right from the time of initial enquiry through to finalization. You can have highly competitive prices but if your service is lousy, you will fail.

PROVIDE CREDIT Many of your potential SME customers are suffering from tight cash flow. Thus, win their business by providing them with generous payment terms, allowing them to ease the cash flow burden of making purchases. Most will be happy paying a slightly higher price if they can get deferred terms for payments from you. As long as you have good credit checking and recovery processes in place, your losses from bad debts will be minimal.

PACKAGE YOUR PRODUCTS Packaging your offerings with other products or services is a great way to not only improve customer service, but also helps avoid straight price comparisons.

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FINANCE| BFM

warranty, free installation advice or a free hotline. If a fridge costs $50 more at your store than a competitor but you offer free delivery, it is difficult for the customer to put a value on that service. Look at ways where you can add value to the customer, at minimal cost to your business.

CASH FLOW Don’t presume the economy will remain strong indefinitely. It might, but it is more likely that it won’t. Accordingly, you need to plan for a downturn by building in buffers. There are some simple ways to do this: • Negotiate extended trading terms with your suppliers. As long as you are a good payer, most will readily agree with this.

• Invoice at the earliest

opportunity and interim invoice wherever you can.

• As soon as a payment is due, get on the phone and talk to the customer and ask the question: “is there any reason why this account is unpaid?”

• Our Canary in the Coal Mine survey indicated that 63 per cent of SMEs outsource their debt collection when the account is more than 90 days old and, of that figure, 38 per cent outsource after 120 days. This is far too long and if an account is unpaid at 60 days, the chances are that it will be unpaid at 90 days and, after 90 days, it runs the risk of becoming a bad debt.

• Dig out your written-off debts, up to 5 years old and outsource them to a no recovery – no charge debt collection agency.

USE TECHNOLOGY Every successful business must continually adopt new technology.

Your competitors are doing it, whether to reach new markets (including your customers) or to reduce costs. You just can’t afford not to be in the game.

PRUNE WEAK AREAS Just as you occasionally need to prune a tree to keep it healthy, review any weak spots in your business. If it has been a costly area for you for a long time, such as a poorly performing product line or service or a failing branch office, scrap it and devote the resources to the healthier parts of the business.

CONCLUSION It is always possible to lift your profit margins and improve your cash flow. By following the simple tips outlined above, you are guaranteed to begin the process of achieving both aims. Remember; healthy cash flow means a healthy business. BFM Roger Mendelson is CEO of Prushka Fast Debt Recovery Pty Ltd and is principal of Mendelsons National Debt Collection Lawyers Pty Ltd. Prushka acts for in excess of 55,000 small to medium size businesses across Australia and operates on the basis of NO RECOVERY – NO CHARGE. www. prushka.com.au. Mr Mendelson is also author of The Ten Mistakes Businesses Make and How to Avoid Them and Business Survival, both published by New Holland Publishers.

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BFM | PROFILE

Preparing for the digital future Marek Kowalkiewicz has an agenda: to create a thriving future for his children. The foundation of this future is a digital economy that drives cities and businesses to be competitive on a world stage. Kowalkiewicz speaks with Business First about his ambitions to turn the city of Brisbane into a digital powerhouse that his children and future generations of citizens and businesses can not only thrive in, but also be proud of.

H

ow do you prepare the right future for your children?

If you ask Polish born, Brisbane loving Marek Kowalkiewicz it has a lot to do with creating a thriving digital economy.

Prof. Kowalkiewicz certainly doesn’t suppress his love for Brisbane. He says, “I love Brisbane so much that I want it to be the leading place in the world in the digital economy.”

He certainly has form in creating digital economies, having spent half his professional life working for industry with large software organisations, and the other half working with universities. Prof.

Kowalkiewicz also founded his own digital start-up and has worked in digital meccas Silicon Valley and Singapore.

Interestingly, he compares Brisbane to the Californian hub that is arguably driving the world’s technological breakthroughs.

While Brisbane has some way to emulate the history of Silicon Valley, what buoys Prof.

Kowalkiewicz are the cultural comparisons.

“The people we have in Brisbane are just as smart, just as passionate, just as entrepreneurial as those in Californian Hub,” Prof Kowalkiewicz says. “If we can prepare the right setup, give them

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the right environment, we can definitely help people in Brisbane grow their businesses and be just as successful.”

Prof. Kowalkiewicz says the digital work being done in Brisbane is now bearing results.

“The start-up space in Brisbane is very hot. There are a lot of things happening practically every day.

It’s really exciting,” he says.

Brisbane is the second city in the world behind New York to have appointed a chief digital officer, but what separates Brisbane from New York according to Prof.

Kowalkiewicz is the city’s more relaxed nature, which potentially leads to better decision-making unencumbered by stress and hustle.

It is those traits that attracted this Silicon Valley Senior Director of Product Innovation to the city of lights.

Indeed, Silicon Valley is a long way from Brisbane, however Prof.

Kowalkiewicz has really sunk his teeth into leading an ambitious research agenda to inform and influence a robust digital economy in Brisbane and Queensland.

Prof. Kowalkiewicz manages a contemporary research portfolio and converts industry-driven opportunities in the digital economy into research outcomes of global relevance.

“Nothing excites me more than exploring bleeding edge technologies and using them to create opportunities and solve problems that businesses or individuals face,” Prof.

Kowalkiewicz says. “The opportunity to make a tangible difference to businesses and students is a key reason for making the move. That and the enormous liveability of Brisbane.”

Prof. Kowalkiewicz sees his current role as the best job in the world.

“I get to work with CEOs. With C-Suites of large and small organisations in Brisbane. Founders and owners of small organisations.

And I get to work with them every day. What I do, and what my team is good at, is helping them discover what they are and plan for the future. My job is to make them aware what may be around the corner and the disruption to come and to work together with them on addressing these issues. In a way I get to create the future with them; not only predict their future but shape their strategies.”

Behind this is an ability to look at what is happening globally and determine what opportunities are locally relevant to really put them at the forefront of global business practice. www.businessfirstmagazine.com.au

PROFILE| BFM

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BFM | PROFILE

Prof. Kowalkiewicz conducts a lot of research, examining various organisations around the world to see what makes them successful: the tricks, the business models, the approaches that make businesses thrive. He then shares those lessons with Brisbane-based organisations and SMEs. He is working on several projects with Brisbane businesses at the moment.

“I’m working with a start up created by three graduates of QUT’s Executive MBA programme, that in turn works with Queensland Urban Utilities to develop a smart toilet concept.”

The concept is a small sensor; a small physical device that can be installed inside a toilet and analyses waste that can shared with a person’s GP. Essentially it is a pre-diagnostic device that could create a closer relationship between patient and doctor.

Prof. Kowalkiewicz sees several benefits of this, including delivery

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to remote communities in Queensland, where there are no Doctors nearby.

“There are no GPs in certain areas, so there are communities who would get this early warning, early feedback on their health, which I think is really exciting.”

Another project being worked on by students at QUT, which is yet to be associated with business is the exploration of the technical possibility to connecting families of small communities to internet for less than $1,000. Assuming there’s an Internet connected city or town within 20, 25 kilometres.

“We’re exploring cheap ways of providing that last mile of Internet.

We’re trying to make it super cheap and accessible.”

So not only is Prof. Kowalkiewicz looking forward, but he is also helping businesses in the present through regular podcasts to businesses which explore a particular topic from the digital economy such as the impact of 3D

printing on industries, or specific concepts like block chain or digital identity.

Prof. Kowalkiewicz also holds events where several hundred people from Brisbane pile into one room and explore a particular topic.

“Just a few weeks ago, we had an event on the future of retail. A few months ago, we had an event on proactive organisation. So we explore how a business could predict what their customers might want and deliver those services even before they’re asked for.

Furthermore, if you’re a large organisation we can run a joint research project and explore a particular topic in depth.”

Part of the strength of this digital scene in Brisbane is the partnership formed between PricewaterhouseCoopers (PwC), QUT, Brisbane Marketing and the Queensland Government, which Prof. Kowalkiewicz says is the only such partnership in the world where governments, industry and

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PROFILE| BFM

academic partners come together to explore digital economy.

“It really hasn’t happened anywhere else in the world.

There are some partnerships between industry and academia or government and academia but not the full triangle. So this is very, very unique and each of those partners is crucial in their own right. On one hand they convert the outcomes of my and my team’s work into real world impact. So there is the research that I do and there are already services available to cities and organisations based on the outcomes of the research.”

Prof. Kowalkiewicz spends a lot of time with Brisbane Marketing, with PwC, with Queensland Government and asks them “what are the challenges that you’re facing, what are the challenges that your customers, that your citizens are facing” and based on that he shapes is team’s research agenda.

“It’s a wonderful co-existence and collaboration,” he says.

And it is a collaboration that has certainly taken the city into the digital age and allowed it to thrive.

“I think Brisbane is doing very well and one of the reasons is because I clearly see that people in Brisbane Marketing clearly understand that the digital economy is not only about computers, technology, IOT smart networks and so on. In the end, it’s www.businessfirstmagazine.com.au

all about people; it’s all about the human aspect of the city. And they see that the digital technologies are basically just an enabler.

“There is also a huge difference when compared to other cities around the world based on conversations around how do we become a better city and how do we use digital technologies in order to enable us to become a better city.

In the end we need to be a better city for our citizens and the goals that they might have including

work, education and lifestyle.”

With all that in mind, Brisbane is fast tracking its digital approach and Prof. Kowalkiewicz is one of the facilitators of the city’s ascension as a world respected digital innovation hub.

And with that ascension comes the ultimate goal: to have the people in Brisbane stay in Brisbane so that Brisbane thrives, and for Prof. Kowalkiewicz personally to prepare the right future for our children. BFM

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BFM | LEADERSHIP

New leadership needed for crisis management National headlines every day bring fresh reports of business crises which shred reputation and destroy market value writes Tony Jaques.

Y

et many companies continue to leave crisis management in the hands of middle managers and technicians who may think that crisis management is the same as crisis response or emergency management or operational recovery. And there are still companies which think that a good business continuity plan is “all we need to be protected.� The sad truth is that such ideas are not only wrong, but expose the company to serious risk.

Now, a new approach to crisis management is emerging which demands fresh executive thinking, with more direct senior executive participation and a much greater focus on strategic crisis prevention rather than simply crisis response.

For a long time crisis management was regarded as a largely tactical activity delegated to lower level personnel, focused mainly on preparing a crisis manual in advance; holding an occasional simulation drill; and hopefully responding as well as possible in the event of an actual crisis.

Of course effective tactical preparedness is still important.

But while establishing a robust crisis response process may provide a reasonable outcome when an incident happens, it contributes nothing to crisis prevention, long term value or reputation management.

By contrast, the emerging conception of crisis management is a much more strategic activity –

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way beyond conventional incident response – with a strong focus on identifying and managing crisis threats long before they strike.

What’s crucial here is that the necessary change cannot be delegated downwards. This new approach called Crisis Proofing can only happen at the top of the organisation and brings a need for new leadership skills beyond just chairing the crisis response team or acting a spokesperson.

Firstly, a more strategic approach to crisis management demands much greater engagement from the Executive Suite and the Board Room. This greater participation has been evolving for a while, but has recently gathered pace with increased stakeholder expectation of more direct top management participation, and in the face of high-profile publicity about failure at the highest levels. Think Seven West Media, Dreamworld, Centrelink.

However progress is slow. A global survey of board members, published in early 2016, showed fewer than half of the non-executive directors questioned reported they had engaged with management to understand what was being done to support crisis preparedness. And the same survey showed 73 per cent named reputation as the single greatest crisis vulnerability, yet only 39 per cent said there was a plan for it. Perhaps most concerning of all, the Australian segment of the international data revealed that only 11 per cent of directors said their own organisation’s ability to respond to a crisis was “very effective” and only three per cent felt their own organisation was “very capable” in crisis prevention.

This worrying perspective brings us to the second key element of Crisis Proofing, which is moving the leadership mindset from what to do in the event of a crisis to what can be done to prevent crises from happening in the first place.

Crisis Proofing advocates more top management participation for better outcomes, moving responsibility from the operational response centre up into the executive suite, highlighting that senior executives are responsible not just for crisis www.businessfirstmagazine.com.au

response but for crisis preparedness and prevention.

This evolution towards strategic recognition and prevention has in turn expanded the crisis management role of top executives and directors. However it has also exposed a practical challenge.

There is little doubt that most top executives want to do what’s right for their company, yet some struggle with deciding exactly what needs to be done when it comes to protecting against the operational and reputational damage threatened by a crisis.

The reality helping drive increasing senior executive involvement is that most crises which threaten a company are not sudden, unexpected events, but are preceded by clear warning signals, which are frequently ignored. In fact the Institute for Crisis Management in Denver Colorado, which has been tracking business crises in the media for well over 20 years, concludes that about two-thirds are not unexpected at all, but are what they categorise as “smouldering crises” – events which should have and could have prompted prior intervention.

This leads to the key steps where business executives need to allocate time and resources: • Implement effective processes to identify and respond to issues before they develop into crises • Listen to stakeholders and properly understand their concerns • Show willingness to accept bad news • Analyse risks to be ready for the most obvious or likely crises • Provide leadership to develop a crisis-aware organisation Nothing can be guaranteed to save a business from crisis, but the fact that one in four organisations hit by a crisis go out of business should be reason enough to make this a top priority. BFM Dr Tony Jaques is an internationally recognised authority on issue and crisis management and Director of Melbourne-based consultancy Issue Outcomes P/L. His latest book is Crisis Proofing: How to save your company from disaster (Oxford University Press, 2016)

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BFM | PROFILE

Ready to go software streamlining business Praveen Reddy, the chief executive at enterprise management software firm Periscope Corporation focuses on putting the clients in the driver’s seat. That, he tells Business First, is why Periscope is so unique.

P

eriscope is not just about making organisations more efficient. It’s about making them more effective.

It does this through a software platform to manage every aspect of a client’s business, in the way the client wants.

“What we want to do is have our software driven by our clients, and that ensures that we are responding to a client need and that it is business relevant,” says Periscope Corporation’s Praveen Reddy.

It is important here to understand exactly what Periscope Corporation does.

This Australian owned and operated company enables businesses to connect easily through a company’s unique internet portal, it’s software can be designed to assign staff specific positions in the system, so that everybody sees only what they need to, improving efficiency and accountability. It can seamlessly reflect the HR function, so when someone leaves, the manager is automatically put into that position until the position is filled.

The beauty of the software is that it can be configured to suit any specific business with workflows, dashboards and reports that are tailored to their exact needs. The software is used for traditional governance functions, as well as a wide variety of other applications such as strategic and business planning.

Essentially, Periscope software can be used on all devices, making integrated business management a seamless operation.

“Ultimately when you look at organisations, it’s really about them looking for efficiency. But more importantly, they also want to be more effective. Our software can really make an impact on this.

Usually organisations start on the efficiency side, but as they build a portfolio of data sets, they want to look at what trends we’re seeing in

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the organisation and improve the way they conduct their business.”

By way of example, Reddy tells the story of a client who sits quite separate from the operational part of their organisation. Reddy says he was talking to the client about the data sets that they had, and the spike in complaints at a specific time every year.

The software enabled the company to recognise the causes and move from efficient processing of complaints to effective practices to prevent the complaints in the first place.

It is also helping businesses move into new work paradigms.

Mobile devices have really taken off in the last couple of years.

Employees are bringing devices into organisations and there’s been a real merging of what’s corporate and what’s personal. Portability is now something that organisations are really looking for, Reddy says.

“They are looking for work from home flexibility, but also the ability to take that flexibility out on site. That’s where, again, we’ve really worked very hard as an

organisation on trying to support that portability and the way the workforce has evolved over the last couple of years.”

Periscope’s self contained software is built around auditing principles. It started as a tracking system where clients had an obligation or requirement and tracked it against time. They would have accountabilities against those actions. However the software now has much more complex calculations, intuitive workflows, and data through dashboarding.

“People aren’t just looking for a replacement for a spreadsheet, they’re actually looking for business intelligence coming from the software. And so again, that’s helped drive us, it’s helped us understand the needs of business.

We have seen many dashboarding applications that organisations are using to determine datasets Periscope actually tells them about the business, and what they can do with that information. And there’s no doubt that’s where we’ve really evolved significantly.”

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Periscope is that it runs one version of the software. And that’s very much for the benefit of clients because when there’s an issue, then it’s an issue for everyone and addressed and fixed across the board.

Reddy refers to this approach as a “pseudo-socialist environment where if we do a development for a particular client that’s going to benefit all clients, they all get it. And so for us that’s really important.”

Also important is client feedback as it is clients who influence the development of the product.

Periscope sit down with the client to build what they want, or they can build it themselves.

Empowerment is a really important aspect of what Periscope do and therefore they run training courses for clients so they can go off and build their own forms.

The reason for this: “I always hated the principle of being held hostage to a third-party vendor for even the simplest of changes,” Reddy says.

Periscope has built up a sizeable client base over the years across industries. They now have companies and governments across the eastern Australian seaboard, South Australia and Tasmania.

“We’ve seen an increasing interest from the not-for-profit sector, driven by the need for better governance and better systems as a result of the national disability insurance scheme (NDIS). It’s very much about moving from the block funding from government, to a pay for service, and some of those fees are very tight in terms of being able to deliver that service, so you have to be able to find some efficiencies through your whole supply chain in the organisation.”

Reddy is acutely aware of these NDIS challenges, as he sits on the board of VicDeaf, an organisation that itself is repositioning to be an NDIS provider of choice.

The key for Periscope is driving clients’ success.

“When we see our clients’ success and recognition of their staff, we know we’ve played

a small part in that and that’s probably one of our biggest accomplishments,” says Reddy proudly.

“A number of clients have won awards for the use of the product in conjunction with a board or governance aspect of the organisation that they wanted to showcase. We love that acknowledgement.”

Today Periscope Corporation is looking at the breadth of the footprint in organisations and taking away old spreadsheets and other applications that were just used for one-off purposes, and incorporate them into one system.

Periscope is also working with trusted resellers, who can support their own businesses, so that the software’s distribution network is enhanced.

It’s a good model and clearly a successful one and as business needs continue to evolve as business practices change, Periscope Corporation want to be there to help businesses make the transition easier. BFM

Supporting good governance for senior executives and Boards

Empowering clients to take control

Solutions for all industry and government sectors

Low risk, reliable and reputable software solution

Fully Australian owned and operated since 1998

Contact: Praveen Reddy

Email: praveen@pericorp.com

Phone: 03 9882 1896

Web: www.pericorp.com

Suite 1 | 5 Rose Street | Hawthorn East VIC 3123

BFM | TEAM

HELPING STAFF WITH THEIR PERSONAL DEVELOPMENT How often do you hear about staff development and training? The more your role is involved with management and leadership, the more likely you’ll need to focus on this. When you think of staff skills, do you think of technical or soft skills?

You should be thinking about both.

HOW STRONG ARE YOUR TEAM MEMBERS’ SOFT SKILLS? There will always be variation of staff skills, being aware of this as they develop is an important part of your role. Another important factor for your team members is what motivates them. Motivation is also something we often hear about, it’s role in the context of work is sometimes obvious, sometimes not. It’s a massive but often subtle influencer of engagement, productivity and professionalism.

HOW DO YOU GET HONEST FEEDBACK ABOUT WHAT’S IMPORTANT TO YOUR STAFF? If you only seek feedback from your staff at formal performance reviews it’s unlikely they’ll tell you if they are unhappy. If they’ve voiced things in the past that they don’t believe you’ve tried to resolve or even take seriously, they are more likely to tell you what you need to hear to move onto another topic. Depending on the culture amongst management, it can be challenging to be willing to listen and engage with staff, even if you aren’t able to accommodate some requests in the end. You’ll probably struggle to get a staff member to admit “I don’t trust you”, and if

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they do, it’s probably because they have already found another job.

HOW CAN YOU BUILD UP TRUST? If you can build up trust to the point where staff are sharing some of their personal motivations, this can give you a source of powerful insight. Within their motives you should be able to find ways to help them achieve these personal goals more effectively at work. But what about soft skills training that will enable staff to deliver more value based on better customer relationships?

HOW CAN YOU TEACH YOUR STAFF TO CARE MORE ABOUT CUSTOMERS? Consider personal development training, it might involve listening, empathy, motivation,

interpersonal skills, emotional intelligence and other things important for personal success in life. This training also has the potential to greatly improve professional effectiveness.

This kind of training is not just important for customer service staff, in fact you may stand to gain the most improvement by providing it to technical and non customer facing staff.

HOW DO YOU GET STAFF TO AVOID CONFLICT? If you think of all the major difficulties faced in your current or previous workplaces, there’s a good chance many of those problems are based on interpersonal factors.

When people have a strong degree of personal development, they are much more likely to avoid www.businessfirstmagazine.com.au

TEAM| BFM

interpersonal problems, and can also help others avoid them too.

They are far more likely to be interested in the organisation’s professional goals and make personal decisions based on that understanding.

WHAT ARE THE BENEFITS OF SOFT SKILLS TRAINING? This type of training will help your staff understand how to build better relationships with colleagues and customers. These skills are important for everyone, not just those facing customers directly, and not just those involved in the commercial aspects of those dealings. The financial planner who is just looking at implementing a financial product from a technical or commission standpoint is missing a true www.businessfirstmagazine.com.au

understanding of how it could help the customer. So too is the IT engineer who only looks at a server being deployed as another machine to build. If these people were actively looking to understand how these solutions impact what’s important to the customer, they could deliver so much more value through these stronger relationships.

PERSONAL DEVELOPMENT WILL SUPPORT PROFESSIONAL OUTCOMES Personal development, especially the development of soft skills will have benefit for any employee, both in their personal and professional lives. There is also an important message you are sending your team members with your actions, that their personal

priorities are important to you.

Staff members who know their leaders care about their personal priorities are far more likely to stay working for that kind of leader.

There are so many opportunities to show a regard for these kinds of skills to your team members, perhaps the more specialised or technical your team members are, the greater positive impact you can have.

When the training you provide to staff is having a double benefit of improving their personal lives, you’ll be contributing towards happier people who are living more effective lives. With this, increased job satisfaction is likely and that in turn can greatly improve quality of work and retention of these talented individuals within your organisation. BFM

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BFM | PROFILE

A COMMITMENT TO UNDERSTANDING Running a boutique, highly-specialized, highly-focused, high-touch business is what sets recruitment agency Carrera apart from its competitors. Business First speaks with managing director Michael Floyd about finding a niche in this highly competitive space.

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ichael Floyd says with Carerra, he was trying to fill a massive gap in the recruitment space. While the big guys could go off and provide impersonal, average service, with not a lot of customer satisfaction and a final bill of tens of thousands of dollars, Carrera was set up as a tightly focused, value accretive business that could deliver with speed.

That’s the beauty of being a boutique business, that can get to know its market intimately and understand the trends, issues,

Michael Floyd

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challenges and opportunities in the marketplace.

“We’re going to deliver significantly better value than a much bigger competitor who’s trying to be all things to all people and actually failing,“ Floyd says.

“I think we always had a consulting mentality, but we’ve now driven it even further in developing products and having different conversations with clients that led us to having better longerterm relationships.”

Carrera occupies a unique space in the market, particularly with its

level of specialisation and attention to customer detail.

It’s billed as one of the most sought after talent consultants for sales and marketing roles.

And this specialization has seen the business expand across the country to Sydney, Melbourne, Brisbane and also across the ditch to New Zealand.

The best businesses are those that take an interest in their clients, not just take their money.

Carrera has made a habit of talking to people and understanding what’s next.

In a nutshell, what sets Carerra apart is “being able to get involved much sooner and staying longer in a client’s life. I don’t know of any other competitor that’s positioned exactly the way we are.”

The key, he says, is not to compete on price. That’s a losing strategy.

“Competing is something we avoid completely. There’s a lot more a good consultant, and I say consultant rather than recruiter, can add to a client and to a candidate. They don’t need to use price to gain business. It’s actually not sustainable in a lot of cases.”

According to Floyd, developing a high touch business means doing more than just recruiting. It’s very much about being what he calls a “talent consultant”.

As Floyd explains, talent consultants involve themselves in a much broader part of the process than just recruitment. They look at structure and how you engage with the talent market. They make recommendations around salary and process.

“We provide a range of services beyond recruitment like interview skills training. We can audit the recruitment process that you have inside your business right now.

With candidates, we’ll actually sit down and spend a lot of time understanding what it is that they want, not from just the job, but www.businessfirstmagazine.com.au

PROFILE| BFM

from what their life choices or their lifestyle is. We have people coming back to us constantly for advice, which obviously, we’re not getting any money for, but that’s not what it’s about. A talent consultant is an advisor over the long term.”

Floyd believes that overall the recruitment industry has too much of a narrow focus: fill a job or find a job. However there should be a much broader focus that affects people in a much deeper way.

He calls it the “ultra-fit recruitment process.”

“It’s a term that we coined internally to make sure that the process that we work through with clients and candidates covers all of the most critical aspects in finding the best talent and finding the right role.”

This still exists and is important, but there’s also personality fit, values, and the various processes of engagement and longevity and lifestyle fit.

Questions that are asked include: What does the future hold for the candidate and business? Is there a

match long-term?

“So, again, it’s a deeper consulting style that gets a better outcome for both parties, versus the transactional stuff.”

Floyd says success is about building foundations. In the case of recruitment it’s about understanding the absolute depth and breadth of the business’s challenges. What the role is. What the market is. What the customers of a particular business are doing.

The talent and what they will discuss with their wife or husband when they go home.

That’s our positioning: we can get deeper into all of those things than anybody else.”

While the market has changed a lot since he started the business in 2002, there is one thing that has remained the same: Carrera’s commitment to demonstrate value.

So what does the industry hold for its own future as well as Carrera’s?

“It’s an interesting question,” he says. “I’m not even sure the industry is going to grow. I think at some

point in the next decade we’ll see a change in the business cycle as we’ve seen in the past. And I think we might see the number of recruitment companies out there shrink. But I think there’s always going to be a place for businesses like ours. I think what our focus is going to be on is just continuing to work with businesses and help them grow.”

Which is exactly the attitude that has kept this business moving forward and will continue to do in future. BFM

master every turn in sales & marketing

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As a business leader, your vision is brought to life by an ideal mix of supportive people.

Attracting, engaging and retaining the right talent in sales & marketing can help you navigate the twists and turns, roadblocks and new exciting avenues that will determine your business’s success.

At Carrera, we’re fearless in helping map the right path for you and your business.

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mastereveryturn.com.au

BFM | TAX

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TAX| BFM

WHY 2017 IS THE YEAR OF THE TAX AUDIT The Federal Government’s Tax Avoidance Taskforce is putting tax audit activity back in the spotlight. Tax specialist Murray Howlett looks at some of the ways you can minimise the pain if it happens to your business.

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ince the Federal Government announced last year its intention to raise $1 billion in new revenue from tax audit activity, individuals and businesses have been on high alert.

Already this year, the Australian Tax Office (ATO) has announced it would review the GST rules for salad because of their ‘very rapidly moving nature’.

The Government’s principal revenue collection agency has also launched a compliance crackdown on small businesses operating in cash as it seeks to claw back some of the $23 billion lost to the ‘black economy’.

With a 2017 goal to raise nearly $1 billion in new revenue from increased tax audit activity, it’s no surprise business groups are being urged to get their affairs in order in readiness.

UNDERSTAND YOUR RISKS In the year of the tax audit it’s more important than ever for businesses to know where their ‘bodies are buried’. With any audit, the onus will always be on the individual taxpayer to substantiate their tax position.

Most laws require the complaining party to prove their case, however the onus of proof is reversed in taxation matters.

This means that the ATO can raise assessments that require the individual taxpayer to prove them wrong so it’s always preferable to avoid adverse assessments being issued in the first place.

ACCESS TO DATA The ATO’s data tracking and interpretation capabilities have

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improved exponentially over recent years and the bottom line is they’re looking to make sense of the data.

The advent of computer technology has made it easier for the ATO to track the spending habits of Australians and many businesses are being caught unawares.

In more recent times we are starting to see them utilise other, more abstract, methods to perform their checks. For example, they have run a program where they contact private schools to understand who is paying the school fees for the students that attend.

With businesses they’re looking for any inconsistencies in tax filing records, whether GST filings reconcile with income tax filings and whatever else they can find on the public record.

We’re also seeing cross-border and e-commerce transactions attracting the ATO’s attention.

But as much as they’re looking and as much as the data tracking processes have improved, the interpretation is sometimes flawed and in some cases they’re simply looking to understand what they don’t understand.

So what do you do if the tax office calls? Here are five ways to ensure you avoid or minimise the pain of an ATO audit:

2. Be prepared Calculate your risk. If you know where the risk issues are for your business, you are better placed to respond to ATO queries. This also means quantifying any exposures and knowing who may be liable.

1. First contact is everything The first communication with the ATO following notification of the audit sets the tone thereafter. Is this going to be a confrontation or a collaboration? Which approach is best for your set of circumstances?

Pilot Partners’ Tax Partner Murray Howlett has practiced as a professional business advisor since 1993. He is knowledgeable in all facets of federal tax and regularly consults on corporate tax, superannuation and international tax-related matters. www.pilotpartners.com.au.

3. Understand where the ATO is coming from The ATO runs various programs and standard audit enquiries.

Understanding the mischief they are looking for will help you to respond appropriately with the relevant information they are seeking.

4. Respond quickly As a general rule, be able to anticipate a query from the ATO and have the ability to shut it down swiftly. Responding quickly and appropriately sends a clear message to the ATO that you have strong systems in place. They will see that you are organised and be less likely to dig deeper.

To ensure you are able to do this, implement strong and appropriate systems in your business to record and reconcile your activities.

5. Expect that the ATO has access to plenty of data Assume the ATO has access to banking records, property titles, credit card records and even who paid your school fees. BFM

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BFM | PROFILE

HOW SYDNEY SEAPLANES OVERCAME ITS SETBACKS Sydney Seaplanes CEO Aaron Shaw speaks with Business First and reflects on the growth of his business and the pitfalls it has overcome.

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s we enter our eleventh year in the market as Australia’s largest seaplane operator, it’s only natural for me to look back – as I sit at our new terminal with a coffee in-hand and our fleet before me – at how far we’ve come since consolidating five shonky seaplane operators into a single business.

We’re due to post turnover figures of $8 million this financial year – a 15% increase on 2016 – bolstered by a 20% increase in passengers since last year and the introduction of a hospitality offering (that’d be the terminal I’m sitting in right now).

However we’ve not been without our setbacks. Whenever I’m asked about missteps or failures, one move in particular comes to mind.

We worked for a long time on offering a direct service to

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Newcastle. That service started in 2009 and we kept it going for three-and-a-half years (I’ll get to why we stuck by a failing venture shortly). There are a lot of different compliance requirements compared to chartered flights, so it was a very long and involved process. The agencies we had to seek approval from to operate the service were as follows: CASA (Civil Aviation Safety Authority), as there were no other approved schedule seaplane services operating in Australia; DoTARS (Department of Transport and Regional Services), whereby we needed to seek exemptions from normal airport security measures; NSW Maritime and Hunter Development Corporation; Newcastle Ports Corporation; and the Australian Defence Force, since Newcastle

Harbour is located within Williamtown Airport airspace.

We started with eight flights per day, which was a big mistake. We overestimated the interest by quite a bit. We should have started the service with a maximum of four flights per day; starting with eight was far too many and stretched our resources.

We didn’t conduct formal market research around firm demand and pricing, which we should’ve done.

We looked mostly at anecdotal or historical data about services previously offered and general statistics about daily travel between Sydney and Newcastle, plus major corporates likely to use the service. Our business modelling showed the service would grow to be a profitable addition to our services but we underestimated www.businessfirstmagazine.com.au

PROFILE| BFM

the cost and overestimated the demand.

The service was pitched mainly at law, engineering, and medical professionals who wanted to be in and out of Newcastle quite swiftly.

While we did get interest from the relevant demographics, including nib healthcare, it wasn’t enough.

We committed a caravan [larger seaplane] to it.

Say we had five people flying to Newcastle, paying $200 per head. We only have one caravan, so committing to the Newcastle service meant turning away 10 people paying $400 per head for a dining experience. Also, that’s a 30-minute flight versus a 10-minute flight. We were doing that way too often. This business has high overheads as is, so losing money on our main plane wasn’t viable.

Because we’d invested all this time and money and effort, and we’d developed all these great relationships with our numerous regular customers, we were kind of reluctant to let it go. We tried to get government support to keep it alive. The Member for Newcastle at the time, Jodi McKay, who was also

the NSW Minister for Tourism, told me no, and also that if we stopped the service she’d withdraw all support for Sydney Seaplanes. The DA for the terminal next door was pending at the time, so we couldn’t really risk losing government support or rocking the boat at all.

I regret that we weren’t able to attract a financial backer for the service. We had many wonderful and loyal customers that we grew close to and who relied on the service – I felt sorry about letting them down when we stopped it. Establishing the service was difficult and letting it go was difficult. That being said, we would definitely bring it back in a scheduled capacity if we had a way of underwriting it.

These days we focus more on either value adding or improving our existing successful products, thereby increasing revenue and profitability on these services through yield and load factor i.e. instead of spreading our customer base across a broad range of services, we seek to grow that base while simultaneously consolidating that growth onto a successful and proven product. BFM

Aaron Shaw

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BFM | TECHNOLOGY

CLOUD TECHNOLOGY IS AN ENABLER OF CHANGE

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TECHNOLOGY| BFM

With sophisticated digital tools at their disposal, how can HR see organisations through strategic transformation?

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recent KPMG report found that while cloud HR technology was a great tool, true transformation requires strategic change management. Companies that implement sophisticated HRIS without due change management found the switch in technology underwhelming.

A growing number of HR departments are already using or looking to implement cloud technology, but can cloud HRIS and HCM systems be a magic bullet quick fix for HR? In short: yes and no.

While technology can absolutely enable automation and streamline the tedium of manual processes, the fact remains – it is only a tool.

As you might suspect, a tool can yield very different outcomes in different hands.

EXPECTATIONS VS REALITY Cloud HR is becoming a leading delivery model for HR technology.

However, while some companies have successful integrated cloud HR as a tool for success, others have faltered.

The study reported that only 24% of businesses effectively utilised cloud HR to drive greater business value. This figure can be better though. Many companies implement cloud technology with the expectation that it will provide a quick fix for HR pressures and problems, but people and processes also require adaptation to complement it.

TECHNOLOGY, PEOPLE, PROCESS The key word here is: alignment.

The adoption of new technology must be spearheaded by people with a strong awareness of business goals in alignment with technology and process.

As most cloud HRIS systems are robust enough to include modules configured to an organisation’s needs, it is up to key personnel to decide on which functionalities are www.businessfirstmagazine.com.au

actually necessary for the business.

Additionally, while technology can generate hundreds of accurate HR, payroll and financial reports, it is still up to people to translate data into actionable strategies.

In the same way, processes need to be adapted and documented so that relevant personnel are kept abreast of changes and can do their jobs with ease, while maintaining compliance.

The KPMG report found that HR professionals can and should engage top leadership and line managers to advocate new processes and ways of working as well.

Ultimately, true transformation happens at the intersection of technology, people and process.

LEADING THE CHARGE FOR CHANGE Whatever the approach, cloud technology is ever-evolving so it is not always be possible for HR professionals to look to a pre-existing protocol for guidance. Instead, organisations are increasingly looking to HR professionals to lead the charge in defining parameters and developing new ways of working with the new technology for optimal business outcomes.

By moving from steward to strategist, this shift in the role of HR could signal a greater stake at the leadership table. BFM

By Dr Denise Tan, Affinity Employer Services. Affinity’s goal is simple: to make your organisation more productive. Founded in 1987, Affinity has developed clever software that streamlines complex payroll and HR processes through technology and automation. Designed for businesses employing 150+ staff, Affinity provides a suite of cloud-enabled tools to manage payroll and HR tasks from any device. Affinity can also take care of your payroll needs, offering fully-managed payroll services.

Follow Affinity HR & Payroll on LinkedIn, Twitter or visit us at www. affinityteam.com

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BFM | PROPERTY

Property industry too often under attack The property industry needs to be recognised for the massive contribution it makes to the Australian economy rather than being the subject of regular attack, says a leading property adviser.

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idal Rasheed, Managing Director of Silvertail Property Group, said recent GDP growth results were in part attributable to the property industry. The results included a 1.2 per cent increase in dwelling investment in the quarter.

“Traditionally people will criticise the property investment industry and blame investors for driving housing prices up. But if I wasn’t for the property industry we probably wouldn’t have had the same growth we have had,” Mr Rasheed said.

“The property investment industry makes an important contribution to the Australian economy including thousands of jobs. The sector represents a large chunk of the real estate market and also contributes to construction, finance, retail, infrastructure and myriad other industries.

“The ABS has reported that over 1.06 million people are employed in construction as a result of some of the work we do – and there’s more than 217,000 people employed in rental and property management.

A lot of this can be attributed to investors.

“Building and construction accounts for close to 8% of our GDP and about 9% of employment in Australia.”

Mr Rasheed said negative gearing had been put under the spotlight during last year’s Federal election period, with debate about abolishing negative gearing. He said this was misguided.

“Investors last year wrote $3.7 billion off their taxable income however, through capital gains taxes, they have paid over $51 billion,” he said. “They’ve also contributed to about $45 billion in property-related tax revenue

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collected by state and local governments.

“Aussies love property.

Residential housing across the whole country is estimated to be worth $6.6 trillion – or three times the sharemarket. Construction accounts for about 230,000 new homes in Australia a year.”

Mr Rasheed said overall the property industry contributed to three main pillars of the economy: 1. Providing jobs and economic growth.

2. Providing shelter for a lot of Australians (1 out of 4 live in a rental). This lessens the pressure on governments to provide housing for people who can’t afford to buy.

3. Creating wealth for a lot of Australians. Investors who are self-funded reduce the burden on government pension and welfare payments, which is particularly important in light of Australia’s ageing population.

“As with any industry, there are some players who do the wrong thing. But we shouldn’t let that get in the way of the big picture, making sure . BFM Nidal Rasheed is Managing Director of Silvertail Property Group, established in Adelaide in 2014 and working with clients around Australia. www.silvertail.com.au In October 2016 Nidal won the Owner-Entrepreneur category of the Australian Institute of Management (AIM) Leadership Excellence Awards in SA; in 2015 he was South Australian winner in the Young Manager of the Year category of the AIM. Nidal has won numerous awards for outstanding achievements in the areas of sales and customer service for leading ASX listed property developers and other national companies he has worked with.

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PROPERTY| BFM

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BFM | PROPERTY

APRA’S WIDE NET: CORPORATE LENDING MARKET FEELING THE SQUEEZE There has been a lot of noise recently about credit tightening in the residential market as a result of the ever-changing landscape of bank lending policy and what will happen to the “property bubble”. However, the fallout is not limited to just property investors the corporate lending market will also soon be feeling the squeeze as the Australian Prudential Regulation Authority (APRA) casts a wide net in enforcing tough new rules.

By Francis Farmakidis, Founder of Vobis Equity Attorneys.

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PROPERTY| BFM

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op-tier banks are now demanding more onerous reporting of earnings before interest, tax, depreciation and amortization (EBITDA) from business owners applying for loans, along with enforcing greater income to loan ratios based off these EBITDA guidelines. They are also demanding stronger tangible asset balance sheets, longer trading histories and greater cash trading surpluses.

New restrictions particularly affect businesses wanting sub $30

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million loans, where there were already only a handful of major bank players. This has effectively paved the way for a ‘one horse race’, where lenders can reject or accept applications from stable businesses due to their appetite for that deal at that time.

In this environment, it’s dangerous for any borrower to rely on top-tier funding. Major banks themselves are imposing strict loan terms not only on corporate lending, but also on business property lending.

The CBA in particular has adopted a practice of demanding quarterly or even monthly reporting to track debt to income ratios as a loan condition. If the ratios are not met, the Bank still has the power to default, regardless of whether loan repayments are being made.

A majority of borrowers are not meeting these stricter conditions and are being left with very few financing options. As a result, many proven but junior asset backed borrowers with strong business models are being forced to look to second-tier lenders, where loan conditions are heavily skewed towards higher income levels above higher interest rates.

Effective rates with these second-tier lenders (including application and ongoing management fees) end up being higher than those for personal credit cards. Essentially, missing out on loans from top-tier banks means a rise in the effective cost of capital from around 5.5 per cent to 20 per cent.

Given the recent tightening of the major banks on corporate lending, the only alternative for borrowers is to turn to second tier lenders.

The flow on effect from this will be a burgeoning second-tier loan market where private equity takes on what has traditionally been the small-to-medium enterprise banking space.

Unfortunately, things are going to get a lot worse before they get better. It is up to the government to level out the market by increasing competition in this vacuum between top banks and second-tier lenders.

Government reform should include policy changes and funding to allow licensed professionals to access this market to compete with second-tier lenders. Otherwise, financiers in the second-tier will monopolise the market, with greater opportunity to manipulate term sheets so that they give rise to technical events of default.

The long term effects could be destabilising for a huge part of the business sector unless the government steps in to offer new and practical options for corporate lending and business property lending. BFM

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BFM | FEATURE

THE WHY IN WI-FI For many Australian businesses, guest Wi-Fi is no longer an after-thought with demand from consumers driving the uptake of guest Wi-Fi services.

By John Rankin, Managing Director, Skyfii

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FEATURE| BFM

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kyfii’s own analysis has identified that shopping centre visitors will spend up to 25 per cent longer in-venue when using a guest Wi-Fi service, while 66 per cent of travellers admit they would change hotels for a better Wi-Fi experience, according to a study by Xirrus.

From shoppers in a retail venue, and the mobile workforce working in between meetings from a café, to travellers at an airport, the desire for public Wi-Fi is increasingly becoming a necessity.

These services support not only local tourist economies but are being demanded by the globalised workforce who need to be online and connected. But for those businesses yet to flick the switch on guest Wi-Fi, the question remains – why Wi-Fi? The benefits of providing public Wi-Fi extend beyond the service you provide to users. As a business, city, education facility, airport, shopping centre or retailer the benefits are tremendous, and here are just a few.

BUILD A DATABASE OF ENGAGED CUSTOMERS For many users, the first step to accessing public WiFi is to land on a registration page. Registration portals offer the ability to capture user details as they log onto public Wi-Fi. With these details you can begin to grow a database of people who are engaged with your venue and your brand.

By selecting a Wi-Fi solution with analytics technology in-built, you can quickly capitalise on this data through clever engagement tools. For instance, go beyond the standard registration page to schedule subsequent questions in the captive portal to capture additional data from users when they return to the network.

Savvy businesses are also going one step further to serve targeted advertising to users. Retailers are embracing location-based technology to understand the consumer journey within shopping centres. Using this, shoppers can be served a promotional discount offer for the exact store they are standing outside of – converting window-shopping into sales!

ATTRACT NEW CUSTOMERS Guest Wi-Fi adds an incentive for visitors to enter in venue with recent research showing a growing trend towards people looking for Wi-Fi as a key feature when selecting a restaurant.

This can also be applied to public venues looking to engage with users in the area. At Skyfii, we recently worked with Waverley Council to bring free Wi-Fi to the iconic Bondi Beach. Every year, more than 2.2 million people visit the Bondi Beach area to soak up the sun, sand and surf.

During this past summer, beach-goers were able to access guest Wi-Fi while roaming the beach, baking on the sand or walking the streets (in search of the perfect smashed avo!).

IMPROVED CUSTOMER EXPECTATIONS The increase in guest Wi-Fi deployments have started a trend amongst consumers, whereby the provision

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of Wi-Fi has become an expectation. Guest Wi-Fi is provided in numerous settings including workplaces, airports, education facilities, city centres, pubs, shopping centres and hotels. By meeting these expectations you improve your customer’s experience and their loyalty to your venue.

In the case of Bondi Beach, the chance to capture millions of visitors presents a lucrative opportunity to increase sales for businesses in the local areas and enhance the experience for both travellers and locals.

CONSUMER ANALYTICS For organisations, the benefits of offering guest Wi-Fi extend beyond simply delivering a connection and capturing data.

For me, the most exciting opportunity lies in the data itself – providing a platform for organisations to construct a clear picture of the profile and behaviour of its users.

By adopting a Wi-Fi solution that includes analytics software, businesses have the opportunity to dive deeper into the insights that Wi-Fi can deliver. This helps to understand and visualise visitor behaviour, and empowers the measurement of key aspects of the performance of a venue.

This can be blended with additional data feeds, such as CCTV cameras, to better understand how users operate in your venue. Smart organisations are embracing this technology to inform decisionmaking, such as implementing traffic paths and workplace design. If you know that 20,000 people walk a certain path through your venue every day, why not capitalise on that by adding a pop-up kiosk or interactive billboard? The insights that data from your Wi-Fi can deliver can have an immediate impact on your business and importantly, the bottom line.

CONSIDERATIONS When considering implementing guest Wi-Fi in your business, there are a few points to remember. The network should be implemented by a reliable and secure vendor, ensuring it can safely maintain traffic from large numbers of people trying to access the network at once.

Ensuring the Wi-Fi can be accessed quickly and easily will be key to repeat use. By having a solution that offers easy on-boarding you can boost repeat visits and deliver a greater experience.

Look for a solution that offers in-built engagement and analytics technology. Without this, you are losing a valuable opportunity to learn more about your customers and on-site guests.

The opportunities to connect with your consumers via Wi-Fi are too great to ignore. By embracing this technology, you can deliver better user experience, collect valuable customer data, push targeted content and use data-driven insights to make informed business decisions.

Now’s the time to hit go on your guest Wi-Fi and analytics strategy to discover more about how your visitors interact with your organisation and the world around them. BFM

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BFM | FEATURE

What Entrepreneurs can learn from a Heavy Diesel Auto-Electrician Traditional stereotype in Australia will often undermine the entrepreneurial potential and abilities of your everyday auto-electrician, motor mechanic, etc. Unfortunately, this poor assessment of these tradespeople, reduces the opportunity for them to be considered eligible candidates in a typical business development or leadership role. The general consensus is that these ‘tradies’ are mostly capable of just fixing vehicles, getting their hands full of grease, and simply following instructions from their boss at work in a 9 to 5 job!

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ontrary to this belief or myth, is Sandro Tranquim. A heavy diesel auto-electrician who is not only technically capable of repairing heavy vehicles, but is also flexing his muscles in other ways, and demonstrating his other talents as an entrepreneur, disruptor, and founder of Tranquim in Melbourne.

Originally from Mozambique and raised in Zimbabwe, Sandro’s humble beginnings in the mechanic’s trade began over 20 years ago and with

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the help of his Father, he was able to learn the fundamentals of running a business in the mechanics’ trade. Since 2015, Sandro has been on a mission to build a world ranking operation delivering exceptional service for heavy vehicles including auto-electrical, mechanical, and air-conditioning within the waste management, haulage, and earth moving sectors.

In an attempt to bust the myth of traditional stereotype, and closely examine Sandro’s unique entrepreneurial mindset of an auto-electrician, I was www.businessfirstmagazine.com.au

FEATURE| BFM

to begin again, this time more intelligently’, said Ford.

According to Sandro, there will always be set-backs.

‘Just dust off the dirt from your knees and get back up.

Adversity makes you stronger. It’s during the storms that the true character of the man is realised. You have to fall first before you can learn to walk.’

INVESTMENT VERSUS COST-CUTTING Experience from a 20-year coaching career has taught me that most SME business owners aim to ‘cost-cut’ to make profit, rather than ‘invest’ like entrepreneurs to reap the rewards from long term risk-taking. ‘I don’t believe in cost cutting’, says Sandro. One needs to spend wisely but when cost-cutting is your goal, it’s a sign of a small mind. You won’t grow beyond the confines of smallness if your mindset is small. Invest in infrastructure, tools, knowledge, your people; and it will pay off’.

able to uncover his philosophies to business and life in an interview on InspireTalk radio.

THE POWER OF VISION We often hear famous quotes from serial entrepreneurs that share their philosophies and ethos to life. Lindsay Fox once quoted ‘Life isn’t about algebra and geometry. Learning by making mistakes and not duplicating them is what life is about’.

With a vision of being the next Lindsay Fox in the heavy vehicle repair industry, Sandro has taken the massive leap of faith of employing 4 full-time staff; placing 3 fleet vehicles on the road; and securing a 500 sqm commercial premise in Derrimut, in less than 18 months. Servicing major accounts across Victoria, Tranquim is disrupting the standards of customer service and rapidly expanding its operations across Victoria.

DEALING WITH SET-BACKS, ADVERSITY AND FAILURE Great missions, like the journey to Mars, or an invention beyond one’s imagination, are full of unpleasant surprises, frustrations, painful experiences, and endless set-backs. Henry Ford knew this experience all too well when attempting to create his first automobile. ‘Failure is simply the opportunity www.businessfirstmagazine.com.au

THE RELEVANCE OF RELIGION One of my favourite quotes was from KFC’s founder - Colonel Sanders, where he gave credit to ‘God’ for his business success: “When I started out in business, I didn’t know exactly what I was doing by promising God his part if he helped make my enterprise a success, but I now think that that is the reason for my success ever since.”

Without a doubt, Sandro’s resilient mindset as an entrepreneur is underpinned by his Christian faith. For this reason, I was curious to understand how religion and especially ‘faith’ has impacted his outcomes in business: ‘I believe in God and I believe that He wants the best for me and so it’s faith that enables me to get up each day, do the hard yards and believe in faith that He will bless it. God’s my Boss and I see that I’m answerable to Him for what I do with what He’s placed in my hands.’

HUBRIS VERSUS HUMILITY Common practice would suggest that pride, aggressiveness, and self-belief are the essential ingredients to a successful professional career in business. However, what I soon discovered from Sandro, was his humble, gentle, and kind heart, as well as his respect for others.

Without a doubt, today’s CEO’s should learn from Sandro’s character and adopt this unconventional leadership style as a way to embrace and encourage people within their organisation to feel more respected, valued, and ultimately ‘loved’.

CONCLUSION Whilst most people in business would undermine the entrepreneurial genius of an everyday vehicle technician, I would argue that these ‘tradies’ are often the backbone to our business economy.

As we’ve seen with Sandro, it is evident that determination, passion, and care for others is the ultimate driving force to his success, as opposed to conventional belief that encourages an aggressive attitude, self-importance, and pride as the ultimate ingredients to a rewarding career. BFM

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BFM | MENTAL HEALTH

Why workplace mental health and wellbeing must be taken seriously and how to take action to create a mentally healthy workforce As many Australians spend most of their waking weekday hours at work and increasingly more time with workmates and clients than with their own family and friends, it’s important that they feel mentally healthy, safe and valued at work. If this can be achieved, performance is likely to be at its optimum, allowing busy corporates to flourish in other equally important aspects of life.

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ental illness is now the leading cause of sickness absence and long-term work incapacity in Australia. Up to 50% of Australian workers have experienced bullying and alarmingly, workplace bullying is estimated to cost our economy $6$36 billion annually.

In mentally healthy workplaces: • People watch out for each other and can ask colleagues if they’re ok • Managers and teams understand mental health and openly talk about it • People know about things they can do to build resilience for challenging times at work and at home • Staff with mental health concerns seek help early • Staff with mental health issues are supported in their recovery.

• Mentally healthy workplaces are good for people and businesses

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When workplaces are mentally healthy, enormous benefits to individual employees and to the business itself are seen, such as: • Enhanced work performance and productivity. We perform at our best when we have high levels of psychological wellbeing and job satisfaction.

• Improvements for a company’s bottom line. Reduced staff turnover, recruitment and training costs; fewer sick days and ‘presenteeism’ (being at work but not able to work at capacity), greater productivity and creativity are all good for your business – increasing revenue and decreasing costs.

• Improvements in wellbeing.

Work instills us with a sense of purpose, provides social networks and supports, gives opportunities to grow and develop, and helps us achieve in

areas of strength - all important contributing factors to our wellbeing.

• Helping recovery. For those of us living with mental illness, work can play an important role in helping us recover. Many mental illnesses we see in the workplace are treatable, and in some cases, preventable.

• Attracting (and keeping) great talent. Businesses that invest in mental health are more likely to attract and retain the best and brightest. The culture of workplace wellbeing has many flow-on effects to individuals, businesses and the community.

BUT HOW CAN AUSSIE BUSINESSES ACHIEVE THIS? A well-designed workplace should support individual mental health, leading to reduced absenteeism, increased employee engagement www.businessfirstmagazine.com.au

MENTAL HEALTH| BFM

and improved productivity. It therefore makes great business sense to invest in the mental health of the team.

‘Every dollar spent on effective mental health action returns $2.30 in benefits to an organisation.’

(PWC, Beyond Blue National Mental Health Commission, 2014) Evan Jackson from the Black Dog Institute, an Australian charity dedicated to creating a mentally healthier world, shared six ways to help make a workplace mentally healthy: “There are lots of simple things everyone can do to make a mentally healthy workplace. You don’t need to spend a lot of money and you can engage all the team to make it happen,” explained Evan.

1. Smart work design Establish flexible working hours.

Address workplace culture of when, where and how you work.

Involve staff in deciding how work is performed. Listen to people’s ideas about how to get their work done.

Monitor staff workloads.

Ensure your physical work environment is safe and encouraging.

2. Building personal resilience Provide stress management and resilience training for those in highrisk jobs, such as emergency service workers exposed to significant levels of trauma or stress.

Use evidence-based approaches such as cognitive behaviour therapy.

Provide and encourage regular physical activity opportunities like lunchtime yoga, jogging or meditation.

Encourage mentoring and coaching

4. Increasing awareness of mental health Provide access to mental health information. Leave brochures about mental health on team notice boards.

Talk openly about mental health at work.

Participate in events like World Mental Health Day and RU OK? Day. Conduct mental health awareness programs and mandatory training.

Include mental health development in staff induction and development.

5. Supporting staff recovery from mental illness Provide supervisor training on how to support workers recovering from mental illness and stressful life events.

Facilitate flexible sick leave.

Modify duties and work schedules when appropriate.

Provide a supportive environment and ensure no discrimination or bullying occurs.

6. Early intervention Encourage staff to seek help early.

Consider wellbeing checks once appropriate supports are in place.

Provide mental health training so staff can support each other.

Provide a peer support program for staff.

The Black Dog Institute provides specialist, tailored workplace training to support businesses to achieve a mentally healthy environment and this year

are one of the mental health charities you can support through Challenge4Change, a virtual fundraising event taking place during 21-27 August 2017 where everyday people across Australia can challenge themselves to undertake some form of activity and bring together friends, family or workplace colleagues to do so; mental wellness is about staying active and staying connected!

The event already has the support of several other prominent mental health charities such as Beyond Blue, BATYR, Lifeline, ReachOut, Police Legacy NSW and Black Dog Institute who kindly provided expert input to this article. To register your business or organsiation to take part in Challenge4Change and take action in support of mental wellbeing, simply visit www. challenge4change.com.au BFM

3. Building better work cultures Learn how to have conversations with people you’re concerned about and encourage all staff to look out for each other.

Provide mental health education to the whole team.

Reduce stigma. Speak openly about mental health conditions.

Ensure senior staff are engaged in mental health promotion and providing a safe and positive workplace.

Implement a mental health policy including zero tolerance of bullying and discrimination. www.businessfirstmagazine.com.au

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BFM | MEDITATION

The secret weapon available to all entrepreneurs The life of an entrepreneur generally involves leaping out of your comfort zone and teaching yourself to fly. As a result, it is one of the most stressful lines of work one can choose. Meditation is scientifically proven to offer better rest than sleep and is known to increase creativity, productivity, tranquillity and happiness. Doctors are recommending that patients practice regular meditation because it is well-known to help with stress-related conditions and anxiety.

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tevie Rose founded Meditation Revolution after three decades of experience practicing meditation. Meditation can increase productivity, calm their anxiety and transform their lives.

Meditation works by triggering a relaxation response, helping to lower the heart rate and blood pressure and reduce stressproducing hormones.

“Entrepreneurs are typically extremely busy individuals who are often forced to focus on many details all at once. At the same time, they are often creative, ‘big picture’ types who jump from one idea to the next. It’s no surprise they often struggle with insomnia, anxiety, negative thinking and a host of issues that stem from there,” says Stevie. “Meditation has been proven to improve quality of sleep, increase positive thoughts and reduce stress, making it a key ingredient for entrepreneurial success.”

Steve Jobs, Oprah Winfrey and Arianna Huffington are just a handful of well-known meditators.

In fact, Huffington once wrote, “Stress-reduction and mindfulness don’t just make us happier and healthier, they’re a proven competitive advantage for any business that wants one.”

Kim Liddell (pictured), Founder and Managing Director of Non Destructive Excavations Australia, knows first-hand how stressful the life of an entrepreneur can be. Kim

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founded the business 11 years ago and her team are world leaders in subterranean safety. She juggles work with raising her young family and attributes her calm demeanour largely to meditation.

“I’ve dabbled in various forms of meditation for a couple of decades but over the last year I have solidified my practice into a daily routine that brings peace and clarity,” says Kim. “I absolutely love it and I love the beautiful tribe of people that I’ve met on this path such as Stevie Rose from Meditation Revolution.

The entrepreneurial journey is a rollercoaster of highs and lows and can be extremely demanding and stressful at times. Meditation provides a process to calm and clear the mind, to alleviate stress and anxiety and to maintain presence.”

Kim is also a coach for an accelerator program within the Entrepreneurs’ Organisation and Stevie held a meditation workshop for the group. “This group were searching for ways to aid in slowing down their busy lives, reduce stress and to be more present. Meditation is proven to help with all of these issues in today’s world. They were keen to explore the practical application of mediation and Stevie was a brilliant teacher,” says Kim. Stevie’s top 5 tips for entrepreneurs starting a regular meditation practice:

1) “Make meditation, like your business, a priority. Start your day with 10 minutes of meditation before you begin the to-do lists.

This way you set yourself up with the right mindset to tackle and embrace the day ahead.”

2) “Meditation is for money, a healthy mindset, a strong body, a determined focus, clear and concise clarity. Book out your meditation time in your diary and don’t compromise your practice.

Dedicate a minimum of 10 minutes each morning before 7am and 10 minutes each afternoon before 6pm to it.”

3) “Get an advantage. Offer meditation to your work force for a more productive, stress-free environment. Then include one break out meditation session each week. You, your staff and your clients will benefit immensely.”

4) “Follow your gut instincts. The practice of meditation will give you insight and intuition that are often dismissed or ignored in the world of business. Start listening to your inner wisdom for a broader and insightful perspective in business.”

5) “Invest in a teacher. As you invest in personal development courses and coaches, find yourself a teacher who you can call on to support your meditation practice, offer advice and fine tune it.” BFM www.businessfirstmagazine.com.au

MEDITATION| BFM

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BFM | DESTINATION

A TASTE OF PERU

When thinking of world cuisines people quickly identify French food as the frontrunner of Europe, Mexico as the clear leader in North America and Japanese as the most exquisite of Asia. When it comes to South America, Peru has undeniably established itself as the gastronomic capital. In fact, the coastal-Andean-jungle nation has received various global accolades for its cuisine – perhaps serving France, Mexico and Japan a healthy serving of humble pie.

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l Perú, as locals call it, is certainly one of the most fascinating countries in the world. Breathtaking landscapes, a rich history and unique cultures distinguish the country as a shining star, sparkling brightly in the eyes of foreigners – even in comparison to its closest South American neighbours. At first glance, it would seem that over the past decade Peru has been largely hiding under the veil of Machu Picchu’s mystic.

Upon closer examination however, you’ll find that Peru’s cuisine and celebrity chefs have taken the world by culinary storm. Today, large crowds of travellers visit Peru not only to marvel at its archaeological ruins and immerse themselves in its living cultures, but also to sample Peruvian cuisine and dine at Lima’s renowned restaurants, three of which are among the World’s 50 Best.

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PERU’S CULINARY HERITAGE Peru’s rich history and exchange between the Spanish, Africans, Chinese, Japanese, Italians and native indigenous groups, are the key ingredients to its renowned culturally-infused cuisine. This, coupled with a diverse geography and a rich variety of foods, make the perfect recipe for the country’s colourful and flavoursome gastronomic blueprint. A unique Peruvian flavour and cooking style wasn’t however, born in a vacuum. After decades of a Eurocentric influence and culinary approach, several Peruvian chefs began to return to their roots by promoting home grown local dishes. This transition not only impacted the way Peruvians saw their own food but it also gained the attention and recognition of Peruvian cuisine from around the globe. One of these Chefs was

Gaston Acurio, who after decades of serving French dishes in the Peruvian capital, began promoting ingredients such as quinoa, which at that time was considered a “poor man’s food.” Today, Acurio not only has one of the world’s best restaurants in Lima, but he’s also the mastermind behind 32 restaurants in other countries. It’s also safe to say that quinoa has become a global ingredient with a ‘super food’ reputation. www.businessfirstmagazine.com.au

DESTINATION| BFM

TASTING PERU For travellers looking for the ultimate adventure and gastronomic experience, Peru delivers in spades. With three distinct regions, the country’s attractions and cuisine is as diverse as its landscape. Traditional cuisine is characterised by local and fresh native ingredients. The western border of Peru is framed by the Pacific Ocean and a desert landscape. It is here you’ll find a bounty of Peruvian dishes made with fresh fish and seafood, such as ceviche. In the eastern throes of the country lies the great sprawl of the Amazon rainforest.

Constituting approximately sixty percent of Peru’s landmass and standing as one of the most diverse and biologically rich zones of the planet, the Amazonas boasts an abundance of ingredients, including the Brazil nut, plantain and freshwater fish.

Finally, running lengthways from north to south of Peru are the Andes Mountain Range – Peru’s Highlands and spine of South America. Peruvian ingredients including potatoes, corn and an assortment of tubers are harvested in this region, while cuy (guinea pig) and alpaca are staple meats.

THE GASTRONOMIC CAPITAL OF LATIN AMERICA Peru’s capital city and main point of entry for travellers, Lima, is a melting pot of cultures from throughout the country.

And perhaps due to this ethnic diversity, the city has found its identity in the fusion of cuisines from around the country and across the globe. Renowned www.businessfirstmagazine.com.au

as the ‘Gastronomic Capital of Latin America’, Lima’s culinary scene is being spearheaded by the Peru’s top Chefs and culinary entrepreneurs alike. Last year, the World Travel Awards named Peru as the World’s Leading Culinary Destination for the 5th consecutive year and The World’s 50 Best Restaurant awards, listed three of Lima’s leading restaurants with Central at number 4, Maido at number 13 and Astrid y Gaston at number 30. With the World’s 50 Best set to take place in Melbourne on April 5th, Peru is certain to see its gastronomic status soar to even greater heights.

GET YOUR OWN TASTE Peru has never been more accessible to Australians! LATAM airlines, Qantas and Air New Zealand make the leap across the Pacific Ocean to Latin American the air hubs of Santiago, Chile

and Buenos Aires, Argentina, with various short onward connections to Lima available. The chic Lima neighbours of Miraflores and Barranco are home to a variety of stylish and boutique hotels including the recently opened Hotelito Atemporal in Miraflores.

A host of food tours and handson workshops, including cocktail and ceviche-making classes are available. A trip to the Surquillo Market in Lima offers travellers the opportunity to see and taste fresh Peruvian produce and ingredients.

For those who care to dabble in fine dining at some of the World’s Best, advance reservations are essential.

And for the absolute cherry on top of the Peruvian cake, head to Lima in September for Peru’s Mistura Food Festival. With over 9 years in the running, this food festival attracts thousands of people from across the globe for the ultimate Peruvian gastronomic fusion. BFM

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BFM | HEALTH

HEALTH SPECTRUM:

The 9 Levels to Peak Performance

As the great Roman poet Virgil once said, “the greatest wealth, is health” – it’s difficult to counter this simple statement, which comes from way back in the Augustan period, or sometime between 70 and 90 BC.

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uite simply put, without good health it doesn’t matter how much money we

have.

Disease doesn’t just manifest in the body all of a sudden, rather it is caused by a combination of factors. These could be genetic predisposition, but in many cases they are lifestyle factors, which can be modified.

This is why it’s critical to address health issues early, before they progress and start costing more time, and money.

Together with a team of experts, and the knowledge incorporated from 5000 years of Chinese Medicine, Ayurveda, meditation and yoga, we created the Health

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Spectrum.

This Spectrum clearly sets out nine levels of health – from optimal health down to chronic disease. It links together the medical industry (which focuses on the lowest levels, or sickness) the wellness community (which focuses at the middle levels) and the mindfulness industry (which is somewhere in the top levels).

With the right help, it’s not difficult to find out where you are on the Health Spectrum. Here’s a brief explanation of the levels: Optimal health: At this place not only is the body completely healthy, but so is the mind. This free flow of in the body leads to the ability to reach detachment and

a place of observation on a daily basis.

Ultimate health: Here the body, spirit and mind have reached the highest level of consciousness. It takes many years of practice to get to this point and life is easy and happy.

Good health: At this level the body is in balance, senses are sharp and emotions are pure. Thinking is clear and there is plenty of energy, with few signs of stress.

Accumulation: From this point down, the bottom six levels link to the Six Stages of Disease in Ayurvedic Medicine. At this level www.businessfirstmagazine.com.au

HEALTH| BFM

there is an imbalance in the body and it might show up in the small intestines or stomach as constipation, abdominal distention or gases in the colon. For some people this could mean intense hunger, dark or yellow coloured urine, discoloration in the whites of the eyes, heaviness, lethargy or cravings. Most people don’t take notice of the imbalance at this point, believing stress and minor health complaints can be ignored or treated with a band-aid approach.

Aggravation: At this level the ongoing imbalance – whether through diet or lifestyle or stress – has gone from a quantitative imbalance to one that is qualitative.

With most disease originating in the gut, the abdominal pain and discomfort starts to intensify causing heartburn, reflux, asthma, sinus congestion or excess mucous.

At this stage few take notice of the problem, perhaps only visiting a pharmacy to get medications for short-term relief.

Spreading: Now symptoms and imbalances start to spread to other parts of the body, via the bloodstream and circulation leading to aches, pains and low energy. It can affect the body with fatigue but also the mind with depression or anxiety. Symptoms might be cold hands, dry skin, palpitations, rashes, burning, congestion and water retention.

Localising: Here imbalances settle into a weak part of the body – perhaps due to previous trauma, genetic predisposition, accumulated emotional stress, repressed emotions or other factors. This is when many people start to see doctors, who are often not able to name the disease, or they begin to look into their lifestyle as a result of the visible symptoms they’re feeling.

Disease: At this level the body has clearly come down with some sickness. The Western medical industry gives the disease a name and attempts to treat it – so that might be high cholesterol, heart disease or diabetes – however this can be problematic as the www.businessfirstmagazine.com.au

underlying cause of the disease haven’t been treated.

Chronicity: It usually takes many years of an untreated disease to get to this level. At this point the disease has become so strong that the body’s natural healing system can’t reverse it and it might progress into an autoimmune disease or even cancer – both reaching epidemic numbers now.

Some diseases will be untreatable, however in many instances they can be treated with the help of qualified doctors and health practitioners and it is possible to move back up the health spectrum.

The earlier the symptoms are

identified, and treated, in the Health Spectrum, the quicker recovery will be. When you know where you are at, you can have a personal strategy and will be able to move up the spectrum. BFM Clinical director of Back to Health, Jo Formosa specialises in Ayurveda and neuro strategies. Along with a team of highly qualified therapists, she offers a number of modalities to achieve optimal health in highpressure environments, which include Ayurvedic medicine, acupuncture/ Chinese medicine, remedial massage, neuro strategies and clinical testing.

For more information and to do the Health Spectrum test, visit http://healthspectrum.geniusu.com

The Spectrum THEHealth Health Spectrum

Violet Level - Optimum Health

Ultra-violet Level - Ultimate Health

MINDFULNESS PRISM

Indigo Level - Good Health

Blue Level - Accumulation

Green Level - Aggravation

WELLNESS PRISM

Yellow Level - Spreading

Orange Level - Localizing

Red Level - Disease

TREATMENT PRISM

Infrared Level - Chronicity

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BF | THE LEADER’S BOOKSHELF

THE LEADER’S

BOOKSHELF

Until next month, happy reading! Daniel G. Taylor Mental Health Copywriter and Speaker The Light and Fast Organisation: A New Way of Dealing with Uncertainty by Patrick Hollingworth. With all the changes taking place in the global business environment, it’s easy to look at them and feel uncertainty about whether your business will still exist in five years. Rather than giving you a way to predict the future, Hollingworth teaches you how to handle an ever-changing business environment. His approach is so sound that I recommended The Light and Fast Organisation to one of my clients who lectures in business at RMIT University. It will ensure students are prepared for the reality of the marketplace. And it will give your business the best chances of still being here in five years.

Putting Stories to Work: Mastering Business Storytelling by Shawn Callahan. Callahan’s approach to helping you develop storytelling skills is not formulaic.

You won’t find a paint by the numbers template.

Instead, he teaches you how to find stories, know the right time to use them, and practice telling them.

TED Talks: The Official TED Guide to Public Speaking by Chris Anderson. If you want to get better at public speaking, who better to learn from than the curator of TED. Rather than presenting something formulaic, Anderson offers areas to consider and encourages you to choose what works for you.

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THE LEADER’S BOOKSHELF | BF

Value: How to Talk About What You Do So People Want to Buy It

by Robyn Haydon. For service businesses, where the value of what you offer is intangible, Haydon’s ideas are pure gold. I found her approach so useful for that I interviewed her for an article for my client, Wealthy Web Writer. If you sell services, read this book.

Brand Desire: How to Create Consumer Involvement and Inspiration by Nicholas Ind. My view of branding is that it usually has little to do with producing sales.

I expected it would be a purely academic take with no relationship to the reality of business. But as well as being an academic, Ind has plenty of business experience. The book, therefore, is well-researched and the ideas useful to marketers.

*Originals: How Non-Conformists Change the World

by Adam Grant. It’s hard for a writer to get onto my must-read list. With his first book, Give and Take: Why Helping Others Drives Our Success, Grant convinced me of the value of what he had to say and joined that list. In Originals, he looks at the science that shows that — like many things — being a non-conformist is a skill you can learn and develop.

Jab, Jab, Jab, Jab, Jab, Right Hook: How to Tell Your Story in a Noisy World by Gary Vaynerchuk. Vaynerchuk made his name through his ability to dominate social media as he told the story of his wine business. This book is beautifully presented, filled with examples and critiques, and helps you think of how to make your social media posts more useful. Vaynerchuk will be in Australia for the National Achiever’s Congress at the end of February and the start of March.

Work with Me: How to Get People to Buy Into Your Ideas by Simon Dowling. While caring for my Grandma, and then my former partner, I learned some painful lessons about buy-in. People will lead you to believe they’ve bought into decisions you’ve made (often collaboratively) — and then down the track, they’ll resent the decisions and blame you for making them.

Dowling’s book explains why this happens and helps you get true buy-in.

If you’ve read a great book, please email me and tell me about it at daniel@danielgtaylor.com. www.businessfirstmagazine.com.au

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BFM | FAST LANE

Alfa Romeo Australia announces pricing on the Giulia sports sedan line-up Alfa Romeo’s Giulia sports sedan range has gone on sale in Australia priced from a highly competitive $59,895.

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ased on Alfa Romeo’s flexible all-new Giorgio rear-wheeldrive architecture, the Giulia is more than just an allnew premium sports sedan: it’s the vanguard of the Alfa Romeo renaissance, and the start of an exciting new era for the 106-year old Italian brand.

Designed, engineered and produced in Italy, the Giulia sports sedan introduces a new level of standard equipment and driving enjoyment to the mid-sized luxury class.

The all-new Alfa Romeo Giulia’s Australian line-up consists of five models across four equipment grades – Giulia, Super, Veloce and range-topping Quadrifoglio.

All Giulia models benefit from highly competitive levels of standard equipment, including leather upholstery, alloy wheels, bi-Xenon headlamps, keyless go,

Alfa Romeo Giulia pricing (Feb 2017) Giulia $59,895 Super $64,195 (2.0) Super $65,895 (2.2d) Veloce $71,895 Quadrifoglio $143,900

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stop/start technology, satellite navigation, dual-zone climate control, rain sensing wipers, cruise control, rear parking sensors and a reversing camera.

With pricing starting from $59,895, the Alfa Romeo Giulia mounts a strong argument as one of the best value premium sports sedans on the Australian market.

The Alfa Romeo Giulia is offered with the choice of four all-aluminium, all-turbo engines, all of which meet the latest Euro 6 emission standards. Each is mated to a smooth and seemingly prescient ZF eight-speed automatic transmission which sends drive to the rear wheels via a carbon fibre driveshaft.

The Alfa Romeo Giulia stands out for its distinctive Italian design, expressed through an impeccable sense of proportion and the sophisticated simplicity and quality surfaces that craft its unique design. Only Italy could have designed the gorgeous Giulia.

The new Giulia’s curvaceous exterior is unashamedly extroverted and modern yet remains faithful to Alfa Romeo’s rich 106-year heritage. Inside, the crisp and classy interior is designed to envelop the driver and cater to their every need.

All Alfa Romeo Giulia models benefit from a perfect 50/50 weight distribution, excellent

power-to-weight ratios, and innovative engine and driver technologies designed to maximise driver enjoyment and minimise environmental impact.

This new Alfa Romeo combines stellar engine performance and clever use of ultralight materials, such as carbon fibre, aluminium, aluminium composite and plastic, to reduce weight in the quest for class-leading handling, refinement, performance and driving excitement.

All Giulia models have an advanced, lightweight carbon fibre drive shaft to enhance engine responsiveness.

Standard safety specification on all Giulia models includes new efficient active safety systems like Forward Collision Warning (FCW) with Autonomous Emergency Brake (AEB) and pedestrian recognition, Integrated Brake System (IBS), and Lane Departure Warning (LDW).

“We are thrilled to welcome the Alfa Romeo Giulia sports sedan to Australia,” said Steve Zanlunghi, president and CEO of Alfa Romeo Australia.

“The Giulia’s combination of quality, performance, value and Italian spirit across all models gives Australians something truly unique and exhilarating in the premium sports sedan market.” BFM www.businessfirstmagazine.com.au

FAST LANE| BFM

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