Business First Magazine - Sep/Oct 2014 by Associated Media Group Pty Ltd

BUSINESSFIRST for Business Leaders

September/October 2014

www.businessfirstmagazine.com.au

JAMIE MCPHEE Creating a modern banking experience

STOP THE BULLYING

How to establish respect in the workplace

Mark Coyne

How a League legend took over the boardroom

Growth Hacking Nick Mescher’s disruptive approach to project delivery

It’s never too late to invest

Buying property in your 50s is a sound financial decision

BUSINESS FIRST MAGAZINE Vol 1 Issue 5

AU$12.95 NZ$13.95

The height of luxury Margaret River, Audi R8 LMX and more

772203

129000

INSIDE: Investment // Leadership // Lifestyle // Property // Tech

EVERYTHING ELSE IS JUST TRAFFIC. INTRODUCING THE ALL-NEW GHIBLI | WWW.MASERATI.COM.AU

Nothing turns heads like a Maserati, and the sporty new Ghibli commands attention wherever you take it. Ghibli was born from a racing heritage and the Maserati designed, Ferrari built twin turbo V6 engine will help you find your voice again. It represents the perfect marriage of style and technology. From the city to the long open road the Ghibli will be unlike anything you’ve ever experienced. In fact, once you’ve taken a test drive and seen it first hand, you’ll agree that everything else really is just traffic.

GHIBLI S – ENGINE CAPACITY: 2979 CC | MAX POWER: 410 HP AT 5500 RPM | MAX TORQUE: 550 NM AT 1750 RPM | MAX SPEED: 285 KM/H 0-100 KM/H: 5.0 SECS | FUEL CONSUMPTION (COMBINED): 10.4 L/100 KM* *As per Australian Design Rule (ADR) 81/02.

n. odel show Overseas m

SYDNEY 1300 708 906 | MELBOURNE 1300 971 677 | BRISBANE 1300 707 147 | ADELAIDE 1300 856 429 | PERTH 1300 795 369

BF | CONTENTS

BUSINESS FIRST CONTENT

Editor’s Desk News Operation: Excellence Operational excellence is business necessity. Without it, organisations enter into mediocrity or fail. Business First looks at the importance of operational excellence. 10 Infographic: Operations in numbers 11 Q&A: Minimising operational cost damage Our business experts and CEOs answer this issue’s big question. (continued on page 7) 4 5 8

COVER STORY 12 Breaking the waves In sport, life and business, transition is crucial to success. ME Bank’s Jamie McPhee speaks about the necessity for transformation in the banking industry and how technology can drive business forward.

CONT 20

PEER TO PEER 20 Big change is happening by Chutisa & Steven Bowman 22 Off to a good money start by John Corias 28 The changing face of social media by Joanna Oakley 30 Tax perils of borrowing money from your own company

by Mark Chapman 38 Establish values of respect by Darren Milchman 40 Simple guide to finding the right technology by Stephane Ibos 46 Mobile business efficiency by John Moss 52 You’re offically being stalked by Mellissah Smith 58 Building a strategic alliance by Stan Gordon 64 Enhancing your investment strategy by Matt Lewis 70 Property investing in your 50s by Patrick Bright

76 Better financial decisions by David Jackman

LIFESTYLE 78 The Leader’s Bookshelf 80 The Perfect Business Partner – Savio Leather III 81 How to dress for success by Megan Etheridge 82 Motivation in the palm of your hand by Lauretta Stace 84 The value of philanthropy

86 Take me to the river by Jonathan Jackson 88 Light up the road: The Audi R8LMX

BUSINESSFIRST MAGAZINE

www.businessfirstmagazine.com.au

CONTENTS | BF

ENTS

BUSINESS FIRST LOUNGE 24 From centreman to business fly half – Mark Coyne has emulated his on field rugby league success in the business world, in no small part due to his ability to lead. He speaks with Bob Forshaw about leading successful teams and why getting back to work is critical to self-esteem. 32 Life at the resort – If anyone has hospitality in his blood it is Barry Robinson. His parents owned hotels and motor inns and he was already working in the business as a young teenager. Robinson speaks about his love for the hotel industry and how it has evolved since he first manned a reception desk.

42 High voltage CEO – Ians Stirling’s knowledge of the utility sector is invaluable. He has been part of the electricity landscape in Victoria and South Australia since 1983 and has garnered extensive experience in senior management positions in all sectors including generation, transmission and distribution. 48 Rise of an empire – Some franchises just work; offer a decent product, made with love and the customer in mind and you have a winning recipe. For Roger Gillespie, the founder of bakery giant Bakers Delight, his winning recipe has transcended continents and, according to BRW, has made him one of the richest men in Australia.

54 The two-speed IT ecosystem – The digital age continues to disrupt and alter how we run our businesses. But has our ability to deliver projects caught up with the new world that is 2014? UXC Consulting CEO Nick Mescher discusses this new paradigm, and tells Ellie McInerney why relationships and communication in the IT industry are more crucial than ever. 60 Power to the people – Power: it is what makes the world go around. Without it, we’d all be living in some Mad Max-type dystopia. None of us wants that. Which makes the jobs of those in charge of our power companies all the more important. Business First speaks with Horizon Power’s managing director Frank Tudor about what it takes to run a power supplier and how innovation is the key to longevity in the sector. 66 Freight train heart – Craige Whitton is a 10-year veteran with Northline. He has been in the service industry for much of his life, even though he started his professional days as an accountant. He has worked across hospitality, travel and various other industries and they are all tied together by one thing: commitment to needs.

72 www.businessfirstmagazine.com.au

72 The energy specialist – When it comes to running a tight ship David McAdam knows his business. The Seymour Whyte managing director and CEO speaks with Business First about the importance of positive energy in a forward thinking organisation.

BUSINESSFIRST MAGAZINE

BF | EDITOR’S DESK

The win-win philosophy There is a recurrent theme running through this issue of Business First magazine and it goes something like this: if you provide your best service to clients and suppliers, everyone comes out on top – including customers. It’s a pretty simple message and an age-old truism. For Roger Gillespie of Bakers Delight, a win-win can be found in the delivery of fresh products by all involved in the making of these baked goods. “There is a commitment to each and every customer; the bread is real and made on site and everyone from the franchisor, to the suppliers, to the customers has to be in a winning position because we want to be as good as can be at what we do,” Gillespie says. For Electranet’s Ian Stirling long-term relationships are key to growth and success. In an industry such as energy, it’s these relationships that allow you to pay less for your energy supply. Stirling says, “Essentially we offer our customers a long term, 15 or 20 year connection service. We manage the construction risk on this by offering a fixed price unless there are factors we can’t control. However we won’t say to the customer during the construction that the price of doing business has lifted by 15% - that’s our risk. If it does rise we’ll absorb the cost.” It is that type of attitude that creates loyalty. And loyalty means a win-win scenario for all involved. Another common theme in this issue is technology shift. As technology improves, expectations around what it can do for us heightened. Jamie McPhee, CEO of Members Equity, is a technophile. Since he arrived at the bank he has been pushing technical innovation and it has paid off. “We believe that people will increasingly want to interact with their bank through mobile devices and will use the branch network much less. We looked at ING Direct, which deployed its business model in 1998 without a branch network and gained 5 per cent of the market quite quickly in the Internet era. What we want to do is take the next step and build the best digital bank in the digital era.” McPhee who adorns our cover this issue has some interesting points to make about the digitisation of the workspace and digital disruption as does UXC’s Nick Mescher. Mescher believes that most businesses are running enterprise wide systems and multi-year projects built on carefully constructed business cases. It’s an old model. Businesses today should be looking at disruption coming from speed-to-market accelerators. “We can bring competitive advantage to market rapidly, by spinning up lean projects delivered by digital experts who see opportunities in emerging technology.” It is an interesting world we live in today. Technology has changed the way we work and interact; it has changed business models and strategies, but one thing remains the same and that is no matter what changes the end goal must be consummate delivery to clients and customers. Which brings us back to the win-win scenario.

Jonathan Jackson

Editor, Business First Magazine

BUSINESSFIRST MAGAZINE

www.businessfirstmagazine.com.au PUBLISHER Alan Hyman EDITOR Jonathan Jackson MEDIA DIRECTOR Bob Forshaw SUB-EDITOR Judy Hyman MEDIA & COMMS MANAGER Ellie McInerney DESIGN Gino Hawkins Head Office: Suite 7, Level 1 174 Willoughby Road St Leonards NSW 2065 Australia Advertising enquiries: Phone: 02 9437 5155 Email: bfadvertising@amgroup.net.au Subscription enquiries: Phone: 02 9437 5155 Email: bfsubscriptions@amgroup.net.au Contributors: Steven & Chutisa Bowman, Patrick Bright, Mark Chapman, John Corias, Stan Gordon, Stephane Ibos, David Jackman, Matt Lewis, Jon Michail, Darren Milchman, John Moss, Joanna Oakley, Mellissah Smith, Lauretta Stace Associated Media Group Pty Ltd ABN 68 123 058 926 Copyright ©2013 Associated Media Group

Publishing, adv CILTA AWARDS by Associated M linkedin.com/company/business-first-magazine

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. WARRANTY AND INDEMNITY Advertisers and/or advertising agencies upon and by lodging material with AMG for publication or authorizing or approving of the publication of any material indemnify Business First Magazine and AMG, its servants and agents against all liability claims or proceedings whatsoever arising from the publication and without limiting the generality of the foregoing to indemnify each of them in relation to defamation, slander of title, breach of copyright, infringement of trademark or names of publication titles, unfair competition or trade practices, royalties or violation of rights or privacy regulations and that its publication will not give rise to any rights against or liabilities against AMG, its servants or agents and in particular, that nothingwww.businessfirstmagazine.com.au therein is capable of being misleading or deception or otherwise in breach of Part V of the Trade Practices Act 1974.

NEWS | BF

Is Australia open for business? Dr John Hewson said the next 18 months will be a tough time for small business and the community should be concerned about what will sustain Australia’s economy past the mining boom. Speaking at the 12th National Small Business Summit, Dr Hewson criticised the government as lacking an overall policy that provides a strong direction for the country or one that translates the value of small businesses into policy.

“Small business are the largest employers and yet they face major difficulties such as getting equity investment, securing bank loans and dealing with business interest rates which are still too high compared to where the official interest rate sits. “We’ve also lost a massive opportunity to build a lot of new businesses in response to climate change with the rescinding of the carbon tax.

“We keep getting told we are open for business, but what business? Where is the growth going to come from after the mining boon?” asked Dr Hewson. Dr Hewson believes that government has a unique opportunity to make a difference to small businesses through tax reform. “I believe it is time that we have a mature debate about structural tax reform so we can ensure equity and longevity in our taxation system.” BF

WINTER CHILLS IGNITE RETAIL SALES BOUNCE BACK Retail spending had recorded its biggest rise since January, according to analysis from the Australian National Retailers’ Association (ANRA). That’s good news for retailers encouraged by a positive outlook and return to stronger figures. The Australian Bureau of Statistics (ABS) released retail figures showed an increase of 0.6 per cent in June compared to May. May’s figure was also revised up from a decrease of 0.5 per cent to a 0.3 per cent fall. Throughout the year to June retail turnover rose 5.5 per cent. ANRA CEO Margy Osmond said June’s figures provided a healthy surprise to retailers at a time where consumer confidence remained weak. “It seems consumers were putting off purchases until the cold snap hit in June. The discretionary spend categories benefited (up 1.1%) from this shift in consumer spending, outperforming the food category for the first time since February and recovering May’s drop. Food categories recorded a slight increase of 0.2 per cent. “It is also likely mid-year clearances helped spur sales for the discretionary spend – where household goods, clothing, footwear and accessories and other retailing all recorded rises. “Clothing was the strongest contributor to the broader category’s rise in June – up 2.6 per cent. While furniture, floor coverings and textiles contributed to the positive result for the household goods category - recording a rise of 2.2 per cent. “Department stores continued to deliver volatile results - down 0.4 per cent for the month. While food services recorded its largest fall in more than a year – with the cooler weather most likely a contributing factor (down 0.6%). Pricing and volumes data for the June quarter showed prices rose 0.2 per cent across the sector, while volumes fell 0.2 per cent www.businessfirstmagazine.com.au

across the sector for the quarter. “If June’s strength continues and momentum carries forward in the second half of the

year, we would expect retail sales to be up six per cent (year-on-year) by the end of the year,” said Mrs Osmond. BF

SME political party John Codrington, Founding National President of Small Business Party of Australia Inc. recently announced his intention to register his association with the Australian Electoral Commission. “We want to advocate for the needs and issues of small business and will enter the political system to have our voice heard,” said Mr Codrington. The Council of Small Business of Australia (COSBOA) did not endorse the intention to register the Small Business Party of Australia at their summit. BF

BUSINESSFIRST MAGAZINE

BF | NEWS

Customers want efficiency New research measuring Australian sentiments around customer service unveils that businesses may need to work faster if they want to impress. Findings show a concern about inefficient service providers and retailers outweighing consumer concern about value for money. The online survey of 962 Australians was carried out by TrueLocal, an online business directory and review website engaged by 5.7m unique visitors per month. When asked which of six customer service experiences they find the worst, one in four respondents (27%) rated ‘long waits or being ignored’ as their number one gripe. This was followed closely by ‘getting the run around on the phone’ (26%) – another time-draining task. Unsurprisingly, ‘rude service’ was the thirdworst service experience (19%). However, ‘hidden costs’ (14%) and ‘incomplete work or a job left in a worse state’ fall near the bottom of the pile (9%). It seems that ‘being given an

apprentice or underqualified person’ to do the job is of least concern when it comes to poor customer experience, with only 4% selecting this option. “This suggests that Australians are less concerned about value for money and more focused on getting things done in time. As a time-poor nation, consumers are seeking efficient services that match their busy lifestyle. They’re continuously on the move and looking for businesses ranked highly by peers. In fact, in the past year alone, we’ve seen a 32 per cent increase in searches via mobile devices,” says Bradley Taylor, spokesperson at TrueLocal. Victorians appear to be most time poor, with around one in three (30%) choosing ‘long waits’ as the worst customer service experience, more than any other State. It may be the frustrating jingle of hold music, however, that pushes South Australians over the edge, with one in three (33%) respondents selecting ‘getting the run around on the phone’ as their worst. The State least concerned with ‘hidden costs and fees’ is Western Australia (9%), suggesting that residents may rank good service over dollars spent. When it comes to gender, however, it’s women who are least concerned with costs. More men (18%) selected hidden costs and fees as their worst gripe compared with only 12% of women. Instead, women appear to be more emotionally involved in customer service experiences. Nearly twice as many females (23%) than males (12%) selected rude service as their number one gripe. BF

GENERATION DEBT New research from Australia’s RateCity shows Generation Y are credit crazy, and spending up big. The consumer study has revealed that Australians are now taking on debt earlier in life, with age 20 the new average age for young people to purchase their first credit card. This compares with the average age for older generations (such as those aged 65 years and older), which applied for their first credit cards at age 34. Alex Parsons, CEO of RateCity.com.au, said it’s a worrying trend, given that young Australians are struggling with higher levels of debt. “Our research shows 42 percent of young people under the age of 24 have between $10,000 and $30,000 of personal debt, not including a mortgage,” he said. “Australians aged 24 and under are also four times more likely to get a weekly cash advance from their credit card than were their parents’ generation.

BUSINESSFIRST MAGAZINE

“More than half (56 percent) of Generation Ys with a credit card have never had a $0 balance on their credit card in the last year, and 63 percent are not aware what interest rate they are paying. It’s a real concern, given that the average credit card rate is close to 17 percent – that’s a lot of interest we’re talking about there,” he said. The number of credit cards on issue is on the rise with 117,000 incremental cards on the market compared to last year growing to 15.5 million in May (ABS May data), with Generation Y the most likely to sign up. Parsons said among the leading causes of the growth in credit appetite among young Australians was the shift in the way we use money. “We’re becoming an increasingly cashless society and that is breeding new attitudes towards the disposable nature of money, which is increasing the ability to rack up debt,” he said. BF

Unemployment rises Australia’s unemployment rate jumped to its highest level in 12 years during July, causing the Australian dollar to plummet during the Asia session. The unemployment rate unexpectedly jumped to 6.4% from 6.0%. Chris Tedder forex.com says, “Most of the slide in the unemployment rate can be explained by an increase in the workforce, with the participation rate jumping to 64.8% from 64.7%, and by the loss of 14.8K part-time jobs. The good news is that most of the losses in part-time employment were covered by a 14.5K increase in full-time employment. This also brings to light the divergence between most forward looking indicators for the labour market and the headline unemployment rate, which suggests that the unemployment rate may have peaked in July. “From a monetary policy perspective, the RBA has been expecting the unemployment rate to increase, thus July’s figures shouldn’t scare the bank. Although, we need to see at least one more employment report to better assess the longevity of Australia’s labour market. Slight weakness is to be expected as the economy transitions away from mining investment, but if the already accommodative stance of monetary policy proves ineffective in spurring growth in non-resource parts of the economy, then the RBA may be forced to do more. Yet, this looks unlikely at this stage given the mild threat of a bubble in house prices and the relaxed attitude of the RBA towards limited weakness in the economy. “Furthermore, assuming all else is equal, the more depressed the labour market is, the longer it will take the RBA to normalise monetary policy. This is pushing back the market’s expectations of tighter interest rates, thereby making the Australian dollar less attractive. As AUD weakness it lessens the probability that the RBA will provide extra stimulus, thus the overall effect of today’s report is only mildly negative for monetary policy and not alarming enough to support further interest rate cuts.” BF

www.businessfirstmagazine.com.au

NEWS | BF

BANK ON IT One of Australia’s biggest comparison websites finder.com.au is urging Australians to take advantage of the growing competition between financial institutions while they battle it out for market share, following the Reserve Banks’ decision to leave the cash rate unchanged at 2.50%. The Survey found that the majority of experts are betting on interest rates to start rising next year, with the cash rate to continue to a “new normal” level of 4 per cent. Michelle Hutchison, Money Expert at finder.com.au said that financial institutions will continue to compete for market share, despite rate hikes on the horizon. “Our research shows that the power shift between the banks over the past financial year has resulted in more competition, particular-

ly for lending products like home loans and credit cards. “We found that the big four banks lost market share by 1 percentage point for owner-occupied home loans, while gaining 1 percentage point market share for personal credit cards. “With home loan rates continuing to fall over the past year and more credit card balance transfer deals than we’ve ever seen, now is a great time to take advantage of the offers available before rates start to rise,” said Mrs Hutchison. According to a finder.com.au analysis of Australian Prudential Regulation Authority (APRA) data, the big four banks lost 1 percentage point of market share for owner-occupied home loans since July 2013, making up 84 per cent out of all banks in June 2014, worth

$696.6 billion. On the flip side, the big four banks gained 1 percentage point in market share for personal credit cards, sitting at 84 per cent, worth over $34 billion. The increase in market share could be attributed to more aggressive pricing for promotional offers such as balance transfers, with ANZ for instance, now offering 0 per cent balance transfer deals for up to 16 months. “While the cash rate might remain on hold for now, it’s likely to start increasing next year. And with financial institutions competing harder for your business, it’s worth keeping track of your banking products and make sure you’re getting a good value deal. It can make a big difference to your budget once interest rates rise.” BF

PROPERTY INVESTORS LOSE $17.5 BILLION Australian investors could be claiming an extra $5,000 per property at tax time by following a few simple steps, according to Mark Kilroy, director of tax depreciation quantity surveying company Koste. The Australian Tax Office (ATO) is sitting on $17.5 billion in unclaimed tax depreciation entitlements this year alone. “Only 40 per cent of investors are taking advantage of property tax depreciation schedules with average annual claims of just over $3,000 – this is thousands lower than the average annual claims of $8,000,” says Mr Kilroy. “Investors are simply unaware of the benefits and the thousands of dollars they could be claiming in entitlements. “They’re missing the opportunity to reduce their taxable income, as they may be self-assessing claims or undervaluing their entitlements.” Mr Kilroy says quantity surveyors who prepare tax depreciation schedules should actually visit the property rather than use data gatherers, and without a skilled tax depreciation surveyor, the value of assets and whether they are eligible is often overlooked. Investors’ depreciation benefits vary depending on the type of building, its age, fit out and use. ATO legislation states that the owner of a residential investment property can only claim capital works deductions if construction commenced after 18 July 1985. However, a majority of properties in Australia have had some sort of capital works carried out post 18 July 1985 and will qualify for deductions. These additions are constantly overlooked but can have a significant impact on your entitlements. Depreciation of plant and equipment on the other hand is not limited by age, rather it is the condition and quality of each item which www.businessfirstmagazine.com.au

contributes to the depreciable amount established by a qualified quantity surveyor. “If your property is eligible for deductions and you’ve never claimed depreciation, you could be entitled to a substantial back claim,” says Mr Kilroy. “For example, one of my clients who’d never claimed depreciation on a newly built $450,000 property claimed upward of $14,000 in the first year and an average of $9,500 every year thereafter. “Koste quantity surveyors identify and value capital and structural works carried out post original construction and possess detailed

knowledge of the current legislation surrounding plant and equipment to maximise tax depreciation for clients.” The preparation of a tax depreciation schedule should be carried out by a qualified quantity surveyor who has the expertise to calculate building construction costs. Tax rulings clearly state that valuers, real estate agents, accountants and solicitors do not have the expertise to make such an estimate of costs. Mr Kilroy says all Koste surveyors are qualified quantity surveyors who specialise in tax depreciation schedules for both residential and commercial clients Australia wide. BF

BUSINESSFIRST MAGAZINE

BF | FEATURE

OPERATION: EXCELLENCE

Operational excellence is business necessity. Without it, organisations enter into mediocrity or fail. Over the course of the next few pages, Business First looks at the importance of operational excellence, how to achieve it and minimise the damage when operations start to falter.

ccording to PriceWaterhouseCoopers (PWC), as markets shift, businesses must adopt new strategies to survive. PWC states: “As market conditions shift and competitive pressures intensify, so companies have to adopt new strategies. That, in turn, means they need new operational models to accommodate these new plans. But rising volatility and business complexity have recently made operational transformation much more difficult. And, as another three billion consumers join the global middle class in the next few decades – straining far-flung supply chains – conventional operational models will come under increasing strain.”

BUSINESSFIRST MAGAZINE

Take for example, the mining sector. According to Deloitte, Australia’s increasing production costs for operators are impacting their competitive advantage. Deloitte’s report Extracting business value through operational intelligence states that during the recent mining boom, high demand and high commodity prices created favourable conditions for investment and expansion of mining operations whilst masking some inefficient work practices. Now that the economics of the industry have shifted, Australian mining operators are responding by cutting costs and pursuing operational efficiencies. “Our experience reveals that a

delicate balance has to be maintained between ‘cutting too close to the bone’ and maintaining a sustainable operation that can respond quickly when the next opportunity presents itself,” said Deloitte Partner Links Chithiray. According to the report operational efficiencies may be gained by automating and integrating information across the value chain, which can also inform the more radical step of redesigning the operations. Operational intelligence is one of the key levers for improving efficiency. “It is the companies that enable their operators and management to respond in a timely way to operational variances and market volatility, that will be better placed to minimise any adverse imwww.businessfirstmagazine.com.au

FEATURE | BF

pacts and take advantage of productivity opportunities,” said Mr Chithiray. “Ultimately, the goal of any mining operation in simple terms, is to optimise production at the lowest cost with zero harm to the workers and the environment,” said Mr Chithiray. “It is no coincidence that despite the tougher market conditions, global mining leaders are making big data investments in operational intelligence, remote operations centres, automation, analytics and mobility.” Deloitte’s report noted that as connectivity to remote sites improves, a landscape of reporting and analytic solutions is emerging that can enable greater transparency of operational performance in real time for operational staff, site management and executives of the organisation. Such alignment enables all parties to make more responsive and fact-based decisions. “Operational intelligence is driving fundamental changes in the way information is exploited in mining. These www.businessfirstmagazine.com.au

solutions are delivering new insights to mine site executives, management teams and operations staff that reflects their environment and empowers them to make data-driven decisions on performance and costs,” added Mr Chithiray. Those in the mining sector that are keeping the company’s operational infrastructure aligned with its current strategy are the ones who are thriving. This is a key point for all companies. As PWC states, “In a perfect world, a company’s day-to-day operations are managed for peak performance, so that it maximises its profits while minimising its risks, costs and losses. But in the real world management must make constant trade-offs in the risk-cost-loss equation, if it’s to keep the company’s operational infrastructure aligned with its current strategy. To strike the right balance, management must be crystal clear about its operational goals and develop key performance metrics that will enable it to manage those operations within well-defined tolerances.” It means businesses must take a more flexible approach to their operations. Agility and responsiveness to changing market conditions are crucial to growth and future survival. Operational change is easier said than done, but it is important. Businesses need to look beyond ‘cutting the fat’ as an operational response, because invariably the costs saved don’t equate to a fix in managerial or company performance. Says PWC, “many companies have been unable to build on these gains because they haven’t developed team leaders who can do three things: continuously identify and make efficiency improvements; align the corporate vision with activity on the shop floor; and demonstrate the technical and interpersonal skills that will help establish a lasting culture of operational excellence. “Creating an agile operation in the services sector is an even bigger challenge. In factories, idle workers and stacks of inventory provide clear signals that an operation is poorly designed. In service operations, by contrast, it’s often difficult to identify waste and inefficiency. Management may be aware of operational problems without being able to define them in detail, let alone design ways to correct them. Yet failure to understand how well its operations are functioning can be fatal to a service provider.”

So how are these problems solved? The Shingo Institute has an interesting take. It offers Three Insights of Enterprise Excellence™.

INSIGHT #1

Ideal Results Require Ideal Behaviours

Results are the aim of every organisation, but there are various methods by which they are attained. Ideal results are those that are sustainable over the long-term. Simply learning or buying new tools or systems does not achieve ideal results. Great leaders understand the cause-and-effect relationship between results and behaviour. To achieve ideal results, leaders must do the hard work of creating an environment where ideal behaviours are evident in every associate.

INSIGHT #2

Beliefs and Systems Drive Behaviour

It has long been understood that our beliefs have a profound effect on our behaviour. What is often overlooked, however, is the equally profound effect that systems have on behaviour. Most of the systems that guide the way people work in our companies were designed to create a specific business result without regard for the behaviour that the system consequentially drives. Many systems are de-facto systems that have evolved in response to a specific need for a particular result. Managers have an enormous job to realign both management and work systems to drive the ideal behaviour required to achieve ideal business results.

INSIGHT #3

Principles Inform Ideal Behaviours

Principles are foundational rules and help us to see both the positive and negative consequence of our behaviours. This fact enables us to make more informed decisions, specifically, about how we choose to behave. The more deeply leaders, managers and associates understand the principles of operational excellence and the more perfectly systems are aligned to reinforce ideal behaviour, the greater the probability of creating a sustainable culture of excellence where achieving ideal results is the norm rather than the aspiration. This is what the Shingo Model™ illustrates. What cannot be denied is that operational excellence starts from the top down. Clear vision and culture creates policies that allow businesses to move forward with strong operational policies that include technology enhancements, management responsibilities and skills development. BF

BUSINESSFIRST MAGAZINE

BF | FEATURE

THE SURVIVAL

OPERATIONS

GUIDE

to Operational Performance Excellence

64% of CEOs See Operational Effectiveness as KEY to RESULTS.

WHY?

Enormous Increases in

Profit & Efficiency.

KPI

HOW?

Focus on KPIs, Metrics and Targets

WHAT?

Metric = Any Measurement KPI = Most Important Metric

To Clarify Strategy

Which Drives Results

and removes Personality from Arguments

while showing trends vs slicers in time

Metric must be low cost and indepentdently gathered

% ACTION:

Pick ONLY 2 or 3 “KEY” Metrics

Produce at regular frequencies (at least montly)

Have Front-Line pick the KPI’s

Have Front-Line decide targets

Set Targets. Only rule is to be better than last year

Train how Changes in Metrics Affects Business

Use $’s NOT % for unites

Never Punish People with KPIs. Use as knowledge http://www.renshicon.com/Infographic-OperationalPerformanceExcellence/

Technologies for business service importance

90%

- the number of businesses outsourcing at least one element of their business.

An Accenture study found that 49% of businesses plan to transform their business through operations and systems.

56%

of businesses require disruptive technologies.

10 BUSINESSFIRST MAGAZINE

80% of business use mobile technology. 78% of business use cloud technology. A connected workforce equates to higher productivity. A technological ecosystem allows you to scale capabilities and reduce costs.

75% Vivid Cortex found

that over 75% of administration work is reactionary. How long does it take you to recover from interruptions: 5 minutes, 10 minutes, 20 minutes or longer?

www.businessfirstmagazine.com.au

FEATURE | BF

Q&A WHAT CAUSES THE REDUCTION OF OPERATIONAL COSTS AND HOW SHOULD A MANAGER MINIMISE THE DAMAGE?

Jon Michail

is the founder and CEO of Image Group International.

imagegroup.com.au

Stan Gordon is CEO, Franchised Food Company.

I am not an accountant so I may not be the best person to ask about reducing costs, in my business, we are committed to adding value and investing in the future. However, in my experience many businesses would like to know what the real causes may be in the reduction of their operational costs other than the common ones. The common ones include: • the lagging economy • new competition like technology • lower costs from overseas products • the business is running at a loss • management wants to make extra profits • theft or fraud and uninsured assets. Experience tells me there may be other reasons that are not obvious to the untrained eye. For example personal issues,

family challenges or other relationship problems that are operating in the background. Another one is the business culture and mindset of the leaders. By mindset I mean have they the vision to see problems in the business, economy etc. before everyone else does in addition to personal issues that may or may not be obvious and are not being addressed. Do they promote a healthy approach to an abundance mindset or are they operating in scarcity? With the abundance mindset, people confidently view the world as full of resources and opportunities … that there’s more than enough to share … and that more success is coming soon. This means you still need a solid plan as opposed to wishful or airy-fairy thinking.

The opposite is the scarcity mindset, where people view everything as scarce and finite – it’s a dog-eat-dog mindset. If you’re winning it’s because I’m losing. The scarcity mindset reinforces that there’s never enough time, never enough clients, never enough money. And since we can never be sure about the future, we have to ration every last possible resource and grab every bit for ourselves. It becomes a self-perpetuating negative reality in the same manner that abundance thinking supports a positive reality. The best way for leaders and their managers to minimise the damage is to transform their culture to a mindset that inspires unlimited possibility, tough economy or not.

Reductions in operational costs can only be made with adequate planning, utilising your resources, not squandering money away, and better management of your team. It’s certainly important for a business to do their due diligence, research and shop around for alternatives when and where it’s appropriate. Take in-house operational costs for example. Looking to get the best electricity price, the best phone deal and the most cost-effective internet provider is a simple example of reducing costs, but it’s only worthwhile if it doesn’t compromise your business. If you opt for say a cheaper internet service and as a result there’ll be a reduction in the quality and offering, damage to your business is by no means minimised,

it’s probably the opposite. Always weigh up all options. For us at Cold Rock, a prime example of reducing operational costs and also minimising damage is outsourcing the manufacturing of ice cream versus making it on site. For a franchisee to create ice cream on site, operational costs seem lower because the physical cost for ingredients only is less than the purchase price of finished ice cream. The downside and ‘damage’ is not only the costs for the franchisee to hold the stock on site (requiring bigger premises); the hiring of extra staff so as to facilitate making the product, and the extra expenses of electricity, water, etc, not to mention the added occupation health requirements and

increased insurance obligations, but also in the potential issues that might result for the business if they’re unable to deliver a consistent product. Disappointed customers. A dent in brand identity is much more costly than anything else. On the flipside, having a trusted ice cream affiliate means the cost of the product is seemingly higher initially, but operational costs are eventually reduced because each store is presented with a consistent product that they can proudly sell to customers. Everyone knows what they’re getting, and in effect, damage to the business is reduced, costs are saved and you have happy customers. Win, win, win!

www.businessfirstmagazine.com.au

continues on page 79

BUSINESSFIRST MAGAZINE

BF | COVER STORY

Breaking the waves In sport, life and business, transition is crucial to success. ME Bank’s Jamie McPhee speaks about the necessity for transformation in the banking industry. Interview by Ellie McInerney. Words by Jonathan Jackson

here’s something alluring about the sea, and in particular the surf: waiting for a wave to arrive, not knowing how hard it will hit and how this will impact your balance on the board, or whether you will be able to stay on … stay afloat. There is a danger about surfing that is as exhilarating as it is frightening at times. And yet, the allure of jumping on a board is too hard to ignore. The sea draws you back, the surf challenges you to become one with it and ride it through all its ebbs and flows. You feel like once you have mastered the surf, you can master anything. Is there something spiritual

12 BUSINESSFIRST MAGAZINE

about it? I guess that’s an individual thing. Yet, how you face challenges and transformational moments is definitely something that the sea and surf brings to the fore. Jamie McPhee took up surfing nine years ago when he was 40. He is now trying to convince his two daughters to hit the waves. And why not? Their Anglesea property sits on a cliff and looks right over the ocean. Yet for the Adelaide born patriarch of this family, the surf is an extension of his sense of how to approach life – ever shifting, challenging and how to navigate the big waves that come to try and knock you.

McPhee has an affinity with sport in general. “I spent a lot of time playing sport. I played cricket and football and when I stopped playing football, I tried golf.” McPhee understates his sporting skill. He actually captained the Australian under-19 cricket team. This was a team that boasted two future Australian captains in Mark Taylor and Steve Waugh as well as Mark Waugh and Craig McDermott. McPhee also played football in the South Australia Football League. The lessons he has learnt from sport are with him to this day and inform the www.businessfirstmagazine.com.au

COVER STORY | BF

“We at Attra have been delighted to work with Jamie and his team at ME Bank as he goes about transforming his organisation into a major financial institution. His approach to customers reflects our own, placing them at the centre of what we do” Rajat Agrawal Attra way he operates ME Bank. “I am a huge believer in a team first and individual second leadership model. Sport operates in that type of environment and teammates have a personal commitment and dedication not only to their careers but to their team as well. This is what sets apart successful individuals and teams. Watching those dedicated champions it was evident they had the wherewithal and focus to succeed.” McPhee is still involved with cricket as a board member with Melbourne Renegades. The changing nature of cricket is another aspect of sport that www.businessfirstmagazine.com.au

has relevance to business. “Change is fundamental to growth. When we talk about business we are in a unique period in history. There is currently a tectonic shift from the industrial to the digital era. It is as profound as the industrial revolution. That era went from single production of goods to mass production facilitated by machines. Today, it is the use of data that is fundamentally designing a superior customer experience … every organisation is being impacted by this. Take Borders for instance. People were saying for four years prior to their collapse that they needed to run more efficient bookstores. But the real issue was called Amazon. Fairfax’s car classified was impacted by businesses such as carsales.com.au. Today we need to build environments that are consumer viable. If you look at cricket, the One Day series ended up funding Test cricket because it appealed to consumers and wasn’t just male oriented. Now the Big Bash, which runs for a couple of hours per match, means families are attending cricket again. The AFL has done a brilliant job with creating an even demographic of 50% male and female consumers. It brought the product to the consumer market. Some might say the Big Bash is not real cricket, but real cricket to me is looking through the lens of the consumer and developing a product that appeals to consumers. In that sense there is no difference between sport and business.” Sport has always been a passion for McPhee. It is evident in his CV and is brought home when you speak with him. However, the passion for banking didn’t come until later on. After completing an engineering degree, he had no idea what he wanted to do. He felt no engagement with the profession. Someone suggested he go and play cricket in England – which he did. While there he took a job in a bank but had no idea where he was going, but there was an almost instant rapport. “I think back to the subjects I enjoyed while I was studying engineering and they were focused on game theory and financial modelling. So I walked into the UK office of a merchant bank on a Monday and it was a real buzz. The stock market had just crashed and this was a business that was trading foreign exchange and interest rates. It was fast paced and I really enjoyed it, but I knew nothing about finance or banking. When they were talking about

Fragile to Agile’s strong relationship with ME Bank is based on our core belief that business drives technology and our value proposition of enabling business strategy while minimising cost and maximising agility. We would like to commend ME Bank on its vision, focus and conviction during the transformation program. Phil Yeardley, Principal Architect, Fragile to Agile Bonds, I thought they were talking about Alan and Eileen. My knowledge was poor and the money markets were new, but I borrowed a lot of books and devoured them.” He was there for 18 months before heading back to Adelaide and taking a job in the Treasury department with the Co-operative Building Society, which soon became the Adelaide Bank and later Bendigo and Adelaide Bank. The merger between the two was facilitated by McPhee and brought Adelaide Bank’s core competencies in wholesale mortgages, margin lending and portfolio funding together with Bendigo Bank’s unique community focused

Great partners Part of ME Bank’s success lies in its ability to create strong partnerships as well as innovative customer service. Assisting the ME team to achieve their goals are organisations such as Attra, First Data, Fragile to Agile, Symmetry Human Resources, Genworth Mortgage Insurance and Colliers International. The relationship with Colliers is vital. With ME Bank experiencing rapid organisational growth, they found their head office in Melbourne unable to support existing and forecasted headcount. Capacity across each floor was nearing 100 per cent and business units were forced to scatter operations across their tenancy. The bank engaged Collier’s workplace strategy, design and project management service to increase densities on existing floors and deliver an additional floor within their premises. “Colliers have greatly assisted ME Bank in managing both our occupancy challenges and in delivering quality and timely project services,” says Matt Setton, National Procurement & Property Manager - ME Bank. “Their experience and technical expertise made both challenges very manageable and enabled ME Bank to house our growing staff. In addition, their depth of knowledge in lease management has provided great benefit to ME Bank through a period of heightened activity in recent times. ME Bank looks forward to building on this relationship in coming years.”

BUSINESSFIRST MAGAZINE

Open doors with LMI. At Genworth we’ve made lenders mortgage insurance simple, so your customers can buy their home sooner, even with a smaller deposit. Everything you need to know is online. Use the Genworth LMI Toolkit to access videos, apps, case studies and much more.

We’ve made it our business to help yours.

genworth.com.au/lmitoolkit

Genworth Financial Mortgage Insurance Pty Limited • ABN 60 106 974 305 • 101 Miller Street North Sydney, NSW, 2060, Australia • ®Genworth, Genworth Financial and the Genworth logo are registered service marks of Genworth Financial, Inc and used pursuant to licence. LMITA0614

COVER STORY | BF retail banking business. The community aspect was important to McPhee as it is today at ME Bank. He was mentored well and rose through the ranks. In 2006, McPhee was appointed Group Managing Director of Adelaide Bank and in 2007

First Data, the global leader in payment technology and services solutions, makes payment transactions secure, fast and easy for merchants, financial institutions and their customers. Processing more than 1.3 billion transactions per year, with 30 years experience in the Australian marketplace, we guarantee our clients the best in payments expertise, capability and experience. An end-to-end payments solution. www.firstdata.com.au

www.businessfirstmagazine.com.au

became an Executive Director of the merged company. He says Adelaide Bank “was small enough to gain great visibility across the business, but large enough to learn how to run that type of organisation. I had terrific mentorship and the opportunity to do things within the business and to learn about the organisation. The Bank was great at investing in people and I was ultimately the MD in a short period of time because they gave me a chance.” In 2010, when the CEO position at ME Bank opened up, McPhee was ready for the role. And he had big transformational plans, particularly from an electronic perspective. He implemented a digital strategy almost immediately. McPhee said when he joined the bank, “I believe, although not everyone shares this view, that financial services are entering a period of significant digital disruption that will fundamentally change customer service models”. Digital disruption has certainly taken hold in the last few years. Businesses that will survive this new age have adopted the technology to fit consumer requirements. Most banks are adopting new technologies, however ME Bank took this further and in 2010 embarked on a $70 million technology transfor-

It is testament to ME Bank’s culture that Colliers International has been embraced as a strategic partner from the outset of our partnership. Both parties continue to benefit from a collaborative approach to designing and delivering workplace solutions for what is a dynamic business. Dylan ODonnell National Director | Integrated Client Services Colliers International mation that saw the business close its bricks and mortar doors and roll out a new banking platform. One innovation was to create active sites whereby ME representatives would attend worksites to help customers with their banking needs. In larger sites they trialled banking kiosks complete with ATMs and video screen capability that allowed customers to video conference the bank’s contact centre at times when the workplace banker was not onsite. “The important point is that this enables us to take banking services to customers in their workplace rather than them having to come to us.” McPhee was also convinced of the trend towards mobile banking. “We believe that people will increasingly want to interact with their bank

BUSINESSFIRST MAGAZINE

ANSWER: Focus on your business, while we find the right staff for you www.symmetryhr.com.au

What is the right question to ask prospective employees? How do you access the best talent? How do we measure a candidates cultural fit? If youâ&#x20AC;&#x2DC;re wanting to recruit the right staff, the right question is the key...

COVER STORY | BF

through mobile devices and will use the branch network much less. We looked at ING Direct, which deployed its business model in 1998 without a branch network and gained 5 per cent of the market quite quickly in the Internet era. What we want to do is take the next step and build the best digital bank in the digital era,” McPhee says. McPhee studied the models of carsales.com.au, SEEK, realestate.com.au and Sportsbet. They were all focused on consumer-centric experiences. It was like the Big Bash for online consumer Genworth has been a proud partner of ME Bank for 20 years. Together we have continuously collaborated to ensure the transformation and success of our businesses. The dedication and commitment of our people is the key to our partnership and to continuing to realise further potential together in the future. Ellie Comerford, CEO, Genworth Australia

experiences. The transformation in retail behaviour had been changing for quite some time and the banks needed to catch up. ME was a pioneer and it paid off with an award for best Customer Experience in the 2014 Australian Lending Awards. With the appointment of ME Bank’s first chief marketing officer (CMO) in January this year, ME Bank is further enhancing its customer experience as part of its growth strategy. Led by Rebecca James, who has a wealth of experience and clients who have included Westpac, BT Financial Group, Ikea, Microsoft, Coles, Telstra and Qantas, the aim is to drive a broad and unified focus across customer, product, brand and marketing. This

will be the core of a three-year technology transformation program due for completion later this year. McPhee says, “ME Bank is focused on creating a consistently superior customer experience by placing the customer at the centre of our decision making. This role furthers that aim. Rebecca brings a unique blend of brand, technology and leadership skills and experience that will stand us in excellent stead as we build a fundamentally different bank – a genuinely fairer bank – in the Australian marketplace.” It seems McPhee’s strategies are working. Last year the bank announced an underlying annual profit of $36.9 million, an increase of 51 per cent on the previous Financial Year.

“

It seems McPhee’s strategies are working. Last year the bank announced an underlying annual profit of $36.9 million, an increase of 51 per cent on the previous Financial Year.

BUSINESS DNA ME Bank

CORPORATE SOLUTIONS WORKPLACE AND ACCOMMODATION STRATEGY

Our Corporate Solutions team understands that no two businesses are alike. They provide tailored strategies to help you in times of change or business transformation to ensure the best property outcomes. When ME Bank was seeking a property partner to support their business transformation, they turned to Colliers International’s unrivalled experience and proven expertise. Our team integrated seamlessly into their business and ensured all workplace and accommodation aspects of this venture were a success.

Aligning property with business – powerful outcomes sooner. colliers.com.au/IntegratedClientServices

Accelerating success.

Agility by Design

The pace of change in an organisation’ s Agile Business external environment continues to increase, requiring it to design and Dynamic Business Processes deliver change more quickly and Flexible Services effectively than its competitors to thrive. An agile organisation is established on a Enterprise Architecture foundation of dynamic business processes served and enabled by flexible Business Strategy technology services. Without close alignment between strategy and delivery, business agility remains a lofty and elusive goal. Business capability driven enterprise architecture bridges the gap between strategy and execution giving you confidence that your organisation is both doing the right things and doing things right on its journey to a material uplift in agility. Fragile to Agile’ s passion is assisting organisations design an agile target state, driven by their business strategy, and mapping the transition to that target state. Our seamless endto-end approach to change design covers all of the elements required for success in an integrated approach based on the following philosophy:

Business, people and technology design must be aligned and driven by business strategy if an organisation is to successfully deliver its business intent, maximize its agility and minimise its cost and risk. The Fragile to Agile Integrated Architecture Framework was developed specifically to support this philosophy and encompasses the entire breadth (from strategy formulation to implementation) and depth (from the articulation of business intent to technology design) of business change. Using the business capability model as a base, it simplifies critical issues such as roadmap development; investment prioritisation; the assessment of an initiative’ s adherence to business intent; governance and solution design. We are a dedicated business and technology architecture practice helping transform organisations from fragile to agile. If you’ d like to hear more about redesigning your business for agility, please contact us:

contactus@fragiletoagile.com.au +61 8 7071 7017 www.fragiletoagile.com

COVER STORY | BF

“The result was on target and a positive outcome in the context of ongoing investments in the Bank’s future and in an environment dominated by low credit growth and strong competition. “ME Bank’s underlying profit has continued to grow steadily since 2009 based on customer growth and a shift from an off-balance sheet securitisation model to a more traditional on-balance sheet model that is contributing to increased net interest margin. “The 2013 Financial Year was one of consolidation in which we were able to demonstrate significant growth and progress towards achieving the goals

ME Bank and Symmetry HR’s partnership is based on achievement & relationship. Symmetry HR enjoy being part of the ME Bank vision and we heavily invest in understanding that vision. Wayne Baker, Chief Operations Officer Symmetry Human Resources

set out in our three-year business plan. “Retail deposits grew 58 per cent and home loan settlements grew 17 per cent, while EveryDay Transaction Accounts grew 196 per cent and overall customer numbers grew 12 per cent. “Our funding mix has also continued to diversify with retail deposit funding increasing from 6 per cent in June 2008 to 20 per cent in June 2013. “Overall the results confirm our strategic approach, which is to offer an alternative to the major banks based on a genuinely fairer approach, a position derived directly from our industry super fund heritage that sets us apart from other banks.” As for the role technology has played in these impressive figures, McPhee says, “ME Bank’s technology transformation program will position us as one of the most technologically advanced banks in Australia. “Transformation is about improving ‘customer experience’ and capability. It will better enable ME Bank to challenge the majors through product and service innovation and operational efficiencies.”

It’s a great way to compete in a market where the big four have so much leverage. McPhee has called for a fairer playing field, but whether that occurs remains to be seen. Meanwhile, it will continue its strategy of innovation and of customer centric solutions. Recently ME Bank undercut the big banks’ record-low five-year fixed mortgage rates, amid predictions competition in the $1.3 trillion market will remain intense as smaller lenders benefit from lower funding costs. They also issued mortgage bonds at the lowest price seen since the global financial crisis. ME Bank is doing much more than staying relevant, it is leading the charge in technological and consumer-centric transformation. This was McPhee’s plan from the beginning and when the bank’s tech revolution is complete this year, there is no doubt he will look at further innovation. Success comes down to his attitude towards change, his ability to see the ball before he strikes it and his uncanny knack for riding a wave to its logical conclusion. BF

Attra has been in the business of providing software and support services to the banking, finance & payments industry since 1995. With its head office in Melbourne it now works with customers in over 20 countries supported by 1000 professionals globally and a major development centre in Bangalore India. Being an Australian company specialising in financial services with both local and global expertise, we offer a distinct advantage to our Australian customers. Attra’s commitment to quality has seen it appraised as SCAMPI B CMMI level5 as well as being PCI_DSS certified. It was this dual commitment to quality and customer satisfaction that led ME Bank to choose Attra as a partner for their cards transformation initiative. We would welcome the opportunity to discuss with you how your business, too, can benefit from the “Attra Advantage”

Please visit us at: www.attra.com Call us at: +613 9895 0555 Email us at: info@attra.com.au

AUSTRALI A • I N D I A • UK • USA • UA E • CA N A DA • S I N GA P O RE

BF | LEADERSHIP

BIG CHANGE

IS HAPPENING ….

DO YOU KNOW HOW TO SEIZE TRANSFORMATIVE OPPORTUNITIES?

20 BUSINESSFIRST MAGAZINE

www.businessfirstmagazine.com.au

LEADERSHIP| BF

W Chutisa & Steven Bowman

are global business advisors.

e live in a time of accelerating change in the global landscape. Globalisation, environmental calamities, technological advances, and other complex forces are buffeting us like never before. The ancient Greek philosopher Heraclitus recognised many centuries ago that the only thing that is ever constant is change. The truth is, in today’s environment, the changes are coming more rapidly and more dynamic than ever before. These forces and changes are generating unlimited opportunities and inimitable threats. You can’t help but notice that change is accelerating. Yet most people are clueless about what’s causing the changes, how it might affect them, and, most importantly, what to do about them. What can we do in our lives and our businesses to prosper and thrive in the midst of these challenges? All businesses large and small will be impacted inescapably by huge rates of change, whether through technology or globalisation, environmental calamities or economic factors. Business executives must know how to deal with that. Unfortunately, for most people change is often unwelcome, threatening, and disorienting. They refuse to receive it. They turn a blind eye toward a changing environment. They carelessly assume that the future will be similar to the past. In most cases, they can’t quite fathom that their existence could be threatened. In today’s rapidly changing world, obliviousness, unawareness and indifference are not effective choices. Not knowing and not caring can be a death sentence - not only for your career, but for your personal wellbeing, for your financial health and for your future possibility. Have you ever asked yourself what are your points of view about change and about the future? In our experience, few people have given much thought to their points of view that underlie the way they create their

‘

Have you ever asked yourself what are your points of view about change and about the future?

www.businessfirstmagazine.com.au

reality and their future. Most people think that, since the future has not arrived yet, it can be ignored, at least for a while. A lot of people don’t have any idea about what they would like to create as a future. They think they’d like their life to continue to be better. That is not creating a future. The future is too important to be left to chance, and too imminent to ignore. Over the next 25 years the world will undergo monumental changes: economic and demographic trends will shift turning losers into winners, frontrunners into underdogs and creating turmoil for anyone not prepared. Rather than closing your eyes to forewarning indications and hoping that things don’t change too much, you must be willing to break with your own habitual points of view and discover different ways of seeing the world. It is crucial to embrace uncertainty and ambiguity, and fashion it into a prosperous way of life. Willingness to step beyond the unknown in this way can lead to major revolutions in many endeavours. We prefer the idea of embracing change, uncertainty and doubt, rather than running away from them. This can provide a strong sense of what is possible in the future and what isn’t. Constant, unrelenting change is the natural order of things you not only have to get used to, but have to learn to thrive on. Embracing the attitude that change is necessary and indispensable can lead to significant breakthroughs. Creation comes from change, and change is the harbinger of creativity. The most powerful tool you can use to get ready for the impact of change, is to ask questions about your business. We have provided some questions at the end of this article that we use ourselves constantly and teach organisations to use to get themselves ‘future-ready’. To thrive consistently over the long haul requires discipline and a reliable strategy for dealing with new opportunities and unforeseen adversities. You need to be open to playing an entirely new game and you must be willing to break out of conventional models that dictate how you are supposed to function. For you to thrive and prosper, you will have to turn yourself into a change agent. If you wish to be a change agent and become a catalyst for change and transformation, you have to expand your zone of awareness. Awareness is the capacity to know everything. It is crit-

ical to achievement in all areas of your life. Awareness is the key to thrive in a world of disruptive innovation. It is a continuous, ever-moving, ever expanding possibility. To ally yourself with this state of being and the remarkable capacity for change it creates, there must be an essential shift in your attitude, your points of view and your mindset. This shift in orientation requires new practices and the willingness to choose differently. If you wish to expand your zone of awareness, you have to be willing to receive everything. Receiving involves no resistance; it is about remaining constantly open, vulnerable, and unresisting to any energy. Are you ready to take advantage of the new and different possibilities? In my view, there seems to be a sense of urgency in the air, a need for change and new ways of living our daily lives. You need to recognise and observe the trends that will shape the future. Then you can use your awareness and creativity to turn them into positive results. To develop a future awareness and keep it alive, you must immerse yourself in future-related information and ideas that can be fertile sources for how to create your future. It enables you to see different possibilities, new opportunities. It all comes down to the choices you make. The choices and actions you take now can have multiple effects for your future. The questions below will give you an idea of how to get started. 1. What’s possible for our organisation? 2. What do I need to be aware of here? 3. What emerging technologies could change the game? What can we do about this? 4. Could there be future changes or surprises that could harm or benefit us? 5. Where can I put my energy, that would change something? Choice is the way to navigate change. Every choice you make creates awareness and determines what your future can be. What the world will be like in 20 to 30 years from now will depend as much or more on the choices made between now and then. It is important to consciously, intentionally, and deliberately think about future implications for every choice you make and for everything you do. What makes the future happen is what you do today, in the present moment. Your choices accumulate and have an effect on what future will look like. Everything is choice. Everything is infinite possibility. BF

BUSINESSFIRST MAGAZINE

BF | FINANCE

GETTING THE FINANCIAL YEAR OFF TO A GOOD MONEY START

22 BUSINESSFIRST MAGAZINE

www.businessfirstmagazine.com.au

FINANCE | BF

You run a small or medium business and you’ve heard about all these new great technologies that could help you improve. You have been told you could save time, money, increase productivity and a range of other great things. So how do you adapt these technologies?

S John Corias is a Senior Partner at m.a.s accountants

mall business owners looking to start the new financial year off on the front foot need to invest time into keeping abreast of new tax year changes that may have an impact on their small business. The risks of not doing so can either lead to missed opportunities or to potential disaster. The Federal budget handed down in May contained a number of matters that directly impact on the majority of small businesses in Australia.

Employee Superannuation Contributions

While the budget contained measures to delay the rate of increase in the compulsory SGC employers must pay for their employees, the minimum percentage of SGC rises from 9.25% to 9.5% effective from 1 July 2014. Based on current proposals the rate will remain at 9.5% until 30 June 2018. Small businesses need to ensure that this increased obligation is factored into budgeting for the new financial year. In order to ensure you are paying the proper rate it is essential that your accounting and payroll software is updated for these changes. Hanging onto old versions of desktop software is no longer wise, not that we think it ever was.

beg benefit comes for those aged 50 and over who can now contribute up to a maximum of $35,000.00. For those small business owners approaching retirement or even the younger generation just looking at a complete financial plan taking advantage of these higher concessional amounts can result in immediate tax savings and investing in your own retirement at the same time. Fuel tax credits

With the proposed removal of the carbon tax a decision was made in the budget to adjust the fuel tax credit scheme to account for the removed costs of the carbon tax on affected businesses. The amount of fuel tax credit eligible to be claimed will drop for petrol and diesel used in off-road activities. Fuel tax credits will not drop for vehicles with a mass greater than 4.5 tonnes traveling on public roads. The ATO has also gone out of its way to remind businesses that any fuel tax rebates they receive are actually taxable income that needs to be declared in your annual income tax return on an amount received basis. Tax rate changes

A recent decision handed down by the Fair Work Commission has seen the federal minimum wage rise by 3% from 1 July 2014. If your employees are covered by an award agreement then this change will most likely impact on your wages costs. This is on top of the previously mentioned SGC increases, to be fair the Fair Work Commission did set the increase at less than the unions asking point, taking into account the extra superannuation contributions that also take effect from 1 July.

There is only one change to mention when it comes to actual personal income tax rates, but for those affected, it can be a significant factor in decision making. For those whose taxable income exceeds $180,000.00 the temporary budge ‘deficit levy’ of 2% of taxable income will apply to every dollar of taxable income over and above $180,000.00. This levy will remain in place for the next two financial years. A further reason to ensure your payroll software is up to date, lest you under tax yourself or employees and then receive a nasty surprise when it comes time to prepare your own personal income tax returns.

Concessional super cap changes

Increase in Medicare levy

Minimum wages increase

From 1 July 2014 the concessional superannuation caps have increased to allow all Australians to contribute a maximum of $25,000.00 per financial year into their superannuation. The www.businessfirstmagazine.com.au

The current Medicare Levy of 1.5% will rise to 2% from 1 July 2014. This will impact on the PAYG withholding that applies to all employees of businesses in Australia. The Medicare levy exempt

thresholds remain in place for low income earners and a select number of other exemptions. The Medicare Levy Surcharge imposed on those who exceed the applicable income threshold’s and do not have appropriate levels of private health insurance also remain in place for this financial year. Loss carry-back rules repealed

In the 2013 income tax returns a transitional measure applied where small businesses could offset 2013 losses against 2012 taxable profits to generate a refund of tax paid on 2012 profits, rather than carrying forward 2013 tax losses. The Government is seeking to legislate that this no longer apply to 2014 taxable losses. Only time will tell if the Senate allows this measure to pass. Sadly, the uncertainty of such unlegislated yet proposed changes only serves to add to the complexity of Australia business conditions and hinders clear and certain business decision making. With tax laws being passed retrospectively is it any wonder that the biggest complaint of Australian small business is red tape, generated by Government complexity. It pays for every small business owner to invest time into researching changes that may apply to their situation. Some changes can be advantageous in tax planning and minimisation strategies whilst other changes, if not adhered to, can result in significant penalties and headaches for small business owners. Of course how many small business owners actually have the spare time to do this? Not many, would be our answer. The most time efficient manner of keeping abreast of such changes may be through an accountant or financial planner generated newsletter, blog or social media pages dedicated to your requirements. BF John Corias is a Senior Partner at m.a.s accountants, the original accounting office for small business - Celebrating over 50 years in small business accounting. www.masaccountants.com.au

BUSINESSFIRST MAGAZINE

BF | PROFILE

MARK COYNE: FROM CENTREMAN TO BUSINESS FLY HALF Any rugby league aficionado knows the name Mark Coyne: a state and national player, playing 19 State of Origin matches for QLD and nine internationals with the Kangaroos with great success. He spent 12 years at the Dragons, six as captain of St George and wore the famous Red V on more than 220 occasions. Coyne has emulated his on field success in the business world, in no small part due to his ability to lead. He speaks about leading successful teams and why getting back to work is critical to self-esteem. Story by Jonathan Jackson.

ot so long ago, 20 years perhaps, sport in this country was more of a mates’ pastime than it was a professional vocation. Don’t get me wrong, the competitive spirit was alive, fans bayed for premierships – or at least the blood of the opposition – and players took their roles seriously. However, sport wasn’t a career; you couldn’t make a decent living out of it. At the end of a match teammates cracked open a beer or two, parted ways and turned up to their full time

24 BUSINESSFIRST MAGAZINE

jobs on a Monday morning ... before heading to training in the evening. It was a different world back then. Job skills were vitally important. For Mark Coyne, business was a calling as much as sport. “I graduated with a Bachelor of Business, however in 1988 as a 20-year-old I was signed to St. George Dragons. That was my first contract and it was only for $10,000, so I also started to work at Premier Credit Union in a marketing capacity.”

Coyne juggled these roles for about nine years until rugby league became a full time sport. For the three years following he was a professional footballer, but he didn’t quite want to let go of the business skills he was building so he dabbled in a marketing capacity for the club doctor’s rehabilitation business. It was this job that introduced him to the world of workers’ compensation. Upon completion of his football career Coyne was asked to join NRMA’s Road Service Board. Finding the Board www.businessfirstmagazine.com.au

PROFILE | BF

to be acrimonious at the time, and with a desire to move into operations, he didn’t stand for re-election and decided to take on an operational role with GIO in their workers’ compensation business. “I spent seven years there, starting with the Sydney based claims team and in my last three years became the GM of the National Workers Compensation claim business. It was there that I learnt about engagement. Mark Milliner (CEO of Suncorp’s Personal Insurance Operations) was my boss for many years there. He helped me understand the importance of investing in people. Today, I like to sit with staff and hear some of their frustrations and find ways to work out their problems in a collaborative manner.” Of course, Coyne had already been honing his engagement skills on the football field. Football taught him about hard work and work ethic. He says that culture followed him into his business life. “There was a lot to take from my playing days, including overcoming adversity. I have gone through the trials and tribulations of successful and not so successful teams. I learnt to handle it well and treat it as a life experience. Football allowed me to deal with stakeholders – from CEO to fans, media and sponsors. And it taught me about leadership. I played with Dragons for 12 years and was captain for six years. So coming into an industry straight from football, I believe I have been able to demonstrate strong leadership and that has allowed me to move up the corporate ladder relatively quickly.” Whilst playing football, Coyne didn’t expect that he’d one day be in a CEO position. He knew he didn’t want the transient life of a coach, but he thought he might be able to lead a club, St George preferably, at a management level. Yet, his career projection saw him

“At IPAR, we see return to work as an emergency. Our expansive national network, fierce determination to provide quality services to our customers and our unwavering focus on innovation produces consistently outstanding results.” www.ipar.com.au

www.businessfirstmagazine.com.au

transcend that. “I went past that. I have enjoyed the corporate world and it has just become bigger for me. I got to the point where I didn’t want to go back into the football world in that position.” While at GIO, which during his time there integrated with Suncorp, he was approached by Employers Mutual Limited (EML). By this point, Coyne had worked himself into the position of GM – Workers Comp Claims at Suncorp and had made waves with his ability to lead and his people-first attitude. EML had a contract with Coal Services to provide a CEO and Coyne found himself as MD and CEO of Coal Services for two years before taking up his current position as CEO of EML. EML holds a unique place in the Australian compensation landscape. “We differ in that we are the only workers’ compensation mutual in Australia. This means we invest back into our members and occupational health and safety programs. We also only work with compensation insurance. There are no other competing insurance lines in this business, so we are focused on workers’ compensation and have been the number one performer in this sector.” With the ability to concentrate on one core competency, staff at EML is well on board with the people-first message that has placed the organisation at the top of the field. There are 1400 people working with EML. And while Coyne can’t be as hands-on with each one as he was with Coal Services, he ensures the message is heard. “I invested a lot of time in a robust strategic plan and I go out and communicate that to our people, making sure that my managers have an understanding of where the business is heading and that they can reflect that to the rest of the business.” Coyne takes the same approach with clients and suppliers. He says they are key to the organisation’s success because they reflect what the company is doing. Legal firms such as Hickson Lawyers, Edwards Michael Lawyers, Lee Legal Group, Recovery Partners and IPAR are crucial to EML’s operations. “We create panels with all our clients and suppliers because we want to drive sustainable outcomes. We want to get people back on their feet as quickly as possible and we need to work closely to make this happen.”

“As a value driven organisation, Recovery Partners are proud of their long term preferred supplier relationship with Employers Mutual and their clients by providing market leading workplace health and safety and workers compensation services nationally.” Rowan Brown Executive Director Recovery Partners www.rrp.com.au The worker’s compensation industry has changed dramatically since Coyne first entered the industry. Those changes are due to the close working relationships that providers have with each other that are driving better policy. “The industry has changed,” Coyne says. “It was being taken advantage of by people who weren’t genuinely injured or stretched out the injury. Some people could be passive in terms of going back to work, but it’s proven that early active injury management is very important. When I look back at my sporting career I rarely missed a game because when I was injured I did all the right work to get back on track. You need to get people back into the workforce early for everybody’s benefit. “At EML, our suppliers are focused on getting people back to work. We are active in removing barriers. Claimants have legal, medical and rehabilitation issues and therefore all stakeholders have to work with us to get the best outcome.” Best outcomes mean better business performance. EML has grown from 50 staff to 1400 on the back of a strong NSW compensation scheme and the company is currently undertaking a

“Mark’s approachable, supportive and team spirited nature garners the respect and support of all who come into contact with him. His deep strategic thinking and business acumen help to stand him out in the world of business.” Hickson Lawyers

BUSINESSFIRST MAGAZINE

Lee Legal Group Has over 30 years of experience in insurance litigation. Is a firm that embraces progressive strategies in the provision of specialist legal services to the Insurance Industry in New South Wales. Since its inception the firm has solely acted on behalf specialist insurers within New South Wales in areas of Workers Compensation, Motor Accidents and Public Liability. The firm has developed infrastructure, staffing and outcome driven dispute resolution processes, so as to ensure an excellence in the delivery of legal services to Insurers in New South Wales.

The firm comprises 15 staff including two solicitors who are Accredited Specialists in the provision of personal injury legal services and a network of specialist advocates providing almost exclusive services to Lee Legal Group. In addition, experienced paralegal and administrative staff, provide support to clients from our offices specifically designed to allow the movement of information between Insurers and the firm.

Lee Legal Group Suite 9, Level 2 4-6 Kingsway, CRONULLA (02) 95277522 Email: stephen@llgroup.com.au

Everything insurersâ&#x20AC;&#x2122; need in one firm When it comes to devising practical and cost effective strategies to defend claims, in all classes and ranges of complexity, Hicksons has a proven track record, accredited legal specialists and mediators, technology know-how and the service mindset that delivers everything you need from one firm. Our national footprint means that we are everywhere you need us to be. To find out more visit www.hicksons.com.au or ring Stewart Cameron, the head of our national insurance in the workplace group, on 02 9293 5408 or email him at stewart.cameron@hicksons.com.au

Civil and structural engineering services since 1973

PROFILE | BF

“Our new National Self Insurance contract renewal with the state. Coyne Has over 30 years of experience in insurance litigation. Division provides large companies such is hoping that their strong history Is a firm that embraces progressive strategies in the as Woolworths with the opportunity of performance will see them grow provision of specialist legal services to the Insurance of incorporating a national network of their market share significantly. The Industry in New South Wales. company is also looking to expand into workers compensation specialists into Since its inception the firm has solely acted on behalf their business. Woolworths’ employees Victoria as that state’s contract renewal specialist insurers within New South Wales in areas of can be reassured that, if injured, there is due in 2016. Workers Compensation, Motor Accidents and Public Meanwhile Coyne is looking into the will be a team of specialists focused on Calculations Specifications/ Supervision/ Liability. supporting their Designs recovery and return to Detailed self-insurance market. EML recently drawings Certifications Inspections The firm has developed infrastructure, staffing and work every step of the way.” won a contract to handle Woolworths outcome driven dispute resolution processes, so as to Since taking over as CEO almost self-insurance workers compensation ensure an excellence in the delivery of legal services to three years ago, Coyne has been proclaims. Insurers in New South Wales. active in making cultural and strategic “This partnership will ensure both The firm compromises of 15 staff including two Woolworths and Employers Mutual can differences. It has meant that under solicitors who are Accredited Specialists in the provision provide best practice support to injured his leadership, the EML team has been of personal injury legal services and a network of able to help improve the company’s Woolworths’ employees. specialist advocates providing almost exclusive services financial results. to Lee Legal Group. In addition, experienced paralegal “We have strong values that are It is both challenging and satisfying and administrative staff, provide support to clients from demonstrated from my Executive Team working with Mark Coyne and our offices specifically designed to allow the movement because we are focused on the right EML. They require excellence from of information between Insurers and the firm. things – the core business of getting all providers to deliver optimum people back to work and giving them outcomes for their stakeholders. - Lee Legal Group their lives back.” In that sense our philosophies are Coyne sees himself in the role for a perfectly aligned, underpinning a minimum of at least another five years. relationship that has endured for and 08 focused. the end all business this time he will continue to help the - Ph Level 2, 185InVictoria Square, Adelaide 5000 8212In4900 - email @ginosengineers.com.au almost three decades. company grow throughout the country, and all sport is about the way a team comes together to achieve its common while making sure that everyone Edwards Michael Lawyers objectives. BF within the business remains engaged

Providing structural support to the Makris Group

GINOS ENGINEERS

Providing benchmark legal services to Employers Mutual for 28 years. Level 11, 75 Elizabeth Street Sydney, NSW 2000 www.edwardsmichael.com.au 20 BUSINESSFIRST MAGAZINE

www.businessfirstmagazine.com.au

BF | LAW

THE CHANGING FACE OF SOCIAL MEDIA:

Could your business be held responsible for user generated content on Facebook? Lately there’s been a lot of talk about a recent Australian Standards Bureau (ASB) ruling. The ASB ruled that the social media platform Facebook is ‘advertising’ as defined in the Advertiser Code of Ethics (Advertising Code).[i] 28 BUSINESSFIRST MAGAZINE

www.businessfirstmagazine.com.au

LAW | BF

T Joanna Oakey is the Director of Aspect Legal.

his isn’t the first time an organisation has been found to be responsible for user generated content on Facebook. But the cause for all the interest now is the ASB’s finding that Facebook content is advertising, and so subject to the Code, and that the Facebook page owner must monitor content on Facebook to ensure it complies with the Advertising Code. [ii] Yikes! Sounds like a big responsibility, doesn’t it? Let’s take a closer look at the case.

Victoria Bitter case

Victoria Bitter is one of the highest selling beers in Australia. A complaint was made about Victoria Bitter’s Facebook page on the grounds that user content breached the Advertising Code. The claim was that the content was allegedly discriminatory toward women, degrading to homosexuals, used strong obscene language and did not treat sex, sexuality and nudity with sensitivity to the relevant audience. This complaint related to third party posts made by public users of the site, not posts actually made by Victoria Bitter. Followers were asked to comment on things like: “What’s essential for a great Australia Day BBQ?” Even though this sounds like something innocent enough and a fun way to get their audience involved, the user posts in response to the question did appear to be highly offensive. Victoria Bitter did not remove or take the posts down, and that is how they ended up in hot water. Victoria Bitter was found to be responsible for the content, even though it hadn’t authored, posted or endorsed the content in question. This ruling has left many businesses scrambling with the new understanding that content on their social media pages might be viewed as their responsibility, even if it is posted by a third party user. What does this mean for your business?

This ruling has caused a lot of discussion in the media, and has businesses coming to grips with the implications of a finding like this and what it can www.businessfirstmagazine.com.au

mean for them. Perhaps the ruling shouldn’t come as such a surprise though. It’s probably safe to say that the highly offensive nature of the user generated posts, and the fact that they were in response to questions prompted by Victoria Bitter itself (although not offensive), had influence on the finding in this particular case. However, it certainly looks like this is likely to be the beginning of more activity through the courts as our society and businesses come to grips with the changing face of marketing and responsibility across various social media platforms. The ASB’s ruling acknowledges that removing user-generated content would be ‘challenging’. To assist in finding clarity, the Australian Association of National Advertisers has initiated discussions within the industry to produce clearer internal guidelines in response to these rulings. We’ve checked with the ACCC and whether they have an official take on this for businesses, and they don’t yet have anything official to release. They only commented that businesses should comply with the Australian Consumer Laws. One of the ACCC commissioners commented that she’d be surprised if a big corporate player “with lots of resources that’s putting a lot of effort into social media” wouldn’t be able to take down comments within a day or less. She may be correct, but what about smaller businesses with less resources? Until clearer guidelines are provided, the message to take away for the time being seems to be that it’s best to err on the side of caution. i] If you want to see the rulings you can find them here in relation to a Victoria Bitter Facebook page. [ii] It’s probably worth noting this from the ruling itself: “The Board considered that the Facebook site of an advertiser is a marketing communication tool over which the advertiser has a reasonable degree of control and that the site could be considered to draw the attention of a segment of the public to a product in a manner calculated to promote or oppose directly or indirectly that product. The Board determined that the provisions of the Code apply to an advertiser’s Facebook page. As a Facebook page can be used to engage with

‘

Until clearer guidelines are provided, the message to take away for the time being seems to be that it’s best to err on the side of caution.’

These rulings indicate that the courts, and now the ASB, are willing to find that owners of Facebook pages have control over the content that appears on them, even if the content is posted by third party users and not the company itself. Simply denying responsibility won’t work. Businesses now need to have a thorough system in place for actively monitoring their Facebook pages, and other social media platforms, on a regular basis to be on the lookout for and remove offensive content or content that might otherwise breach the consumer laws, the advertising code, or any other relevant law. BF Joanna Oakey is the Director of Aspect Legal, a progressive legal company focused on providing a proactive and innovative approach to the law. aspectlegal.com.au customers, the Board further considered that the Code applies to the content generated by the page creator as well as material or comments posted by users or friends… The Board noted that social media is an advertising platform that requires monitoring to ensure that offensive material is removed within a reasonable timeframe and that content within a Facebook page should, like all other advertising and marketing communication, be assessed with the Code in mind.… The Board recognized the challenges in effectively monitoring social media to ensure that offensive material removed within a reasonable time.”

BUSINESSFIRST MAGAZINE

BF | TAX

THE TAX PERILS OF BORROWING MONEY FROM YOUR OWN COMPANY! I

Mark Chapman is Head of Tax with Taxpayers Australia.

f you own your own business, it can be very tempting to borrow money from the business to tide you over those occasional cash flow interruptions in your personal finances. You need to take care though. There are specific tax rules which are designed to catch the situation where a private company lends money to shareholders and their associates. These rules – known as the Division 7A rules – have been around for many years but continue to be a rich seam of revenue for the Tax Office because they are complex and surprisingly little understood by businesses, and even some of their advisers. Overview of Division 7A Division 7A covers benefits such as payments, loans and debt forgiveness made by private companies. The Division 7A law is an integrity measure designed to prevent private companies making tax-free profit distributions to shareholders (and their associates). The transactions covered by the law include: • Amounts paid by a private company to a shareholder (or their associates), including transfers or use of property for less than market value • Amounts lent to shareholders (or their associates) without specific loan agreements being in place • Debts the business forgives. Note that the rules don’t apply to loans which are fully repaid by the due date for lodgment of the company’s tax return for the year in which the loan is made.

30 BUSINESSFIRST MAGAZINE

The effect of Division 7A is that affected loans, debt forgiveness or other payments are treated as assessable unfranked dividends to the shareholder (or their associate), and taxed accordingly in their hands. Who is affected? The Division 7A rules apply to private companies. Amongst those who could be caught by the rules are the shareholders of private companies and their ‘associates’. The definition of associates is very wide and includes spouses, other family members and related entities (such as trusts). Employees may also be caught by the rules if they are also shareholders (although the fringe benefits tax rules may also apply in preference). When does Division 7A apply? The most common situation caught by Division 7A is where there is a loan made by the company to the business’s shareholders or their associates. A loan will generally be treated as a dividend if a company lends money to a shareholder (or associate) in an income year and the loan is not fully repaid by the earlier of the due date or the actual date of lodgment of the company’s tax return for that income year. Also caught will be the situation where the company makes an asset available for use by the shareholders or their associates, for example a holiday house owned by the company. Where shareholders of the private company use that holiday house for

free over a period, this will usually give rise to a tax liability under Division 7A as a ‘payment’, as this use is viewed as having a commercial value. The shareholder is deemed to have received a distribution equivalent to that commercial value, which without the existence of Division 7A would have been tax free. What happens if 7A aplies? Where Division 7A applies, any loans, payments and debt forgiveness from the business to its shareholders (or associates) may be deemed to be a dividend assessable to tax in the hands of the shareholder (or their associates) typically at their marginal tax rate. The dividend is ‘unfranked’ meaning that there are no franking credits available to the recipient (unless the Commissioner exercises his discretion to the contrary). For Division 7A to apply, there need to be ‘profits’ from which the business can make payments. This is referred to as a ‘distributable surplus’. In general terms, where Division 7A applies, provided there is a sufficient distributable surplus in the company, all payments made by a private company to a shareholder (or their associate) are treated as dividends at the end of the income year. Avoiding Division 7A To avoid the Division 7A provisions, transactions must be arranged correctly and at arm’s length. In particular there are certain payments, loans and debt forgiveness that are not always treated www.businessfirstmagazine.com.au

TAX | BF

as dividends. Amongst the payments which are not always treated as dividends are the following: • The repayment of a genuine debt owed to the shareholder • A payment to a company (not acting as trustee) • Any payment that is otherwise assessable for tax • A payment made to a shareholder in the capacity of an employee (including their associates) • A liquidator’s distribution. And these loans are not generally treated as dividends: • A loan fully repaid within an income year • Loan to a company (if it is not acting as a trustee) • Loans made ‘in the ordinary course of business’ on commercial terms (by a bank) • A loan made to buy shares or rights under an employee share scheme • Any loan that is otherwise assessable for tax • A loan that is under a special type of loan agreement called a “Division 7A loan agreement”, put in place before the lodgment day of the company’s tax return. Such a loan agreement will specify a rate of interest linked to a periodically updated ATO benchmark and, if the loan is unsecured, will have a maximum term of 7 years (or 25 years, if it is secured) Finally, not all debts that are forgiven are treated as dividends, including: • Where the debtor is a company • If the debt is forgiven because the shareholder becomes bankrupt • Where the loan that created the debt is itself treated as a dividend • If the Tax Commissioner exercises his discretion due to being satisfied that the shareholder would otherwise suffer undue hardship. Borrowing money from a private company, especially if it is your own business, can have serious pitfalls if not carried out correctly. If you have borrowed money from your company, or are planning to, make sure you discuss the consequences with your tax adviser and if necessary put in place a plan to mitigate the Division 7A liability. BF Mark Chapman is Head of Tax with Taxpayers Australia. taxpayer.com.au www.businessfirstmagazine.com.au

BUSINESSFIRST MAGAZINE

BF | PROFILE

LIFE AT THE

RESORT

If anyone has hospitality in his blood it is Barry Robinson. His parents owned hotels and motor Inns and he was already working in the business as a young teenager. Robinson speaks with Bob Forshaw about his love for the hotel industry and how that industry has evolved since he first manned a reception desk.

32 BUSINESSFIRST MAGAZINE

www.businessfirstmagazine.com.au

PROFILE | BF

ew Zealand born Barry Robinson was 10 when he had his first taste of the hospitality industry. As he watched his parents work hard, he was instilled with a sense of adventure and entrepreneurship, but he also learned the technical aspects of the business. “The hospitality industry technically is very simple,” Robinson says. “To start with you have to be responsive with people. It is a relationship-focused business where an eye for detail is required. You have to ensure you hire the right staff, people with 12 or 13 years of experience in making the beds the right way and looking for every detail to ensure when people are entering their room for the first time, the room is impeccable. That is a skill that is lacking in some places today. You also have to work harder than the next person. And if you are not really prepared to do that then you are not going to be successful. It is going to be harder to get to that supervisor position. Sometimes you need to be able to multi task while ensuring you create a point of personal difference for every guest.” When he started on his own, the question of whether Robinson would stay in hospitality or create his own path lingered. It was the latter choice at first and he bought a small transport business in Australia, which he says did moderately well. The time was the early 1980s and Robinson held onto the business for close to a decade before selling out when the hospitality bug came calling. It was then that Robinson’s hospital-

www.businessfirstmagazine.com.au

ity career really took off. He did his apprenticeship within the family business and took that experience further with several independent hotels and resorts. He stepped out of his comfort zone to move into corporate hospitality and at 27, was appointed to a general manager position with Quality Inns NZ. He then went to work for international organisations Swissotel and Choice Hotels International. Choice is one of the largest and most successful accommodation franchisors in the world. With over 6,100 hotels open and under development in more than 40 countries. “I went into the corporate hospitality world where I hadn’t been before. I had always been family orientated.” The former CEO of Choice Hotels New Zealand approached Robinson to open a four-star resort in Indonesia. “I thought it was a strange move in those days. It turned out to be a bit of an eye opener going into a different country. I had a couple of years in Indonesia to start with and then went to China for about three years. I learnt a lot during that time. It was a really interesting experience because it was a communist country then and China hadn’t really opened its doors to the rest of the world. The Security Bureau monitored all your activities and it was a steep learning curve as we had to quickly try and learn the language and grasp an understanding of the culture.” Despite the difficulties the launch into Asia was successful and Robinson became proficient in Asian relationships, a skill that is crucial in the hospitality industry today. “One of the important things that I

learnt in China was patience; in your negotiations and in your instructions to some degree.” This helped when he eventually had to deal with hundreds of millions of dollars worth of investment and investors in the capital-intensive timeshare model and the construction of resort facilities throughout the Asia Pacific. When Robinson moved back to Australia in 2001, it was for a number of reasons. He now had a young family to take care of and he was leading the acquisition of the Flag Group as MD of Choice Hotels Asia Pacific. It wasn’t long after he stepped foot back in Australia that he was approached by a headhunter representing Wyndham Vacation Resorts Asia Pacific. “I had a look at the company and considered why I would want to run a timeshare business. But they convinced me of its merits and that’s when my Wyndham days started. I get bored quickly and I actually didn’t think I’d be here this long but the interesting thing is, Wyndham Vacation Resorts Asia Pacific has a diverse range of businesses within businesses. There is the vacation ownership business, the hotel management business and a large consumer financing business, which operates a Our unique service involves partnering with our clients to create solutions and transform spaces, on time and on budget. Recently, we collaborated with Wyndham CEO Barry Robinson, and together, we produced a look befitting the smart, beautiful and elegant hotel. Guest Commercial

BUSINESSFIRST MAGAZINE

uniform specialist

PROFILE | BF

loan portfolio in excess of $330m. We have our own travel agency and construction business. We have been driving a rapid expansion of our Wyndham Hotel Group brands across the South Pacific since 2009. We commenced with the Ramada and Wyndham Hotels and Resorts brands and currently manage or franchise 12 Ramada properties in Australia, New Zealand, Fiji and New Caledonia with many more in the pipeline. Domestically we are about to launch a new Sourcelinx offers a unique market leading uniform procurement system with online multi site ordering facilities incorporating Trans-Tasman solutions. Sourcelinx’s online system has helped Wyndham procure their uniform & merchandise across multiple brands ensuring their business units brand consistency along with a continued cost efficiency journey. - James Muh, Managing Director Sourcelinx

www.businessfirstmagazine.com.au

brand, TRYP by Wyndham. It is going to be very unique to the market place. We have commissioned four acclaimed street artists to create murals and artworks throughout the property along with a well-known celebrity chef to take care of the food and beverage operations.” Barry joined Wyndham Vacation Resorts Asia Pacific in 2003 as its CEO and Managing Director. It was the perfect match. He had a passion for the hotel industry cultivated over a lifetime. He had the necessary Asian expertise and he clearly wasn’t afraid to tackle a challenging project and build it to something successful and sustainable. In 2006, Wyndham Worldwide was spun out of the parent Cendant Corporation to be its own NYSE listed business comprising three divisions; Hotels, Vacation Ownership, and Exchange and Rentals. Robinson became Managing Director of Wyndham Hotel Group in the South Pacific in 2009. These changes happened just before the Global Financial Crisis of 2007/8, which had dramatic impact on the share price and the company’s ability to raise capital and funding. Wyndham Worldwide had a listing share price

LifestylePanel was established to create a new Guest and Hotelier Experience………….Simple, Effective and Flexible. We have come together with the Hoteliers by listening to what is important to their Staff and Guests. LSP will continue to grow and change as the environment does and remain true to what is important today! Lifestyle Panel

of around $30, this fell to below $3 in early 2009. However leadership hung tough, repositioned the company products and today the Group is trading at over $78 per share. Robinson and the Asia Pacific team mirrored the global success of Wyndham Worldwide and by repositioning the Asia Pacific business arms have played a critical role in the company’s success. Robinson attributes much of Wyndham’s global success to its range of diverse offerings across both the vacation ownership and hotel industries. “The variety and flexibility of the offering that we have is unmatched. We offer accommodation to hotel guests

BUSINESSFIRST MAGAZINE

Beautiful design comes from a beautiful place Here at Guests, we can create anything you can imagine. In addition to our extensive range of existing furniture and finishing touches, we can design and manufacture your ideas. For over 90 years now, we have been working with our clients to bring their ideas to life in resorts, hotels and serviced apartments. This depth of experience means we have a thorough understanding of whatâ&#x20AC;&#x2122;s required operationally across those sectors. To this end, our service includes quality control and project management. If you have a space youâ&#x20AC;&#x2122;re thinking of fitting out, just imagine what we could do for you. Visit guestcommercial.com.au today.

PROFILE | BF

as well as vacation owners. Vacation ownership offers a lifetime of experiences, from apartments stays to cruises and vacation exchange options. Across the Wyndham Hotel Group portfolio of brands we have the full spectrum of accommodation tiers covered. We have limited service and economy brands right through to five star, full service resorts.” Vacation ownership is a booming business. According to a 2012 study by Ernst & Young, in the United States the vacation ownership industry generated $6.5 billion in sales and contributed $70 billion in consumer and business spending. Occupancy levels are also high during good and bad economic times. Worldwide studies show that the hotel industry is running at 58% occupancy while vacation ownership is running at 76% occupancy. In 2012 the average occupancy across Wyndham’s Asia Pacific resorts was 86%. Robinson also is not shy in adapting to specific needs when consumer habits change. The marketing and customer loyalty teams from both Wyndham Vacation Resorts Asia Pacific and Wyndham Hotel Group in the South Pacific are using social media platforms including Facebook, Instagram, Twitter and blogs to better engage with customers. Acknowledged as leaders in this field, Wyndham Vacation Resorts Asia Pacific recently won the 2014 Australian Timeshare and Holiday Ownership Council Social Media award. The other ongoing initiative is property expansion, in which Robinson has been instrumental. During the GFC, Wyndham took an aggressive approach and accelerated growth throughout the Gold Coast, Port Douglas and Melbourne. “At Ramada Port Douglas we From tailored painting programs to large scale refurbishments, Higgins Coatings is recognised as the most experienced painting contractor in the industry for over 65 years. We are proud to align ourselves with Wyndham the leading Vacation Ownership club in the South Pacific region by delivering innovative and seamless painting solutions. Higgins Coatings

www.businessfirstmagazine.com.au

purchased 300 hotel rooms and then converted them into condos with new reception and restaurant facilities. None of this expansion would be possible without the right partners and suppliers. Key relationships that are supportive are a requirement. Whether there is a cost or whether there is a need, we want partners who will go the extra mile to make sure that if something needs to happen overnight or urgently, they will find a way to do it. It’s the same relationship that we have with our hotel customers. I don’t see any difference.” As for the future, Robinson, along with Wyndham, will look at innovations and how they can improve the hospitality sector. Looking back at the kid who grew up in hospitality, to the man and organisation leader Robinson is today, it is clear that he has come a long way. If he were to tell that young, 26 year-old general manager a thing or two it would be remain patient, stay focused, keep

changing the game and don’t lose drive for success. “The biggest thing to learn is you have to be able to continually self-evaluate for improvement. My management style has evolved over the 10 years since I first came into this position. I have a lot more confidence in my ability and I have reinvented myself over the course of time. I think as a leader you’ve got to do that. If you don’t continue to reinvent things, at some stage, you’re going to lose your edge. You’ve got to put that into your leadership aspect as well. Continuous reevaluation of yourself produces results.” And the results speak for themselves. When Robinson joined Wyndham, the Asia Pacific vacation ownership division was barely making a couple of million dollars. Last year the company contributed over $60 million to the group EBITDA. That’s a significant number that is only expected to multiply. BF

BUSINESSFIRST MAGAZINE

BF | HR

ESTABLISH VALUES OF RESPECT On 1 January 2014, bullying and harassment laws in the workplace changed to make it easier for employees to bring complaint against a co-worker, manager or the organisation if they feel a genuine grievance has occurred. If businesses havenâ&#x20AC;&#x2122;t prepared for these changes to date, they could find themselves in a volatile situation writes HR expert Darren Milchman.

38 BUSINESSFIRST MAGAZINE

www.businessfirstmagazine.com.au

HR | BF

T Darren Milchman

is the managing director of United HR Soultions.

he definition of bullying is: repetitive behaviour that creates risk to someone’s health. The way bullying is dealt with in the workplace either perpetuates this risk or mitigates it. However the likelihood that bullying is dealt with effectively is questionable. A common modus operandi is to just sweep a claim under the carpet, give a grieved employee a few days off and then forget it ever happened. No employer wants to admit they have bullies in the workplace, but many would be surprised at the level of bullying that goes on. There is a grave parallel here to the schoolyard. When children are accused of bullying they go to the principal’s office. The principal calls the parents of the accused, however it is very likely that the parents will deny their child is a bully. This is because nobody likes to admit there is a problem of this magnitude; they take the attitude that it doesn’t happen in ‘my school’, or ‘my home’ or ‘my workplace’. The issue may be overlooked or ignored and the root cause is left untreated. This may no longer be the case in the work environment. An employee may take his or her case straight to FWA to regulate. And no business is too big or too small for FWA to investigate. Businesses therefore must be prepared to deal with these issues in a fair and systematic manner if and when they occur. Preparation is key

ProBono News reports, “In Australia the estimated cost of bullying is staggering. An enquiry into workplace bullying by an education and parliamentary committee found bullying costs the Australian economy up to $36 billion every year.” The article went on to state that the productivity commission found that 2.5 million Australians experienced some aspect of bullying during their working lives. Bullying not only has a psychological effect on the person being bullied, it can greatly affect the culture of a business if the right policies aren’t in place to deal with this very serious problem. However, there are many managers who may not have been afforded the opportunity to be educated on best practices of management and therefore, tend to manage people in the way they www.businessfirstmagazine.com.au

were managed. If they were bullied as employees, they may be blind to the problem. Some managers even in today’s environment have an attitude of ‘toughen up’, as opposed to ‘how can I solve this problem?’ It is therefore important to know what to look out for. humanrights.gov.au lists the following as bullying: • repeated hurtful remarks or attacks, or making fun of your work or you as a person (including your family, sex, sexuality, gender identity, race or culture, education or economic background) • sexual harassment, including unwelcome touching and sexually explicit comments and requests that make you uncomfortable • excluding you or stopping you from working with people or taking part in activities that relates to your work • playing mind games, ganging up on you, or other types of psychological harassment • intimidation (making you feel less important and undervalued) • giving you pointless tasks that have nothing to do with your job • giving you impossible jobs that can’t be done in the given time or with the resources provided • deliberately changing your work hours or schedule to make it difficult for you • deliberately holding back information you need for getting your work done properly • pushing, shoving, tripping, grabbing you in the workplace • attacking or threatening with equipment, knives, guns, clubs or any other type of object that can be turned into a weapon • initiation or hazing – where you are made to do humiliating or inappropriate things in order to be accepted as part of the team. FWA regulations are aimed at making the grievance process fairer for everybody. The employee must be able to establish a legitimate claim before FWA will act. If managers are blind to the problem, or unprepared to deal with a genuine grievance, it will undoubtedly be detrimental to their business. Turn the negative into a positive Changes to FWA regulations provide an opportunity for businesses to exercise a change management plan, take

stock of policies and procedures and instigate measures that protect employee and employer. This is not a time to be shortsighted and see only the time and cost involved. 99% of a business’s assets are people; without people you don’t have a business. So it is important that you take the time to re-establish the values in your business and educate people to operate within that value system. Create an environment of respect and educate them in your core principles. Commit to the message, lead by example and establish guidelines for grievance procedures: 1. Investigate and mediate. How will the business react to grievances? If you can’t afford a senior HR representative, find someone who can mentor you. 2. Create prevention strategies. The message from the most senior stakeholders should be about prevention. 3. Make sure your procedures are up to date and aligned with FWA guidelines. 4. Educate your staff about the corporate values – of what is and isn’t acceptable behaviour. 5. Instigate proper communication channels. This starts at the most senior levels including the CEO or owners. If an organisation is serious about the eradication of poor behaviour, then senior executives will conduct themselves in a manner befitting the company’s values. 6. Eliminate the perception of rules for some and not others. People tend to do two things: 1.emulate the behaviour of superiors and/or 2. revert back to learned behaviours when placed under pressure or stress. Good culture will avoid both these scenarios. It is the responsibility of managers to create a framework that limits bullying and if it occurs stops it in its tracks. Just like it is the responsibility of school boards, Principals and teachers to stamp out bullying behaviour within their school, employers have a responsibility to provide a safe workplace for everyone. Changes to any culture is not a sprint; it really is a journey and does take time and persitence. If the process of cultural change and compliance is managed appropriately, it will go a long way towards eradicating embedded behaviours. The key is to take stock and go back to your core values. Failure to do so could be devastating for everyone involved. BF

BUSINESSFIRST MAGAZINE

BF | TECHNOLOGY

THE SIMPLE GUIDE

TO FINDING THE RIGHT TECHNOLOGY FOR YOUR BUSINESS You run a small or medium business and you’ve heard about all these new great technologies that could help you and your business. You have also been told you could save time, money, increase productivity and a range of other great things.

S Stephane Ibos is CEO and co-founder of Maestrano.

o you decided to make the jump and adopt new technologies, for instance the Cloud. It was not an easy decision, and you probably have some concerns – besides, you don’t necessarily feel very confident with technology. Your first question is probably: “where do I start”? Followed immediately by: “What’s the right choice for my business”? These are excellent questions and here is my take on some answers.

Where to start? The myth of the Sourcing Snob

In some countries, it is said that “you

40 BUSINESSFIRST MAGAZINE

are never better served than by yourself ”. And although this can be true at times, it is not necessarily correct when you are approaching new technologies. The fact that you are not an expert can lead you down complicated and expensive paths that could ultimately be detrimental to your business. So the first thing you need to do is become familiarised with the types of technology you need for your business. Take a look around to see what technologies, services and software are out there, how other professionals use them and how they can match your needs. I’m not sure a brand new hair dryer

would be of any use for an advertising agency, to state the obvious. And always remember – you are not alone. Your questions have probably been asked somewhere else on the web and may have been answered. Don’t be shy – google away! You will instantly find forums and websites that can help you get a better understanding of the product/s. Once it’s all a bit clearer, you can look for your actual solutions. But don’t be a sourcing snob. A hidden, unknown website that you would have discovered by yourself after hours of research will not necessarily provide www.businessfirstmagazine.com.au

TECHNOLOGY | BF

you with better services than a provider that actually advertises and comes immediately in front of you during your search. Think about it this way – a provider who spends money to advertise is well aware that you need a service and is actually trying to reach you. Usually it will come with a free (and risk free – double check!) trial, so that you can experience the service at no cost to make up your mind. As I said earlier, don’t be a sourcing snob! As much as thinking outside the box is great, sometimes, just going with the obvious is a good and safe approach and those who make an effort to come to you do it for a simple reason: they generally want to help you. Beware the fawns out there…

Having said all of the above, one of your most difficult tasks will be to evaluate the genuineness of the offerings you will find. Be it online or offline through consulting agencies or sales representatives, you want to be careful not to accept an offer that will seem incredible at first and soon turns into a business disaster: hidden conditions, cost increases, lock-in contracts and other nasty surprises… Be wary of the offer that promises to deliver you everything you need at once, in one product… You would not buy a coffee machine that is also a toaster and a dishwasher. Why? Because your common sense would warn you that it cannot work well. The very same applies to an accounting software that also does customer management, inventory and payroll. But since you are not necessarily an expert, how can you identify the good from the bad and make an informed, rational decision? The best advice I could give here actually comes from Warren Buffet. Talking about investing when you are not an expert, Buffett advises to buy stocks in companies you know and trust as a user, consumer or client, because you are no less intelligent than anyone else and your judgement tells you if the company is doing well or not. Of course, this is not bulletproof advice, but rather good advice to start when you don’t know how. I would apply the same when choosing a Cloud technology for your business. Once you have done some basic research and identified what you www.businessfirstmagazine.com.au

need, set a benchmark. Ultimately you should go with the solution you feel the most comfortable with. If details aren’t clear to you on their website or in their presentation or you feel there is a catch, then don’t go – you are probably right. The same rule applies with the sales representatives. Nowadays, technology providers strive to present clear, hassle-free, transparent offers. If the one you are looking at is not that, then move on to another one. Identify what is right for your business, not what is right for everybody else

It is sometimes easier and more comforting to follow the group rather than going alone in one direction, and that can be true when you need to select the right technology for your business. Let’s say that you followed all the advice so far. You have done some basic research and have a better understanding of what you need, for instance an inventory system that is automated and simple to use. Then, you browse online and again follow the above advice: you dismissed two of them that looked complicated and you didn’t quite understand their offering and pricing. You found two that meet your needs and requirements and by the looks of it, one is quite new. It is specifically designed for your industry, but it doesn’t yet have lots of testimonials or customers. The other one is a well-established player but will require a bit of customisation to fit your specific needs. You think to yourself, ‘it shouldn’t be too hard to tweak the system to get what you need it to do’. Don’t. If anything, always remember that the system is a tool to help you achieve your objectives. Not a master that drives your operations. The first system is young, new to the market. Noted. But does it fit your needs? Yes? Then go ahead, give it a try. The only reason why you wouldn’t is because you are not sure it’s good, as few people have used it. But you don’t need their judgement to make your own, related to your own needs and your own business. And if you are scared about new players, you might find it interesting that Facebook had just 10 users; Google was once only used by 50 students only;

‘

It is sometimes easier and more comforting to follow the group rather than going alone in one direction, and that can be true when you need to select the right technology for your business.’

and Apple started selling 30 computer motherboards to a small computer shop. It may not be that the provider you choose becomes a giant. But why would you care as long as you are provided with the service you need? Know your rights as a customer

No matter with whom you go, remember – always – that you are the customer. You are entitled to ask as many questions as need be, you aren’t the expert after all. So don’t be shy to ask questions. Even if you think they are simple or irrelevant. Ask questions. It can be on the phone, during a face-to-face meeting, on an online chat, it doesn’t matter. First it will reassure you and provide you with answers. But most importantly, it will prove how committed your provider is to you and how much you are valued as a customer. You should never feel like you are a nuisance. Your technology provider should be your best support and provide you with a platform where you can find the answers you need. As I always say to my Maestrano team, “the customers must know that online doesn’t mean alone”. The companies who endeavour to provide a real service will always try to support you to the best of their ability, online and offline. So go ahead, don’t be afraid to choose your technology. Just ask questions, be informed and buy to suit your needs, based on your judgement and the knowledge of your business. You will soon discover that things cannot go too wrong if you just trust your instincts and use your commonsense. BF Stephane Ibos is CEO and co-founder of Maestrano, an innovative cloud based solutions provider aggregating the best open source applications into a seamless, secure and intuitive platform. www.maestrano.com.

BUSINESSFIRST MAGAZINE

BF | PROFILE

High voltage CEO As ElectraNet gears up to welcome new CEO Steve Masters, Business First speaks with outgoing boss Ian Stirling about his achievements in the electricity industry.

42 BUSINESSFIRST MAGAZINE

www.businessfirstmagazine.com.au

PROFILE | BF

an Stirling’s knowledge of the utility sector is invaluable. He has been part of the electricity landscape in Victoria and South Australia since 1983 and has garnered extensive experience in senior management positions in all sectors including generation, transmission and distribution. Appointed as CEO of ElectraNet in August 2002, his focus was on providing a reliable and competitive electricity transmission service to customers and also on the challenges that faced the business as it implemented its planned $400 million investment program. Fast-forward 12 years and Stirling has not only overcome those challenges during the initial five-year program, but even greater challenges in subsequent programs. The latest revenue determination by the Federal Regulator for 2013-18 is the most recent challenge. It meant Stirling had to develop and initiate cost-cutting measures to the tune of $50 million. Those measures started in 2013. To give you some idea of the costs of the industry and how it was building to this point, in 2010 Stirling told a Senate inquiry into national fuel and energy needs that the transmission sector, which manages assets worth about $12 billion, expects to spend some $8 billion in augmentation on a ‘business-as-usual’ basis in the next five years. It also expects to spend a similar amount in the following five years, while also having to outlay an additional investment of $4 billion to $5 billion on accommodating new renewable-energy generation in the grid system. By that statement it is clear that the sector itself was and still remains under a great deal of pressure, particularly as energy consumption habits continue to evolve. These changes to the business have already seen price reductions for customers up to 13% by ElectraNet in 2013/14. Of the outgoing CEO, ElectraNet Chairman Gordon Jardine praised his long-term contribution. “During Ian’s 12 year term as CEO, ElectraNet has delivered more than $1 billion of grid upgrades and has connected 12 wind farms to the South Australian grid, along the way winning an engineering excellence award for its work. “The Board and owners have been very pleased with Ian’s outstanding contribution over a long period, and we

www.businessfirstmagazine.com.au

will celebrate his achievements later in the year.” For ElectraNet’s new CEO, business will mean strengthening the programs Stirling has implemented, while overseeing the culture development plan to meet future challenges and to ensure ongoing success. Evolution is key

Stirling has seen an enormous amount of change in the industry. It mirrors a career that has seen time spent across, generation, transmission and distribution. Prior to joining ElectraNet, Ian was CFO at GPU PowerNet Pty Ltd, and before that, held various senior positions in the Electricity Supply Industry at the State Electricity Commission of Victoria. He has been in the CEO role at ElectraNet for 12 years and before that spent time as CFO as well as General Manager Revenue Reset. Coming from the public sector there was a freedom that wasn’t previously available. “The private sector is much more flexible which means better productivity. Bureaucracy and those looking to guard their reputations compromise the public sector, whereas the private sector is about making sure that the customers and shareholders are happy.” This suited Stirling’s work ethic better. This ethic was built before he hit his teens. “I’ve actually been working since I was 10 years old. I started off as a paper boy,” Stirling says while lamenting the fact that it is much harder for young kids to get a job these days. “When you look back there were an abundance of jobs a young person could do. It is much harder for today’s generation to find work.” However Stirling was determined to build a career and a viable set of skills. When he entered the electricity industry with a degree in Business with majors in law and accounting, that work ethic that he had learnt as a child came into play. “I like to gain different experiences. I’m the only person that I know in this industry who in the ’90s worked in generation, transmission, distribution and retail. I did that deliberately. I also worked in the corporate area under the Finance Director and in the commercial centre.” During that time the industry evolved from one where all the outcomes were manually reported, to

being recorded on computer systems. “In other words we transitioned from an office based manual records system to one where everything is online and available. Something that today is just taken as given, but one of my first project roles was devising office-based systems for letter writing, budgetting etc., as well as a system for recording the condition of wooden power poles and reporting on them in country based district offices and then rolling out the PC hardware to enable it to happen”. Two other major transitions have been the move from public to private provision and the shift of the consumer to becoming a customer. “In the last 15 years there has been a bigger focus on the customer. Instead of just supplying electricity you have to treat each customer’s individual requirements. And each requirement is different depending on where they are regionally. This was one of the biggest changes as privatisation came in and competition began. Today you have to give better quality supply than someone else and you have to consult with people about what they need and desire. ElectraNet is a large scale B2B connecting major new customers such as major mines, factories or wind farms to the Grid.” Stirling also says that there is no doubt the cost of electricity has risen. This means that suppliers must not only meet customer needs, but they have to compete on a price basis against other suppliers who are looking at other, cheaper technologies. “We have moved from coal fired generation, gas fired generation, towards wind and solar, which has become particularly important to some customers in the last four or five years. These different technologies allow people to control things themselves. They have the ability to decide how they want their power supplied. Tenix provides and maintains key infrastructure assets in South Australia through our unique and innovative partnership with ElectraNet. As the energy market evolves, Tenix and ElectraNet are working together to transform conventional practices and provide the value of collaborative delivery to national opportunities – Mark Duckett, Project Director, Tenix.

BUSINESSFIRST MAGAZINE

Tenix. Powering partnerships. Proud partner of ElectraNet Tenix is a long term partner and leading provider of services to ElectraNet including design, construction, commissioning and maintenance of transmission substations, lines and telecommunication assets. Having commissioned more than 50 substations nationally in the past 5 years, Tenix is the partner of choice for safe, reliable and efficient delivery of critical high voltage assets and improvements.

Tenix is a leading delivery partner to owners of electricity, gas, water, wastewater, heavy industrial and mining assets across Australia, New Zealand and the Pacific. www.tenix.com NSW +61 2 9963 9600 VIC +61 3 8517 9000 QLD +61 7 3804 9800 WA +61 8 6595 8000 SA +61 8 8345 8900 NZ +64 9 622 8600

Energy

Thepower powerof ofaagreat great association underestimated. The associationcannot cannotbebe underestimated.

ForFor thethe pastpast teneight years,years, we have a range of utility projects in excess of $100ofmillion, on time onand budget. we delivered have delivered a range of utility projects in excess $90 million, onand time on budget. Together, Consolidated Power Projects Electranet power South Australiaâ&#x20AC;&#x2122;s future through delivery of high Together, Consolidated Power Projects andand Electranet willwill power South Australiaâ&#x20AC;&#x2122;s future through the the delivery of high voltage transmission infrastructure. To find more about Consolidated Power Projects, visit www.conpower.com.au voltage transmission infrastructure. To find outout more about Consolidated Power Projects, visit www.conpower.com.au

PROFILE | BF

With rising costs comes the necessity for providers to bring prices down and this has been the biggest challenge for companies such as ElectraNet. “The decision making is now much more with the end customer, so much so, that energy suppliers can never stop moving in the ways they generate or provide.” Supply and demand

To keep the customer happy it is important to ensure that everyone in the chain is delivering and being looked after. This means building strong relationships with partners, SA Power Networks, Tenix Australia and Consolidated Power Projects Australia are long-term partners. Good relationships have also been established with sub-contractors. “We like to work with our suppliers for a long time. That brings a great advantage in them understanding our standards and designs, skillsets and the ability to compete on price.” ElectraNet does go to market regularly, however long-term contracts are critical. Yet on a project-by-project basis, ElectraNet believes it can make a difference to its customers. This means partnering with organisations that can deliver on time and what has been promised. “Essentially we offer our customers a long term, 15 or 20 year connection service. We manage the construction risk on this by offering a fixed price unless there are factors we can’t control. However we won’t say to the customer during the construction that the price of doing business has lifted by 15% - that’s our risk. If it does rise we’ll absorb the cost.” Looking forward

One of the biggest achievements in Stirling’s time is the expansion of electricity supply to Adelaide’s Central Business District. This transmission development has ensured the continued security and reliability of supply, facilitating the long-term growth and development of Adelaide, as well as the South Australian economy. It delivered the most significant injection of transmission capacity into the Adelaide CBD since the 1980s – and represented an investment of nearly $200 million. This development formed part of ElectraNet’s $1 billion five-year expansion plans for South Australia in the five years up to 2013. This major transmission development included the establishment of a new substation adjacent to the Keswick Railway Terminal. This substation is supplied www.businessfirstmagazine.com.au

with high-voltage electricity via a new underground transmission cable, and is connected to their statewide communications network via a new underground fibre-optic cable. It is a project that Stirling is very proud of, but it had significant hurdles. “The transmission line route was along a major arterial into the city. It’s choc-a-block every morning with traffic. So we had to work from 7 or 8 in the evening till 6 o’clock in the morning. We engaged extensively with the community, which we do with all our projects, to find out the best way to deliver this for them. To understand people’s concerns requires us to be out there talking with people.” We were successful. On time, under budget and received major awards for both community consultation and a national engineering excellence. In our business, it doesn’t come much better than that. Other moments that stand out for Stirling are very much based around community engagement. ElectraNet provides a variety of community initiatives that embrace community safety, education, the arts, strengthening communities, and conserving and protecting the environment — recognising that the South Australian community is an important long-term partner in delivering high-voltage electricity assets throughout the state. Moving forward ElectaNet will increase its service capacity and looks to strengthen its financial position by the end of the decade. ElectraNet has created a vision that will take it to 2035. The four key objectives of this are: • Ensure safe, secure and reliable supply

• Deliver value for money • Support South Australia’s economic development • Deliver lower emission energy “We’re looking to engage with our customers and consumers to make this vision right and to continue to capitalise on growth opportunities in the resource and mining industries. Of course, all this will happen in my absence. ElectraNet has a great future. I wish I was 20 years younger – it’s going to be an exciting time in this industry and in this company in the years to come.” Stirling is down to earth when he looks back at his career and his time at ElectraNet. He says, “Sometimes you’re just lucky.” Luck is tempered by attitude. “You have to grab every opportunity that comes and makes sense to you. You can be in the wrong place at the right time or the right place at the wrong time, but in the end the world owes you nothing. So with the right amount of attitude and luck you can have a fulfilling career, but outcomes are only achieved by the people you work with and I’ve been blessed by working with great people, dedicated people who have a higher mission of wanting to deliver for the benefit of the community they serve.” Stirling is not quite done yet. He still believes he has 10 good years to influence Boards and leaders. No doubt, he will be telling people to gain as much experience as necessary in a range of different sectors to enable them to fully understand what they are capable of and how this can influence the business and industry they reside in. BF

BUSINESSFIRST MAGAZINE

BF | SME

ON THE MOVE

HOW TO WORK EFFECTIVELY AND EFFICIENTLY WHILE MOBILE In today’s technology-rich business environment, it’s no surprise advanced hardware, software and online services continue to transform every aspect of the workplace. It’s changed the way we work, how we communicate and when and where our business day begins and ends writes John Moss.

dvances in mobile technology over the past few years, particularly 3G and now 4G mobile internet, are enabling a new type of road warrior - those who run their business while on the move. Some have taken it to the extreme, such as the German businessman caught with a fully-functioning office on his front passenger seat. But you don’t have to go to these lengths to manage your business efficiently while mobile. The keys to successfully running your business on the road are getting the right technology, both hardware and software, and learning to manage your time to maximise productivity. On the hardware front you need devices and connectivity. You will need a mobile phone to call people, whether

46 BUSINESSFIRST MAGAZINE

it is customers, suppliers or colleagues. Most mobiles today are smartphones, so you have some computing power, but it’s likely you’ll need to do more than what a phone alone can provide. So, a laptop and/or tablet and the ability to connect to the internet either through your mobile phone or via a dedicated 3G/4G wireless device are important. It doesn’t need to be a smartphone given you have a laptop or tablet, but it can be useful as it often provides faster access to important emails or client details. Your choice of main computing device will depend on your specific needs and preferences. Ideally you want a device that is relatively light and has long battery life, so the new range of Ultrabook devices or a hybrid tablet are perfect. Whether you choose Windows,

Mac or Android is up to you - there are plenty of business and productivity applications available for each form factor and operating system. The applications you run on your devices are critical to your and your team’s productivity and to the business’s overall success. Communication is handled by your mobile phone, your favourite email application on the phone or laptop and, if video is required, Skype. If you are using a cloud-based CRM tool to manage your clients then access to their details will also be straightforward anywhere, anytime, either directly through a browser or a specialised app. Doing business that earns direct revenue is also important on the move. This means you need the ability to provide a quote and raise an invoice. The latest cloud-based accounting apps let www.businessfirstmagazine.com.au

SME | BF

you do this today. If you have a client meeting you can check their up-to-date account balance and invoice history before you head into the meeting, giving you complete insight into their account and helping steer the upcoming conversation. You can even use Essentials to run your payroll and pay your staff while on the go. Cash flow for small business is often a real headache. Chasing outstanding invoices and managing the collection process can be a challenge for business owners. But with the latest mobile payment technology, such as MYOB PayDirect, businesses can take action to improve their cash flow by issuing invoices, taking card payments, and administer receipts on the spot, as well as view their cash flow on-the-go and in real-time. www.businessfirstmagazine.com.au

In the next few years, accepting credit and debit payments via mobile devices could become as everyday as visiting an ATM. Itâ&#x20AC;&#x2122;s due to a quiet revolution going on behind the scenes in mobile payments technology: advances in mobile devices and app technology, along with ongoing developments in card security and encryption technology. When combined, they enable businesses everywhere to become merchants on-the go: on construction sites, at market stalls â&#x20AC;&#x201C; wherever they can using their mobile. There are plenty of other apps that will help your mobile business by combining efficiency and mobility. These apps include note-taking, expense management, document creation, business card scanners, voice recorders and many more. The key is to try them

and find out which work best with your style of doing business. All these apps combined with increasingly powerful and connected hardware are driving the appeal and the ability to work from anywhere. The increasing number of hot-desks and telecommuters in many businesses is simply a reflection of the fact that it is now relatively straightforward to run a business or do your job whilst mobile. There is tremendous scope for Australian business operators to boost their financial performance, strengthen customer acquisition and retention, enjoy work environment flexibility and improve business productivity by using mobile and online technologies. BF John Moss is Chief Strategy Officer with MYOB. myob.com.au

BUSINESSFIRST MAGAZINE

BF | PROFILE

Rise

of an empire

Roger and Lesley Gillespie

48 BUSINESSFIRST MAGAZINE

www.businessfirstmagazine.com.au

PROFILE | BF

Some franchises just work; offer a decent product, made with love and the customer in mind and you have a winning recipe. For Roger Gillespie, the founder of bakery giant Bakers Delight, his winning recipe has transcended continents and, according to BRW, has made him one of the richest men in Australia. Story by Jonathan Jackson.

hen Bakers Delight opened its doors for business in 1980, there was, according to founder Roger Gillespie, a need for product that was made with enthusiasm and that invoked community spirit. “There were a lot of bakeries, but none that were delivering their product with the love that we were delivering,” Gillespie says. “We saw a gap in the market and we filled it.” Gillespie is a fourth generation baker and when he and wife Lesley (along with business partner Gary Stephenson) opened the first Bakers Delight in Melbourne suburb Hawthorn in 1980, they opened with the commitment that was embedded in Gillespie’s DNA by his forefathers. “What we wanted to do was reflect and live up to our name; we are bakers who live to delight and we want to delight every customer with every product that comes out of the oven.” Gillespie says the business is built on a win-win philosophy. There is a commitment to each and every customer; the bread is real and made on site and everyone from the franchisor, to the suppliers, to the customers has to be in a winning position because we want to be as good as can be at what we do. That commitment to quality meant that by 1988, the Gillespies owned 15 bakeries. The model worked, the formula was right. It was time to franchise. “In 1988 we decide to franchise vigorously,” Gillespie says. “We implemented basic training systems, recruitment strategies and legal agreements. It has been constant refinement since.” The franchise model saw quick expansion occur and by 1991, Bakers Delight boasted 43 bakeries across Victoria. In the next two years, Bakers Delight expanded to 200 bakeries and just ten years later, 600. Today there are over 700 bakeries across three countries. The first franchise outside Victoria was opened in Adelaide, South Austra-

www.businessfirstmagazine.com.au

lia. By 1993 stores were popping up in NSW, Queensland and West Australia. In 1995, the business opened its doors in New Zealand and in 2003, expansion into Canada occurred under the ‘COBS Bread’ brand. Gillespie says the reason expansion has been so successful is due to authenticity. “I think we are authentic in what we do; we set about training people the best way we can. We do a good job in marketing, store set up and every aspect of our business and we are constantly looking at ways and means of improving to ensure the franchisees grow and their businesses make a profit.” What sets this franchise apart from many others is the belief that franchisees are not hired, they join the system. “They are self employed and self motivated,” Gillespie says. “They have to have a winning attitude, be energetic and always look at new way of doing things, which is the Bakers Delight way. You don’t need a Bakers background, many do have one, but the training system is so robust that we can turn anyone into a franchisee.” Franchisees train for 16 weeks mini-

Roger Gillespie as a boy in 1955

mum, while many train for a little longer as their stores are prepared. However like any business, the real learning is on the job. Training prepares you to be a Bakers Delight partner, but when you’re on the job you learn about what it is to be in the trenches as a Bakers delight partner. With everybody on board, working towards one message and culture it made international expansion all that easier. “We went to NZ in 1996. It was close to Australia and a logical move. Canada happened 11 years ago. We researched all the English-speaking countries and

BUSINESSFIRST MAGAZINE

50 BUSINESSFIRST MAGAZINE

www.businessfirstmagazine.com.au

PROFILE | BF

“We have had a partnership with Roger Gillespie and Bakers Delight for 13 years or so, which is much closer than a regular supply relationship. Roger and his wife, Leslie, have achieved high growth for the company through hard work and innovation, which I hope we have been a part of. Bakers Delight’s expansion in Australia and Canada shows that through Roger’s leadership the company has a unique offering and is at the leading edge of the baking industry.” John Honan, Managing Director Manildra Group created a matrix of measures to fit what we needed. We found that Canada was the right fit.” Confident that consumers would consume, the hurdles that had to be overcome surrounded local laws and cultural subtleties. As Roger says, when you move overseas you don’t know what to expect until certain things confront you. “Canada is close to us culturally, but from a staffing point of view there are very different expectations about how to be treated, directed and managed and you have to understand those differences and make sure the relationship comes back to the win-win philosophy.” It all comes back to a community-minded spirit. When the staff are treated well the customers benefit. Everything works toward a culture of delight. At home, even those who are operating the proprietary owned stores are being encouraged and supported to one day operate their own franchises. “We’ve taken a couple hundred young people, who haven’t had sufficient funds and trained them. We then help them to own into their own bakery.” With so many franchisees, how does Gillespie keep his finger on the pulse of what is going on? “You have to treat everyone well. You have to have reporting lines that are clear. You have to take an honest approach to doing everything and have clear expectations. Everyone has a job to do and we give them the freedom to do it.” This allows franchisees to build rapport with customers. “We’re local in every community and so we have a relationship with the local community. That’s a big advantage and we pride ourselves on having the www.businessfirstmagazine.com.au

freshest bread we can have to deliver to the community.” Gillespie also puts faith in his suppliers to help him deliver fresh product. “We work very closely with all of our suppliers. We have had the same packaging company for 30 years and the same flour supplier, Manildra, for 13 years. Even the charity Bakers Delight has been affiliated with – the Breast Cancer Network of Australia – has been a partner for 15 years. “We are long terms players who don’t switch and change on a whim. All our suppliers are key suppliers, even those who supply our olives from Greece.” Again it comes down to the win-win scenario. Keep the suppliers happy, the staff happy and the customers happy and you have the ingredients for a successful business. “If standards drop, sales drop. That’s what we are here for. To make sure the

standards are as good as they could and should be and that they are better tomorrow. “Quality is a challenge and making sure there are enough good quality people. The biggest hurdle is getting the right people into the right jobs and getting the wrong ones out.” There were talks of a buy-out a few years ago, but the Gillespies held onto the business so that their adult children could take it to the next level. The Gillespie family own 100% of the business to enable them to maintain control so that they can function ethically; this is what their children will do, this is what they have done for four generations. The plan now is to open many more stores in existing regions, which Gillespie knows will happen because since 1980 he has seen the growth and been there everyday to make it happen. BF

Books are an important part of a CEO’s life. Currently Gillespie is reading Shackleton’s Way: Leadership Lessons from the Great Antarctic Explorer Sir Ernest Shackleton has been called “the greatest leader that ever came on God’s earth, bar none” for saving the lives of the twenty-seven men stranded with him in the Antarctic for almost two years. Today the public can’t get enough of this onceforgotten explorer, and his actions have

made him a model for great leadership and masterful crisis management. Now, through anecdotes, the diaries of the men in his crew, and Shackleton’s own writing, Shackleton’s leadership style and time-honored principles are translated for the modern business world. Written by two veteran business observers and illustrated with ship photographer Frank Hurley’s masterpieces and other rarely seen photos, this practical book helps today’s leaders follow Shackleton’s triumphant example.

BUSINESSFIRST MAGAZINE

BF | MARKETING

YOU’RE OFFICIALLY

BEING STALKED Welcome to the new breed of marketers who are sincerely stalking you for sales writes Mellissah Smith.

R Mellissah Smith is the founder of Marketing Eye.

ecently, an employee told me that she was being stalked online. By a t-shirt. In the lead up to a sporting event she’d ordered a piece of merchandise from a website. Not being a supporter of this particular team, my employee was baffled when suddenly, this one-off purchase started to follow her everywhere. T-shirts of similar style began to appear in advertisements on her Facebook page; tickets to a game

52 BUSINESSFIRST MAGAZINE

were offered to her in banners of news websites. “Welcome to marketing automation,” I explained. Sales and marketing automation is a double-edged sword – and even the most avid marketer can attest to finding it a little bit creepy. Facebook’s recent $19 billion purchase of WhatsApp gave an insight into just how far our social activities are being watched and extracted for the purpose of a more defined and

accurate marketing effort. But it is the sales automation that holds the key and sets the scene for just how intimately those in the know are watching our every online move. Sales automation for those who are still confused is a sales system that operates on the data that consumers input online; marketers use this information to approach potential targets with offers. For the consumer, being offered products based on their www.businessfirstmagazine.com.au

MARKETING | BF

‘

So basically, sales automation is a sincere form of stalking. Through this wooing machine, marketers will contact you with opportunities based on your buying behaviour.’

previous sales is both a service, and well, stalking. US-based SalesLoft generates target lists for clients through extracting information from online social profiles, the internet and a plug-in to salesforce. com. Gone are the days of hunting down leads and building a prospect list from scratch; you can now access thousands of potential leads at one click of a button. Why this is scary is that all of a sudden, Australians will find their email accounts flooded; it’s the start of the sales automation process. The cost to the consumer is privacy and it is about to get a lot worse. “One thing about sales is that sales people have always had a bad reputation and are thought of as unscrupuwww.businessfirstmagazine.com.au

lous and shady,” said Kyle Porter of SalesLoft explaining the theory behind their approach. “I didn’t like this assumption so I began using the internet to find out as much information as possible about the person I’d be selling to, so I could take a sincere approach to that sales opportunity.” So essentially, sales automation is a sincere form of stalking. Through this wooing machine, marketers will contact you with opportunities based on your buying behaviour. They’re not going to waste your time and they certainly won’t waste their’s chasing down a fruitless lead. The success of the SalesLoft approach is indicative of a marketing evolution “Sales is the last to evolve into the scientific process; what we are seeing with our people and the people that buy our product is that we are able to dissect the sales process into bite sized chunks and then optimise,” explained Porter before adding that “sales automation is the biggest development in the industry in 10 years.” To support sales automation, Inside Sales has become a big winner growing at a rate of 15 times higher over outside sales. The role has originated from traditional telemarketing meaning Inside Sales has high touch and typically utilises phone based selling practices and online meeting platforms such as Webex, GoToMeeting and Join.me. The ability to demonstrate products remotely is what has put Inside Sales on the map and while Australia has been slower on the uptake, the adoption of technologies like SalesLoft will become the power tools for early adopters. Marc Benioff, Salesforce.com’s CEO says in his book Behind the Cloud that the company “grew for the first five or six years with a telesales model”. This model has proven to be popular amongst high growth businesses particularly in the B2B arena using a combination of internet technology, hosted CRM, social media and immediate response to further support appoint-

ment setting for sales representatives to close the deal. According to Gartner Research, by 2020, customers will manage 85% of their relationships without talking to a human. But how much of our buying decisions will be made by the seller, all because they have captured information from text messages on WhatsApp or a post on Facebook? While the premise behind sales automation is that the marketer joins the consumer on their purchasing experience, as opposed to leading them in to one – the reality in the future is very different. Imagining them as your seasoned shopping partner, they guide you to the right product and of course, closing the deal is idealistic but the process goes much deeper than that. In this line of thinking, sincerely stalking is actually a helpful tool for the consumer, in addition to the marketer. “Have you made another purchase?” I asked my stalked employee. “No, but I am tempted.” she replied with a devilish grin that only habitual online shoppers will understand. BF Mellissah Smith is a serial entrepreneur and business leader with more than 20 years’ experience in marketing. She runs an international marketing consultancy firm that provides small businesses with a marketing consultant and in-house team of creative, web development and PR experts. www.marketingeye.com.au

BUSINESSFIRST MAGAZINE

BF | PROFILE

PROJECT DELIVERY IN 2014: the two-speed IT ecosystem The digital age continues to disrupt and alter how we run our businesses. But has our ability to deliver projects caught up with the new world that is 2014? UXC Consulting CEO Nick Mescher discusses this new paradigm, and tells Ellie McInerny why the capability to innovate and leverage partnerships in the digital age is more crucial than ever.

n March 2014 Nick Mescher delivered a paper to the NSW IT Leaders Summit. The presentation titled The New Project Paradigm – Can Your Capability Still Deliver? was in response to the changing way in which business manage projects. “Research shows that IT is no longer

54 BUSINESSFIRST MAGAZINE

deemed to be a career of choice, which is a problem because we have an IT workforce that is ageing quickly, the digital age is disrupting everything we do, and employers expect a lot more from the workforce than they were trained for, or could deliver,” Mescher says.

This conundrum has surfaced because organisations today are expected to build and run a two speed IT environment. “On one hand we have traditional IT: Large ERP’s, enterprise wide systems and multi-year projects built on carefully constructed business cases. www.businessfirstmagazine.com.au

PROFILE | BF

It is what we’ve been doing since the mid 80’s, and we’ve matured this ability a great deal. On the other hand, we have disruption coming from speedto-market accelerators. Our new found ability to deliver, almost overnight, functionality which we can put into the market and let our customers tell us if it’s a good idea or not. We can bring competitive advantage to market rapidly, by spinning up lean projects delivered by digital experts who see opportunities in emerging technology,” explained Mescher. “This is the new age of projects. The reality is that most organisations have a project delivery function set up to service the first model, but not the second.” “In the paper I opined that I could understand why we have reached this point, but organisations need to be quicker, more agile, and to do this they need to invest in delivering projects in entirely new ways,” said Mescher. “Yes, we still need the large multiyear projects, yet the entire approach of traditional project management is being challenged more and more on a daily basis.” Throughout his career, Mescher has championed innovation and used those skills to affect change within and outside organisations. Prior to UXC Consulting, he held positions with Adecco as Group MD for consulting and professional services, as CEO of Freelance, and co-founder of CPT Global. In all positions he consulted in the fields of management consulting, business development consulting and IT strategic consulting. Relationships were key to growth in infrastructure and knowledge base. We could go back to the beginning of his career as an IT analyst with BHP and the various roles he held with NAB, Heinz, Olivetti and DMR Consulting, but they would all confirm the same thing: “it was about making sure we had good, intelligent consultants out in the workforce who had the contemporary skills the current market demanded.” Mescher arrived at UXC five years ago tasked with consolidating several independent consulting businesses which had previously been working under a federated business model. These businesses had their own independent brands and management structures, with profits being consolidated across the group. “My role was to enable us to be a www.businessfirstmagazine.com.au

leader in Australia in servicing this two-speed way of running projects. We needed to ensure we kept the capability we’d become famous for – servicing those multi-year projects which transform organisations. At the same time, we needed to innovate and help our clients to disrupt their markets, disrupt their own businesses and drive the growth hacking* (see pop out) which modern executives are striving for.” This set the tone for how the business was to be shaped but also allowed for local and cultural differences. “Having run businesses over the last 10 years across Australia I have an understanding of the way a business works and it is very different in Perth than it is in Sydney. We had to be an organisation that brought a new way of delivering projects to our clients, allowing them to transform their own project capability in a way which suited their own culture.” According to Mescher, a lot of organisations are still running project delivery functions like they were when set-up in the mid-90’s. He suggests most organisations need to adapt in three key ways. 1. Internal Project Capability should be resized “There are some big projects you should be able to build a team around, and bring the capability into your organisation. But this is an ever diminishing set of projects. This needs to be off-set with a variety of partners who can scale up and down rapidly, and have a track record of innovation. There are only three key roles needed inside an organisation: The Program Manager, The Business Change Leader and the lead IT architect. Everything else needed to deliver can, and should be, outsourced or brought in on a partnership level. ” 2. The most valuable experts are the experts in your business. “I see a lot of organisations driving capability uplift programs across their project delivery functions, and these can be valuable on occasion. But the real value in your internal SME’s is that they are experts in your own business. These are the people who in 2014 are crucial to project success. Organisations should have structures which support specific secondment for projects, and allows lean teams to spin up and spin down rapidly. This goes against the grain in a lot of organisations which have spent years building up skills in project

“

Our ability to be uniquely Australian, and service this market should continue to set us apart.”

management, business analysis, project governance or other skill sets.” 3. Recognise and drive a two speed model. “Modern projects come in two types, and project capability should be aligned to these different models. Organisations need to ask themselves: Is this a multi-year, enterprise wide large scale waterfall project? Because we service those one way. Or is this competitive advantage, speed to market, innovation? Because we service those another way. If the project function inside an organisation isn’t asking these questions, then it’s likely only set up for the first model, in which case the business will go around it.” Mescher is seeing this happen more frequently now. “We see a lot of examples of the business coming straight to us, when they should be going internally for help“ Putting these three strategies in place will re-affirm the role of project delivery inside an organisation, and stop the need for the business to go direct to the market for its growth strategies. Mescher says “They’re doing this because they feel the internal project structure doesn’t allow the innovation, rapid delivery that we can provide. Modern project functions need to adapt to service this, and possibly broker the right services for the business as they need to. That brokering model still offers a great deal of value to the business, and shows a level of trust.” When Mescher joined UXC he implemented this philosophy. “What I learnt was that a business must remain agile and relevant to each type of person within the organisation and to the client,” Mescher says.

What is Growth Hacking?

A modern marketing technique coined by the start up community to describe a focus on low-cost and innovative alternatives to traditional marketing. It focuses on lean techniques, social, viral and emerging technologies all aimed at growing a business rapidly. Think Facebook, Linkedin, Twitter and co..

BUSINESSFIRST MAGAZINE

BUSINESSFIRST for Business Leaders

www.businessfirstmagazine.com.au

BUSINESSFI B U S R IIR NEST ST B S U S S IN F I BUSINESSFIRST E R S S S T F T S IR F S S E for Business

BUSIN for Business Leaders

for Business Leaders

On the Riviera

Marketing VISIONStrategy N JONES CLEAN

ALLA R CITY FOR THE HARBOU

Rising above

SPOTLIGHT WE PROFILE 8 TOP BUSINESSES

Creating a system for success in Asia

When business and sport co llide W

Putting to perfection SURVIVE:

hat CEOs can lea rn from Olympic cham pions

e world’s most ADAPT AND SS INTh THE extra BUSINE vagant golf clubs ASIAN CENTURY

JAM E MCPHEIE Creating a m oder

How Con Ma built a billion dolkris lar property empire

STEPHANIE RICE’S TOP FIVE BUSINESS TIPS

SYDNEY

/October 201 www.busines 4 sfirstmagazi ne.com.au

July/

August 2014 www.businessfi rstmagazine.com .au

May/J

www.businessfirstmag une 2014 azine.com.au

zine.com.au www.businessfirstmaga

Leaders

September

March/April 2014

www.businessfirstmagazine.com.au

Dec/Jan 2014

THE MAKING OF A LUXURY BRAND

2030

for Business Lea ders

for Business Leaders

n banking expe rience

STOPMaiH ntai Eni BULL coT mmun ng

YIN G ity Retain How to estab st LEADING lish andards respect in the the ! rein NYn Eva n rkp GEN Y Dic wo IT’S A SO kso n’s lac FIGHT Keep e keys to t empAND ing developmen gian loyee FLIGHT tools to get you Why the technology T BUST6started t success costs down Catering BOOM NOing How Stephen Byron helped toall industry’s still leads the way An theinmap as transform Canberra Why the min se pr M How s oa ar k Con ch blea rad k so Sm C ith has TH Paul oy Littlimp E outlook is not e’s strat n DI rov e egies GI ed : fl for ight TAL succe DIN ssw a Leagu Ho LINKE W, Simply elegant REe VO legenLU d tooTI YOU KNO There’s no busin over the bo ardWh IT’S NOT WHATO YOUThe new, rooyme-stratek ON W improved Mercedes C-Class KNO ess gies will IT’S WH like showbusiness help you survive

Growth Hac

It’s never to o late to inve st

BUSINESS FIRST MAGAZINE Vol 1 Issue 2

AU$12.95 NZ$13.95

BUSINESS FIRST MAGAZINE 5

AU$12.95 NZ$13.9

Vol 1 Issue 1

BUSINESS FIRST MAGAZINE

AU$12.95 NZ$13.9 5

772203

129000

Buying propert y a sound finanin your 50s is cial decision

772203

Why Graham Burk e loves to entertain BUSINESS FIRST

129000

INSIDE: Investment // Leadership // Lifestyle // Tax // Tech g tyle // Marketin INSIDE: Investment // Leadership // Lifes // Leadership // Life style // Tax 9

Finance INSIDE: Business //

19/11/13 4:45 PM

COVER.indd 1 COVERs.indd 1

BUSINESS FIRST

MAGAZINE Vol AU$12.95 NZ$13 1 Issue 4 .95

129000

772203

Vol 1 Issue 3 03

772203

129000

The height of MAGAZINE Vol AU$12.95 NZ$1 1 Issue 5 3.95

Hamilton Island, 05 BMW,

// Tec INSIDE: Investme nt // Leadershiph // Lifestyle // 9

COVERS3.indd

772203

24/04/14 2:17 PM

129000

luxury

Attica and more

Property // Tec h

INSIDE: Inve stment

The height of

luxury

Margaret Riv er, Audi R8 LM X and more

// Leadership 26/06/14 2:30 PM

kin

g Nick Mesche r’s disruptive approach to project delivery

// Lifestyle //

Property // Te ch

SUBSCRIBE to the magazine for Business Leaders Business First’s purpose is to make it easier for CEOs to make the hard decisions. This is a peerto-peer magazine: written by CEOs and other high level executives, with interviews with some of the country’s best leaders.

The magazine is a window into the minds of the business leaders of Australia and Asia. Business First Magazine provides its readers with informative articles tackling the latest issues in Australia, revealing inside tips on everything from business strategy to emerging trends.

• Business • Finance • Innovation • Investment • Leadership • Lifestyle • Tax • Tech • Wealth

6 Issues

$69.95

Visit: www.businessfirstmagazine.com.au/subscribe

PROFILE | BF Agility in the digital age isn’t easy, as consumer expectations change in step with technological advancement. When you look at the updates on your phones, you just expect that they will happen, even though you don’t know why they are happening or whether it was coming in the first place. The consumer doesn’t need to know anymore. The expectation is that an IT provider is on top of the problem before it even becomes a recognised problem. “Projects should be managed in much the same way” argues Mescher. Mescher says there are no limitations to what can be achieved in IT. If you

had asked him the limit question five years ago there may have been a different response, however he has now seen so many disruptive technologies that limitations no longer exist. Technologies now assist lifestyle, the way we live, our storage capacities and a whole lot more. Mescher retells a story from one of his staff talking about a conversation with their 12-year old daughter recently. “He was explaining to his daughter, who during school holidays had broken their monthly 100gb download limit. My colleague was reprimanding her, when his daughter turned to him and earnestly said “but why do we have a

Keeping an eye out Vinnie’s CEO sleepout is a growing movement. It is an important event that brings awareness to the plight of the homeless across Australia and it is an event that Mescher has taken part in for the last three years. “At first it was a novelty for me, but I was blown away with the support I received from family and staff. The company didn’t make any donations in that first year, but the level of support was fantastic.” However, initially this was something that Mescher was only going to do once. That is until someone close to the charity said to

www.businessfirstmagazine.com.au

him that the best way to effect change was to identify and be identified with it. “I have done it for three years in a row now and I believe that money can treat the symptom and cure the disease. There are thousands of worthwhile causes, however this can have an immediate impact and bring awareness to the fact that the homeless are not the stereotypical drunks holding a brown bag on a city step. They include ordinary people who have fallen on hard times and many other people who have been affected by circumstances beyond their control.”

limit?” It struck us all that this child was growing up in a digital world, where the notion of limits in technology was completely foreign to her.” How do we stay on top of such ever increasing complexity, and how does a business deal with this notion of no limits, I ask Mescher. “This brings us back to relationships. UXC Consulting has around 250 staff (with a further 3000 across the entirety of UXC), and over 400 clients and I think I’ve learnt by simple decree that you have to be in the moment for people. Our goal is to bring simplicity to a complex world.” Which really means there is business benefit to be found everywhere if you integrate the right technologies or hire the right technical skills into your business. Consulting firms have traditionally made this their space, and thrive on bringing these kinds of capabilities to their clients. Mescher draws a parallel, “The recruitment industry is transactional and solves a problem for today, with consulting we assist in and give our clients insight that they can’t always get within their own organisation. They are caught up in their own business practices and won’t often have access to the breadth of industry knowledge and experience we provide. A single organisation might not get any visibility of what others are doing from an IT sense. We are there for a specific purpose but also try to add constant value to see them prosper.” Mescher wants to ensure that UXC is the number one alternative for all things IT. “That is a position that we may lay claim to now, but we can consolidate that. We are in an incredible place to build something unique in this landscape, to service major clients and SMEs and to provide an end-to-end offering that no one else can match. Our ability to be uniquely Australian, and service this market should continue to set us apart” UXC Consulting has the ability to rapidly adopt innovation that will drive the business forward. This is necessary to ensure the company stays relevant – for many businesses relevancy is becoming harder and harder. This is because they are slow to adapt to change. “This financial year I am looking at how to adopt innovation to help our clients,” Mescher says. “We want to continue to be a company that people look to when it comes to innovation and IT, and lead the way in a two-speed ecosystem of project delivery”. BF

BUSINESSFIRST MAGAZINE

BF | FRANCHISE

58 BUSINESSFIRST MAGAZINE

www.businessfirstmagazine.com.au

FRANCHISE | BF

BUILDING A STRATEGIC ALLIANCE INTO THE FRANCHISE MODEL

Stan Gordon is CEO, Franchised Food Company.

here’s no disputing that people are an integral part to any organisation’s success – franchising or not. Good people and honest relationships have the potential to make or break businesses, and for any business owner, the buck definitely doesn’t stop with your team (I never use the word employee). Strategic alliance means looking at the importance of relationships that extend far beyond the walls of your business be it office block, café floor or fitness studio. The external associations a business has to help conduct the day-to-day operations including its key suppliers, maintenance and external contractors (and to be frank, the associations that keep a business viable), need to be carefully considered and managed. So why is it important for strategic alliances to be built into the franchise model? The whole concept of franchising is based on solid, strong and trusted strategic alliances. Everything (and I really do mean everything!) in franchising, is based on building AND nurturing these two-way relationships. Let them fall by the wayside, and the wheels fall off. Like most franchise businesses, we have many many strategic alliances, or as I like to call them ‘relationships’. This might be anything from an alliance with a major retailer like Coca-Cola, a confectionary company, an insurance broker, a communications agency, equipment suppliers, shop fitters, landlords…the list is endless. A strong strategic alliance should be for the benefit of all – but it is a mutually beneficial relationship that relies heavily on three fundamental components - understanding, transparency and honesty. When working harmoniously it means your suppliers know what to expect and customers trust in what they will receive. For business’ success with the franchise model, strategic alliances are the crux. Franchisors must align themselves with partners to provide expertise in their chosen field; it offers

www.businessfirstmagazine.com.au

consistency of product, service, best practise, and a buying power that’s advantageous for both franchisor and franchisee. For example, if FFCo was to say engage 20 different suppliers to make ice cream, we wouldn’t a) have purchasing power we have or b) product consistency. The two things absolutely critical that see our ice cream franchise model work so effectively. Similarly, a business would be inefficient if it shopped around for a different internet provider every month purely to get a better deal… it’s a waste of resources which could be better spent building a mutually beneficial relationship with the chosen provider. Much of our business success today is because we’ve chosen our field – the tasty treats market - and everything we do as a business aligns to this core offering. If we decided to start selling washing machines, we wouldn’t do well because I’m not familiar with that market and don’t have the networks. But if we were to go into a coffee and cake business I would have the relationships to make it a success! Again, it’s all about finding your niche and utilising and strengthening existing relationships. Co-branding is a perfect example of strategic alliance within the franchise model and we are already doing it with the Trampoline brand. We are moving into the liquor business and currently building a strategic alliance with one of the larger groups in that market. Why? Because we don’t have the expertise in liquor ….. yet. Admitting this and seeking out more experienced players in the liquor game means we have access to their systems, and in exchange we offer our knowledge of the Australian treats market. The two businesses go handin-hand as they’re both FMCG’s. On the other hand going into a completely different market, like whitegoods wouldn’t work. It’s about finding the balance between a complimentary offering versus a completely different product. But a word of warning: like any business arrangement you have to take

the good with the bad and strategic alliances are not always a good thing. Take our partnership with Souvlaki Hut for example. It was a case of us getting into bed with a franchise system that didn’t work. Equally, issues can arise with the bigger business players fluffing their feathers… so sometimes you risk dealing with abuse of market power and people pushing their own wheelbarrow. Again, do your due diligence and make sure the partnerships are going to be advantageous for both businesses. Franchise businesses wanting to build strategic alliance into their model, should consider the following key steps: • Research, lots of it. Consider all of the options and don’t make any rash decisions. • Trial and error. Put in the time to actually build the relationship, test the waters. It’s not only about price - of course it’s important – but you must make sure the feeling and fit is right. • Ask yourself will this alliance actually result in a meaningful partnership? The relationship must provide two-way benefits. • Consider all possibilities. How will you cope when/ if times are tough? Are you confident and comfortable you’ll be able to work through the hard times and any differences that may arise? Remember… it takes time and there are no shortcuts. Take it back to the very basis of human relationships. Much like an affiliation between two people, you don’t fall in love in the period of a week so don’t expect a business alliance to be built and flourish at the click of your fingers. Be smart and considered in your approach. Set realistic expectations! Lastly, don’t forget that things can go slightly off the rails, and that’s just life. Enjoy the ride and remember the positive possibilities are endless. Visit ffco.com.au for some great franchising tips and business opportunities with Franchised Food Company including brands like Cold Rock, Trampoline Gelato, Pretzel World, Nutshack, Mr Whippy and Europa Coffee. BF

BUSINESSFIRST MAGAZINE

BF | PROFILE

POWER TO THE PEOPLE Power: it is what makes the world go around. Without it, we’d all be living in some Mad Maxtype dystopia. None of us wants that. Which makes the jobs of those in charge of our power companies all the more important. Business First speaks with Horizon Power’s Managing Director Frank Tudor about what it takes to run a power company and how innovation is the key to longevity in the sector.

rank Tudor considers himself to be an energy professional. Certainly his background in oil and gas with BP and Woodside, before taking on the general manager Commercial and Strategy role with State-owned Horizon Power in 2006, would hint that he has vast knowledge of the various forms of fuels that move this planet. Tudor also has vast knowledge about operations in the energy sector and it is this expertise that has informed his successes as a leader.

60 BUSINESSFIRST MAGAZINE

Skills in the balance

In a business the size of BP or Woodside, operational management throws up some great challenges. There’s a stand-alone article in that, however we’ll focus on a couple of lessons learnt at BP. Let’s first look at balance. One of the biggest lessons Tudor learnt about leadership at BP was the requirement for balance. “Balancing short term imperatives with long term objectives, “ Tudor says. “One of the things that I certainly saw very early on in the oil refinery

business was to balance the sustainable capital which you put into the refinery to make sure that the integrity of the assets were maintained for the longterm, with trying to deliver short term cash results for the business. There’s constant tension between the shortterm profitability targets, and requirement to make sure that you have recurrent capital invested in the refinery so that it is there for the long term.” Balance between people is also crucial. According to Tudor it was imperative at BP to ensure that there www.businessfirstmagazine.com.au

PROFILE | BF

were complementary skillsets between people that had deep engineering and operational experience with people that had a broader perspective which could be used in diverse positions. Balance must also be sought between local staff and those on international secondment. Last but not least balance is required within a business portfolio to provide a pipeline of temporal growth opportunities – especially in the resource development business. If you ensure all of that is right, you then have the foundations of a successful business, no matter what the industry. Change on the horizon

The importance of balance was a philosophy that Tudor was able to bring to Horizon Power. While at BP he also became proficient in organisational change management and knowing when to implement change. www.businessfirstmagazine.com.au

“With the oil and gas sector, particularly in large companies that have so much invested in the status quo, it’s often difficult to start to adapt and change, given that you are a large part of what already exists,” Tudor says. Success as a business engenders commitment to the current course even as disruptive technologies or trends begin to take hold. So the ability to start to change large organisations can be a really difficult challenge. John Browne started to do that at BP, at one point going beyond petroleum and embracing renewable and green technology. But again as you step out you don’t want to be too far ahead of the maddening crowd. You don’t want to be too far ahead of competitors and you don’t want to be too far ahead of your investors and your institutional shareholders because they need to be convinced that you are on the right track; you’re prudently anticipating changes but you’re not recklessly speculating. Again it’s balance.” The move to Horizon Power was a natural one for Tudor. It was a move from being a supplier of gas, which is generated to convert electricity into a role as a buyer of gas, but that’s only part of the story. “It was a move within the energy sector and it was a move that allowed me to use a lot of my skills in the knowledge of energy and commercial and business development. I certainly brought a private sector mentality to the business, and I think I also brought a fresh set of eyes to the business that certainly, in the early days, caused us to question things that were being done and hold our decisions up against a set of value benchmarks. If a particular decision didn’t create value and if it didn’t naturally deal with the right level of risk allocation, we turned those decisions around.” Tudor joined Horizon Power because he felt he could make a difference. There was an opportunity to be involved with a start-up and work more closely with government to understand its processes. What he found when he arrived at Horizon Power was a company that provides a very valuable service to regional customers spread over 2.5 million square kilometers. “Everybody is dependent on electricity so we are very much a valued part of people’s lives and there’s a certain satisfaction that comes from that.”

Making a difference

Tudor was appointed to the Managing Directors position in 2010. At the time, the company was in the diagnostic phase of a pending organizational change to bring about single point accountability and improve capability in project delivery. “From diagnostics we went through a complete redesign of the organisation,” Tudor says. “Not from the grassroots level, but to work with what we had and address the gaps in terms of organizational architecture, and where accountabilities had become confused over time. We adhered very strictly to a levels of work approach (as espoused by Jacques), which meant that individuals in the organization were assigned complementary and cascading accountabilities with the correct level of resource to deliver on their objectives for the business. This redesign enabled Horizon Power to build the capability necessary to deliver a major program of work including extending capacity in the Pilbara, building new power stations in remote communities and enhancing the safety of the network through a comprehensive program ‘Logsys is one of WA’s leading providers of key electrical utilities and power services. Our work in the recent Pilbara Underground Power Project alongside Horizon Power is evidence of our uncompromised expertise in underground services. It has been a privilege to work with Horizon Power in ensuring a safe and reliable electrical future for the North West.’ Alan Homes, Managing Director Logsys Power Services

BUSINESSFIRST MAGAZINE

The future of energy is Logsys

At the forefront of technological innovation, Logsys is one of WA’s leading and most respected providers of key electrical utilities and power services. Specialists in underground services and powerline construction and maintenance, Logsys now expands its industrial expertise to bring the latest in structural engineering technology and renewable energy products to Australia, working with key electrical suppliers such as Horizon Power to ensure a clean, safe and sustainable future for all. For more information, Freecall 1300 301 980 or visit our website today.

Environment ISO 14001

Tel: 1300 301 980 Web: logsys.com.au Fax: +61 8 9300 0361 Email: logsys@logsys.com.au

Environment ISO 14001

lateralaspect.LOG 2474

of wooden pole reinforcement and replacement. The power stations have been all shapes and sizes, but the most challenging aspect is to install them into remote communities. Kalumburu is an aboriginal community only accessible via small aircrafts or barge, which provided substantial logistical issues.. To facilitate all of these projects has meant working directly or indirectly with independent power producers and other service providers. “We’ve put a lot of work into establishing the integrity of our wooden poles, which obviously for an electricity company is very important. Our fleet of wooden poles is compliant with Australian standards that we achieved over a number of years. In this endeavor compliance was an important milestone and we worked very closely with a company called Transfield” The ability to deliver these projects has set Horizon Power up well. Other successful projects include power stations in Carnarvon, Karratha and Port Hedland. Others incorporating world-first renewable technology supply clean, safe and reliable power to communities in the east Pilbara. Under the Aboriginal Remote Communities Power Supply Program (ARCPSP),

62 BUSINESSFIRST MAGAZINE

Horizon Power upgraded electricity infrastructure and commenced offering direct retail services for customers in a number of large, remote aboriginal communities and town reserves. Horizon Power has directly or indirectly built over 20 power stations to service the needs of customers. It is also undergrounding much of the distribution network in the Pilbara to ensure safer and more reliable supplies along the cyclone-prone coast. “The Northern cyclone season between November and May of each year sees some five to six cyclones, of which two at least cause significant damage to the LV distribution network. We work closely with the community; the development commission and state government to deliver a safe and reliable service to people that are living in those pretty hostile conditions.” Over the last few years over $1 billion has been directly invested by Horizon Power and $5 billion indirectly invested into major capital projects to meet growing energy demand, particularly in the Pilbara, but Tudor acknowledges that this significant program of work has now slowed down at the same time as the Australian economy has slowed. Given these changing circumstances, combined

with the largely completed delivery of a major program of capital works, State budget pressures and increasing public sensitivity to power prices, Horizon Power has sought to significantly reduce its costs. The most recent structural review of Horizon Power kicked off in 2013. It was designed to refocus the business on core operations, streamline structure and processes, capitalise on asset investments and knowledge, refine asset management practices, further improve capital efficiency and work in partnership with the private sector to develop infrastructure and deliver services. Outside safety and customers’ regulated service standards there were no sacred cows and the business deliberately sought to benchmark its operations against regional US utilities in order to set targets and inform decision making. Horizon Power designed an organization from a clean sheet and implemented in a short timeframe a radical turnaround (targeting to halve discretionary operational expenditure) in a series of phases starting in December 2013. “One of the most important ingredients of that whole process was to deal with our people in a respectful manner as we had to radically challenge prowww.businessfirstmagazine.com.au

PROFILE | BF cesses that we had used in the past, but we certainly could not have considered the scale of the change before we had built the capability and resilience of the organization in the wake of the 2011 redesign”. Horizon Power has now created two separate operational divisions (plus three corporate divisions) covering the North West Interconnected (Power) System (NWIS) which supplies the mining towns of Karratha, Port Hedland Point Samson and Roebourne, and some 34 Non-Interconnected (Power) Systems (NIS) which include small Aboriginal communities, traditional farming towns and vast rural networks such as Esperance. As the installed capacity connected to or close to the NWIS exceeds 2,000 MW, Horizon Power is anticipating and facilitating the move towards an integrated and coordinated energy market, whilst in the NIS Horizon Power is expediting the introduction of disruptive technologies, such as distributed PV, to accelerate the transition to smart grids and ultimately grid-less communities. Horizon Power is committed to being sustainable in the long-term and making smart investments in digital technologies and systems that enable the business to improve customer experiences, increase internal productivity/ collaboration across vast distances and drive convergence in operating and information technologies. Business in the Asian century As a former national chair of the Australia China Business Council, a position held for five years, Tudor knows all too well the importance of creating substantial relationships with Asian partners. He is still on the board and is also on the Advisory Board of both the Australia China Council (a

www.businessfirstmagazine.com.au

small group that advises the Foreign Affairs Minister) and the Australian National University’s China in the World centre. “China plays an important part of my life because I think it’s an important part of what’s happening globally, “Tudor says. “I think since China joined the World Trade Organization (WTO) in 2001 it’s had a tremendous impact on trade and investment across the globe, particularly in Australia, and particularly in Western Australia where Horizon Power operates. We’ve seen a lot of developments in the Asian region around oil and gas as well as iron ore, and China has become our largest and most important trading partner.” Tudor believes that China has above all else an internal focus and that during the course of the next 20 to 30 years will be ensuring that it gets its per capita GDP up to avoid the middle income trap of many developing countries. The prosperity from that will be shared globally. “I think there will be a continuing requirement from China for resources and commodities that come out of Western Australia and Australia. Providing we manage that relationship respectfully, and I think successive governments have done that, we will be in a unique position in terms of our cultural understanding and healthy trade investment relationship. This is complementary and makes sense to both sides.” The key to successful relationships with China-based businesses is respect. It is important to build relationships ahead of business requirements. This ensures the relationship endures. It is a core professional relationship that underpins a business.”

Horizon by the numbers Horizon Power is a State Government-owned, commercially focused Corporation that provides high quality, safe and reliable power to approximately 100,000 residents and 10,000 businesses, including major industry, across regional and remote Western Australia. Horizon Power services 46549 customer connections (June 2014) in the Pilbara, Kimberley, Gascoyne, Mid West and southern Goldfields (Esperance) regions, dispersed across an area of approximately 2.3 million square kilometres – about 10 times the size of the state of Victoria. Horizon Power manages 38 systems: the North West Interconnected System (NWIS) in the Pilbara and the connected network between Kununurra, Wyndham and Lake Argyle,, 2 rural systems associated with Esperance and Hopetoun and 32 stand-alone systems in regional towns and remote communities.

Moving forward

As Horizon Power continues to focus on providing a safe and reliable power supply for customers, there will remain an importance on protecting the value of the business. “The focus will be to continue to service our customers, to deal with employees respectfully and to anticipate and embrace future developments and technologies that are going to impact on the energy sector.” Tudor is leading the charge on this front and if there is one message he would like to get across it is that the only constant is change and businesses need to adapt and innovate, which is becoming a more important part of business survival. BF

BUSINESSFIRST MAGAZINE

BF | INVESTMENT

ENHANCING YOUR INVESTMENT STRATEGY Matthew Lewis, who heads up CMC Markets Asia Pacific and whose firm is a co-founder and member of the Australian CFD Forum, is fighting to change the legal conditions that led to the MF Global collapse, and has strong views on how the CFD industry can improve to better protect investors and strengthen the industry for the long term.

64 BUSINESSFIRST MAGAZINE

www.businessfirstmagazine.com.au

INVESTMENT | BF

T Matthew Lewis is Head of CMC Markets Asia Pacific.

he latest figures from the Australian Tax Office’s Deductible Gift Recipient Listing (17/07/2014) highlight growing philanthropic investment by wealthy Australians with the largest number of new private ancillary funds (PAFs) being established since before the global financial crisis. The renewed optimism in the global economy, driven by many markets reaching new all time highs, is rubbing off on Australian investors who are coming back to the markets to enjoy healthy dividend yields from their share portfolios. Many are now looking for alternative investment options or seeking greater diversification by looking to CFDs (contracts for difference) to complement their portfolio, and gain access to instruments not available on the stock market to hedge their risk and increase returns. CFDs are a derivative product that allow experienced investors to trade on the price movements of shares, indices, currencies, treasuries and commodities across the globe. The very nature of CFDs enables traders to profit from both rising and falling markets, meaning both bullish or the most bearish of traders can gain advantages from using them. Investors prepared to educate themselves in CFDs can access more than 5,000 CFDs over financial instruments including global indices like the German Dax or US Dow Jones, bonds, US shares, gold, oil and more than 320 currencies from G10 countries to exotics. They can use this investment tool to re-shape their portfolios and gain greater diversity, while building in a buffer to be able to take advantage when economic or market conditions change. For example: • By trading a CFD over Rio Tinto shares, investors can take a long or short position and gain the benefit of the reporting season bonanza without actually owning Rio Tinto shares. • On the other hand, investors who are overweight in Australian banks or are concerned about a falling Australian dollar can go ‘short’ or hedge their physical portfolio via a sold CFD position, offsetting any falls in their portfolio value, should bank shares or the AUD plummet.

www.businessfirstmagazine.com.au

The CFD industry has had its detractors in recent years, due in part to the impact on Australian investors of the MF Global collapse, which stripped Australian investors of more than $300 million. Client money law

Currently, Australian Client Money rules do not go far enough and allow undercapitalised CFD providers to use client funds, quite legally, to hedge their own positions or positions of other clients, due to a loophole in Australian law. The biggest issue facing thousands of Australian CFD traders today is whether local traders have invested their money in a CFD provider that does not fully segregate client money and potentially uses it for their own hedging activities, or the hedging activities of other clients. Traders with these providers could lose their capital overnight without entering into a single trade. My concern is that CFD traders aren’t aware of this and there could be up to five hundred million dollars ‘at risk’ because some traders simply haven’t asked their CFD provider if they use client funds to hedge. A key initiative of CMC Markets and the CFD Forum is to educate investors about mitigating these risks and to help drive a higher standard of regulation. Using client money would be totally unacceptable in any other industry and I’m fighting to bring that into law so CFD investors and traders gain the same protections that are offered in other asset classes and in virtually every other country in the world. In addition to not using client funds, and in line with the CFD Forum’s Standards, I’m also keen to see all CFD providers in Australia sufficiently capitalised and maintain a minimum level of net tangible assets equal to, or greater than, AUD$2 million, or 10% of average revenue. Mitigating risk for investors

CMC Markets is a co-founding partner of the CFD Forum, an industry body which is focused on offering greater investor protection and better understanding for those trading CFDs. Along with a number of other stan-

dards aimed at increasing regulation and to benefit the end client, Forum members completely segregate client monies and adhere to a capital requirement that is double what the current regulations call for. CMC Markets’ decision to not use client money doesn’t come without sacrifice, as having access to a huge pool of money is clearly beneficial for any business. ‘Driving change’ however is the right thing to do, and it’s the best way to stop the next potential MF Global collapse from happening to unsuspecting Australian investors. Time is right

The time is now right for the government to close the loophole in the client money law to give Australian CFD investors the same level of protection that they would be offered in pretty much every other country in the world. Traders are calling out for change, citing Investment Trends research in which an ever-growing number of traders of CFDs and FX are selecting providers that abstain from using client money for business purposes. I liken the public image of CFDs to that of the Futures market when it began 25 years ago. Back then, the thought of placing an investment on something that didn’t exist yet – like corn or cotton – was a strange concept to the purists in the stock market and the same can be said for CFDs today. What the future holds for the CFD industry

Following a number of initiatives and reviews by the regulators the CFD Forum is hoping for a change in the law. I’m calling to stop CFD providers using client money, to make this financial instrument more appealing to serious investors who want to introduce a good mechanism for diversifying risk, and to act as a hedging instrument or as a more cost effective derivative. The CFD industry is still in its infancy in comparison to say stockbroking or futures trading. I am keen to see the regulators give CFDs a level playing field so experienced investors and traders can access their untapped potential and use this unique financial instrument as part of a sophisticated investment strategy. BF

BUSINESSFIRST MAGAZINE

BF | PROFILE

66 BUSINESSFIRST MAGAZINE

www.businessfirstmagazine.com.au

PROFILE | BF

Freight train heart Craige Whitton is a people man and the best way to keep people happy is to offer great service. This is his message when he speaks with Business First about the growth and success of Northline. Interview by Bob Forshaw: Words by Jonathan Jackson

raige Whitton is a 10-year veteran with Northline. He has been in the service industry for much of his life, even though he started his professional days as an accountant. He has worked across hospitality, travel and various other industries and they are all tied together by one thing: commitment to needs. “All industries are about service. That’s what Northline is about. We provide a service and we find supply chain solutions,” Whitton says. Northline was Incorporated in 1983 and is a privately owned and managed Australian company specialising in four major areas of service provision: road and rail freight management services; warehousing and distribution; global freight forwarding and mining, construction, oil & gas logistics. With 13 branches across Australia they have an extensive operation that employs a diverse team of professional staff as well as dedicated full-time pick up and delivery subcontractor partners offering secure handling, from container loads to fragile product to doorstep deliveries. Whitton says Northline is set apart from similar companies by its family approach. “We are a family owned, private company. This gives us flexibility in customer service in that we have people available from all facets of the business

www.businessfirstmagazine.com.au

“

All industries are about service. That’s what Northline is about. We provide a service and we find supply chain solutions.” BUSINESSFIRST MAGAZINE

NORTHLINE & KEEFORCE Keeforce is proud of our long term partnership with Northline. Northline’s commitment to infrastructure development and strategic growth is testimony to their understanding and focus on continuous improvement of customer service.

Keeforce supports Northline’s national freight network with road linehaul services between capital cities and major provincial centres. This includes the highly successful quad trailer express service to Darwin ex-Brisbane.

Keeforce always give 110% to achieve on time, fully compliant and safe express services through their national linehaul shuttle services. Northline can have confidence in knowing their chain of responsibility, linehaul associated requirements are covered daily by Keeforce and are regularly audited.

Great teams get the best results.

KEEFORCE

let add some force to your team.

KEEFORCE The Linehaul Specialists Go with the Force www.keeforce.com.au Brisbane – 07 3277 7104

including operations managers, site managers and myself who act as advisors and are available for our clients to speak to.” Private ownership also means that Northline controls its own network. “All of our depots are controlled within our brand and we can cover the whole of the country all within our business structures. That is an important difference.” Northline invests heavily in its structures and infrastructure. In May this year the company opened its new $24 million Sydney transport and logistics facility at Smithfield. Holroyd City Council Mayor Nasr Kafrouni and local member of parliament Andrew Rohan cut the ribbon on the new 32,000 square metre facility. This investment has been made to meet the growing needs of the company and their customers and to provide easier access to major transport links. The Facility provides more than 16,500 square metres of warehousing and freight operations space including a 2,000 square metre all-weather loading and unloading breezeway and the company’s New South Wales state office. Meanwhile Northline is in the final throes of construction on its $21 mil-

68 BUSINESSFIRST MAGAZINE

lion transport and logistics facility at Redbank in Brisbane’s South. “Queensland is a key market for the company and this investment will provide us with a greater presence in the state and allow us to further improve our service offering,” Whitton says. “The new buildings in Sydney and Brisbane are purpose built to give us productivity and synergy improve-

ments. And they bring us closer to our customer base. The facilities make the whole operation smoother.” When service is your focus, running a tight ship is critical to success. Everything from IT to governance is handled with care. Take IT for instance, every item that leaves the warehouse is barcoded and tracked until delivery. This attention to detail has allowed and www.businessfirstmagazine.com.au

PROFILE | BF

strong business practice has enabled Northline to withstand most major problems. “Pre and post GFC we have consolidated the business within the industry. Prior to the GFC we were told we had a lazy balance sheet because we didn’t have a lot of debt, then post GFC we were told we were geniuses because we didn’t have a lot of debt. We managed to avoid GFC-based problems because we had strong practices in place.” Strong practices have also allowed Northline to build on its current successes. Last year they secured a major contract with Rio Tinto. The contract, which started in June 2013, sees Northline transport more than 5000 tonnes of freight annually from around the country for Rio Tinto’s Weipa bauxite mine located on western Cape York Peninsula in Queensland. Freight transported for Rio Tinto is diverse – from printer cartridges to large pieces of earthmoving machinery and everything in between. The freight is transported to Northline’s Cairns depot where a local barge contractor then transports it around the cape to the mine site. Northline took over the contract after being selected for its high quality service and innovative approach to cost savings that could be achieved through its national transport and distribution network. “Rio Tinto has cast a major vote of confidence in Northline’s capabilities and the strength of our distribution network which we’ve been building for over 30 years,” Whitton says. In terms of winning a major contract such as this Whitton says it is about helping the client to understand the company’s capability and how the client’s risk will be managed. A contract manager then oversees the daily running and operations of the contract. Again, success comes down to attention to detail. And to service the client further last Keeforce’s strong relationship with NORTHLINE is based on delivering high standard service outcomes across many varied tasks. Urgent supplies to remote centres, specialised freight into the heart of the capital cities or the daily service “we’re there”. Keeforce proudly partnering with NORTHLINE Don Forsyth, Managing Director Keeforce

www.businessfirstmagazine.com.au

year Northline introduced a connectivity strategy that connects its customers with that of their clients. Service is key. Northline is currently embarking on a review of corporate objectives and are reinvigorating their ‘customer delight’ program. They are looking at ways to upskill staff and redevelop their workforce plan. “We want to attract, retain and develop our people as a key part of growth. We started a review of what we may or may not need from a growth perspective. We looked at what lays ahead for us and what we need to help meet our goals and our staff are a major part of continuing our service of excellence philosophy. To that end Northline introduced a Future Leaders Program. The comprehensive program is designed to introduce staff to a wide range of disciplines within the business, which in turn establishes a footing for their progress. “We want to give these future leaders experience in all facets of the business. We want to promote internally and if we can achieve this then they have learnt and grown within the business.” These future leaders are appointed mentors and every time they finish a rotation they are signed off by the supervisor of the division they have worked in and by their mentor.” The key tenets that run through the company are culture and integrity and these are reflected from the Chairman down. “If we can get this right in all aspects of operations then we will have happy

staff and happy customers,” Whitton says. There are more than 850 staff and sub-contractors, but Northline ensures that everyone who works for the company shares the vision. “We have to take time to make sure the strategic elements are right, the communication of that is right and engagement into various processes is strong.” Engagement is critical. “You are only as good as the links in the chain, therefore we do a lot of work in compliance This means that no matter whether you are a valued supplier such as Keeforce or a staff member, everyone is engaged properly and being serviced well.” In a competitive environment suppliers and clients are king. Northline focuses on these relationships and how to add value to them. “You just have to get the basics right and the rest of it will come.” Northline is always looking forward and at ways to improve its business operations and customer service. “I don’t think you can ever be satisfied,” Whitton says. “I’m as hungry as ever and the business is hungry to keep improving and growing. “We have good infrastructure with people and property. We are not putting numbers down but we have plenty of capacity and capability to grow by another 25% to 30%.” And this growth projection can only be a good thing for Northline’s clients as an already good service offering is destined to get better. BF

BUSINESSFIRST MAGAZINE

BF | PROPERTY

PROPERTY INVESTING IN YOUR FIFTIES Every game has rules which you can ignore at your peril. With property investment it’s often several years before you realise you have made a mistake so seeking the right advice to ensure you get it right the first time is not just important, it’s critical.

70 BUSINESSFIRST MAGAZINE

www.businessfirstmagazine.com.au

PROPERTY | BF

he reality is most people, in particular those in their fifties today, won’t have accrued enough superannuation to keep them in the lifestyle they are accustomed to when they retire. If you are in your fifties, you still have time to build up a small portfolio of investments and property. This is an important piece of the investment puzzle because it is low-risk, insurable and won’t disappear. Often people who are in their fifties have a lot more disposable income with many at the height of their career and the kids off the books. It’s incredibly important to take advantage of this situation and set yourself up with the right investments to ensure you can enjoy all that retirement has to offer. Now is not the time to be trying to play catch up with high risk invest-

ments. High risk can easily be summed up by investments that promise above average returns. The reason you don’t want to take risks at this stage is because you have limited time to recover the capital loss if the investment goes pear shaped. Generally speaking you should be investing and protecting your future financial position with reliable income-producing assets that generate both capital growth and cash flow. Here are a few important tips to help you get started: Protection and preservation of your capital is more important than the return on it

Invest in secure, quality property with a proven track record rather than speculating by chasing the latest ‘hot spot’. Investing in locations with upside is important

however looking at a location’s history and track record is equally important. Well selected property in capital cities has shown over the medium and long term to deliver the most consistent returns both in capital growth and having ongoing occupancy, particularly in the inner ring around the CBD but not in it. Invest in the liquid part of the market

It’s wise to invest in property that is easy to sell when and if you need to regardless of market conditions at the time. Here, I recommend buying investment properties around the median price for the suburb you’re investing into. I would stick to 20% above or below the median. There are always plenty of buyers and plenty of tenants in the middle of the market.

Patrick Bright is the Director of EPS Property Search.

Pick the right property type

Traditionally houses have had better capital growth and apartments have received better rental yield. For some time now, in particular over the past decade, changing demographics have been tipping the demand towards apartments in many but not all areas so do your research. Generally two or three-storey walk-up apartment blocks have lower overheads by way of strata fees and better capital growth than high-rise apartments unless they have great views or some other highly desirable feature. Know your target tenants

Your choice of tenant should influence the type of property you buy and where you buy it. For example, if the area is popular with young families, a three or four-bedroom house in a quiet street close to the local school, shops and transport would be a good bet. But if it’s an inner-city suburb full of young professional singles, you should be looking for a stylish apartment in a security building close to transport, cafes and shopping precincts. Look to buy property that you can add value to

When you purchase a property that is already renovated it will save you from having to do the work yourself however you will generally pay a premium. Where possible I prefer to purchase an investment property where I can manufacture capital value and increase its rental return. BF Patrick Bright is the Director of EPS Property Search and is the best-selling author of four Real Estate books in his “Insider’s Guide” series. epspropertysearch.com.au

www.businessfirstmagazine.com.au

BUSINESSFIRST MAGAZINE

BF | PROFILE

72 BUSINESSFIRST MAGAZINE

www.businessfirstmagazine.com.au

PROFILE | BF

THE ENERGY SPECIALIST

When it comes to running a tight ship David McAdam knows his business. The Seymour Whyte managing director and CEO speaks with Business First about the importance of positive energy in a forward thinking organisation.

n 2012 when David McAdam took on the role of CEO with Seymour Whyte, certain adjustments were needed. The business had to recover from cost write downs on a number of infrastructure projects. The company was in the throes of a difficult period. McAdam was tasked with turning Seymour Whyte’s fortunes around. It was the construction company’s 25th anniversary and he was looking forward to the challenge. “I decided to join as CEO of Seymour Whyte because I have great confidence in the potential that exists. Seymour Whyte is a company with solid foundations and a diverse history. It is a company with a strong reputation for excellence in project delivery, great people, a strong balance sheet and an unparalleled focus on zero harm. The first 25 years has resulted in growth of our turnover from $5 million in 1987 through to $300 million last financial year.” Those are good figures, so what was going wrong? The problems were more process and discipline focused. “The core strength of Seymour Whyte never changed. What was needed were better processes. We deliver complex major essential infrastructure projects and we work in brownfield areas where you have to make major changes with minimum impact. I

www.businessfirstmagazine.com.au

haven’t changed that, what I have done is coalesced the team to be more competitive and add more value,” McAdam says. To do this, he had to ensure leaders within the business were aligned and had the necessary skills and drive to join the challenge and make positive influence. Early on, major strategy workshops determined the strategic direction of the organisation and redefined the Values, Behaviours and Expectations required to realise this vision. “Getting the alignment right was critical in the early months. If people understand the ultimate benefits and can see where the company is heading, and what it stands for, it can make change management a little easier,” McAdam says. “I’m not however saying it was easy. In fact, the first six months were bumpy. I started examining expenditure and asked for greater rigour in the business case. Not everyone was happy initially, however after a short period people recognised the value of a smarter, leaner and more agile business. This has led to far greater levels of accountability within the company. “I have been across a lot of industries and have found that success is about driving people, encouraging them to see things differently and then chal-

lenging them to find better ways. I like to create a whole energy centre around the passionate pursuit of finding a better way to do things. By doing this, we brought the organisation back to what it was good at, which was finding smart solutions in the supply chain and engineering, construction and programming methods – all the things that make or break good projects.” Managers were also challenged as to

BUSINESSFIRST MAGAZINE

Seymour Whyte have been operating in the Queensland environment for many years and Boral have been associated with their growth into the substantial operation they are today. This growth has principally been driven by David McAdam in his desire to ensure long term sustainability of the business and provide a broad portfolio offering to his clients. There are many personal relationships in place between the two businesses and this has provided the platform to support ongoing operational improvements. Boral is a major player in the Queensland construction materials market and highly values a relationship based approach to conducting business. Congratulations to David on his achievements so far and we look forward to our continuing relationship. For further information on Boral please contact Rob McGuire on Tel: (07) 3867 7497 or Mob: 0401 896 461. www.boral.com.au

why they were doing things in certain ways. It was found that many tasks were done because that is the way they had always been done. Today, McAdam encourages management to come to him if they know of better ways to do things. He is regularly onsite and engaged with staff because Seymour Whyte wants them to have the resourc-

74 BUSINESSFIRST MAGAZINE

es, tools and systems to make their job easier. “When you build trust with staff, they will come forward. Ask the superintendent what works for their crew instead of what senior management wants. It’s engagement that creates energy.” The trick to success is to get the

strategy right and the people energised behind that strategy. From there, it is easy to find out what the client needs and how to deliver on that. McAdam oversees 350 staff across two operating entities as well as sub-contractors. To keep them engaged he delivers a monthly CEO video update with his personal reflections about www.businessfirstmagazine.com.au

PROFILE | BF

where the business is at, the broader market, and why Seymour Whyte makes certain decisions. “This gives staff a sense of respect, helps them understand the bigger picture and why we run the organisation the way we do,” McAdam says. “I go out and talk to our people to get to know them and vice versa. I try to break down the barriers between senior management and the workforce. Energy is about putting a human side to the business and constantly doing our best to communicate.” Suppliers are treated the same way. “Our critical suppliers are important to our culture because they share the same values. “Our most important suppliers share our values from the senior managers down. They must have the right safety culture; physical and emotional care of people is paramount. Over the past 26 years, we have built close working relationships with contractors and suppliers who understand the issues in the industry that are important. This flows through all links in the chain. If you treat your contractors as colleagues, then this creates good value from the supply side and we can deliver quality work at a good price. The bottom line is that when the market gets tougher you want the best suppliers and contractors to stay with you, rather than run away.” McAdam says that honesty with clients also keeps them on board. “Be frank and honest with clients. I www.businessfirstmagazine.com.au

don’t sugar-coat things; we tell it like it is from a market perspective. We say this is what we have done and these are the results. We want our clients to say, ‘I am happy to give the job to Seymour Whyte and I know they will get the job done.” The business is showing strong financial signs and Seymour Whyte is continuing to implement their strategic plan focused on growth and sector diversification, which includes creating a national footprint and smart acquisitions into different markets. This began with the acquisition of Rob Carr Pty Ltd. Formed in 1989, Rob Carr Pty Ltd’s annual turnover exceeds $50 million. They possess specialist capabilities in conventional and trenchless pipeline construction, micro tunneling, deep shaft and service installations. These complementary civil construction capabilities in the water and power industries create an opportunity to offer an expanded project portfolio to the combined business. “Seymour Whyte reviewed more than 50 potential acquisition targets before proceeding with Rob Carr Pty Ltd,” McAdam says. “This is an exciting business that provides a range of new growth opportunities and offers a strong alignment of operating cultures and professional competencies. “Seymour Whyte’s first acquisition will take us to where we want to be in the water and power utilities market.

Boral Asphalt, as part of Boral’s Construction Materials and Cement business, supplies and installs key products into major building and infrastructure projects across Queensland and Australia. With a strong resources position and capability in every region within Australia, Boral is able to provide products and services to a broad range of clients and projects. ROB MCGUIRE, General Manager Asphalt (QLD/NT) Boral Resources

It will increase quality of earnings, and increase technical expertise in the growing micro-tunneling market. The acquisition has brought a new kind of energy to the business. “New technology and new clients have created a whole lot of buzz which turns into good productivity.” Focus is now on bedding down the new business and then growing into the West Australia market and Eastern States. McAdam’s aim is to be across the whole resource, utility and transport space and to deliver infrastructure across those sectors. In the meantime, the share price has moved from 68 cents to over $2. McAdam says this is because they stuck to their plan to reenergise the business. BF

BUSINESSFIRST MAGAZINE

BF | INFORMATION AGE

BETTER

FINANCIAL DECISIONS

For many businesses and executives, it’s so easy to fall into a data-driven rut, always using the same information points on which to base commercial actions writes David Jackman.

David Jackman is the managing director of Pronto Software.

new financial year is a great time to reassess the analytics you are using in your business for decision-making purposes. Often, there’s a host of information right in front of your eyes, which, if you’re working with the right software provider, can help make your business leaner, smarter and faster. So this new financial year, why not step back and take some time to focus on how you could improve access to critical business information, no matter where your staff is working? Fire up the sales team Sales staff at various levels of seniority in a business require up-to-the-minute information to help them access current client details while on-site, close deals in shorter timeframes, and assist in driving revenue growth. This new financial year is the time to make sure your sales team on the road can easily access thorough client information, as well as insights into previous meetings. Being able to access this information from wherever they are working, using a range of different devices, prior to a client or prospect meeting gives sales staff a real edge over competitors that can only find this information when they are at head office. Not to mention access to such key information at your fingertips energises sales staff with the confidence and arsenal required for almost any query or request. Additionally for sales managers, it’s essential they have up-to-date data about revenues and margins for more accurate sales projections and pipelines. For example, it would be of great benefit if they can be instantly notified when a sales order has been transacted below the minimum gross

76 BUSINESSFIRST MAGAZINE

profit percentage threshold or when a sales order has been put on hold, so corrective measures can be put in place promptly. Financial insights at your fingertips Having clear visibility of your business, with a consistent stream of information that you can trace and drill down, across the various departments, is critical to increase your agility and sustain your success, especially against the backdrop of an uncertain economy. As you review your business, you might have started to understand the cost associated with double entry of data and poor data integrity. This can ring true particularly if you have multiple warehouses with different costs in each warehouse, or buy and sell in multiple currencies or have multiple operating entities that need to consolidate to a parent company. So use this time to undertake an audit of the key data points your finance executives need to ensure it has a helicopter view of the financial performance of every unit of the business, from staff utilisation to sales revenue and margins. The right data can not only reduce the time it takes to produce monthly profit reports but also help your business concentrate on efficiency and future growth. Support for people in the field If your business has a team of technicians on the road, the ability to deliver the information they need anytime, anywhere is a huge competitive advantage. Access to real-time information can help them stay connected to the back office and manage their day-to-day workload, particularly when there are unplanned events. Being able to easily

capture parts used, timesheets, photos and signatures at the client site, reduces the time between doing the job and charging it will make a big impact on the bottom line. So now is the time of year to look at what information your technical staff need while they are on the road, and whether your current systems are able to meet this need. If not, it’s worth reviewing whether your software really meets the needs of your business. A superior Enterprise Resource Planning system integrated with business intelligence, mobile and analytics that can be customised to the niche needs of the organisation to provide staff all the information they need to do their job to the best of their abilities – no matter where they are in the world – is one of the most valuable assets a business can have today. This new financial year think about what information key staff don’t currently have access to, and how you could provide them with this data, to help ensure your enterprise is making important decisions on the right basis. Businesses that do this will be able to take advantage of new opportunities as they arise faster and fix problems more rapidly. Importantly, they will be able to embed a culture within the organisation in which actions are based on accurate, up-to-date facts, which is a mark of a company at the top of its game. BF David has more than 30 years business and technology experience spanning C-level roles, recognised as an expert in generating business value from IT investments. Since joining Pronto Software in 2000, David has doubled the company’s profits and expanded the business into new, international markets including the US, Canada and PNG. www.pronto.net. www.businessfirstmagazine.com.au

INFORMATION AGE | BF

www.businessfirstmagazine.com.au

BUSINESSFIRST MAGAZINE

BF | READING NOOK

A little reading goes along way and as any good CEO knows, you can never really stop learning. In Business First’s Reading Nook, we review some inspiring writings about all things business.

CHINA Business Bites: Essential Ingredients for success Daryl Guppy Major Street Publishing CHINA Business Bites is a well-written guide for those who are thinking of doing business in China. CHINA Business Bites covers areas including: • Business – It’s easy to get it wrong but with just a twist, also easy to get it right. • People – The diverse mix of expectations, beliefs and practices creates the potential for monumental levels of confusion. Author Daryl Guppy explains how to avoid or manage these confusions. • Host and guest – best behaviour for when you are in China and how to exceed Chinese expectations when you are the host in your home country. Guppy is himself a successful China businessman and says when doing business there you either like it, or hate it. There is no room for indifference. Clearly he loves it and in this book he shares his enthusiasm for, knowledge of, and wisdom about, doing business in China. Guppy sits on the board of the Australia China Business Council. He provides support for Chief Ministers and Cabinet ministers and has advised Singaporean and Malaysian Chinese businesses on better approaches to working in China. He has deep experience in working and he is the author of The 36 Strategies of the Chinese for Financial Traders.

78 BUSINESSFIRST MAGAZINE

Digilogue: how to win the digital minds and analogue hearts of tomorrow’s customer Anders Sorman-Nilsson Wiley Anything that can be digitised will be digitised. But can the digital-connect ever really replace the personal touch? Is word-of-mouse always more effective than word-of-mouth? And what of customers’ enduring need for analogue experiences (think analogue watches, paperback books and multiplex movie theatres, for example). In your rush to embrace your customers’ digital mind are you ignoring an equally valuable asset: their analogue heart? Better yet, how can you leverage the analogue heart to provide your company or brand with an unbeatable competitive edge?  The answer, according to internationally acclaimed futurist, Anders Sormon-Nilsson is Digilogue — the ‘translational sweet-spot, the convergence of the digital and the analogue.’  A book that will revolutionise how you do business in a digital world, Digilogue provides powerful insights, strategies and tools to help you provide value to digital minds, while connecting with analogue hearts.

Online Investing on the Australian Sharemarket Roger KInsky Wrightbooks If you’re like a growing number of Australian investors, you’d like more control over the financial decisions affecting your share portfolio or super fund. Whether you want to trade at home or on the go using an iPad or smart phone, you can make substantial savings by trading online and managing your own investments. There’s an abundance of information and many facilities and tools available on the internet but you need guidance to successfully navigate and use it so you can make good investment decisions. This new Fourth Edition of Online Investing on the Australian Sharemarket has been written to reflect the latest changes in online investing including new websites and information on self-managed superannuation funds. Focused entirely on the Australian market and trading protocols, you’ll discover how to find the best online broker, setup your account, place orders, analyse the market, trade at the best time and price and monitor and improve your portfolio’s performance. Written in easy-to-understand language, there are many strategies and tips in each chapter that will help you to trade shares like the professionals. This book is the ideal guide for beginner and intermediate level investors who want to learn to invest wisely and profitably. www.businessfirstmagazine.com.au

FEATURE | BF

Q&A continued from page 11

Mat Jacobson is the founder and executive director of Ducere. ducere.co

Mellissah Smith is the founder of Marketing Eye.

To be honest the topic is a bit obscure as it assumes that a reduction in operational costs necessarily will incur some damage. If reducing operational costs is the objective, then the first item on the agenda would be to look at ways to simultaneously reduce costs and enhance business outcomes. For example, it might be cheaper and more efficient to outsource IT hosting as opposed to hosting all data on internally maintained infrastructure. If done properly there should be no need to minimise damage, in contrast, there should be enhanced outcomes for both the business and customers. In some situations though, a cost reduction does create a negative impact. For

example, a decision to move all customer service operators offshore. There are obvious cost reduction benefits and these may be necessary in order to maintain profitability. This will of course have an enormously damaging impact on the retrenched workforce, but the longer term risk to the business is far greater, that is the potential brand risk in customers dealing with low paid, international workers without a strong loyalty to the business, just to cut costs. Focusing on cost cutting as a strategy for profitability is a very slippery slope in a country such as Australia. Why? Because we will never be able to compete on a commodity based price reduction strategy.

There will always be competitors in China, India or another country that will produce the same product for less. The only alternative is a strategy around customer service and quality. A perfect example is the automotive industry, where Australia positioned itself in the low cost end of the market and died a slow death to cheaper imports. Contrast this to the German automotive industry, which focused on the quality end of the market. Not only does their sector survive but has great profitability. Awareness of long-term advantage, as opposed to shortterm cost-cutting could be the difference between survival and obsolescence.

The professional services industry has been hit over the past few years due to an increase in the cost of living, and lower unemployment driving employees to demand pay rises alongside a number of other increases in business costs without necessarily an increase in billings. As an entrepreneur, watching revenues increase but profits decline has been instrumental in looking at the overall business structure and substantiating a greater investment in technologies, and a collaboration across multiple cost centres with other like-minded businesses using the group power to negotiate betters rates with

suppliers—to reduce the overall operational costs of the businesses. As a business we have substantially increased our investment in technology, especially in business automation software solutions to reduce the number of employees working in the business. This is difficult to implement, particularly if your company is growing and does cause disharmony within business units. Everyone is looking for job security and as employers, it’s our job to provide that. Building a plan around how employees can embrace newer technologies and think about cost-cutting in all areas of the

business is imperative to being able to minimise the ‘E-word of mouth’ damage internally and externally, particularly when a restructure has taken place. Giving employees greater visibility into financials can be a positive, but also can have a negative impact. Education into what the financials actually mean for longterm company sustainability can fall on deaf ears in different parts of the business, but if employees are constantly reminded of what investments needs to be made in the future and what the costs of these investments actually are – they tend to have greater buy-in.

www.businessfirstmagazine.com.au

BUSINESSFIRST MAGAZINE

BF | STYLE

SAMSONITE’S SAVIO LEATHER III RANGE: THE PERFECT BUSINESS PARTNER When travelling for business it is not only important to look the part, but the right business case could very well make travel more stylish, practical and comfortable.

amsonite is catering to corporates with its premium business collection: the Savio Leather III which has recently launched in Australia. Appearance is key to representing not only your workplace but your personal style and Savio Leather III projects an image of prestige, quality and excellence, something that every businessperson strives to encompass. Featuring a fusion of contemporary and classic design, this first-class leather range remains at the forefront of business collections on the market. Superior craftsmanship is employed to create the Savio Leather III collection, made from leather ensuring your case is durable and stylish. Organisation is top of mind with the collection’s design, featuring smart compartments to best organise your business essentials. Padded iPad and laptop sleeves will also ensure your hardware is protected at all times.

Savio Leather III’s Messenger Bag (RRP$269.00) and Large Laptop Briefcase (RRP$339.00) are great for day-to-day business use whilst the Rolling Tote (RRP$529.00) acts as a mobile office. For those who need all their files and devices with them, or a business case for domestic and overseas travel, the Rolling Tote will meet all your functional needs Samsonite’s Savio Leather III business collection is available at leading luggage retailers including Myer, David Jones, Strandbags and Victoria Station. BF

80 BUSINESSFIRST MAGAZINE

www.businessfirstmagazine.com.au

STYLE | BF

How to Dress for Success in the workplace The question of what’s appropriate to wear in the work place or to a job interview, is one we are often asked at Dress for Success Sydney. With so many women of all ages, ethnicities, shapes and sizes, it’s not always an easy one to answer. Here are a few tips we provide to help women dress for success.

C Megan Etheridge

founder of Dress for Success Sydney.

hoose an outfit that makes you feel confident. What we wear is in part an extension of who we are, so it’s important to look and feel yourself. Of course this doesn’t mean wearing flip flops or track suit pants, it means selecting attire that makes you feel confident and at your best. Research shows your mood and confidence can have an impact on your performance, so make sure you start your day with an outfit that makes you feel good. Dress helps build executive presence. One of the things that sets leaders apart is their executive presence. This is made up of many elements, from strong communication skills and likability, to charisma and a polished appearance. Undoubtedly an executive’s dress plays a strong role in creating this perception. Find an outfit that helps created this polished appearance and builds executive presence. First impressions count. According to 2011 research by Harvard Medical School and Massachusetts General Hospital, people assess your compe-

www.businessfirstmagazine.com.au

tence and trustworthiness in a quarter of a second (250 milliseconds) – based solely on how you look. With this in mind, women need to ensure their dress gives a positive and memorable first impression. The research also found that good grooming habits, which include looking ‘polished’ or ‘pulled together’, are vital in dressing for success. It identified that 83 per cent of senior executives believed ‘unkempt attire’ (which included wrinkled or tootight clothing and visible lingerie) detracts from a woman’s executive presence. There was a marginally smaller percentage (76%) that believed it undermines a man’s. A suit is not for everyone. Women often fall into the trap of opting for a masculine suit, covering themselves from head to toe. When we surveyed the women from Dress for Success, they too had a perception that a suit was critical in order to look the part. In fact if you look at the attire of many successful Australian women, you’ll see a dress, skirt or pants is just

as prevalent – if not more so. You don’t have to wear a suit to look confident, comfortable and professional. Dress for the occasion. Not all outfits are created equal. Check your calendar the day before to see if you have an important meeting that may require a slightly more professional look. It could be as simple as adding a jacket, or wearing a nice pair of heels to match the occasion. Less is more when it comes to accessories. Don’t over accessorise your work attire. It’s important to have character but not at the expense of attracting unnecessary attention. We often suggest jazzing up a work outfit with accessories after hours. Lead by example. Work attire is part of the cultural fabric of an organisation, so managers need to empower the standard of dress. If your manager comes into the office with wet hair and training shoes it sets the bar for the rest of the team. To create a high performing, positive team, set the standard by taking pride in how you dress. BF

BUSINESSFIRST MAGAZINE

BF | HEALTH

MOTIVATION IN THE PALM OF YOUR HAND

Modern society’s obsession with their mobile phones may finally be paying dividends in terms of exercise participation.

I Lauretta Stace is Chief Executive Officer of Fitness Australia.

n today’s society it would be safe to say that in one-way or another we are always connected or ‘plugged’ in. Figures show that the average smartphone user checks their mobile 150 times per day. While these figures aren’t a very positive reflection on the country’s face-to-face social interaction they do point to an opportunity. This being how mobile devices can be used to increase participation in physical activity. With more than 70% of the population not getting enough exercise and 11.19 million smart phone users in the country, there is considerable motivation to explore the success of this type of intervention. There is already a vast array of wearable technology and fitness related smart phone applications, and now Apple and Google have each announced their plans to integrate self-tracking data into their mobile operating systems with HealthKit and Google Fit. The interesting thing to watch will be

82 BUSINESSFIRST MAGAZINE

how the advent and expansion of this type of technology will motivate people to get off their chairs and increase their regular activity levels. In my own experience, I have some partially active friends who now routinely check their daily steps and make an effort to go the extra mile to reach or exceed their daily goal. In my own case, I check to see how ‘inactive’ I am being throughout the day. We know that prolonged sitting can lead to some deleterious health conditions and a lack of energy. If I am sitting for extended periods at work, I am now more aware of the situation and reminded to do something about it. The fact that this information is so accessible and the product is so simple to use is a great step forward. At their most basic level, I believe that these gadgets really do have a role to play in improving physical activity levels and hence, energy levels and productivity. Perhaps all CEOs should encourage their teams to wear them at work. BF

www.businessfirstmagazine.com.au

HEALTH | BF

There is already a vast array of ‘wearable technology and fitness

related smart phone applications.’

BUSINESSFIRST MAGAZINE

BF | PHILANTHROPY

THE VALUE OF PHILANTHROPY Encouraging figures released by the tax office show that wealthy Australians are putting their hands in the pockets and giving back to community initiatives despite tax and regulatory burdens against them and the charities that receive the donations.

he latest figures from the Australian Tax Office’s Deductible Gift Recipient Listing (17/07/2014) highlight growing philanthropic investment by wealthy Australians with the largest number of new private ancillary funds (PAFs) being established since before the global financial crisis. The good news is that 141 PAFs were established in the year ending 30 June 2014, bringing the total number of PAFs in Australia to 1,225. PAFs are the fastest growing segment of philanthropy and also likely the largest. PAFs held $2.93 billion in funds as at 30 June 2012, and distributed $250 million to the community across welfare, education, culture, research and other sectors during 2011/12. Chris Cuffe, Chairman and founder of Australian Philanthropic Services said the increase in the number of funds is evidence of a growing tradition of philanthropy among wealthier Australians. “The continued success of private ancillary funds is crucial to engage the next generation of philanthropists,” he said. “It is great to see increasing numbers of families sharing their wealth with the community and particularly encouraging to see increasing numbers of those listed in the BRW rich list also known for their philanthropy.” Earlier in the year the Australian Charities and Not-for-profits Commission (ACNC) called on charities to share their experience of red tape in the sector through an online survey. The survey, conducted by Ernst and Young, was part of a wider research

84 BUSINESSFIRST MAGAZINE

project to measure the baseline of red tape imposed on the sector and to identify target areas for red tape reduction. “Participants at the forum, including charities, told us the importance of measuring the amount of red tape affecting the sector and recommended that we commission research into this,” said ACNC Commissioner, Susan Pascoe AM. The initial phase of the red tape reduction research looks into the regulatory and reporting burden on charities at the Commonwealth level. Future research may look at the burden imposed by states and territories and the burden on the broader Not for Profit sector. The research involves developing a conceptual framework, conducting case studies and mapping and costing red tape. While these statistics of increasing philanthropic behaviour, along with research being done into the burden of red tape is encouraging, there is still a great deal of legislation to battle through, particularly for the receiving charities. Ease of this burden is required to encourage even further participation in worthy causes. Australian Philanthropic Services is one of the key champions of the PAF model in Australia and provides independent, not-for-profit advice to individuals and advisers. Since its launch in 2010, Australian Philanthropic Services (originally known as the Social Ventures Australia PAF service) has grown rapidly and is now establishing over 25% of all new PAFs in Australia.

Australian Philanthropic Services currently supports over 100 clients with their philanthropy, offering businesses, wealthy individuals and families the ability to donate tax effectively to a trust they have created. The trust can then disburse funds to a range of eligible not-for-profit organisations over a chosen timeframe. The positive change has come via a shift in the regulatory environment, which up until a decade ago did not provide tax efficient philanthropic structures comparable with those available in the USA and UK. While that is no excuse for not putting your hand in your pocket, it did make philanthropy or philanthropic efforts cumbersome. In 2001, a Howard government initiative promoted family philanthropy, with the first Private Ancillary Funds being established as Prescribed Private Funds (PPFs). The business community had significant input, under the guidance of David Gonski. In 2009, after significant consultation with the sector, the structure was reformed by the Rudd government, new Guidelines introduced and the structure renamed Private Ancillary Funds. Areas of compliance were tightened and processes streamlined, with these changes receiving bipartisan support. It is important that progress continues to be made because philanthropy should be a lifestyle choice, without burden. The more help businesses and wealthy individuals can give to worthy causes and charities, the better off we all will be. BF

www.businessfirstmagazine.com.au

PHILANTHROPY | BF

www.businessfirstmagazine.com.au

BUSINESSFIRST MAGAZINE

BF | DESTINATION

TAKE ME TO THE RIVER

Luxury accommodation, fine Margaret River wine and daily in-villa canapés sound too good to be true, however West Australian business Walk Into Luxury offers all this and more.

t is said that golf ruins a good walk, well with the Walk Into Luxury experience there is no small round ball in site just stunning vistas and post walk experiences that allow you to relax, rejuvenate and retreat. As the name suggests, Walk into Luxury offers all-inclusive walk packages with post-walk massages, daily in-villa canapés and fine wines, exclusive dining and wine tasting experiences at renowned wineries and restaurants, and a host of other inclusions. Luxury accommodation is also included, with stays at up to four award winning resorts and boutique retreats. These include Small Luxury Hotels Of the World members Smiths Beach Resort and Injidup Spa Retreat, as well as local favourites Pullman Resort Bunker Bay and Losari Retreat. Who would have thought a walking experience could be so luxurious? Yet here are just a few of the treats you can expect from Walk Into Luxury:

86 BUSINESSFIRST MAGAZINE

- Exclusive Leeuwin Estate four course lunch with matching Art Series wines (7 night walk) or lunch with wines at award winning Wills Domain (4 night walk) - private pool or spa villas at ultra luxe accommodation, including two Small Luxury Hotels of the World - private in-villa chef experience featuring a top local chef - spa treatment at award winning Injidup Spa or Vie Spa - 6 course tasting menu with matching local wines at Studio Gallery and Bistro (whose chef, Malcolm Chow, is of Vue de Monde fame) - daily in villa canapés and Margaret River wines and boutique beers - best local produce used in gourmet walk snack packs - private wine tasting at Lamonts. If you are worried you are being a little too decadent, Walk Into Luxury donates 5% profit from each and every

walk to local WA charities. “We are keen to be a part of the community we operate in and to do our bit to support the region. We think guests appreciate having a portion of their travel dollar going back into the area they have enjoyed as well,” says owner and director Nikki King. And if you are worried that your walk might be affecting this beautiful environment in some way, the ‘leave no trace’ principles of bush walking have been instigated. “Walk Into Luxury limits guest numbers to ensure we do not overuse the track,” King says. “We source all food and beverages for our walks locally to reduce our carbon footprint, and we provide guests reusable water bladders and containers to minimise the use of plastic. We are also a Friend of the Cape to Cape Track, which is a group that helps preserve the track for future generations.” The Cape to Cape Track is a spectacwww.businessfirstmagazine.com.au

DESTINATION | BF

enjoy on and off the track are yet another opportunity to taste the first-rate produce the region is known for, with all products being 100% local. “We are proud to support many great local restaurants, wineries and other businesses that provide top quality products. This also means our guests get to taste the freshest local produce and sample the Margaret River region’s best throughout their walk,” Nikki says. These are exclusive, private tours, not general walking tours. “Our walks are designed as private experiences to be enjoyed at your own pace and without the crowds,” Nikki says. “Private guides are available or guests can elect to walk self-guided with all maps, safety gear and a monitored GPS device provided by the Walk into Luxury team. Travel writer Fleur Bainger experienced the walk and the post walk luxury. She wrote in Australian Traveller magazine: “I sink into the leather

couch in our air-conditioned, ocean-facing villa before spying its plunge pool: moments later I’m in. The fridge is filled with canapés and local wines, plus alcohol-free grape juice by Voyager Estate. A breakfast hamper is on the bench and fluffy white towels beckon. Motivation to leave this haven is found only in the lure of a multi-course dinner at nearby The Studio Gallery; the chef there lists Vue de Monde and Tetsuya’s on his CV. The restful evening more than prepares us for the following day’s hike through a karri thicket of white toothpick trunks that rise up to 60 metres high. And there’s the promise of a relaxing massage chaser.” The experience meets the demands of the walker and those seeking the perfect moments of relaxation. Walk into Luxury offers a very different product to other Australian walks. They are private experiences for guests to enjoy with friends or loved ones; they are not walks set in the typical tour group format. Luxury accommodation is included at hand-selected resorts. The packages offer holistic experiences in food, wine, accommodation and of course walking. The price is all-inclusive and different packages offer different experiences. And did we mention that private jet transfers are also available from Perth to Margaret River along with luxury transfer options? If that isn’t enough, you can experience the region by air on your helicopter ride. This is a spectacular luxury experience and offers something very different from what you may have experienced before. www.walkintoluxury.com.au. BF

ular section of coastline running from Cape Naturaliste (near Yallingup) past Margaret River to Cape Leeuwin in the south west corner of Western Australia. National Geographic has voted it as one of Australia’s top ten tracks. Along the track, walkers experience everything from pristine beaches, limestone cliffs and granite boulders to coastal bush land and the majestic Boranup Karri forest. Walk into Luxury has partnered with some of the best local operators to ensure each aspect of its ultra-luxe walks is top notch and 100% local. Food in particular is a standout. Exclusive tasting menus with matching wines at premier Margaret River wineries and restaurants – including Leeuwin Estate, Wills Domain and The Studio Bistro – are a standard inclusion. So is a private in-villa chef experience, which provides guests on the 5 and 8 day walks a chance to meet (and be served by) a top local chef. The gourmet hampers provided for guests to www.businessfirstmagazine.com.au

BUSINESSFIRST MAGAZINE

BF | FAST LANE

LIGHT UP THE ROAD: THE AUDI R8 LMX The Audi R8 LMX offers breathtaking performance and groundbreaking technology. The limitededition car is the first production car in the world to come equipped with laser high beams. The R8 LMX is now available for order, and a limited number will be offered to Australian customers.

udi is the leader in developing automotive lighting technology. In 2008, the Audi R8 became the first production car in the world to boast all LED headlights; this was followed in 2012 by dynamic turning indicators. Audi launched a new chapter in automotive lighting with the Matrix LED headlights, which recently debuted in the new A8. Now the brand with the four rings is igniting the next stage in the R8 LMX: laser light for the high beams. It increases the range substantially, which is ideal for a supercar like the R8 LMX. The Audi engineers work very closely with their racing colleagues on the development of lighting technologies. The combination of LED and laser high beams, for example, was used for the first time on the new Audi R18 etron

88 BUSINESSFIRST MAGAZINE

quattro at the 24 Hours of Le Mans on June 14 and 15. The premium brand is thus continuing its tradition of using motorsport to test new technologies destined for production. The laser spot, which is active at speeds of 60 km/h and above, supplements the LED high beam in the R8 LMX and greatly enhances visibility and safety. An intelligent camera based sensor system detects other road users and actively adjusts the light pattern to exclude them. The Audi R8 is the dynamic, top of the line Audi model. Its high-revving, mid mounted engine, double wishbone suspension and ASF (Audi Space Frame) aluminum body are closely based on racing. The Audi R8 LMX is available as a coupe with a production run limited to 99 vehicles. With 419 www.businessfirstmagazine.com.au

FAST LANE | BF kW and 540 Nm of torque, its 5.2 litre, V10 engine accelerates the car from 0 to 100 km/h in just 3.4 seconds. Top speed is 320 km/h, and average consumption is 12.9 litres of fuel per 100 kilometres (299 grams CO2 per kilometre). A compact, seven speed S tronic transfers the power to the quattro permanent all wheel drive system. The new top model also sends out a clear visual signal with its Audi exclusive customised paint finish in Ara Blue, crystal effect. A large, fixed rear spoiler increases the downforce on the rear axle. Like the front spoiler lip, the flics on the sides, the engine compartment cover, the exterior mirror housings, the sideblades, the rear wing and the diffuser, it is made of carbon-fibre reinforced polymer (CFRP) with a matte finish. A limited number of the Audi R8 LMX vehicles will be offered to Australian customers. Further details will be announced in the coming months. BF

‘

The Audi engineers work very closely with their racing colleagues on the development of lighting technologies.’

www.businessfirstmagazine.com.au

Full Specs The Audi R8 (14,9 – 12,4 l/100 km [15.8 – 19.0 US mpg]; 349 – 289 g CO2 per km [561.7 – 465.1 g/mile]) is the dynamic, top‑of‑the‑line Audi model. Its high-revving, mid‑mounted engine, double wishbone suspension and ASF (Audi Space Frame) aluminum body are closely based on racing. The Audi R8 LMX is available as a coupe with a production run limited to 99 vehicles. With 419 kW (570 hp) and 540 Nm (398.3 lb‑ft) of torque, its 5.2 liter, V10 engine accelerates the car from 0 to 100 km/h (62.1 mph) in just 3.4 seconds. Top speed is 320 km/h (198.8 mph), and average consumption is 12.9 liters of fuel per 100 kilometers (299 grams CO2 per kilometer) [18.2 US mpg/481.2 g/mile]. A compact, seven‑speed S tronic transfers the power to the quattro permanent all‑wheel drive system. 19‑inch wheels are combined with carbon‑fiber ceramic brake discs, which up front measure 380 millimeters (15.0 in) in diameter. Red anodized brake calipers shine behind the exclusive designer wheels. The R8 LMX is shod with 235/35 R 19 tires up front and 305/30 R 19 tires at the rear.

BUSINESSFIRST MAGAZINE

www.mtr.com.au

10 THINGS TO DO AFTER HAVING TO SWITCH OFF YOUR ELECTRONIC DEVICES 1. Point out the window and yell ecstatically � “There’s Wally!” 2. Ask the person next to you what the name of this airline is. Start giggling when they answer. 3. Hum the Star Wars Imperial March theme song when the plane is taking off. 4. It’s absolutely possible to lick your elbows. 5. Call the steward / stewardess "nurse". 6. Hold out your hands in front of you and pretend you're flying the plane. 7. Ask someone for their autograph, pretending that you think they're from Kath & Kim. Bonus points for pulling off “Look at moy, look at moy!”. 8. Ask the person next to you, "So, which hotel are you staying in when we reach Pyongyang?" 9. Imagine there’s a cat on your lap. Start petting it. 10. Worry about getting the best people to help your technology / business ideas take flight.

We understand that business travel often means squeezing more work out of less hours. So if there’s anything you shouldn’t do on this list, it’s #10. With us, you have a recruitment partner who is constantly mapping out the candidate market on your behalf. And building your employer brand in every interaction (just as we do for Australia’s top organisations) so the best talent flock to you. So recline your seat (when you can, of course). Order another G&T. And savour your time off in the air. When it comes to talent, we’re always switched on so that you can truly ‘switch off’. Call Chris, our Managing Director, on 03-9674 3388 today to discuss a partnership opportunity. Or email Chris.Sandham@mtr.com.au