Business First Magazine - May/June 2014 by Associated Media Group Pty Ltd

BUSINESSFIRST for Business Leaders

May/June 2014

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Rising above

How Con Makris built a billion dollar property empire

Putting to perfection

The world’s most extravagant golf clubs

Retain then rein

Keeping employee costs down

BUSINESS FIRST MAGAZINE Vol 1 Issue 3

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An all in approach

Paul Little’s strategies for success

There’s no business like showbusiness

Why Graham Burke loves to entertain 9

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INSIDE: Investment // Leadership // Lifestyle // Tax // Tech

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BF | CONTENTS

BUSINESS FIRST CONTENT

4 Editor’s Desk 5 News 10 India’s Engine of Innovation As India strives to become the next big innovation hub, it faces challenges ranging from bewildering regulations to educational shortcomings and inadequate infrastructure. But the country’s indomitable entrepreneurial spirit may well overcome the hurdles.

CONT

COVER STORY 14 Con Makris is one of the greatest examples of a self-made man and is also one of the richest men in Australia.

PEER TO PEER 12 Innovate or stagnate: leveraging structural change for career development by Professor Fred McDougall 22 EOFY 2014: avoid last-minute paperwork blues by Tim Reed 24 A matter of trust by Andreas Costi 26 Cost versus productivity: the international communications challenge by Alex Blinko 34 Australian entrepreneurship in the Asian Century by Jon Michail 36 The rise and rise of bitcoin and why you should avoid it like the plague by Blake Sterling 38 CEOs: Who do these leaders lean on? by Federico Re 46 Creating risk as strategic advantage by Steven & Chustisa Bowman 48 The language of leadership and building a movement by Petar Lackovic 50 Five IT scenarios that can wreak havoc 56 The new privacy regime by Daniel Kovacs 58 Common oversights regarding disaster recovery & how to avoid them by Sean Dendle 64 Next-generation cloud: delivering real differentiation by David Jackman 66 How to become a trusted adviser (and stay trusted) by Jonathan Weinstock 70 Taking the fast break by Jonathan Jackson

LIFESTYLE 72 Health – The Pillars of Good Health by Lauretta Stace 74 Reading nook by Daniel G Taylor 76 Hideaway – The Berkeley River Lodge 76 Extravagance – The world’s most expensive golf clubs 80 Fast lane – Lexus’ luxury SUV

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CONTENTS | BF

ENTS 28

BUSINESS FIRST LOUNGE 14 A chip off the old block – Con Makris began his career working seven days a week in a South Australian foundry. Today he is worth an estimated $980million and is a property development mogul. He spoke with Bob Forshaw about coming to Australia with nothing to lose but the shirt off his back and how his work ethic has formed his success.

28 Shining the light – Lawrence & Hanson Group has been in existence for 128 years. They have survived because they are able to adapt to changing times and technologies.

40 The energy specialist – The energy sector is a fickle one, especially when you are in retail. Yet good leadership can create a market leader in a highly competitive and volatile field. Nigel Clark is a very good leader and in a short period of time has transformed Momentum Energy into one of the leading energy suppliers.

52 Breaking with tradition – Late in 2013, Alloys under the direction of CEO Paul Harman, expanded operations across the country. It was a move designed to reinforce the company’s position as Australia’s leading specialist distributor.

60 When a Little goes a long way – While Paul Little is no longer a spokesperson for Toll, his influence in this public company is still being felt. The former chief speaks about his time at Toll and how this has informed his most recent venture, property development company Little Property.

68 That’s entertainment! – Village Roadshow CEO Graham Burke speaks with Business First about why reinvention is necessary for success.

60 www.businessfirstmagazine.com.au

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BF | EDITOR’S DESK

Great expectations There has been something wildly entertaining about BRW’s Rich List over the years, the voyeurs in us all love to find out how much the richest people in the country are worth. Even with that particular magazine now off the shelves, the Rich List is still printed online because it creates a huge amount of interest. And so every business magazine looks to interview pillars of Australian industry, not necessarily to repeat how much they are worth, but to find out their views about the burning issues of the day, finance, business management, leadership and how they steer the ship of their successful multi-million and in some case billion dollar company. Business First is no exception. There is a healthy respect for our business leaders here and we hope that comes through in the way report them. In this issue we haven’t held back. We have two of Australia’s iconic businessmen in Con Makris and Paul Little. Little, now runs Little Projects, however he is still Toll’s largest shareholder although he has little to do with the company in a business capacity these days. Of Toll’s success he says, “We had a clear vision, we employed the best people, and we offered this integrated service. I think it was a combination of all of those things that allowed the business to be successful, and we grew the business aggressively. That aggressive growth combined with the strategy that we had in place at that point in time worked really well.” Makris is another who has been in business long enough to know what works and what doesn’t. His success was built on learning. “I did everything… I had to study everything, the markets and accounting. And I knew that is the way I could make money.” There are a few big names in this issue. Another is young rich-lister and sports star Andrew Bogut, who conducts tours through Silicon Valley and connects upstarts with capital raisers. We look at the rise of Village Roadshow, what makes Nigel Clark tick and why Lawrence and Hanson is so strong in the electrical field. On the lifestyle side we go to the Berkeley River Region to discover a world of luxury for business travellers and look at some of the most expensive golf apparel in the world. We hope this issue is as insightful as it is entertaining and if you have any feedback, please don’t hesitate to send it to me at jjackson@amgroup.net.au Your feedback is valued and I will endeavour to answer each and every one of you. For now, enjoy the read.

Jonathan Jackson Editor, Business First Magazine

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www.businessfirstmagazine.com.au PUBLISHER Alan Hyman EDITOR Jonathan Jackson MEDIA DIRECTOR Bob Forshaw SUB-EDITOR Judy Hyman 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: Professor Fred McDougall , Tim Reed, Andreas Costi, Alex Blinko, Jon Michail, Blake Sterling, Federico Re, Steven & Chustisa Bowman, Petar Lackovic, Daniel Kovacs, Sean Dendle, David Jackman, Jonathan Weinstock, Lauretta Stace, Daniel G Taylor.

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 nothing therein is capable of being misleading or deception or www.businessfirstmagazine.com.au otherwise in breach of Part V of the Trade Practices Act 1974.

NEWS | BF

Eliminate tax on investment scheme The Australian Taxation Office (ATO) has opened the door for a new related party borrowing strategy within Self-Managed Super Funds (SMSF) that has the potential to eliminate income tax on the investment earnings of wealthy investors. Many advisers mistakenly believe that borrowing in SMSFs is limited to the acquisition of property, and that the interest rate charged by a related party must be an arm’s length rate. This, however, is not the case. With the correct structure, SMSFs can in fact borrow to effectively acquire assets such as cash, term deposits and listed securities. Further, the funds can be lent to the SMSF without the requirement to pay interest. “With the possibility of lending additional money to a SMSF without interest, our new borrowing strategy has the potential to completely eliminate tax payable on investment income,” says David McKellar, chartered accountant and director of Melbourne-based Allied Business Accountants. “Take the example of someone who has $2 million worth of investments outside of super. Assuming an investment return of six per cent, this would be generating income of $120,000, with tax liabilities of up to $55,800 per annum. “Depending on their age and circumstances, it may be possible to make non-concessional contributions of up to $150,000 per year into the fund. By bringing forward three years’ worth of

contributions, you could pay $450,000 into the SMSF right now.”  However, this still leaves more than $1.5 million in exposed outside investments with up to $43,245 payable in tax. “If the remaining $1.5 million was loaned to the SMSF, it could use the loan to purchase an investment,” says McKellar. “The income from

that investment would then be earned by the fund and concessionally taxed as such. If the fund is in ‘pension mode’, then the income of the fund is tax free. “The result is no income tax or capital-gains tax being payable, and a tax savings of up to $55,800 per annum. BF

Industry collaboration required According to a group of sector leaders, Australia’s oil and gas industry must fix its sights on developing greater collaboration as it brings a range of mega projects into operation. The need for oil and companies to become more coordinated was a hot topic at the DNV GL event, which involved more than 30 industry executives talking under Chatham House rule. This assertion was sparked partly by media attention in February 2014 on the construction of three giant LNG plants side by side on Curtis Island in Gladstone, Queensland, resulting in billions of dollars of duplicated investment. Similar overlaps have been flagged elsewhere. “The Australian oil and gas industry is simply not collaborating enough. Operators and suppliers across the country would benefit greatly by sharing best practice and the lessons they have learnt in a structured forum. We are doing a lot of things for the first time here. We should be sharing our experiences,” said a board member of an offshore services company during the discussions at the DNV www.businessfirstmagazine.com.au

GL-hosted event. Another participant in the roundtable discussions commented that companies in Australia seem to have an issue with working together, which doesn’t make sense considering that the majority of the country’s major projects are being developed by joint ventures. Richard Palmer, regional manager, DNV GL Oil & Gas - Australia, New Zealand and Papua New Guinea, said “If we want to maintain security of energy supply, our industry has to set our sights on working in deeper and harsher conditions, and keep pushing the boundaries of safety, reliability and performance in our

projects and operations. Industry collaboration will be central to achieving that.” Some senior leaders at the DNV GL’s roundtable discussions agreed that the government also has a role to play in helping Australia’s oil and gas industry to work together more effectively. “The government fines operators who don’t invest in innovation. This doesn’t encourage a long-term view on collaboration. We need the government to facilitate us working together, not force us,” said a senior safety manager for an Australian mega project. Other contributors suggested that companies should do more to foster internal collaboration before they address the approach of cross-industry working. “The organisational set-up of the bigger oil and gas companies is extremely complex. I sometimes get the feeling that the left hand doesn’t know what the right hand is doing with some operators, and that is an issue that needs to be addressed properly if we are ever going to collaborate effectively as an entire industry,” disclosed a senior manager for an international oil company. BF

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BF | NEWS

Q2 2014 investment outlook Saxo Bank, the online multi-asset trading and investment specialist and parent company of Saxo Capital Markets, has published its second quarterly insight for 2014, focusing on the outlook for Europe.

European outlook: A United States of Europe? Following an abundance of false starts, the European economy is likely to encounter further challenges in Q2, Saxo Bank writes in its second quarterly insight for 2014. By the end of the second quarter, the European Central Bank is likely to grow increasingly concerned about deflation and the lack of growth and signal new quantitative easing and yet another set of unconventional measures. As well, Europe faces its biggest electoral challenge since the 1970s, as the reality gap between Europe’s voters and their EU-friendly politicians is wider than ever. At the May EU parliamentary elections, look for EU sceptic parties to form one of the largest overall blocs in the new European Parliament. If Brussels listens to voters, it could mark a decisive turning point for the failing EU experiment, even if for now, the political status quo is more likely to maintain the upper hand. While the economic outlook appears to be improving for Spain, Portugal and Greece, this is really part of an internal transfer of problems from these ‘Club Med’ countries to France and soon Germany, which is likely

to flirt with recession by the end of the year. France and Germany are also likely to suffer from reduced exports, particularly in the luxury goods sector, as Asian growth cools. Steen Jakobsen, Chief Economist and CIO for Saxo Bank, commented: “The EU member countries have surprised with their political solidarity over the last few years of the EU crisis, but the electorate is growing restless and EU-sceptic parties are making huge inroads that the establishment must recognise. Beside this we have the eternal problem that the EU entirely lacks an economic foundation that is sound and long term. Here in early 2014, EU complacency has never been higher, just as real political and popular entropy is about to make its presence felt.”

structurally and cyclically due to prior credit excesses. As Jakobsen points outs, “We have been so focused on saving the world, the banks and the political system that we have underinvested in people, education, infrastructure, innovation and technology. “It will not be the European Parliamentary elections that make or break the EU, but how the policymakers and their trusted mandarins respond to the slowdown and subsequent rebalancing of the world.”

Global outlook: a ‘state of flux’ The ‘Fragile Five” (South Africa, Brazil, India, Indonesia, Turkey), which with the recent additions of Argentina, Russia and Chile have become the “Fragile Eight”, are now in the process of rebalancing, as the Fed tapering has forced their currencies weaker and required policy tightening that will crimp growth and right the structural imbalances that have grown in recent years. This “state of flux” is a positive development overall, but too many countries and economies are trying to do the same thing simultaneously – devalue and increase exports – so growth is likely to weaken

Foreign exchange: EURUSD will peak at about 1.4000/1.4050and then turn down to 1.2500 (the ECB should get active on deflation over the summer). USDJPY could see 95.00 on a VAT hike and initial signs of Abenomics failing. The “Fragile Eight” will drop another 5 percent. Commodities: will do well through Q2 as real rates will drop, but could fall again heading into H1 2015.Will take profit in Q3 2014.

Key points on investments for 2014: Fixed income: core government bonds will be the only asset that is up Q1 2014 versus Q12015 (rebalancing and lack of productivity).

Equity: The S&P 500 will peak at about 1,9001,950, then a 30 percent correction. Equities are the only asset not yet hurt by the changing economic cycle. BF

BUSINESS CONFIDENCE RECOVERS Roy Morgan Research’s latest Business Confidence survey in March 2014 shows that Australian Business Confidence rose during the month, partially offsetting a steep decline in confidence during February. An increase of 3.3 points from February to a score of 120.6 puts Business Confidence back above the level that immediately preceded the last federal election in August 2013, when Business Confidence rated only 119.6. These figures are the result of 1,511 interviews with business across all industries, sizes and locations around Australia. The modest recovery in Business Confidence was driven by an increasing proportion of businesses reporting that their financial position compared to 12 months ago has improved (up 4.5 points to 32.6%), and a return of confidence in the economic outlook for Australia in the next 5 years (up 2.4 points to 64.5%). There was also a sharp increase in the belief that the next 12 months will be a good time to invest in growing a business (up 3.8 points to 59.7%). However these improving expectations are offset with

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concern for individual businesses, with the proportion of businesses expecting to be better off financially 12 months from now declining 2.2 points to 37.7% of Australian businesses. Nigel Smith, director of Business Research, Roy Morgan Research, says: “The resilience of Business Confidence in March 2014 appears to largely reflect the strength of the Finance and Real Estate industries, particularly in Victoria. Recent figures showing a surge in new dwelling approvals for the Melbourne CBD is most likely driving this, although the Construction industry in the state appears to have only moderately benefited from this strength. “With the exception of the Mining industry, it is notable that between 2011 and 2014 the industry that has consistently shown the highest Business Confidence is the Finance & Insurance industry – corresponding a period of historically low interest rates in Australia. If Australian interest rates do rise in 2014, Business Confidence in this industry is likely to suffer a setback.” BF www.businessfirstmagazine.com.au

NEWS | BF

VISA GETS BEATEN Purchases for goods and services from merchants worldwide in 2013 grew by $2.786 trillion or 22.0% to $15.422 trillion*. The most popular payment method based on purchase volume were UnionPay debit cards, which for the first time surpassed Visa credit cards and Visa debit cards, according to the annual report, Global Cards, published in the current issue of The Nilson Report, the top trade newsletter covering the card and mobile payment industries. UnionPay, established in 2002, is the national bankcard association in China. When comparing credit card purchase volume only, Visa’s market share of 39.22% was down 262 basis points. MasterCard’s share dropped 158 basis points to 26.08%. UnionPay’s share grew by 534 basis points to 20.39%. American Express’s share fell 109 basis points to 11.79%. JCB’s share improved by 3 basis points to 2.21%, and Diners Club’s share declined 8 basis points to 0.32%. When comparing debit card purchase volume only, UnionPay’s share increased 738 basis points to 47.19%. This gain made UnionPay the largest general purpose debit card issuer based on purchase volume. Visa’s share fell 605 basis points to 40.62%, and MasterCard’s share declined by 133 basis points to 12.20%. Credit, debit, and prepaid cards in circulation totaled 8.33 billion at the end of 2013, up 13.3% or 975.0 million cards over year-end 2012. Visa brand credit, debit and prepaid cards initiated more than 101 billion payments at merchants last year, more than twice as many transactions as MasterCard, its nearest competitor. BF

SMES LOOKING FOR GROWTH INDICATORS: 2014 New research from Bibby and CoreData reveals that financial and insurance services SMEs are the most confident about their business prospects (85%), followed by those from administration and support services (80%) and education and training (79%). However, while SME confidence is high, almost one in three SMEs report finding cash flow more difficult to manage than 12 months ago and almost half believe there has been no change to their cash flow situation. Cash flow issues experienced in the past 12 months include one in four SMEs (28.9%) report customers making excuses for slow payments, 21% report declining margins and 15.8% have had issues with Government ‘red tape’, compliance and tax administration. Triggers directly from customers that have negatively impacted SME cash flow in the past 12 months include 27% have suffered late payments from a client, 15.3% have had a bad debt because a customer has gone bust and 12.6% have had a client negotiate to pay an invoice in monthly instalments.

Australia ranked world’s 10th most socially advanced country

Purchase Volume by Card Type ($Tril.)

2012

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UnionPay Debit Visa Credit Visa Debit MasterCard Credit UnionPay Credit Amer. Exp Credit MasterCard Debit JCB Credit Diners Club Credit 0.5 1.0 1.5

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Mark Cleaver, managing director, Australia and New Zealand, said: “Problems like these are forcing some SMEs into less productive activities, like having to spend more time chasing payments (17%). We also found that some SMEs (11%) are offering discounts for early payment and 15% of SMEs are even refusing to trade with some clients due to non payment.” The research from Bibby Financial Services and CoreData, conducted from February 3-14 on 859 SMEs across Australia, reveals that Australian SMEs hold a largely neutral position in relation to cash flow. The Bibby SME Cash Flow Index Score of +1.02 highlights that cash flow has marginally improved from July 2013, though it has sustained a recovery from a low in August 2012. Andrew Inwood, founder and principal of CoreData, said, “Despite high levels of business confidence, almost half the respondents (49%) think the Australian economy will stagnate this year. One in three (33%) expect the domestic economy will contract, while just 18% think it will expand. BF

Australia is the world’s 10th most socially advanced nation according to a major new global index published by US-based nonprofit, the Social Progress Imperative, and released at the 2014 Skoll World Forum on Social Entrepreneurship. Australia finished behind top performing New Zealand and other countries including Canada and Norway, but finished ahead of Germany, the United States and France – according to the Social Progress Index 2014 which ranks 132 countries based on their social and environmental performance. The Social Progress Index, created by a team led by Professor Michael E. Porter of Harvard Business School, is designed as a

complement to GDP and other economic indicators to provide a more holistic understanding of countries’ overall performance. The full, interactive dataset from the Index is be available at http://www.socialprogressimperative.org/data/spi Measuring a country’s social progress outcomes the Index also identifies the areas in which Australia is under-performing compared to countries with a comparable GDP per capita. Australia under-performs on the measure of ‘Shelter’ (18th globally), thanks partly to the quality of its electricity supply, but scores well on ‘Personal Rights’ (2nd globally) and well on the measure of ‘Health and Wellness’ (5th), behind Japan (1st) and Italy (2nd), but ahead of the UK (37th), the United States (70th) and Canada (13th). This is thanks partly to a high life expectancy–on average Australians will live to almost 82 years old (the 6th highest country for life expectancy globally). Professor Michael E. Porter said: “Until now, the assumption has been that there is a direct relationship between economic growth and wellbeing. However, the Social Progress Index finds that all economic growth is not equal. While higher GDP per capita is correlated with social progress, the connection is far from automatic. For similar levels of GDP, we find that some countries achieve much higher levels of social progress than others.” BF

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NEWS | BF

Are you sure you’re ready to communicate?

‘Think before you open your mouth’ is excellent all-round advice for most people. It’s also particularly salient for marketers, because brands are constantly communicating in a multitude of ways. And if you’re not communication ready, your business can be affected. There are numerous cautionary tales out there – horror stories for any CEO or marketer - of brands that spectacularly communicated the wrong message. Like when KFC launched in China using the global line ‘finger licking good’, which was translated as ‘eat your fingers off ’. Not so tasty after all. While ‘lost in translation’ marketing examples abound, the general principle of being communication ready applies to every brand, every day and in every way. Add to that the democratising nature of social media that increasingly provides consumers with a powerful voice, and you have a fluid situation awash with potential sharks. www.businessfirstmagazine.com.au

Put simply: before you start communicating, the strategic foundations need to be firmly in place. That way you can mitigate the risks, capitalise on the opportunities and reap the rewards. So why aren’t more businesses ensuring their brands are communication ready? Emily Medizaday, Strategy Consulting Manager at T20 Consulting, explains that “many businesses undertake some form of strategic planning but there are pitfalls. The final recommendations may be sound in theory, but they can be impractical, or at worst, impossible to implement.” But help is at hand with T20 Consulting’s Communication Ready Workshops. T20 Consulting has extensive experience assisting a range of Australian businesses to become communication ready. In Emily’s words, “Our Communication Ready Workshops bring together key stakeholders to achieve alignment, strategic focus and to formulate straightforward

recommendations that can be readily and successfully implemented. And, importantly, we understand the holistic business implications.” Many businesses are undertaking Communication Ready Workshops according to Emily: “We’ve worked with health services, wealth management, real estate, online ventures, not-for-profits, home furnishings and design, B2B and are currently midstream on a very exciting strategic project with an ASX listed company. “It takes discipline and focus to become communication ready; it also takes an equal amount of discipline to stay the course and implement the recommendations. But the results achieved through our Communication Ready Workshops, from both a marketing and business perspective, are well worth it.” For more information about T20 Consulting’s Communication Workshops, contact Emily Medizaday: emilym@T20Group.com.au. BF

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BF | FEATURE

INDIA’S ENGINE OF INNOVATION

10 BUSINESSFIRST MAGAZINE

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FEATURE | BF

As India strives to become the next big innovation hub, it faces challenges ranging from bewildering regulations to educational shortcomings and inadequate infrastructure. But the country’s indomitable entrepreneurial spirit may well overcome the hurdles.

irmalya Kumar is an internationally known authority on doing business in India, and professor of marketing at the London Business School. “The thought that there are not enough people in India may sound strange for a country whose population is more than 1 billion,” Nirmalya Kumar says. “But when you are doing R&D and product development work, you need scientists, you need engineers, you need Ph.D.s – and in India these people are in a very small group. The country has been unable to ramp up its educational infrastructure so as to get enough of them in the pipeline.” Kumar, originally from Calcutta, is a professor of marketing at the London Business School, the author of six books and an internationally known authority on doing business in India. He sees both strengths and weaknesses in India’s efforts to become a global innovation hub. India has succeeded brilliantly in the past 20 years in breaking up operations that formerly had to be done in the same place, he says. Indians figured out how parts of tasks could be done in India, taking advantage of low costs and high expertise, and then reintegrated. For example, he says, “You may need to cook your hamburger in New York, but your table reservation can be made through India, and your bill processed in Bengaluru.” When it comes to innovation, India is taking advantage of a similar partition of labor. “In the old days,” Kumar says, “global innovation always took place in the developed world, where the company headquarters were located, such as in the UK, the US or Europe. Today, global companies typically divide the development of a major project into distinct pieces. One part might be

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given to China to develop, another part to India. For the Boeing 787 Dreamliner, the technology for landing in zero visibility was designed in India.” This approach has been a boon for India, where innovation centers in the past typically focused on creating products for the Indian market. These days, India boasts 750 R&D and innovation centers where designers and engineers are working on global projects.

‘

India boasts 750 R&D and innovation centres where designers and engineers are working on global projects.’

“That’s a big change,” Kumar says. Historically, India has displayed great energy for commercial ventures, despite many roadblocks. “India has always been a highly entrepreneurial nation,” Kumar says. “Indians are naturally inclined to start businesses.” Under the British Raj, however, Indians faced oppressive restrictions on owning their own businesses. While independence in 1947 lifted some of them, India was left with such a rigidly controlled economy that many of its entrepreneurs chose to go abroad. Eventually, Kumar says, “practically every motel in the US and every little

mom-and-pop store in the UK was owned by Indians.” Today, while India has seen a remarkable economic rise, many hurdles remain before it can become a top world centre for innovation. For one thing, Kumar says, “there are too many regulations. In some states, it can take as long as 180 days to register a company. That’s unacceptable.” Other challenges include poverty, educational deficits, and infrastructure shortages. Kumar spent his childhood in Calcutta free from the distractions of TV and telephone. “I was a voracious reader,” he says. “I read anything that came into the house, including the paper wrappers that the vegetables came in.” When he was 15, he picked up his father’s copy of Philip Kotler’s classic textbook Marketing Management. “I loved this book, and from that moment on, I wanted to do something in marketing.” Ultimately, Kumar moved to the US for a decade, writing his Ph.D. with Kotler himself at Northwestern University in Chicago. “It was a dream come true for me.” Kumar has gone on to write three books on marketing and two on doing business in India. His newly published sixth book, Brand Breakout: How Emerging Market Brands Will Go Global, combines both of his main themes. “Why is it that all the brands we know come from the developed world?” he asks. “My book shows eight different pathways that emerging market brands can follow to take their brands global.” What makes Kumar tick? “I have very clear objectives, and I’m driven to achieve them,” he explains. In this, perhaps he serves as a role model for India itself. BF

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BF | INNOVATION

Innovate or stagnate:

leveraging structural change for career development “Innovate or stagnate” is a well-used phrase in business, and it’s fast becoming a pre-requisite for education institutions, and professionals, seeking to stay one step ahead of what employers want writes Professor Fred McDougall.

J Professor Fred McDougall is Vice-Chancellor and President, Torrens University Australia.

ust as companies big and small must adapt, evolve and embrace change to remain relevant, higher education institutions need to be equally agile. For professionals, the story is no different: being able to adapt and respond to change is key. The number of Australian industries undergoing a period of major economic and structural change is growing. While the media and manufacturing sectors have been in transition for some time, we can now add mining, education and aviation to the list of sectors with an ever-increasing emphasis on structural change and managing financial risk. And while CEOs, unions and government are attempting to work their way through the changing corporate landscape, the workforce is understandably anxious and talk of restructure and redundancies has many professionals taking action to secure their employment prospects for the future. In the wake of job losses at a number of companies - Qantas, GM Holden, Sensis and Toyota to highlight a few interest in further study is anticipated to grow exponentially. In fact, there’s a well-documented precedent of a spike in demand for postgraduate study during, or immediately following, periods of economic uncertainty, as during the Global Financial Crisis (GFC). Data from IBISWorld substantiates that online education enrolments rose during the GFC as many deferred entry into the labour market, some took up study post-redundancy and others in the workforce sought to upgrade their qualifications in a weaker jobs market. And while the current climate is of a different scale, it’s likely the increasing level of structural change across multiple Australian industry sectors will

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act as a driver for postgraduate study as professionals seek to ‘upskill’ or ‘reskill’ – whether to gain a competitive advantage in the job market or to shore up their current employment by adding value through enhanced expertise in areas such as decision-making, strategic planning, entrepreneurship, sustainability and conducting business in the Asia Pacific market. The number of people completing a postgraduate degree has almost doubled in the past decade, with more than 90 per cent of postgraduates in full-time employment soon after graduation. Career progression within the same industry isn’t the only reason motivating postgraduate study. In an era where the ‘jobs for life’ concept has been confined to the history books many more are pursuing postgraduate qualifications – and knowledge – to give impetus to a change in career path or industry altogether. Although it’s certainly only one of the motivating factors, there’s no ignoring the financial benefits of postgraduate study, with postgraduate salaries higher than equivalent salaries for Bachelor degree graduates in every employment sector and postgraduate median salaries rising year on year, with a seven per cent jump between 2010 and 2012 alone. Research shows full-time employees with postgraduate qualifications earn a median annual salary of $85,000, compared with $66,000 for fulltime Bachelor degree graduates with management and commerce qualified postgraduate males earning the highest median salary of $108,300, compared with $92,300 for women in the same field. As for how all of this additional education is taking place – the answer is often online.

The rapid expansion of online postgraduate opportunities is attracting a diverse mix of students to further education, and geography is no longer a barrier to selecting the postgraduate program most suited to an individual’s passion, goals and budget. Interestingly, a 2014 Financial Times ranking of global online MBA programs found that those studying primarily online were doing so to fine tune their management and leadership skills and expand business networks rather than being purely financially motivated – although chasing a promotion was still a relevant factor in opting to choose an advanced business program. Just as students – and big business - are augmenting their offering and reassessing their structure to add value, savvy higher education institutions are doing the same. As part of the global Laureate International Universities network, Torrens is perfectly positioned to take advantage of this growth and to forge strong links with Asian business, communities and governments. Laureate institutions are well versed in the internationalisation of experiences, curricula and creating vibrant communities between both domestic, foreign, on-campus and online students. In an increasingly borderless marketplace, competition for students is intensifying, and while Australian universities are widely regarded as staying abreast of global market trends in education, we need to up the ante. The vast amount of knowledge now available online – and easy access to it – is revolutionising the role of universities as custodians of higher education. New universities, such as Torrens, have the agility and ability to meet market demand as defined by industry partnerships cultivated to help shape programs www.businessfirstmagazine.com.au

EXECUTIVE INNOVATION ANALYSIS | BF

that will equally benefit domestic students and attract international students from across the Asia-Pacific region. Socalled ‘traditional’ established universities are often unable to move as quickly due to their size and structure. At Torrens, we’re maximising the advantages inherent in our status as a new university that is part of the larger global network to constantly review and adapt our programs – with input from local industry experts – to quickly respond to market demand, which is why courses across our postgraduate programs have an international dimension wherever possible. Materials are selected to highlight contextual and institutional differences with elective courses such as Competing in a Global Marketplace and Managing Businesses in the Asia-Pacific region, as well as a capstone course in sustainable business strategies, specifically designed to address the challenges of managing staff and an organisation in a global context. As the University grows, we’ll continue to review current and forecast industry trends to mould our programs, and add new ones, geared towards preparing students for the jobs – and skills – of the future. Just as digital technology has transformed the media, retail and other industries, education is taking its turn. And while physical campuses will always remain, the way education is both www.businessfirstmagazine.com.au

delivered and accessed is changing – and that change will continue well beyond the current period of corporate restructure. Through our commitment to handson small classes, using state-of-the-art technology to leverage our international resources, and making intelligent use of digital media assets to connect students with expert mentors both domestically and from throughout the Laureate global network; Torrens is demonstrating our commitment to staying ahead of the curve and capitalising on change to benefit our students. As global mobility increases, not just for students but for academics and universities as brands, opportunities to access broader student and teaching talent will expand. Global partnerships will flourish and industry relationships will need to be deep and deliver measurable results. Superficial work placements won’t deliver the authentic understanding and experience students need, and today’s students are savvy enough to demand more, and rightly so. Education is a business, but it also needs to work with business to differentiate programs, support research and reinforce our role as originators and drivers of innovation. At Torrens, we’re preparing our students to reconfigure themselves to adapt to – and succeed – in rapidly changing markets both in Australia and abroad.

Change is not a passing phase, it’s an evolving state, and those professionals (and organisations) with the skills and confidence to embrace it, and turn it to their advantage, will rise to the top. Torrens University Australia is currently extending 30 per cent scholarships to all accepted online MBA*, Global Project Management, Education and Public Health postgraduate students who commence study in May 2014. *Scholarships are also applicable to on-campus and hybrid MBA applicants. To apply, visit www.tua.com.au BF As Australia’s 40th comprehensive University, Torrens University Australia aims to deliver an innovative environment for learning, scholarship and research that is culturally diverse and career-oriented with a global perspective. Torrens is a part of Laureate International Universities, a leading international network of over 75 innovative higher education institutions – teaching more than 800.000 students in 30 countries and online. Professor McDougall was Deputy Vice-Chancellor and Vice-President (Academic) at the University of Adelaide, an appointment he held from 2005 until 2011. Previously he was the Foundation Professor of Management at the University, an appointment he has held since 1987, and Executive Dean of the Faculty of the Professions.

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COVER STORY| BF

A CHIP OFF

THE OLD BLOCK Con Makris began his career working seven days a week in a South Australian foundry. Today he is worth an estimated $980million and is a property development mogul. He spoke with Bob Forshaw about coming to Australia with nothing to lose but the shirt off his back and how his work ethic has formed his success.

on Makris is a brave man. There are few 16-year-olds who would leave their country of birth to find a better life elsewhere. Most teenagers migrate with their parents and usually have no say where they go. But the Makris family was different. Con’s parents wanted him to make his own way and escape the depression that was engulfing parts of Europe, including his home country Greece. It was the right decision for Con and the Makris family. Not least because he could find a better life, but there was also the shadow of national service looming. “I was still in my teens, only 16-years-old and it was a decision made by my parents to emigrate, not just me. The other defining issue was that Greece had compulsory military service which was for a period of four years. Many young men left their families for abroad as a consequence of this policy. The scars of World War 11 were still very real.

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Con’s first priority was to find a job, work a couple of years, make some money and then return to Greece. “I think that was the idea of every other person coming to Australia. The years pass however. Before I knew it five years had elapsed, I had married, started a family so there was no choice but to make Australia my second home.” The first job in a foundry was the most difficult of his life. Dealing with molten steel in searing temperatures, seven days a week, 12 hours a day can make even the most youthful of men fatigued. He backed that up with a job in a fish shop – his own fish shop. It was the ultimate cliché as Con says “the Greek in the fish shop…” He worked hard, saved money and tried to take care of himself pay cheque by pay cheque. When he had accumulated enough money he bought the grocery store next to his fish shop. He then kept upgrading. This work ethic that allowed him

to continue to expand his business interests was instilled in him at the age of 12. “I was working for a lady who made garments for the wealthy establishment. I would bring small packets of fabrics to my employer, and she would decide whether or not to purchase 50 meters or 100 meters. I would then help her buy patterns for the garments. That’s where I cut my teeth in becoming an entrepreneur. Later, I started working in a delicatessen in Athens. Back then they didn’t have supermarkets as we know them today, but instead had super delis. In this environment I learned about service and the value of good customer relations. So when I moved to Australia, I was primed to put this raw retail grounding into practice. I was ready to work!” It was through his ownership of a group of chicken shops when Con’s entrepreneurial talents really came to the fore. He had sold roast chickens in his fish ‘n chips shop and was comple-

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The Oracle Gold Coast

Te Awa Hamilton, NZ

Chancery Auckland

Birkenhead Point Sydney

Jeremy Whelan (+64) 9 356 4791 jeremyw@ignitearchitects.com

www.ignitearchitects.com

Peter Harrison (+61) 2 9819 8600 peterh@ignitearchitects.com

COVER STORY| BF

mented about how tasty they were. So he opened a chicken shop in Hamilton Victoria, a wealthy area where he had fantastic trade. After a great deal of success, he opened another shop in Portland. Not before time, Con owned seven shops; this was the genesis of the Makris Empire! Eventually he had accumulated seven shops. Part of the success of those shops, other than flavorsome chicken, was Con’s ability to find a property hot spot and recognize its future development potential. “I would find a small property, buy the freehold, and then establish a chicken shop. I would then sell the business, retain the freehold property and receive rental income,” Con says. “This is how I was able to accumulate multiple assets. Con was now a property developer. He identified and purchased small shopping centers in Adelaide with development potential and transformed these modest centers into flourishing shopping precincts. The cycle of purchase and development, picking off modest or underperforming centers and applying a measured strategic development application still describes the fabric of the Makris Group today.

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He recognized that he was operating in an intensely competitive, global and constantly changing landscape, He was prepared to commit to negotiating change, and reinvent the shopping center business model, and seize opportunities as they present. He understood property development and he also understood the needs of the tenants, because he had been in that position himself. He is a relatable man, well liked and this trait goes beyond business skill. This trait can be the difference between success and failure. “Over the years I have been able to build a reputation which is synonymous with sound ethics, ethics which today are still the cornerstone of every decision my company makes. I demand this of all my employees. This trait is what drives tenants to follow me from one shopping center to another. The most important thing you’ve got to remember is that landlords should act as partners. My partners are my tenants and my bankers. My tenants have to work to pay the rent, and by paying the rent they enable me to pay my bank. That’s how it works. Everybody makes money this way. It’s that simple!” It wasn’t quick movement into

“

You can’t just see a property and think wow, I’m going to buy it, develop it and make money. You have to apply appropriate due diligence, do the sums, and then if everything points to a suitable yield, you invest. This business is not about aggressive accumulation, it’s about making smart play; that’s when you create wealth.”

The Makris Group are a pioneering national development group, constantly breaking new ground in the retail environment. It has been a privilege for Intro to provide specialist town planning advice to assist Con and his team deliver on their vision. Intro Design

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BF | COVER STORY

development and redevelopment, but that was certainly becoming Con’s core business. He knew he had to find someone with a strong finance and accounting background. Those skills were lacking, as his only formal education was a very limited time of public school enrolment in Greece. Colliers International are proud of their long-standing partnership with the Makris Group working across retail leasing, investment services, valuations, commercial and retail management teams. Con Makris’s refreshingly nononsense approach to property and his competitive spirit ensures all stakeholders on a project are constantly raising the bar to accelerate success.

Eventually he found a former banker to install as CO, who has now been with the company for almost ten years. However, in typical tenacity, tantamount with his early foray into retail, Con also taught himself about the complexities of banking, accounting and how to read the markets. “You can’t just see a property and think wow, I’m going to buy it, develop it and make money. You have to apply appropriate due diligence, do the sums, and then if everything points to a suitable yield, you invest. This business is not about aggressive accumulation, it’s about making smart play; that’s when you create wealth.” There is much more to development than buying and selling as we are learning here. The logistics of a shopping center also come into play. Con has studied this and knows how to design a shopping center. “You have to insure that the shopping center is aesthetically pleasing. You have to provide a range of services people need; parking has to be easily accessible and plentiful. The actual configuration of retail outlets is paramount to the success of the

center. For instance, the chemist and the newsagent need to be located near the entrances, from one end to the other because the shopper will use the services offered by these outlets. In applying this strategy you create increased foot traffic, an absolute must for any center to become a successful shopping destination.” The Makris Group has developed and continues to grow through Con’s ability to read an area and its demographics, his willingness to learn all there is about his business, to be astutely aware of his competition and to zealously apply that work ethic that was instilled in him during his early teens. All of those factors combined to help Con expand beyond the borders of South Australia. He had a zealous appetite to navigate different markets. “Adelaide is a lovely city to live in and raise a family, but the landscape to foster and encourage development is different to that of other cities such as Melbourne and Sydney. Some time ago I purchased a shopping center in Sydney. This shopping center had some ten vacant shops. Not to be discouraged, I saw an opportunity, as within

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â&#x20AC;&#x153;Con has a deep sense of vision and purpose, and he and his team have the commitment and stamina to drive the best possible result. There are always challenges along the way, but itâ&#x20AC;&#x2122;s great to have our design skills recognised as an important part of the process.â&#x20AC;? Peter Harrison, Director of IGNITE Architects

the tenancy mix there were what we call in the industry, best majors, those being Big W, Woolworths and Franklin Fresh. The supporting tenancies being specialty shops were not that appealing and in fact were impacting on the desired success of the center. The task on hand was simple, improve the quality and range of specialty shops and you improve the viability of the center. This is exactly what happened and the center became one of the best performers in the group. Families are important to Con; the families who tenant his shop space and his of course his own family members. His sons Ross and Jason both work in the business and are astute students of the game as was their father all those years ago. Despite having his sons in

Market leaders and retail experts At JLL, we understand that each shopping centre and client requires an individual approach. We tailor our services to suit key areas of focus that are specific to you. With a total retail area under management of over 220,000sqm across more than 35 shopping centres, it is one of the reasons JLL is the largest managing agent of retail assets in Queensland. Management enquiries: Jacqueline Kinloch (07) 3231 1326 jacqueline.kinloch@ap.jll.com Marina Mirage

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the business, everyone is aware that Con is still at the helm of the Makris Group ably supported by his CO, John Blunt. There is though, like every successful business, a carefully planned succession strategy in place. “I’ve seen other colleagues pass on the responsibility of running family companies to their children at a young age, but those children were not ready to embrace the rigors of business. They didn’t have the right work practices or ethics at that point in time. It is typical human nature for the younger generation to want to demonstrate to their parents that they can do it better. Emotions supersede logic and that is when bad judgment takes place, bad judgment which often leads to destroying a business that has taken years to establish. When the time is right, nothing will please me more than to see my sons take over the stewardship of the Makris Group. They will have the confidence required to further build the empire by knowing that their father will always be in the background as a mentor and sounding board when required. Somehow I think full retirement, whilst appealing is still some way away.” Con has achieved an enormous amount since he opened that original fish shop. His journey has taken him to share the stage with Steve Forbes and Prime Ministers to speak about business. He has been invited to Greece to address a national symposium comprising of government ministers, mayors of major Greek states, and influential business leaders. He has also won the prestigious Southern Australia Ernst & Young Entrepreneur of the Year Award. He is well recognized for his achievements, but there is no time to rest on laurels. Savills are proud to support the growth of the Makris Group portfolio, providing state of the art technology in property accounting, shopping centre management and leasing as well as construction management and project services. Rino Carpinelli, Managing Director – Savills SA

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The Makris Group has invested $120 million on the Gold Coast in the past year and intends to invest more. The Group has paid $65 million for the prestigious retail and office precinct below The Oracle twin towers at Broadbeach. Last April he paid $52 million for Marina Mirage, an exquisite center laced with shops selling international labels. He followed up by buying the Marina at the front of the centre from receivers for $7.1 million. Of the Oracle, Con told the Gold Coast Bulletin “It’s a great credit to developer Con Nikiforides — he’s done a magnificent job. It’s also a tremendous asset for the Gold Coast and has become a landmark. “People in Adelaide who visit the Gold Coast talk about The Oracle when they return.” Mr Makris said The Oracle had four vacant shops but that he already had tenants lined up for them. “People tend to acknowledge the Makris Group’s reputation as leaders in the retail business and therefore have confidence in leasing retail space”. “Soon there won’t be any Oracle vacancies; somehow we need to expand and provide additional retail space”. Not satisfied with two prestigious retail and office precincts plus a Marina

on the Gold Coast, Con is now looking at a fourth purchase, a significant landmark retail development which, if the sums add up, will become part of the Makris ever expanding stable. The Group is also looking to do something similar in Greece. Con has partnered with two successful persons, a Dubai businessman, who has form in Middle East marinas and also banker from Boston. Their aim is to transform Greek properties into landmark shopping precincts, mirroring those developed in Australia. Despite his willingness to semi-retire, Con isn’t slowing down yet. You almost get the impression he doesn’t know how. When he finds a good property, he wants to transform it. He does unwind occasionally aboard his luxury boat in Greece but he says, “I never leave my business for more than a month. That’s my secret. Even though I know everything is 100%, I can’t relax unless I return to make sure everything is okay.” Con Makris is a long way from the kid who came to Australia to put some cash in the bank and go home. He has not only made a life in Australia, but his business has transformed economies. And it is all down to work ethic and respect. Certainly a unique individual who is built for accomplishment and engineered for success. BF

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BF | BUSINESS

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BUSINESS | BF

EOFY 2014: AVOID LAST-MINUTE PAPERWORK BLUES If you’re a start-up or small business operator nervously counting down to the end of the financial year (EOFY), take action now to help you avoid last-minute paperwork blues writes Tim Reed.

I Tim Reed

is the CEO of MYOB.

f you spent the final hours of last June tackling piles of paperwork, reconciling receipts and clocking up rushed conversations with your accountant or bookkeeper – there’s a much better way to bring in the new financial year. Managing a business can take up the majority of your waking hours. It’s tempting to delay the not so exciting aspects, such as bookkeeping, until crunch time. Lack of preparation is one of the key reasons why many business owners and their loved ones dread the end of financial year. With a little forward planning, it’s possible to avoid the stress of negotiating piles of paperwork and usher in the new financial year with confidence and clarity. Here are five EOFY paperwork mistakes that businesses frequently make that can cause eleventh-hour blues, and how to avoid them.

1. Not keeping detailed documentation

A common mistake is being unprepared. If accounts and records aren’t reconciled and updated regularly throughout the year, this can make the end of financial year period much harder than it needs to be. Missing invoices and receipts can result in large gaps in reporting, as well as lost time spent tracking down misplaced paperwork. Using reputable accounting software you organise and track your financials, build a clearer picture of your financial circumstances, and helps keep you compliant, too. A daily feed of bank transactions, which comes straight into MYOB’s accounting solutions means keeping up to date with your accounts now takes a lot less time than in days gone by. Paperwork that’s well organised means fewer ongoing tax time tangles for you, your employees and your loved ones. It also frees up your time, so you can focus on growing your business and doing what you love. www.businessfirstmagazine.com.au

2. Inadequate planning and monitoring of cash flow

Businesses often fail to monitor incoming and outgoing cash flow within a set timeframe – such as a financial year or a quarter – and are left without vital funds to service their obligations. Generally, this is because they don’t have the data to monitor and track their ongoing, fixed and variable costs, and ad-hoc expenses. Before long, some businesses can find themselves starved for cash and facing serious financial difficulties. Together with advice from your professional accountant and/or bookkeeper, accounting software can help you better understand your business and manage cash flow in real-time. It will track your expenses, payroll, inventory, estimate GST owed and more, so you can clearly see how your business is going at any time. And if you use a cloud solution such as MYOB Essentials, your system is always up-to-date with your business bank balances thanks to your transactions being automatically fed in from your bank. 3. Not keeping up with changes to tax compliance

The end of financial year is also a time for businesses to prepare for the year ahead, which includes being aware of changes to tax compliance. The laws and regulations that apply to running a business change frequently so it’s important to ensure you’re up to date. Staying up to date with compliance changes can give business operators a head start on the new financial year. An accounting solution acts like a virtual assistant by automating many aspects of your financial management and lets you view your financial situation in-depth or at a glance. Stay in touch with your accountant, bookkeeper or financial advisor too. 4. Relying on just a head-in-thesand approach to accounting Some business operators aren’t cut

out for accounting. Regardless of automation, they’re better spending time working in and on the business than on the books. These businesses are best to work with a bookkeeper or accountant to get their books done for them. MYOB has a range of accredited partners available and ready to help. Many accountants can sign the business up for MYOB Essentials or MYOB BankLink, a service that sends the businesses bank transactions directly to the accountant, minimising the amount of paper records the business owner needs to provide. 5. Leaving tax paperwork until the last minute Some businesses don’t take a long-term approach to their tax, leaving them unable to forecast or make accurate, informed decisions about their business. These limitations can impact a business for years to come. Maintaining a close working relationship with your accountant, bookkeeper and/or financial planner, and using an accounting solution makes it easier to stay on top of tax and end-of-year financial requirements. Put away that shoebox, retire other time-consuming systems and start taking advantage of accounting software to streamline your processes, get better reporting and insights, and ensure you are compliant. It’s never too early to get organised so you can spend less time on paperwork. It means less stress for you, your employees and your loved ones, and more time for growing the business and enjoying life outside work Visit http://myob.com.au/EOFY for a summary of major tax changes, helpful tips, resources and more. BF Tim Reed is the chief executive officer of Australia’s largest business management solutions provider, MYOB. He develops and drives the business’ strategic development, including its expansion into online business management solutions.

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BF | TRUSTS

A Matter of Trust F

Andreas Costi

is Director of Sales and Relationship Management Australia and New Zealand for the Goal Group of Companies.

ew structures are as widely used but as little understood as trusts, especially when it comes to the potential tax consequences which can arise where they are misused. A trust is basically a structure which allows a person or company to hold an asset for the benefit of others. The person who controls the asset is the ‘trustee’ and those who benefit are the ‘beneficiaries’. The assets held in a trust can vary – property, shares, businesses and business premises are all commonly held in trust structures. The creator of the trust (the ‘settlor’) sets out the specific rules as to how these assets should be managed in a document called the trust deed. By putting assets in a trust, you don’t own the assets in your name. The assets are legally controlled by the trustee. However, you can potentially control exactly how those assets are managed now and in the future. You have the power to set out who receives the income arising from the assets and when they receive it, as well as who receives the underlying capital represented by the assets themselves and when. Discretionary Trusts (sometimes known as Family Trusts) are the most common type of trust used by business owners in Australia. They are generally created to hold a family’s assets and/ or business so as to protect those assets and to facilitate tax planning for family members. From a tax perspective, the main advantage is that any income generated by the trust from business activities and investments, including capital gains can be distributed to beneficiaries in lower tax brackets (often spouses or children). Because the trustees of the trust have the ‘discretion’ to distribute income and capital as they see fit – and no beneficiary has a fixed entitlement to receive anything – the trustees are able to ‘stream’ income in a tax effective way on a year to year basis. The downside is that to the extent that they don’t distribute the income of the trust, the trustees themselves are liable to tax

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TRUSTS | BF

on the undistributed income – and a rate of tax usually higher than the beneficiaries themselves would have to pay. Note also that there are limited circumstances when the trustee has to pay tax on behalf of certain beneficiaries, the most common ones being where beneficiaries are children under the age of 18 or people with certain disabilities. In most cases, from an asset protection perspective, assets held in a family trust cannot be attacked by creditors or lawsuits so they are ideal for protecting assets from business or personal disputes and they can also facilitate the transfer of assets from generation to generation tax free. The problem with trusts is that they have become – in the minds of the ATO at least – synonymous with tax avoidance, particularly where they are used by the highly wealthy. The perception has grown that trusts are increasingly being used to hide income altogether, to conceal the underlying ownership of assets and to facilitate transfers of funds tax free between family and business groups through mechanisms such as interest free loans. To combat this perceived tax risk, last year, the ATO announced the creation of a special Trusts Taskforce, given the job of looking into non-compliance amongst the millions of trust structures in place. Amongst the areas the taskforce will be looking at are the following: • trusts or their beneficiaries who have received substantial income and are not registered, or have not lodged tax returns or activity statements (meaning that in many cases, distributions of income from trusts have never been disclosed on a tax return) • trusts involving offshore dealings through tax havens • agreements with no commercial basis which direct income entitlements to a low-tax beneficiary (a spouse or child for example) while the benefits are enjoyed by others (a business owner or partner, for instance) • where there is an artificial characterisation of amounts, such that tax outcomes do not reflect the economic substance of what actually took place, with the result that some parties have received substantial benefits from a trust while the tax liabilities corresponding to that benefit have gone elsewhere – for example, by making trust resolutions www.businessfirstmagazine.com.au

that artificially reduce trust income in an attempt to direct minimal entitlements but full tax liability to entities with no capacity or intention of paying the tax • where there has been mischaracterisation of revenue activities to achieve concessional CGT treatment – for example, by using special purpose trusts to attempt to re-characterise mining or property development as discountable capital gains (a very common situation arises where profitable property disposals are claimed as capital to enjoy the 50% discount whilst loss making disposals are claimed as income to enjoy full benefit of the tax losses) • where changes have been made to trust deeds or other constitutional documents to achieve a tax planning benefit, and are not credibly explainable for any other reason • where transactions have excessively complex features or sham characteristics, such as round robin circulation of income among trusts (which basically means that income flows through a convoluted and hard to follow trail of entities before ending up back where it started, without a corresponding tax liability arising anywhere) • where new trust arrangements have materialised that involve taxpayers and/or tax scheme promoters who have histories of or connection to previous non-compliance – for example, people connected to liquidated entities that had unpaid tax debts. So, where does this leave you? Well, if you have substantial personal and/ or business assets and have never considered setting up a trust for the benefit of your family, there is plenty to be gained by talking to your tax adviser or lawyer about the pros and cons. If you already have a trust structure in place, now is probably the time to do some due diligence – look at what you’ve got, how you’ve used that structure and consider the motives behind your planning, talk to your advisers and get their sign-off that nothing you’ve done is likely to fall foul of the ATO. BF Andreas is responsible for the development and sales of Goal Group Ltd suite of products and services and the relationship management in Australia and New Zealand. www.goalgroup.com.au

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BF | COMMUNICATION

COST VERSUS PRODUCTIVITY the international communications challenge

Technology can assist businesses to reduce costs, improve productivity and reach new economic markets, but in an increasingly globalised world, many businesses are challenged to manage international communications simply and cost effectively. A research projectÂš commissioned by Truphone in February 2014, set about uncovering how Australian businesses are managing the international communications challenge writes Alex Blinko.

R Alex Blinko

is managing director of Truphone Australia.

esearch conducted by Truphone found that more than one in 10 employees in organisations surveyed had a mobile roaming bill higher than $5,000 from a single business trip abroad. Managing costs was by far the biggest challenge identified for Australian businesses with employees who travel overseas, with 40.1 per cent of respondents citing this as a major business issue. This puts organisations in a very difficult position. Managers are seeking to give staff the tools they need to ade-

26 BUSINESSFIRST MAGAZINE

quately communicate with stakeholders in overseas locations, as well as remain productive while away on international business trips. But given the high cost of international communications, many businesses are facing significant challenges in finding a solution. So how can Australian businesses better manage their international communications? The research revealed some interesting insights into how organisations are managing these challenges, and the implications on cost and productivity.

Maintaining connectivity

A key finding of the research was businesses with staff travelling internationally have a dependence on email as the primary method of staying connected. Of businesses surveyed, 63.3 per cent identified email as a key business tool for employees to communicate when travelling overseas. Close to half the respondents identified free Wi-Fi as a primary source of connectivity for business travellers, followed by use of current mobile providersâ&#x20AC;&#x2122; roaming services (39.9%). www.businessfirstmagazine.com.au

COMMUNICATION | BF

policy requiring employees to only use free Wi-Fi hotspots when working abroad. Similarly, 29.3 per cent of organisations surveyed use policies to limit employeesâ&#x20AC;&#x2122; use of their devices entirely. The impacts, whilst harder to measure are most felt from the travellers themselves. Respondents to the survey reported that they have lost important clients due to restricted mobile services, and that restricted communications with colleagues overseas have impacted decision-making and productivity. By contrast, more than a quarter (27 per cent) of respondents have no policies around the way staff use devices while abroad. Whilst accepting roaming charges as a cost of doing business, these businesses are still challenged with managing the costs, even though productivity is not hindered. Finding a solution

The same can be found for businesses with frequent international communications from Australia. Reliance on email for communications to overseas contacts is high, with 54 per cent of respondents using email to stay connected to contacts abroad. Cost the key concern

More than two in five respondents said cost had caused problems for their business. Of the businesses surveyed, almost a third (27.2 per cent) of their annual mobile spend is on international communications, with nearly one in five (17.7 per cent) spending more than 40 per cent. By comparison, the equivalent figure for US businesses shows only 11.4 per cent of US companies spend more than 40 per cent of their total annual mobile bill on international communication - according to research commissioned by Truphone and conducted by CCMI www.businessfirstmagazine.com.au

in October 2013, International Mobile Communications: How to Balance Connectivity, Productivity and Cost Concerns. With Australian businesses seeking to expand globally and conduct business abroad, the challenge is to balance the demand for connectivity with operational efficiency. One of the ways organisations are trying to address this is through policies to manage international communications. Balancing productivity concerns vs policy

To strike the right balance between managing the high cost of international communication and enabling employee productivity, Australian businesses are turning to policy in an attempt to find a solution. Over a third of respondents surveyed (35.4 per cent) have instigated an international communications

The need for simple, cost-effective international communications is paramount to the success of Australian businesses operating on a global scale. Key to this is providing businesses with an alternative that enables them to empower staff to communicate internationally, whilst maintaining control on costs. The research indicates thereâ&#x20AC;&#x2122;s an appetite across Australian businesses for an international mobile provider that provides international mobile services at local rates in multiple countries, with a focus on reliable connectivity and effective global customer support. And for those Australian businesses that do embrace new ways of communicating internationally, the benefits of increased productivity and reduced costs will propel their business forward globally. BF Alex Blinko is managing director, Truphone Australia. Reference: ÂšThe research was conducted by independent research firm CoreData in February 2014. Findings are based on responses from 300 individuals employed in Australian businesses across a variety of sectors. Results are based on small-to-medium-sized (40-199 employees) and large-sized (200+ employees) businesses.

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BF | PROFILE

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PROFILE | BF

Shining the light

Lawrence & Hanson Group has been in existence for 128 years. They have survived because they are able to adapt to changing times and technologies. CEO Robin Norris speaks with Bob Forshaw about the commitment to learning and innovation that keeps the company relevant.

ontinuous improvement has been the goal of L&H Group since its founding days in 1886. The message of success and one that current CEO Robin Norris is keen to put forward, is that success is due to a program of innovation and continuous improvement, coupled with a strong focus on quality. It is a culture of commitment to continuous improvement, and the pride they take in meeting customer needs. The philosophy of quality is steadfast and ingrained. According to Robin this is achieved in several different ways. “We have a long-term commitment to learning and have always had a strong commitment to people. This commitment has become more relevant today as we try to keep pace with what is happening in the sector, but we feel we can do this by focusing on the development of staff through learning programs that turn staff into leaders.” It’s the case of leadership versus

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management, which all organisations should focus on. For Robin, leadership is vitally important, as good management is the result of strong direction. Throughout the organisation employees are encouraged to learn and lead. They are encouraged to have strong values. “We don’t compromise on the values we have gone to business with,” Robin says. “We are definitive in what we will and won’t do and we stay true to those values. It’s a big part of how we communicate who we are to staff, suppliers and customers.” This can be challenging when the company’s expanse takes in 180 locations across Australia and over 1400 employees. However using a range of mediums – onsite and off – Robin is able to communicate to his people so that they are eager to take the journey the company is on. “We don’t want them to feel like they are being told what to do. We want

them to feel that they are part of the way forward with the organisation.” L&H pour a lot into its employees’ growth. As such the company joined the Australian Employment Covenant (AEC). The Australian Employment Covenant (AEC) is a private sector initiative aiming to secure 50,000 sustainable jobs for Indigenous Australians. “It is the right thing to do and a good opportunity to become involved and help the wider community. We felt being involved would have a positive impact on our business. It is a way to show staff that L&H is a good corporate citizen who wants to be involved in all the right things. “From a commercial point of view it provides us with opportunities to employ people in areas where it is difficult to find the right talent, particularly in remote areas where we need talented people.” What is does from an outsider’s point of view is show commitment to

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PROFILE | BF the growth of staff members and people in general. Indeed, as we mentioned before commitment is a cornerstone to this company’s success and it extends to clients and suppliers. L&H has not only built loyalty due to its longevity, but according to Robin the company has never taken its customers for granted. “We have always looked to bring business opportunities to our customers. These are businesses in their own right, small businesses, so we look for opportunities to help them grow which in turn helps us grow. We promise great service and that has been a focus in our business forever.” In a rapidly changing industry service and growth are key. To be able to provide that service, it means a company must continue to evolve and track industry changes. “Our focus has always been on trying to understand customers and the changing industry needs, so that we can solve their problems for them. We do this by taking solutions to them, not just product. We have always looked to add value to the customer. We have always looked to recognise new market

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opportunities and how we address those opportunities.” Out of this commitment have come specialist businesses within L&H to cater to evolving technologies and practices. These businesses include Auslec, which is committed to meeting the needs of industrial, electrical and safety specialists, L&H Solar + Solutions, Pacific Datacom (PDC), a specialist distributor of copper, fibre and wireless data products and materials, Specialised Lighting Solutions is a national leader in the sourcing and distribution of lighting and Smarter Clothing, which supplies corporate clothing, workwear and promotional clothing. The electrical industry has seen a great number of changes. “We have created businesses to cater to those markets such as data communications, solar and alternative energy. We are always keen to learn and keep our mind open,” Robin says. As suppliers bring new product to market, L&H remains keen to present that to customers. “We try to develop strong partner and supplier relationships that ensure we are getting their product to market quickly,” Robin says.

‘

We have been market leaders because we are always prepared to innovate and try something new. We have a strong culture built around our values and that drives our decision-making.’

Match Master a supplier and manufacturer of digital TV antenna systems for domestic and digital TV commercial applications and Nexans Olex, an Australian manufacturer of electrical cables are valued suppliers. Nexan has been partners with L&H for a long time and a strong relationship has developed over that time. Master has been a partner for a shorter amount of time; however what they both have

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See your business in a new light

See how Philips LED is helping businesses realise efficiencies philips.com.au/lighting

PROFILE | BF

in common is that they are innovative companies who share similar values. Philips Lighting and L&H Group have been partners for over 50 years . In the new world of LED and Energy Efficient solutions, Philips is a great fit in both the L&H and Specialised Lighting Solutions value proposition. Values create a bond, bonds turn into loyalty and this means that the organisation, the supplier and the customer are all in win-win situations. Which is great business practice. “We have been market leaders because we are always prepared to innovate and try something new. We have a strong culture built around our values and that drives our decision-making,” Robin says. Take for instance the solar movement. L&H viewed this as a market www.businessfirstmagazine.com.au

opportunity and acted accordingly. “We needed to provide a solution, not just componentry. So we developed the L&H solar solutions. These are not restricted to solar, but also to alternative energy such as wind. These are new market opportunities and there are dangers that the market may be flooded with inferior non-compliant imported product, however the L&H emphasis is to have a solution package that gives customers all they need including the comfort in knowing that the product supplied by L&H is fully compliant and regulated.” Despite some cowboy products entering the market, Robin feels the industry still has a bright future. “There will be challenges in understanding new commerce and e-commerce, but again this is an opportunity.

It is an alternative way to do business, but we are doing business with the same people.” Another element Robin is looking at to continue to evolve the company is the supply chain. “We need to improve our supply chain. It is one of the things that goes hand-in-glove with our e-commerce strategy. We want to bring safe product quicker to market and improve accessibility to that product. As an industry we have a responsibility to ensure that quality safe products are being brought to market.” Robin’s goal is in unison with that of L&H. It is to adapt to new trends and opportunities and to do that with talented people, so that everyone grows. That ability is what has made L&H a market leader for so long. BF

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BF | ASIA FOCUS

Australian Entrepreneurship in the Asian Century Asia is booming and there has never been a better time for Australian entrepreneurs to capitalise on the opportunities in the region.

T Jon Michail

is the founder and CEO of Image Group International.

imagegroup.com.au

he Prime Minister Tony Abbott recently told an ASEAN business forum that “trade means jobs” and his latest visit to the region, that included attending Australian Week in China, proved to be a success for the simple reason that there is extraordinary scope for Australia and Asian countries in general to mutually benefit from growing relationships. During the visit, Mr. Abbott and his political colleagues were joined by an unprecedented delegation of ministers, state premiers and heavy hitting billionaires James Packer, Kerry Stokes and Andrew “Twiggy” Forrest and more than 630 business people. They also toured Japan and South Korea; these two countries, plus China have a combined population of 1.5 billion, a GDP of $15 trillion and buy more than half of Australia’s exports. China is our biggest trading partner, followed by Japan and South Korea in fourth place. The opportunities exist not only in Asia but also in Australia; Australians by nature are world class in terms of aptitude and professionalism and are recognised as such in the region despite having an image of a informality.

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Although our entrepreneurial spirit can always get better, I believe we (entrepreneurs, government and NGOs) are all in an excellent position to leverage our formidable skills via services and products because of our location and better understanding of Asian cultures than European or American businesses. The Prime Minister recently echoed some of these sentiments when he said, “For Australia, the tyranny of distance has given way to the advantage of proximity.” Our overall appreciation of Asian cultures and multicultural diversity is already producing many great results – our experience the ground points to countless success stories, large and small, that have helped capitalise on this unprecedented growth. CAPITALISING IN AUSTRALIA, ASIA AND… THE WORLD! The Asian economic strength has helped the Australian real estate market rebound mostly because of the influx of Chinese immigrants and their money coming into the country. That has been good news for developers, builders, estate agents, banks

and others because it has among others things generated activity and created jobs. Other positive home grown stories include: Ruslan Kogan Founder and CEO of Kogan Technologies. Now 31, Kogan started eight years ago in his parents’ garage in Melbourne with little money, importing electrical goods from China rebranded to the Kogan brand. He is and now rated as one of Australia’s leading online retailers. According to BRW, Kogan is now valued at $315million, not bad for a kid from the suburbs. Janine Allis Founded Boost Juice in 2000 and now has a revenue of $200million plus. With 250 stores operating in 14 countries including Asia, the company’s future growth will come from expanding into the Asian region. Carolyn Creswell Founder of Carman’s Fine Foods who started a small business with $2000 and has now successfully launched it www.businessfirstmagazine.com.au

ASIA FOCUS | BF

internationally. Carolyn knows the company’s future growth prospects will be fuelled by exporting across the region. Ms. Creswell won the 2013 Telstra Business Woman of the Year Award in recognition of her entrepreneurial efforts. Alec Lynch Founder of crowd-sourcing site, Design Crowd, also started in his parents’ living room and is currently expanding globally, first buying a US company in 2012 and then moving into Asia. Matt Barrie Founder of Freelancer, the popular crowd-sourcing site with over $50million revenue and 4.3million users where talk of a public listing is on the agenda. Dr Sam Prince, 30 A medical doctor, entrepreneur, and philanthropist. He started the Mexican restaurant Zambrero Fresh Mex Grill at age 21 while he was at medical school, believing a market existed for healthy Mexican food. By 2009 there were 17 stores in Australia and the company had generated more than $13.7 million in revenue. Soon afterwards, Prince set up the Emagine Foundation, through which he’s built 15 schools in Sri Lanka and Vietnam and plans 100 more in the Asia-Pacific region by 2014. Prince is also chairman and founder of One Disease at a Time, set up in 2010 to work on eradicating scabies, a www.businessfirstmagazine.com.au

disease rife among Indigenous communities. His prodigious achievements saw him named as the 2012 Young Australian of the Year for the Australian Capital Territory. Prince is an entrepreneur with a social conscience and much heart. “Sam Prince does the work of 100 men, improving the lives of thousands through his innovative medical, business and aid projects,” stated GQ in naming him the 2011 Man of Chivalry in its annual Men of the Year list. George Calombaris As a judge on MasterChef Australia, George Calombaris has become one of the world’s best-known television chefs, with an audience numbering in the millions. His personal brand influence has added much to his fortunes and helped to re-ignite an industry that at times is difficult to succeed in. MasterChef Australia, which heads into its sixth season in 2014, is seen in approximately 50 countries worldwide, including Indonesia, India, Malaysia, Pakistan, Thailand, Singapore, Taiwan and Vietnam. Opportunities exist in numerous ways including sport The 2015 Asian Cup – now just a year away – not only offers a unique opportunity to engage neighbouring nations in a world-class festival of football, it could help Australia take a footing in the Asian Century itself. The Asian Football Confederation (AFC) Asian Cup in January 2015 will be the largest football event ever hosted on Australian shores. Staging

a marquee event for the 47 nations of the Confederation comes at a time when there is growing recognition of the potential to leverage football, and Australia’s membership of the AFC, to broaden and strengthen engagement in a region vital to Australia’s future prosperity. Asia’s extraordinary ascent, which has already changed the Australian economy, society and strategic environment, will continue to drive transformations and deliver opportunities for growth throughout the ‘Asian Century’. Leveraging the appeal of the world’s most popular sport to tap into Asian growth markets has already been put into practice. In 2011, for example, Australian footballer Joel Griffiths, then a star player in the Chinese domestic league, helped draw a crowd to a business breakfast in Beijing to facilitate trade engagement. The Australian Trade Commission (Austrade) has also staged trade promotion and business-networking events for the 2010 FIFA World Cup in South Africa and will do so again at the upcoming 2014 World Cup in Brazil. The 2015 AFC Asian Cup Local Organising Committee says that hosting Asia’s largest sporting event and festival of football brings a raft of exciting opportunities, as well as responsibilities. With a potential television reach of 2.5 billion people, they are acutely conscious of the stage for both national and destination image building that they have taken carriage of. The evidence points to Australia being the ideal location and the timing is right to capitalise on the boom of our Asian neighbours. BF

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BF | INVESTMENT

THE RISE AND RISE OF BITCOIN and Why You Should Avoid it Like the Plague

Some technophiles and investors are touring Bitcoin as being a revolution in currency and the way the world transacts, however we must be cautious when considering Bitcoin as an investment writes Blake Sterling.

Blake Sterling is an analyst with Wealth Within.

wealthwithin.com.au

n 2010, James Howells, an IT consultant from the UK quietly sat at his computer working whilst simultaneously enjoying his favourite cold beverage – a can of lemonade. We all know that liquid and PCs don’t mix and after an unfortunate fumble, James could only watch on in horror as most of the remaining contents of the can seeped into his now severely damaged PC. Frustratingly, the PC was toast. James’ next steps were to pull ‘old faithful’ apart, placing the hard drive into an already overflowing computer spare part drawer and sell the remaining usable parts online. Fast forward two years and whilst the PC incident had long been forgotten, James’ pile of spare computer parts had quickly grown. Fed up with tripping over the occasional keyboard and losing precious space to James’ hoard, his wife ordered an immediate clean out to rid them of all the spare parts that weren’t needed. With these demands, James

begrudgingly began the laborious task of throwing away most of his PC stash including the dusty hard drive from his old, lemonade soaked PC. James told reporters in November 2013 that he did have second thoughts about throwing the hard drive away, just before he placed it into his bin and saw it for the last time. However lamented he had no idea that the 7,500 bitcoins, worth approximately AUD $8 million, held on the hard drive, would ever be valued at more than the 20 pounds he spent to buy them. When surprisingly questioned on why he wasn’t down at the local tip, madly searching for what could only be described as a needle in a haystack James replied “Why aren’t I out there with a shovel now? Well, I think I’m just resigned to never being able to find it.” Welcome to the world of Bitcoin, a crypto-currency and the first of its kind to use highly complex mathemat-

ical algorithms to control its creation and transactions. A visit to the Bitcoin website (bitcoin.org) provides more detail on what Bitcoin actually is. Here’s a paragraph from the FAQ page on the website: “Bitcoin is a consensus network that enables a new payment system and a completely digital money. It is the first decentralised peer-to-peer payment network that is powered by its users with no central authority or middlemen. From a user perspective, Bitcoin is pretty much like cash for the Internet. Bitcoin can also be seen as the most prominent triple entry bookkeeping system in existence.” Confusing? Yes. But as the paragraph suggests, the best way to think about Bitcoin is ‘….like cash for the internet.’ Bitcoin is seen as the ‘bad boy’ of the currency world. An underground, virtual currency that is neither owned nor controlled by Government or official agency.

Market Price (USD) Source: blockchain.info

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INVESTMENT | BF This lack of regulation could also be pointed out as a major weakness. In recent months, several high profile Bitcoin ‘exchanges’ have either filed for bankruptcy or closed without warning amid hacking and theft scandals. Funds have been frozen and those holding Bitcoins with such exchanges have literally lost their holdings overnight. Japanese company Mt. Gox, once considered the world’s dominant Bitcoin exchange filed for bankruptcy in late February following a large scale hacking theft of 850,000 bitcoins – worth more than AUD $600 million at the time of writing. The company’s website is no longer active and several ‘Bitcoin traders’ have launched lawsuits against the company in the hope they can retrieve their money. The story behind the rise and fall and then rise again of Bitcoin is an interesting one. A developer by the name of Satoshi Nakamoto is credited as the forefather of the virtual currency, working on the concept in 2007. Mystery however surrounds Mr. Nakamoto as he has never publicly revealed himself and many believe the name Satoshi Nakamoto is simply a collective pseudonym for more than one person. By 2008 a patent for Bitcoin had been approved, the Bitcoin.org website was created and a white paper distributed online, by the mysterious Nakamoto character, touting the benefits of the virtual currency. Cited benefits include the lack of manipulation of Govern-

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ments and financial institutions and that transactions take place between two parties without a middleman i.e. Bank acting as a conduit to a transaction. Importantly the white paper reveals that a maximum of 21 million Bitcoin will be created across a time frame ending in 2040. In 2010, the first Bitcoin exchange is born – Bitcoin Market and the virtual currency is trading at under USD $1.00. By November 2013, Bitcoin is trading over $1000. In December that same year, following a number of high profile Bitcoin thefts and China’s Central Bank decision to ban Bitcoin transactions, the virtual currency plunges to just above $500. The currency certainly has had a wild ride over the last few years. Extreme price volatility is obviously a large component of its recent popularity and large fortunes have been made and lost within days (just ask James Howells). So the question begs - should you even bother trading Bitcoin? Bitcoin is essentially a commodity, exuding characteristics much like Gold. The algorithms behind the virtual currency mean there will only ever be a maximum of 21 million ‘coins’ in circulation and being a limited resource means it is immune to the effects of inflation. In addition Bitcoins have no fundamental or intrinsic value as the currency does not provide an income. Therefore, value is derived purely from the expectations of what the Bitcoin

community is willing to pay at a specific point in time. Whilst at face value this is not a bad thing. All commodity traders are only ever concerned with price direction and hoping they’re on the right side of a trend, the key downside to Bitcoin is the risk inherent with the virtual currency. As a trader, a significant part of my success is reliant on the management of risk and by the natural law of this process, minimising my risk at all times where possible. Bitcoin on the other hand is subject to a risk factor that other publicly traded markets and products have no concern – theft. Hackers are responsible for stealing millions of dollars worth of Bitcoin with little or no recourse on the side of the owner. A secondary issue for Bitcoin is liquidity. Without a satisfactory market size, the virtual currency will not only remain highly volatile but trading will be the pursuit of a limited number of individuals. Then there is also the question around technology. Systems currently in place for the trading and use of Bitcoin are obviously not up to scratch and highly susceptible to theft and other illegal activity as demonstrated by cases such as Mt. Gox in Japan. Whilst these risks remain and without proper regulation, most traders and investors will likely pass on Bitcoin (myself included) and I encourage you to do the same. BF

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BF | COACHING

CEOs: WHO DO THESE

LEADERS LEAN ON? Federico Re uncovers why CEOs need a professional Coach to successfully fulfil their demanding roles.

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COACHING | BF

T Federico Re

is an Entrepreneurial Coach and founder of

creativeentrepreneur. com.au

here is no doubt that in today’s competitive environment, rapidly changing markets, and shifting trends, that a CEO is under enormous pressure to make the right decisions, and perform at their best. A CEO is the decision-maker, the leader, the pioneer, the problem solver, the person people turn to for answers, as well as the person people blame if poor decisions are made within the organisation. It is therefore not surprising that we are witnessing a ‘CEO epidemic’, where 2 in 5 CEOs quit their jobs within the first 18 months of their appointment. This is fundamentally caused by their failure to secure long-term strategic partnerships with their subordinates and peers. Today’s executive leaders not only face scrutiny from the public, but also from their stakeholders, their executive team, and their employees. It often only takes one poor decision for the reputation of a CEO to overturn, and for their role to topple. Ego, self-confidence, and hubris are also common negative contributors or crippling factors that only accelerate their demise. So, who does the CEO lean on to receive help, guidance, and achieve the desired results? How does a CEO maintain his vision, his energy and passion, whilst staying calm and reassured during turbulent times? Who can he trust the most when the ‘going gets tough’? The CEO and his Coach

As with most popular sayings, there is much truth behind the quote: ‘Leaders are born, not made. But great leaders are made not born’.

‘

So, who does the CEO lean on to receive help, guidance, and achieve the desired results?’

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The real point here is that a great CEO is made with the help of an experienced coach, trainer, mentor, or the like. The relationship between the CEO and his confidante is based on mutual friendship, trust, openness, transparency, and objectivity, as well as maintaining a professional distance between them. Most great leaders of the modern age, like Barack Obama have a Coach; so why shouldn’t the CEO of any organisation have one too? Why CEOs Fail

CEOs experience failure or prematurely burnout for a number of core reasons. The primary factor is ego and self gratification. Companies need leaders who are honest, humble, reliable, passionate, and genuinely committed towards the welfare of its stakeholders. Successful leaders should be focused at making their people flourish, formerly acknowledging their efforts and work habits and building a positive intrapreneurial work culture. The other main reason is their leadership style is out of touch with modern times. Gone are the days where the boss makes all the decisions, and their subordinates follow strict directives. CEOs need to embrace the cultural evolution of today’s workplace environment and support the changing ethos and mindset of the modern day worker – the ‘Millennial’ employee. ‘Millennials’ need leaders who respect their ideals, encourage innovation, embrace change, new workplace technologies, a flexible lifestyle, and even philanthropy. Modern-day workers need to be heard, regularly acknowledged for their efforts, and rewarded more than ever before. Leadership Styles

The relationship between a CEO and their Executive Coach will be ultimately based on complete trust, transparency, honesty, authenticity, and objectivity. Top leaders need an advisor that will help them fulfil their extremely demanding role with more ease and confidence. A Coach will assist a CEO with various leadership methodologies and

styles that will best suit the individual and the particular culture of the organisation. These areas may include: 1. Leading from the heart versus leading from the head; 2. Interpersonal distance versus personal closeness; 3. Approachability versus tough mindedness; 4. Pragmatic and logical versus passionate and visionary; 5. Empowering and entrusting versus directive and assertive; 6. Pride and self-confidence versus humility and unpretentiousness; 7. Personal visibility and transparency versus private persona; 8. Entrepreneurially spirited versus conservative and risk averse. The Importance of a Coach

The value of a Coach is undeniably critical and highly pivotal for the success of a CEO of a progressive company. A caring but detached and brutally honest Coach, will offer open and constructive feedback and objective advice that will improve or eliminate the CEO’s blind-spot, as well as play a pivotal role in their personal growth and development. A Coach will enrich the CEO’s mindset, by instilling a surplus of energy, drive, and courage to successfully fulfil the challenging and multi-faceted tasks of his or her role; to see possibilities whilst others see limitations; to secure the interest and approval of their subordinates and other parties; and to inspire others with visions of what they can contribute. During turbulent times, the role of a Coach will be to provide an oasis of tranquillity and an environment where the CEO can openly express his or her fears, failures, and dreams. A professional Coach may therefore be the only trusted person a CEO can truly lean on during periods of uncertainty, vulnerability, and isolation. BF Federico Re is an Entrepreneurial Coach and founder of creativeentrepreneur. com.au. For nearly two decades, Federico has assisted an array of fast growing SMEs in Australia, focusing on entrepreneurial leadership and innovation.

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BF | PROFILE

Nigel Clark at Gordon Dam, Tasmania (Photo: Peter Matthew)

The Energy Specialist The energy sector is a fickle one, especially when you are in retail. Yet good leadership can create a market leader in a highly competitive and volatile field. Nigel Clark is a very good leader and in a short period of time has transformed Momentum Energy into one of the leading energy suppliers. Nigel speaks with Jonathan Jackson about creating a sustainable business, market fluctuations and staying ahead of the pack. 40 BUSINESSFIRST MAGAZINE

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PROFILE | BF

omentum is an apt name for a growing company that has been around for a short time. Nigel describes those early, fledgling days back in 2006 as crazy, fly-by-theseat-of-your-pants times. The established utilities may have considered Momentum Energy the cowboy in the pack, but sometimes there’s a synergy in madness that favours the brave. And Momentum was brave. Before we look at why Momentum has only taken a short time to become an established leader, let’s first take a quick look at its leader Nigel Clark, because Nigel’s background informs much of Momentum’s rapid rise. It is going to be hard to sum up Nigel’s career in a few medium-sized paragraphs. He knows finance and tax; he studied it all those years ago. He then practiced for short stints at Coopers and Lybrand and Ernst and Young, before moving into the real world of business with Alcoa of Australia. Alcoa Inc. is the world’s third largest producer of aluminum. I don’t know why but it seems to have an iconic place in Australia’s history, perhaps because of all the cans we kicked when we were kids. So when Nigel arrived in the 1980s, it was a great place to be. “Back then, Alcoa was a pretty vibrant company, they had a real focus on training, learning and development, so I was exposed to some really great quality leadership, training and experiences,” Nigel says. It was here that he was exposed to the World Leadership Forum run in Pittsburgh for up-and-coming managers within Alcoa Inc. There he learnt from and was exposed to senior leaders in the organisation through to the CEO of Alcoa and people from different cultures and countries. He travelled the world with the organisation working on a variety of assignments and projects. “I did a lot of efficiency audits, internal audits, and a range of things with regard to sharing best practice around the world. I got to go and do some work in the USA, South Korea, Brazil and Spain. So, those were all great opportunities. “That was one element for which Alcoa is very good — giving you exposure to leadership and experiential learning, but also a lot of emotional intelligence practices that really gave you an understanding of your own style, your team’s style and how you interrelate with people. That allows you to understand how you work as an individual and the impact you have on others.”

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“If you look at the roots of all of that, it really does goes back to some of the quality management principles, focusing on continuous process improvement and really using that as a mindset, so I was very lucky to come through and then be grounded in those principles. To this day, I still use many of those practices, techniques and tools to help people to think about continuous process improvement in Momentum.” Nigel held a lot of roles at Alcoa. Business Support and Planning Manager, Commercial Development Manager – WA Operations, Corporate Accounting and Planning Manager and Assistant Treasurer. He worked his way up to become Commercial Manager of Victorian Operations. These were diverse roles and he grabbed every opportunity as it came along. “I wasn’t shy in taking on new opportunities and testing myself in areas that were out of my comfort zone that led to growth as an individual. This is a valuable lesson for anybody I feel.” Nigel followed the same pattern when he joined TXU. His philosophy is that while the world evolves, people don’t change; the same principles of having respect for the individual, giving people opportunity and knowing what might motivate an individual or may not still apply. “Those basic principles of human understanding haven’t changed. So, you can adapt a lot of what you see and learn along the journey.” He learned about the resource sector with Alcoa and at TXU was primed to challenge himself through what he describes as a “fast-paced, integrated retail portfolio agenda”.

“The guys that I got to work with were probably some of the best in the industry as far as running a very active trading portfolio. My first 20 months at TXU were spent on the wholesale trading side, and that was a fantastic experience in a fast moving energy market that was continuing to become de-regulated.” The company was then twice sold. First to Singapore Power, which split the business and sold off the retail part to CLP, which went onto become TRUenergy and was subsequently renamed again to Energy Australia. In three and a half years his roles varied from wholesale strategy and analytics to retail strategy. Or from the dark side to the light side. While most in the industry only experience one or the other, the fact that Nigel had both held him in good stead when he moved to Momentum. And that’s when things became really interesting. He began with Momentum as a contractor in March 2006. The company was just over a year old; it was a start up that needed a jack-of-all-trades at a time when utilities were popping up everywhere and the market landscape was rapidly changing. When Nigel joined Momentum it was a private company with approximately 35 staff and in the fiscal year of ’06, revenue was just over ten million. A rocky period followed as they burned through cash to attract new customers and build a sustainable business. “In ’07, we just fought for our life. It’s an interesting story that most people don’t know. We had all this competition and new entrants coming into the market and then, if you remember, we

Momentum team at the 2013 Corporate Games

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hit the energy crisis and the seven years of drought started to take their effect. So, you had several hydro generation systems that had basically run out of water; in Tasmania, NSW and Victoria. You had several Queensland thermal power stations running out of water and the wholesale energy prices tripled, so they went from literally 50 dollars a megawatt hour to 150 dollars a megawatt hour. “So we’re a small private company with not very deep, capital pockets and the wholesale market tripled. We were staring down the barrel of putting out products that cost $150 and going out and trying to sell it for the equivalent of $50. The market was regulating people to make a loss, which was just obviously not a very sustainable picture, and a lot of market participants went into a conservation mode because of their AFSL license conditions. It was a very hairy time. Two retailers went bust. So we did a lot of nimble things very quickly that really preserved cash inside of the business and we survived.” All the skills Nigel had learned in his career came to bear during this period as he faced the energy crisis, then the GFC and ongoing regulation and deregulation. It is a market of constant change and not one for the faint hearted. So how was it navigated? “That’s a really good question. Regulatory-wise, it’s just been a nightmare. If you look at what energy rates are comprised of, more than half of any bill that we charge to customers is pass-through of numerous regulatory schemes and distribution costs that we have no control over. Many of these pass-through costs have experienced large increases in the last five years but it’s the retailer that is the ultimate bearer of bad news to the customer. “One of our real issues is that we’re challenged because, as an industry, we are wholly looked on as one and yet we as a company are trying to build a strong relationship with the customer while passing through all these costs that we have no control over. “So how do we go through it? I suppose one, is to be surrounded with smart people who are helping me scan the environment as to what’s going on. I have an excellent team at Momentum and access to great resources within the wider Hydro Tasmania group”. In September 2009 Hydro Tasmania, Australia’s largest producer of renewable energy, took full ownership of www.businessfirstmagazine.com.au

Momentum Energy. Hydro Tasmania has 100 years of experience in energy that has given Momentum an opportunity to offer a whole network of energy experts and consulting services to its customers. “Two, we try and participate through the likes of the ERAA (Energy Retailers Association of Australia) to try and influence government policy to achieve a sustainable and cost effective industry for consumers. Three, we partner with quality organisations that have grown with us in our journey and success. Partners that have been critical to the success of Momentum over a long period of time have been; The T20 Group led by Rod Curtis responsible for driving and assisting the development of our Branding and Marketing strategies and market execution “Back in 2002, Momentum Energy and Agility CIS were both new entrants in the Australian market looking to bring fresh and innovative products and services to Australian consumers. Since then both companies have experienced exceptional growth, with Momentum an established energy retailer and Agility CIS a leading global utility solution provider. Nigel is a leader that is continually looking into the future, analysing opportunities and anticipating trends. Nigel’s insight and ability to communicate is invaluable to Agility CIS”

Bastion EBA led by Jack Watts who have developed and executed our Market Sponsorship strategy and provision of brand activations Agility CIS led by Mike Thorne who have been since day one our billing system provider and key technology partner All of our partners are critical to the ongoing success of Momentum. They understand our business, our people and our culture to drive quality outcomes. They have had a large influence in shaping the brand and structures we have today. Lastly they are genuinely great people to work with. “But I think the way I ultimately navigate it is by focusing on the customer. At the end of the day, if you can keep your customers onboard and not suffer turnover that this industry’s renowned for, then you’re going to have a fighting chance to build a reputable brand and a solid customer base. It’s about trying to focus on the trends that are evolving and how you’re going to connect with your customers. It’s more than just selling the commodity. It’s about being an energy service provider and being in touch with your customers’ needs and building a frictionless experience for them when they deal with your organisation. Being Customer Centric as your core mode of operating is essential.” “When I came into the MD role, it was very much, “By 2020, what do we want to look like?” We have built and continue to build platforms that underpin the business. Having the right platforms, having the right energy services offering, having very strong

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insights about your customer base and using those insights to really shape your future direction will allow you to keep ahead of the curve.” Those are three pillars that Momentum focuses on. It’s a challenge, but Momentum is about having a culture and an organisation that is nimble enough to respond to continuous changes. They plot one to two to three year goals against the backdrop of the organisation’s culture. “It’s very much being able to adapt to change very quickly because some of the things imposed upon us, like the carbon repeal that is coming is an absolute leap. We went through months of indecision about whether the carbon scheme was going to come in. Now we’re going through all the indecision over whether the thing’s going to be repealed, so that is a case of something that is out of your control and yet has large impact on your business.” As part of the Hydro Tasmania group, one of the main tenets of the Momentum brand is clean energy: how to adopt, how to adapt and how to integrate newly emerging clean technologies including solar and battery storage. Those trends are now emerging in Europe and across the world as all have the same issue about fossil fuel versus renewable energy and the way forward to cleaner energy supplies. “As a group, we generate clean energy and we have a unique electricity product on the market that we call “Smile Power”, which is an independently verified product that is matched with the generation of clean energy. That is our lead product that we sell to small business and moms and dads and we’re very proud of that product and what we do for Australia through our Tasmanian based clean energy sources.” Clean energy is what sets Momentum apart from its competitors and one of the reasons their popularity has grown in such a short time. Another is their no door-knocking policy to residential homes which they adopted when they first started. This has built trust and confidence amongst consumers. And as we discussed at the beginning of this article, the strong leadership has also had an impact. Through Nigel’s leadership, everyone is on board with brand message. There are several key elements to this. One is that Momentum is clear about its brand principles. “We tell it very straight to the consumer so that there’s no miscommunication,” Nigel says. “We’re clear in our marketing of products and marketing around our brand principles and what we stand for as an organisation.” There is a lot of misunderstanding about our industry and we aim to make customer offers clear and transparent. “Secondly, how we get people swinging to the Momentum culture, if you like, is that we work very hard on the mojo of the company and building a very positive and active environment to take on the big guys. I push very hard an insurgent mentality where the small guys are taking on the big guys. So even though we’re a little bit bigger our self now, that’s

Choose the right solution from the start.

We love working with Momentum. They’re a challenger brand that is shaking-up a crowded category by being different for all the right reasons. We feel like we’re sharing a vision. All roped together, we’re climbing a Himalayan peak. T20

www.agilitycis.com Innovative and flexible data-to-cash solutions for electricity, gas, water, internet and telecommunication businesses. Auckland

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Houston

Dubai

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PROFILE | BF something that’s very ingrained in our culture. “ “Part of our culture is that we have fun and celebrate success. So, we rely very heavily on having a very positive culture in what is a very tough industry. We’re up against 20 retailers in Australia in a highly competitive low-margin industry. We have to be absolutely on our game and at the end of the day, that comes down to our people. Other companies say staff is their main asset, in our case that’s true. I work very hard with my team on building culture, creating career growth and opportunity for our people and celebrating our success. Our staff at Momentum is fantastic.” Nigel is well known for his progressive and achievement-oriented approach to running a business and this is evident in the way he runs Momentum. There are now 260 employees, a growing customer base and products to match. Momentum’s rise is no mean feat. There may have been a little luck, but Nigel’s encompassing expertise has allowed the company to avoid disaster, build an exceptional team around culture and continue to grow. BF

Momentum Sustainable Garden at Melbourne International Flower and Garden Show

We believe successful partnerships ignite evolution. We exist to make our clients heroes.

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BF | LEADERSHIP

Creating risk as strategic advantage C

Steven & Chustisa Bowman

are global business advisors.

omplexity and volatility in the business arena is higher than ever. Everything is changing. This brings about more powerful and diverse sources of risk. Though risk is inherent within all business opportunities, many leaders prefer to be risk averse. They view risk as a threat, and avoiding risk at all cost as the goal. They often feel distrustful and suspicious, not wanting to receive any kind of risk. Risk averse people dislike risk, and therefore will stay away from adding ventures to their business because of the perceived risk of that venture, and in turn will often miss out on new

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and different possibilities. When people are unwilling to receive change, theyâ&#x20AC;&#x2122;re more likely to avoid taking risks that would invite change. This always leads to missed opportunities. Risk aversion often generates professional complacency, squashed initiatives, promotes unthinking compliance and cultivates an unconscious organisation. Consequently, the organisation operates in a weak position and organisational accomplishments are hindered. One of the best predictors of an organisationâ&#x20AC;&#x2122;s health is how well the business executive and teams are

willing to receive risk and respond to changes. The staying power and longevity of organisations is always defined by their ability to take advantage of new and different possibilities that are presented. In most settings, a possible future event will present both risks and opportunities. The ability to deliver growth and performance in volatile business climates with confidence and clarity has become a business imperative in the wake of the financial crisis. In the current environment, you must develop the ability to consciously and effectively deal with uncertainty and risk. In order to thrive

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LEADERSHIP | BF in current economy, where creativity and innovation will be rewarded, you have to be able to take risk and to see it as a strategic advantage instead of something to avoid. You must be able to perceive and receive the changes, positive and negative, that may affect your organisation and the world. You must also trust in your ability to respond to these changes as consciously and skillfully as is required. What if risk was not a threat, but an opportunity?

Sadly, most people view risk and opportunity as opposites. They see risk as something bad and opportunity as something good. In our view this is an erroneous interpretation. Concentrating purely on seeing risk as negative and a threat will also constrain thinking about organisational strategies and objectives. You can’t have judgement about risk being a bad thing and seeing risk as a strategic advantage at the same time. Every judgement takes you out of awareness of ‘what else is possible?’ If you are constantly looking at what could go wrong there will be a natural tendency to set fairly conservative, low risk strategies. This may be entirely appropriate for organisations with a low risk appetite and an unadventurous attitude. Maintaining this point of view will inhibit thinking about those risks or situations that you may be able to exploit to exceed your targets or perceive new and different possibilities. Risk is inherent when you endeavour to do something new, and by definition attempting to generate new business calls for a new way of being. Please recognise that everything you’ve decided you can’t receive equals your inability to receive different possibilities. Great opportunities in business always come from occurrences and episodes that are happening now. You have all choices available when you are willing to receive risk. Obsession with security and predictability

The goal of most organisations has been to stamp out unpredictability and to avoid risk. In order to maintain predictability and security you have to become risk averse and it requires judgement to maintain this. Any time you judge something as negative or come to a conclusion about anything, nothing that doesn’t match your judgement or your conclusion can come into your awareness. Most people are unwilling to risk, because they don’t www.businessfirstmagazine.com.au

want to lose. So, what would it be like to no longer judge risk as negative and bad? What would it be like if risk was viewed as just another way of looking at potential opportunity and innovation? What if risk management was viewed as innovation? How you see risk often shapes your business strategies. You have to be willing to take advantage of risks to change your business. If you can’t see risk as opportunity or as a strategic advantage, you will never create a business that is more than what you currently have. Is that really what you want? You know you would like to have greater. You have to start looking at: “How do I take advantage of everything that I judge as risky?” Seeing risk as strategic advantage and an opportunity enabler can open your mind to the full range of different possibilities from future events. Break your pattern of thinking about risk

There is a completely different way of viewing things and a completely different way of managing risk. First, you must be willing to push beyond the points of view that constrain your thinking. You can break your pattern of thinking about risk by radically changing your definition of risk. It starts with recognizing that risk can be an opportunity. In fact, the formal definition of risk found in nearly all international standards on risk, states that “Risk is anything that impacts on an organisations ability to achieve it’s strategic goals”. So, instead of judging risk as bad, you may wish to start asking, “What is the strategic advantage or opportunity with this ‘risk’?” By asking this question, you invite the awareness of a different possibility. Asking this question also can alter your perception of risks and possibility, and may help you to let go of your negative points of view that will never create innovation or growth. From this space you can actually thrive and find joy in working with all the chaos that surrounds the current business environment. What would it be like if you were to have a level of awareness that was beyond anything you ever thought possible? This is what begins when you are willing to see risk as strategic advantage. The key is, when thinking about risk and undertaking risk management activities, think about whether there could be a strategic advantage as well as a negative consequence from a future

event. If there is, consider controls or strategies that might enable the organisation to capitalise on such situations should they arise as well as strategies or controls to minimise potential harmful outcomes. The ability to see both the potential opportunities and threats of risks will help organisations to be better prepared and confidently make better decisions. When you start to have a judgement about the risk, you will often start to limit what you can have or generate for your business. Instead, ask the question: “What can I do to use the management of this risk to my advantage?”

‘

Risk is always present; its presence is a fact of nature.’

Learn from nature

Risk is always present; its presence is a fact of nature. Risk presents both challenges and new possibilities. In the natural arena, floods and forest fires can be seen as terrible events, since they often spawn devastation in their wake. Floods generally engulf the landscape with water, but they also spread vital nutrients. For plants, the sludge that is occurring on the landscape after the flood is a strategic advantage. They take advantage of the natural fertilizer to grow and flourish. In the case of forest fire destruction, pine trees and other species have used these calamities for their own benefit. After forest fires, pine trees often flourish instead of perish. Fires generate new spaces that allow prepared pinecones to quickly take advantage of the space. What if you were willing to position yourself to take advantage of major risks, and viewed all risk as potential opportunity? Accepting that risk is always present is the first step toward managing risks to take advantage of the opportunities and reduce the effects of the harmful consequences. Take a few moments to see what it would feel like to view risk as a strategic advantage. And what that might open up in your business. What might that generate as a possibility? When you are able to see risk as a strategic advantage, you start to create choice in your business. You don’t have choice otherwise. BF

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BF | LEADERSHIP

THE LANGUAGE OF LEADERSHIP AND BUILDING A MOVEMENT I Petar Lackovic is CEO with The Entourage.

like to treat leadership like a language…if you wanted to learn Spanish, would you learn more from a 12 month Spanish course at a language college or by living in Spain for one month? Arguably you would say by living in Spain…Why? Because you are surrounded by the language 24/7, to maximise your experience or to even get by you are speaking and hearing it everyday, not just a few times a week… you are working on your Spanish 24/7 whether you realise it or not when you are surrounded by it. To become the best Leader possible, you must speak the Leadership Language 24/7, be conscious and implement leadership strategies on a daily basis and only then you will find yourself fluent in Leadership. So ask yourself, am I improving my standing as leader each and everyday? There are many facets of Leaderships that have been and will continue to be covered over time, however the one facet that has always intrigued me and the one that the most effective leaders of our generation possess, is the innate ability and artistry to use their Leadership skills to create a movement: A movement with both the brand they represent and a movement within the organisation itself. Throughout history, the nucleus of the most powerful movements is often a Mandela, Mother Theresa or Ghandi type figure or in business a Nooyi, Branson or Welch type figure and one thing they all had in common is the ability to create a group of people with a common ideology. When we talk Leadership, I believe it’s the leaders that can create a group of people with a common ideology, that will blow their competitors apart

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and catapult their business and people to new heights they could hardly imagine on their own…this is the type of leader to aspire to. To live and breathe, this day in day out, would be to treat Leadership as a Language. Here are four leadership language lessons to enable you as a leader to build the most powerful movement possible. 1. Purpose of Communication Maybe because it’s simple and easy but too often we communicate ‘What’ it is we want people to follow, yet the what merely reinforces the logical components of the direction as opposed to the vision. Simon Sinek and his ‘golden circle’ place emphasis on the ‘WHY’ because “it’s often the complete opposite to everyone else. People don’t buy into what you do but they buy into Why you do it. The Why creates belief and people believe what you believe. If you communicate about what you believe, you’ll attract those who believe what you believe. Sinek goes on to say that “The WHAT is merely the proof behind what you believe”, so please remember that people don’t buy into what you do, they buy into WHY you do it.” Here is another way to look at it… You can choose to communicate three key areas: 1. The What. 2. The Outcome of the What, or 3. The Effects of The Outcomes. The effects of the Outcomes resonate deeper with people and reverberate on a more emotional level that aligns with purpose. 2. Guts As a Leader we are often looking into

new horizons, seeing and looking for what others don’t, venturing where others wouldn’t dare and tinkering with a universe that doesn’t yet exist. For this reason the Leader needs to have the ‘Guts’ to stand alone and even look ridiculous in the eyes of others. Nelson Mandela had the guts to stand firm, follow through and face the repercussions of his actions and beliefs so as to lead the way. 3. Be Easy to Follow So many times the road ahead can seem complex, challenging, even risky at first sight…all leading to visions that could create doubt and uncertainty in your team. Be easy to follow by making the complex seem simple, the challenging seem rewarding the risky seem exciting and communicate as such. www.businessfirstmagazine.com.au

LEADERSHIP PROFILE | BF

‘

Remember that Leadership is a language and the more you speak it, the more natural it will become. What you do have to remember is, that it is a universal language that the whole world is craving to speak.’

Master the art of being able to break down the unimaginable, into manageable steps/actions and rehearse clearly articulating this. 4. Focus It’s the early adapters or the first followers that everyone often follows. and a clever leader will have a complete focus on embracing these early adapters or the first followers. Focus on embracing the early adapters or first followers as equals, this way it’s not only about the leader anymore but about them, the plural. It does take guts to be the first follower and it’s the early adapter or first follower that transforms the leader with the new, complex, challenging or risky idea into a leader and visionary. Remember, there is no movement without the early adapters or first followers. www.businessfirstmagazine.com.au

It could be said that the early adapter or the first follower is actually a form of leadership in itself as they may brave ridicule and this takes guts...so edifying them will create a security and belonging for others to buy in quicker to the movement. (This is something Steve Jobs and Apple did very well, which is why you would see hundreds waiting in line before an Apple store opens to buy the new version of the iphone/ ipad etc.) Creating a movement as a leader is no easy feat which is why so few succeed, yet it it the real testament of a great leader. On results alone, one of the greatest leaders of our time Jack Welch says it best…” “Giving people self-confidence is by far the most important thing that I can

do. Because then they will act.” Remember that Leadership is a language and the more you speak it, the more natural it will become. What you do have to remember is, that it is a universal language that the whole world is craving to speak.” I’ll leave you with one more Welch bomb... “Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion.” BF Petar Lackovic is a highly sought after international speaker, coach and business adviser, who specialises in implementing successful strategies that produce consistent world class results. He is also the CEO of leading entrepreneur education facility, The Entourage. the-entourage.com.au

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BF | TROUBLESHOOTING

Five IT scenarios that can wreak havoc Whether on holiday, working from home or on-the-go, an IT professional’s work is rarely ever done. With so many IT Pros looking to enjoy the opportunity of an extended holiday with the Easter and ANZAC Day Long weekends, SolarWinds (NYSE: SWI), a leading provider of powerful and affordable IT management software, has outlined five of the top IT challenges an IT pro may encounter when working remotely and offers practical tips for a real-time resolution.

1. End user has locked their Active Directory account This scenario plays out every day in organisations across the globe and it’s an easy one to manage if you are in the office or at least at home near your computer. However, when an IT pro is enjoying some family time at the local park, this can be a tough one to manage. With the proper remote support tools, this issue is an easy one to fix no matter where they are. 2. End user needs help using a business-critical application All IT pros receive requests for training disguised as support tickets. It’s not uncommon for a Sys Admin or Help Desk Tech to spend a good portion of their day on activities that would be better categorized as training rather than support. Imagine a scenario in which an end user’s inability to perform a simple task in a CRM solution is slowing sales. It’s an easy one to manage while an IT pro is in the office, but when they’re on holidays it can mean training by phone with no visual clues as to what the end user is doing. 3. Email server goes offline An email server going offline is a serious situation that can be greatly complicated when an IT pro is away from the computer. Being alerted to this problem is hard enough since so many alerting systems rely on email systems to relay alerts, but troubleshooting the issue while away from a computer is next to impossible without the right systems in place.

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TROUBLESHOOTING | BF

4. Lost files or folders This is another common scenario that is easy to resolve while in the office, but can be tricky while away. Imagine one of the organization’s C-suite executives lost track of an important file just before an analyst call. With the right remote administration tool, it’s a situation that can be swiftly addressed and make an IT pro look like a hero... even when relaxing by a pool. 5. Your entire IT team is Out of the Office If the IT staff happens to be simultaneously out of the office, let the help desk software be the wingman. Balance the load according to skill sets when IT staffers are on holidays or away at a conference to ensure that the right

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person is assigned to work on appropriate tickets to minimize downtime, maintain end user satisfaction and to avoid any (unnecessary) holiday interruptions. When choosing help

desk software for an organization, look for one that’s capable of setting up forwarding rules to get tickets to the right resources based on the type of work expected. BF

Best Practices for Managing your IT Remotely this Easter • A dreaded part of any IT pro’s holiday is the alert, email or phone call from the office that an IT emergency has occurred. An IT pro can make the most of his hard-earned personal time by considering a few Remote IT Management best practices: • Have a strong foundation to continuously monitor and manage activity at all times, including new applications, servers and network devices that may be added while IT staff are away.

• Assign and define rules for automated help desk ticket routing. • Establish a notification and prioritizing system, including SMS-enabled alerting to receive messages directly to a mobile device. • Invest in IT management tools that provide access and a means to manage systems remotely from a mobile device, including sharing the end user’s screen, remote desktop support and troubleshooting.

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BF | PROFILE

BREAKING WITH TRADITION Late in 2013, Alloys under the direction of CEO Paul Harman, expanded operations across the country. It was a move designed to reinforce the company’s position as Australia’s leading specialist distributor. Paul speaks with Jonathan Jackson about expansion of the business and the brand.

he acquisition of Integrex Systems by Alloys in July 2013 allowed the organisation to extend their footprint across the country. With a presence in Melbourne, Sydney, Brisbane and Adelaide, Alloys could execute an integration plan designed to combine the operations of the two companies into one, under the Alloys brand. Ultimately, this means that Alloys has been able to offer a bigger and better service and product offering. The expanded Alloys operation now offers Australian technology resellers a range of benefits including: • Localised sales teams and distribution centres in Melbourne, Sydney, Brisbane and Adelaide • Access to the largest portfolio of print and imaging products in Australia • Faster fulfilment of orders across Australia • Increased online capabilities and services • Expanded customer service options • Expansion of the Integrated Technology division • Transparent location-based stock holdings for better customer visibility and availability. Alloys CEO Paul Harman said “The new business brings the strength of Alloys and Integrex together to provide our customers and suppliers with an even stronger reason to business with our team.” He added, “It means that Alloys and Integrex will now be one brand, with one goal, one sales methodology and managed as one team. This will give

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our customers and suppliers an easier line of sight as to how to work with us, and allows us economies of scale that we haven’t had before. The merged business now has the largest portfolio of print vendors in Australia and provides greater access to our Integrated Technology solutions right around the country.” Alloys has a history of value-added distribution. The company has been around for 32 years offering SME technology resellers a range of non-traditional services. It informs their branding as the ‘non-traditional distributor’. “Our non-traditional approach requires the Alloys team to be more knowledgeable, offer greater flexibility, and to build stronger relationships with their customers, suppliers and the product solutions they sell,” says an Alloys spokesperson. Alloys has two specialist divisions Print and Imaging and Integrated Technology. Alloys brands include: ACTi, Axis Communications, Brother, Canon, D-Link, DTG Digital, Elite Screens, Epson, Fuji Xerox Printers, HP, IQEye, JVC, Kodak, Kofax, Konica Minolta, Kyocera, Leviton Security & Automation, Lexmark, Milestone Systems, Mitsubishi, Oki, Optoma, Panasonic, QNAP, Samsung, Sony and Verbatim products. CEO Paul Harman is no stranger to brand management. He enjoyed various sales managerial roles before the 10 years he spent with Fuji Xerox. Seven years ago he joined Alloys to build the business. www.businessfirstmagazine.com.au

PROFILE | BF

Those sales roles, as he went from territory to territory, and indeed his time at Fuji Xerox taught Paul a great deal about customer service, customer fulfilment and leadership. And while he admits that taking over the senior management role of a company wasn’t his initial aim, this was certainly the path on which he was headed. “I spent a great deal of my life thrust into leadership roles. And so when I was visiting businesses on the road, I was exposed to a lot of different leadership techniques and styles. A lot of those techniques are still with me today in terms of understanding and knowing what works and what doesn’t. It is advantageous to view a one man company or a five hundred men company and how they go about trying to keep a business afloat and keep it running.” One of the biggest lessons was one of adaptation, particular in the technology sector. In fact, according to Paul this is a challenge for any business. “Probably one of the greatest challenges that any business has going forward is how they are going to keep up with the rate of change in the market, in the globalisation of the economy, or the technology that’s required to drive the business.” It is almost impossible to keep up with every change and so what works for Alloys is that they are a specialist, they specialise in certain areas of the market and ensure that their research, client feedback and customer feedback is up to date. It is also important to pick which technologies you focus on due to the ever-changing nature of a technology, which may actually evolve in a three month cycle when it used to be 24 months. “If you narrow your focus too much to actually want to provide the latest and greatest trend, you are going to find it very difficult for your suppliers, your customers and your staff to be able to follow what the vision of the business is. In some respects you have to balance the core business with what is gaining traction.” So how the market develops, what the different markets are and what the current product offering is, all play a key role in service and branding of the business. To keep on top of this, Alloys gathers its key managers around the country for 15 minutes a day to look at their critical numbers and find out what they are doing right, what is going wrong and what actions they need to www.businessfirstmagazine.com.au

take to make sure the business continues on the right track. That puts a lot of pressure on the business that a: the data is the right data and b: that data is available. Alloys is a smaller business than Fuji Xerox and Paul finds it easier to keep his finger on the pulse. He says sometimes at a larger organisation, you can fall further away from where the decisions need to be made. “It doesn’t matter if you are the Operations Manager or the General Manager of a particular business unit, unless you have complete central control you never have the entire picture. At Alloys we have the ability to make a close connection. I can gather around the ten people that need to be involved in decisions and we then hope all the staff in our business actually see the decisions that we make and why we’re making them. In a large organisation you don’t actually have that clarity.” Making personalised decisions that helps the company and its clients pay their bills is part of the brand strength of Alloys and Paul has been doing this since he moved from the COO position into the CEO role. That was a significant move as he transitioned from making sure everything works in an operational sense, to leading and setting the agenda for the business. He sees his role now as threefold: making sure he is setting an agenda for the business and positioning the business so that they are on the right pathway to success; looking at the commercial and combined interests of the business and strategy interests so that the business can pay its bills and not break the law; looking after the security and welfare of the staff. That’s a weighty agenda, but Paul was ready to take it on. “I know a lot of people who wanted leadership positions for the title but at some stage didn’t actually want to do all the things required to be a leader. There’s unglamorous things about being a leader in terms of the decisions that have to be made and being on top of management needs. I hit a stage in my career where I had the will to want to continue leading with my very own style.” When he took over at Alloys, Paul took about 100 days to understand the magnitude of the business. He listened to his staff and learned from them. He discovered what was and wasn’t working. The next step was to really outline

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When he took over at Alloys, Paul took about 100 days to understand the magnitude of the business. He listened to his staff and learned from them. He discovered what was and wasn’t working.’

to people what Alloys was going to do to move forward to make the business even better. “That’s a personal phase and that’s probably a phase that in various times in my career I haven’t always got right. It’s really about making sure that you’re setting an agenda and vision for the team, for everybody in the team to relate to and understand.” Paul set a new pathway, while expanding on the direction of the company. Again it was about understanding what needed to be done to reconcile the business. Alloys was focused on print hardware specifically and some of the various different products surrounding that. So it was a matter of understanding the product selection criteria and the markets Alloys wanted to serve and therefore the critical success practices to reach into those markets. “It really meant that we initially went from being a five or six division business without any of them really being complete, to a two division business where we always take more holistic approaches in the marketplace.” According to Paul, this meant client relationships became easier. Suppliers could see that Alloys were more aligned with their own vision. They could see a wholesale distribution business with a vision and pathway that added value to them and the area that they are involved with. This is where the brand of being a ‘non-traditional distributor’ really strengthened and where brand values became aligned with those of the suppliers and even the customers. Take suppliers for example.

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BF | XXX

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PROFILE | BF

“Our suppliers are manufacturers of products. And generally manufacturers have a particular goal in mind when they are manufacturing the product. Not all of those goals constantly line up with customers’ expectations or localised needs. Our non-traditional distribution philosophy aims to be able to change that disconnect between the manufacturers and the customers. We went about gaining real knowledge about the product and developing real flexibility about how we are able to work with the supplier and customer. Those relationships are about making sure that the customers can get everything they can out of the products even if it means adding other parts to finalise the solution for them. The non-traditional distribution philosophy is giving our resellers the best opportunity to achieve growth profit and cash flow. Most distributors are a combination of a post office and bank, we aim to provide a further range of services that add value for customers and suppliers.” Paul believes this sets Alloys ahead of www.businessfirstmagazine.com.au

competitors. “We wear the non-traditional distribution tag with a badge of honour because we think that sets the standard in the market place.” Alloys is a family business, which adds a further dynamic to the structure. However the values and the context of what the business is designed to do for that family is synergistic with what Paul is trying to achieve with the Alloys’ business model. The business has morphed from being a traditional small family business where it’s a vehicle for employing a number of family members, to having families working in the business who are actually making a difference; corporatising and delivering on a national business approach rather than just a family business approach. That being said, Paul shares similar values with the family. “It’s very important that when you bring in an outsider, that you have someone who has all the same values and wants to drive the business as hard

as you do, but is going to be totally cognizant of what went before and how the business has run. So relationships are very important not only externally but internally as well. And we have a really cohesive team at a leadership level and we enjoy working with each other.” Alloys has 85 staff all working in the same direction to fulfil the motto and brand of ‘Having the flexibility to meet our customers needs and expectations’. They are all on song because if Paul leaves one legacy it is to develop really good leaders in any organisation that he has been involved in. “We’ve worked very hard in developing a strong leadership team which allows me to work on the business and allows them to do most of the day to day running the business.” It is a simple matter but it is key, because it creates consistency within the business, which in turn creates consistency with suppliers and customers and it is that synergy which is so important to Alloys to live their motto of being a non-traditional distributor. BF

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BF | LAW TECH

THE NEW

PRIVACY REGIME

As a business owner, you need to be ready for the significant amendments to the Privacy Act 1988 (Cth) (“the Act”) that come into effect on 12 March 2014 and that could impact your business.

hese changes may mean that your privacy policies and procedures need a radical overhaul, or you may face very substantial fines.

Personal information

Daniel Kovacs

is a Special Counsel at Kliger Partners.

The new Australian Privacy Principles (APPs) must be complied with if your business collects, uses, stores or receives personal information about individuals. Personal information has a broad meaning and includes informa-

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tion or opinions about an individual whose identity is apparent from the information or opinion supplied. It includes information such as customer records, names, email addresses, dates of birth, as well as more sensitive information. Previously it may have been enough to make sure that no breaches of privacy were committed by your business. The new regime now, in most cases, requires your business to have

and implement a robust and accessible written privacy policy which addresses the following points: • the reasons your business collects the information; • how the information will be collected and used by your business; • the length of time the information will be held by your business; • how an individual can access and correct the information; • how the individual can complain www.businessfirstmagazine.com.au

LAW | BF

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The use of an individual’s personal information (including, for example, their home address to send advertising) may now require the consent of the individual.’

Credit providers will therefore need to update the following: • standard terms and conditions if goods or services are purchased on delayed payment terms; • credit application documentation; • privacy statements; and • any arrangements with credit reporting agencies. Direct marketing The new regime also covers the use of personal information for direct marketing. The use of an individual’s personal information (including, for example, their home address to send advertising) may now require the consent of the individual. These obligations are additional to the requirements under Spam and the Do Not Call Register legislation. Penalties

about breaches of privacy; and • whether the information will be shared with other businesses (located in or outside Australia). If your business receives information about individuals from another source, you may be responsible for making sure that the individual concerned is aware of that fact. There are also new provisions about: • how you can collect, use and disclose personal information; • your obligations regarding keeping your records accurate and up to date; • data information security; and • your ability to disclose personal information overseas. www.businessfirstmagazine.com.au

Providing credit

A wide range of businesses will now be caught by the credit provider requirements which apply more broadly than to traditional credit providers (such as banks and financiers). You will be considered a credit provider and have to comply with the onerous credit provider obligations, (including providing detailed information about the kinds of credit checks you may perform and how you may access and disclose the personal information of those seeking credit) if your business provides customers with more than seven days credit.

What happens if you do not comply with these new requirements? Fines of up to $1.7 million may be imposed for breaches by companies. Individuals may be fined up to $340,000 for a breach. What you should do now

You should seek legal advice to develop a privacy policy that complies with the amended laws, if your business does not have a privacy policy. If you already have a policy, you should seek legal advice to find out if your privacy policies and procedures are adequate to comply with the new regime. BF Daniel Kovacs is a Special Counsel at Kliger Partners, specialising in Intellectual Property, IT and e-commerce law. Kligers.com.au

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BF | TECHNOLOGY TECH

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Disaster recovery plans can only be a success if the necessary budget is allocated to it.’

www.businessfirstmagazine.com.au

TECHNOLOGY | BF

Common oversights regarding disaster recovery & how to avoid them A disaster recovery plan can be considered a success only if, when implemented at the time of a disaster, it ensures that the business continues to operate smoothly writes Sean Dendle. Sean Dendle

is a technology entrepreneur who has been working in IT from the age of 15. He is director of award-winning company, Cymax. cymax.com.au

hough it may seem a simple enough requirement, more often than not disaster recovery plans are bugged with some common mistakes or errors which can be easily avoided with a little bit of common sense and foresight. Below are some common nontechnical mistakes regarding disaster recovery plans and also the possible solutions to avoid them.

Active support and involvement from the senior management

â&#x20AC;¨ It is just not enough to have the approval of the top management, for the disaster recovery plan to be a success during implementation; the top management should be proactively involved in the execution. Having their presence physically at the time of disaster uplifts the morale of all the participants and works towards success.

Employee buy in and support

To ensure that the disaster recovery plan is executed effectively it needs the support of the employees. The employees must be convinced on the efficacy of the plan against the disaster. It is important to involve all the departments of the business in the disaster recovery operations so that they can assist in the planning process and thus take ownership of the plan to an extent. It is important to have the non-technical team too as part of the disaster recovery team.

Disaster recovery is not a one person job

More often than not companies designate a person as the sole in charge of the disaster recovery process. This should not be the case because www.businessfirstmagazine.com.au

disaster recovery activities are time critical, hence there should be a group of well-trained individuals to execute the process.

Generalisations vs. Specific tasks

In the disaster recovery plans, most often there is a large extent of generalisations. This should not be the case. Clear specific steps, activities, and processes need to be thoroughly documented (and tested) to ensure that mission critical data and business processes run unhampered.

Budgetary constraints

Disaster recovery plans can only be a success if the necessary budget is allocated to it. Not only monetary budget, but human resources too, should be allocated for the successful implementation of disaster recovery. Key people from different departments should be allocated and their expertise should be utilised both for planning and execution. Specific issues in disaster recovery to bear in mind by organisations considering cloud solutions are:

Data criticality

Organisations do not segregate data on the basis of its importance and consider it as a large whole which needs to be saved. Hence they go in for cloud backups for the whole data produced. This may not necessarily be required. You may find only data which is mission (business) critical requires backup to an offsite location in cloud backups for instant recovery.

RTO and PRO

Companies do not pay much importance to setting the recovery time objective (RTO) and the recovery point objective (RPO) for cloud backup. The RTO and RPO are highly important to ensure that the business does not suffer in any way in situations of outages. Organisations should have a realistic RPO and RTO set so that they can manage better in times of outages.

Difference between High Availability (HA) and Disaster Recovery (DR)

It is vitally important for companies to understand the subtle differences between High Availability and Disaster Recovery. High Availability is the ability or the resilience of the data centre or location whereas disaster recovery is the data availability across different data centres or servers at various locations.

Inter-dependencies of servers

Companies usually tier servers but do not pay attention to the inter-dependencies while working on the disaster recovery plan. Because of this focus on individual technologies without consideration to the inter-dependencies, there is a high probability that the cloud backup plan might not be sufficient. For a successful disaster recovery plan it should be bring in the organisation as a whole and should be thought of as a necessary expense and not as something that can be dealt with later on. My final thought is: a disaster recovery plan is only as good as the last time it was tested. How frequently do you test your DR plan? How long did it take? Are the results of these tests provided to management for review? BF

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BF | PROFILE

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PROFILE | BF

When a Little

goes a long way While Paul Little is no longer a spokesperson for Toll, his influence in this public company is still being felt. The former chief speaks about his time at Toll and how this has informed his most recent venture, property development company Little Property. Words by Jonathan Jackson. Interview by Bob Forshaw

ow does one of the most powerful men in logistics, running one of the most significant companies in that industry move from freight, transport and logistics services into property? According to Paul Little, the transition isn’t as difficult as you think. Transition is all about knowledge and integration. “Toll had a very large number of properties around Australia and around the world really. So you acquire certain skills and knowledge about developing property. I have always found property very interesting. When I left Toll, I thought property development was a risk that was more easily managed than perhaps other forms of investments.”

A brief history of Toll

By the time Little had departed Toll, he had served the organisation for well in excess of 20 years and felt that the organisation required a fresh perspective. www.businessfirstmagazine.com.au

“I think it’s good to have a changing of the guard in most organisations over that period. I felt it was time for Toll to bring in new ideas.” It is always a difficult decision to step away from an organisation that has shaped your life as much as you have shaped that company’s structure, shareholding and focus. Little says it was a difficult decision to make, but the right decision. He came to the Managing Director’s position in 1986 after being largely responsible for arranging the management buyout from Peko Wallsend. This deal set up Little’s career for the next 26 years. “The main challenge in negotiating the buyout was to agree on a price. The business was for sale and we were ultimately able to negotiate an arrangement that Peko were happy with. We had the interest and we had the desire; we just needed to go to Peko and have them agree on a price and the total package.”

Little was able to transform Toll from this point onwards. Peko Wallsend owned Toll and a number of other diversified entities. By privatising Toll, it meant the focus could shift solely to making the organisation a logistics powerhouse. “The buyout gave us the ability to grow the Toll business, to expand the range of services offered by the business. It was always a very good business, but perhaps wasn’t getting the focus and attention that we were able to give it. So I think we gave the business a new life in many respects.” Post the management buyout, the focus shifted to survival in a very competitive transport industry. Our focus then moved to the implementation of a longer-term strategy. “Having a business that was in many ways focused on delighting customers with service levels was an important attribute of our approach. It is an extremely competitive indus-

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BF | PROFILE

try; always has been. But I think to be able to offer the customers high levels of service and great levels of innovative and creative solutions worked really well. And then as the company grew, we were able to integrate those service offerings across different modes of transport and across different geographical areas. Previously a customer might have had three or four transport service suppliers with different companies to get goods moved from Asia into Australia, but under our strategy they would just need to make one phone call and they could track the movement of the goods. That was unique at the time. It’s not unique now, but we offered seamless, integrated service and we built a company that would actually deliver that.” Toll Holdings developed to become the pre-eminent provider of integrated logistics services in the Asia region. A clear vision, the knack to employ the best people and the ability to offer an integrated service allowed the business

to be unique and very successful. “And we grew the business aggressively,” Little says. “That aggressive growth combined with the strategy that we had in place at that point in time worked really well.” Applying the integrated approach to property

The integrated approach that worked so well for Toll, is the same approach Little takes with Little Projects. With this property development venture Little has assembled a team of property experts, whose purpose is to not only build some of the most unique apartments in Melbourne, but to also offer an integrated service to tenants and owners that doesn’t just finish with the sale of a property. Little Projects is a multi-faceted property group that focuses on delivering innovative and high quality residential and commercial property solutions around Melbourne. With successes in commercial, land subdivision and apartment developments, the company’s core competency

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Little Projects is a multifaceted property group that focuses on delivering innovative and high quality residential and commercial property solutions around Melbourne.’

DEFINING MELBOURNE’S SK YLINE.

I L K S O U T H YA R R A

LIT TLE PROJECTS IS FOCUSED ON DELIV ERING I N N O VAT I V E , H I G H Q U A L I T Y R E S I D E N T I A L A N D COMMERCIAL DE VELOPMENTS ACROSS MELBOURNE T H AT W I L L S TA N D T H E T E S T O F T I M E . D E L I V E R Y T H R O U G H I N N O VAT I O N .

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PROFILE | BF

lies in its ability to purchase inner-city commercial or industrial sites and develop them into desirable residential apartments. The fact that Little Projects are still considered the new boys on the block is a big part of their differentiation. The company is focused on high-rise residential opportunities in clearly defined locations. This means they can uniquely offer an integrated approach to both investors and owner-occupiers. “We build them, we rent them, we sell them, we manage and care for them. So again, it’s pretty much an integrated strategy that we have for real estate that differentiates us from other companies.” What began as a small venture has grown rapidly and in 2013 experienced its best year yet. According to managing director Michael Fox, Little Projects completed 803 apartments in Inner City Melbourne in 2013. In their summer newsletter, Fox pointed out that the “team at Little Projects has been busy completing three iconic new lifestyle developments including 101 Bay in Port Melbourne, Halo in St. Kilda and ILK in South Yarra. We have also made exceptional progress with the sales and construction of our Brunswick east lifestyle precinct and commenced construction of Central South Yarra.” All this has been possible because

Little Projects had their strategies correct to begin with. “I’ve always thought that growth was a very important element in business, Little says. “You need to have a strategy that clearly sets out your goals and how to achieve them. Our rapid growth to a large extent has been based on our strategy of trying to take advantage of what appears to be a strong demand for high-rise apartments in inner suburban areas of Melbourne and other states. It’s taking advantage of an opportunity and not being frightened to have size and scale in a business. “I think the real estate market needs to be flexible enough to cater for the varying demands of homeowners, people who want to invest, people who want to rent, people who maybe are not quite sure what level of interest they want and where. It’s a far more complex set of requirements that potentially customers have today and I think that an organisation like ours needs to be structured accordingly. So in summary I think the way we’ve approached the opportunities in real estate is to understand more clearly the varied requirements of potential customers.” Assuming Little Projects continues on its current path, it is likely that the ‘new boys on the block’ moniker will be dropped fairly shortly and that

other developers will take that same integrated approach. Little is used to competition and feels that Little Projects’ strategies and the current market conditions can keep the company ahead of the pack. He says of the current conditions, “I believe the real estate sector is currently being underpinned by stronger than normal demand – I’m talking residential now, not commercial or industrial – it’s also being assisted by lower interest rates and a steady economy.” Which augurs well for future acquisition and expansion. In February the company acquired a property in Melbourne’s Docklands for $18.5 million from a local private investor, then there are the developments mentioned above. These are strong times for Little Projects. And Paul Little is proud of his people and his business. “In summary, we’ve built a new alternative brand in terms of the real estate sector that has evolved in a fairly short space of time. Our approach is different in that we are building, selling and managing real estate in a way that integrates the service offering to customers. I’m proud of that. To start a new business, a new brand in a very competitive market and have it achieve modest success in a short space of time is something I’m proud about,” Little says. BF

Little developments timeline

‘101 Bay Street’

‘Halo’ Fitzroy Street

‘ILK’ Toorak Road

‘Tip Top’ Edwards Street

‘Central’ Yarra Street

No of apartments: 256 Completed: Oct 2012

No of apartments: 159 Completed: Feb 2013

No of apartments: 388 Completed: Sept 2013

No of apartments: 411 Completed: April 2014

No of apartments: 360 To be completed: May 2015

Port Melbourne

St Kilda

www.businessfirstmagazine.com.au

South Yarra

Brunswick

South Yarra

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BF | TECHNOLOGY

NEXT-GENERATION CLOUD:

delivering real differentiation We are in the midst of a cloud computing revolution. In 2014 storing information ‘in the cloud’ – which means users can access applications and software across a network of connected computers – is hardly a new idea. But what is cutting edge is having a cloud solution that genuinely sets your business apart from others in your field.

David Jackman is the managing director of Pronto Software. pronto.net

mart business leaders know that not all clouds are equal. It’s the cloud solution that can give you information about what’s happening in your enterprise as it happens, from anywhere in the world, that will really deliver that extra magic to a business. Technology in this category will allow your company not just to stand out from its peers, but will also lead to greater profits. The benefits of cloud are clearly being seen by businesses, with IDC fore-

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casting that cloud spending, including cloud services and the technology to enable these services, will surge by 25 per cent in 2014. With such investment being made into cloud computing, businesses must ensure their use of the platform provides differentiating functionality to ensure competitive advantage. So the question many executives are asking right now is how do we achieve this differentiation? From my perspective, you need to ask four key questions

of your software vendors when making a decision about business management technology. 1. Does the technology connect easily with your other systems, both in the cloud or on-premise?

Businesses should be able to align their specific applications with the right platform that’s best suited to running its operations more efficiently. So look for software vendors that offer a platform-agnostic solution, that’s sophisti-

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TECHNOLOGY | BF

information remotely. It should be the place where everyone can access customer information, sales opportunities, activities and reports across a range of different mobile devices. It should also assist staff to better manage their time. By opening up access to information across all levels of the business, it allows for faster, informed decision making that improves productivity across the board. 4. Does the solution offer the ability for data to be stored locally?

cated enough to allow different systems supported by different platforms to speak to one another and work seamlessly. Providers that can do this will have an underlying philosophy of adaptability and flexibility, which will indicate a genuine willingness to tailor their solution to meet the real requirements of their clients’ businesses. 2. Can our technology vendors customise their solution to meet the unique needs of our business?

This is a big one. Many software vendors will only offer a one-size-fits all solution. They will tell you that their product is suitable for any business, in any industry. But rarely is this really the case. The best software providers will be able to take their offering and adapt www.businessfirstmagazine.com.au

it so that it’s generating exactly the right information you and your staff need to make important business decisions to take your enterprise to the next stage of its success. 3. Can the technology be easily accessed on mobile devices?

Most businesses have a mobile workforce that needs to be able to access critical data from wherever they are. The ability to access this information in real-time is critical to achieving success in the fast paced world we live in. So look for software vendors that have a mature mobile offering to ensure your staff can stay connected, no matter where they are in the world. The solution should allow you and your teams to record, process and track

One of the first questions I’m usually asked when I meet a client for the first time is ‘Where will my data be stored?’ I’m able to assure them that their data will be stored in Australia which mitigates the security issues of an off-shore model. When you’re talking to any software vendor, make sure you understand where your information will be stored and that you retain full ownership. It is important that both parties have access to the data in standard format and that the cost of activating this is defined and therefore not allowed to be excessive. This will give you added confidence that your intellectual property is safe and secure. If the solutions you are considering can tick these four boxes, your business will be poised to reap substantial rewards. It will have all the tools to be positioned at the peak of its field. It will have the right information to act quickly in the face of changing business conditions. It will be able to identify and solve information bottlenecks to increase efficiencies. This will lead to productivity gains and will help the business control and ultimately lower costs. Most importantly of all, it will mean your company has the potential to compete more aggressively in your markets and generate super-profits, the holy grail of all top business managers. So don’t settle for relationships with software vendors that can’t answer the tough questions. Instead, choose to work with a partner that’s just as focused on the success of your business as you are. BF David Jackman, Managing Director, Pronto Software.

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BF | MENTORSHIP

HOW TO BECOME A TRUSTED ADVISER (and Stay Trusted)

As an expert in the field of recruitment, I understand that relationships with clients can change over time, and for a variety of unexpected reasons: a change in management, strategy or culture, or an adjustment in the need for assistance. In my years running an accounting recruitment firm, I’ve learned that the best consultants become trusted advisers quickly, and stay trusted for the lifetime of their relationships. All a consultant has is their reputation, and once that’s gone, it can never be brought back writes Jonathan Weinstock.

consistently high level of service ensures es ignore their top clients and end up spending more on corporate hospitality you give 100%, 100% of the time. for their poorest clients. Investing in your clients and giving back is a sure TIP 3 way to reinforce your relationship. Deliver on what you promise. Meet deadlines and budgets, and always follow up as promised. Remember how TIP 7 Never forget the clients. Maintain the disappointed you were as a kid when relationship equally, even when your the local shop promised they would client may not be paying for your have more of your favourite football services. When times are good again, cards on Monday, but then they never quality clients will remember who had them? You never forget. remembered them. The best measurement of your TIP 4 TIP 1 Show real life examples of prior success reputation is to ask your clients to two Have the client’s best interests in by providing social proof. Demonstrate questions: Would you come back to me mind— not yours. This shows you care who you’ve helped in the past and how, without hesitation? Would you recomand are willing to sacrifice personal exactly, you helped them. While you’re mend my services to others without hesitation? If the answer to these questions gain to ensure the client achieves the at it, encourage new clients to talk to is “yes,” then you’re doing a great job, and best possible outcome. Take time to your happy clients. The more people help your clients in other ways. Admit speak to your success, the greater your it serves as a reflection on the leader for building a company culture with strong if you don’t know something or can’t reputation as a recruiter will become. values. I’d invest in this type of company. help, and refer them to someone better Even just asking these two questions who does or can. And be a good loser TIP 5 helps create trust and shows you care. Be seen and heard in your industry. if you miss out on a deal this time And that’s a sign of a trusted adviser. BF around; there’s always tomorrow. If you’re a specialist, make sure you’re seen and heard at events and in publiJonathan Weinstock is ‘The Start-Up TIP 2 cations, and share your exposure with Do a good job! This may sound obvious, your clients so they can see that you’re Guy’ who turns ideas into profitable business or quick failures at lightning but there are plenty of poor service pro- passionate about your industry and speed and low cost. Jonathan is the stand out from competitors. viders out there; you can stand out by current founder of Launchtwo People, being great at what you do and ensuring Sports Grab, MVP Genius and current that your staff is on top of their game. TIP 6 Board Member for the Entrepreneur’s This can be a challenge, but ‘A-grade’ Give back. Reinforce the relationship Organisation, Melbourne Chapter. talent is worth fighting for. Always pro- by investing more in your clients than Linkedin Profile: www.au.linkedin.com/ vide quality service. Poor service burns your competitors do. Don’t ever take your status for granted. Many business- in/jonathanweinstock/ clients. They will come and go, but a

arning the title of a ‘trusted adviser’ is a privilege and should never be jeopardised. It takes a long time to achieve and mere minutes to lose. Particularly in desperate times, consultants can risk the lot by selling their soul for a short-term gain. The Jonathan sun does rise again, so a serious player Weinstock is the founder of will always value their proven integrity. Launchtwo People So how do you achieve this trusted advisor status? Here are some tips I’ve come across that reinforce a back-tobasics approach:

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MENTORSHIP | BF

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BF | PROFILE

That’s entertainment! Village Roadshow CEO Graham Burke speaks with Business First about why reinvention is necessary for success.

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here is something so satisfying about going to the movies. Settling into the big chair and waiting for the click that tells you the screen is expanding and the sound is being turned up. In that darkened theatre it’s just you and the sets and the actors on screen. It’s another world, hidden away from the foot traffic in the malls or the bleating of car horns. It’s unrealistic dialogue and events that for two hours become reality. It’s the escape. In recent years, the comfort of that escape has improved tremendously. Movie going has become an experience. Bigger screens, better sound, 3-D technology, food and wine and comfortable chairs, go a long way to creating a five star experience for film lovers. Even those who don’t love film, find the act of attending a theatre to be comfortable, if not pleasurable. Village Roadshow Limited has led the way in creating experience. The organisation is not just limited to movie theatres; this is an expansive business that incorporates theme parks, distribution and even film production. We’ll get to those elements later, but

let’s dwell on the movies a little longer, because that’s where the Village story begins. In 1954. In a drive-in theatre in the Melbourne suburb of Croydon. It was Roscoe ‘Roc’ Kirby who founded Village. A movie lover, Roc began his career selling ice creams and sweeping floors at his father’s cinemas on the Mornington Peninsula. In 1954, Kirby took the financially risky step of constructing a drive-in called The Village Drive-in and soon afterwards the company owned around 40 drive-in theatres. With cinema attendances dropping due to the introduction of television, Village made a move into metropolitan cinemas. In 1989, after Village Roadshow went public they made an aggressive move into other markets, such as film production, theme parks and radio. After the float, the Kirby family remained the majority shareholders, owning 51.5% of the shares in Village Roadshow. Roc Kirby retired as CEO in 1988, leaving the running of Village Roadshow to his sons, Robert and John, as chairman and deputy chairman, and surrogate son, Graham Burke, as CEO. www.businessfirstmagazine.com.au

PROFILE | BF

“ Village Roadshow CEO Graham Burke

“I have been at Village my whole life,” Graham says. “Roc mentored me. He taught me not to get too fancy and that the business is about selling tickets and about being exciting. If we don’t excite then the public won’t go to the entertainment we provide.” Roc is famous for his quips, but one that stood out for Graham and is part of the Village philosophy centres around reinvention. “Every single morning when you get up you need to reinvent yourself,’ Graham says. “Our founder used to say flexibility is the key to success.” And Village is flexible. When Robert Kirby initiated Gold Class in Australia, it changed the standard of movie going. V-Max has taken the experience another step forward. Let’s not forget also that Village went into movie production early on and is responsible for such Australian classics as Breaker Morant, Mad Max and more recently Red Dog, which became the third highest grossing DVD ever in Australia. “We have been involved in film production for 25-30 years and it is an excellent adjunct to distribution and cinema. www.businessfirstmagazine.com.au

In this business content is king.” Reaping rewards at the moment is the Lego Movie. “We look at the film production business as a portfolio. We have a whole ongoing slate of movies coming up. Theme parks have also been quite lucrative. While the company recently consolidated its US activities to just Las Vegas, selling out of Phoenix and Hawaii, their focus has been directed toward China and South East Asia. “We want to focus on that region because the sheer population and lack of quality, well managed theme parks makes sense for us.” Village will be emulating the very successful Gold Coast theme parks, which include Sea World, Wet ’n Wild and Movie World. “We are very proud of our theme parks on the Gold Coast, they are an outstanding calling card for what we represent. They are world-class parks and we will unashamedly copy what works in those parks in this foray into Asia.” Village also had a large stake in radio for a while and turned Austereo into the number one network. At that stage, they were an integrated media company; today Graham prefers to label Village as strictly an entertainment business. Along with Robert and John Kirby, they will be looking to consolidate their ventures in future, focusing on the core business of theatres, theme parks, distribution and production. “We have a very prudent growth program,” Graham says. “Robert is working in Asia on the theme parks and we have other projects which are too early to announce. In cinema exhibition we

We have been involved in film production for 25-30 years and it is an excellent adjunct to distribution and cinema. In this business content is king.”

are building the Gold Class cinema circuit in the US and in Australia we are extending Gold Class and V-Max. In our overseas joint venture, we will be expanding from three to four films to 10 films in production (the company also owns 47.6% of the Los Angeles based entertainment division, Village Roadshow Entertainment Group which includes the Village Roadshow Pictures film production and distribution business, and, from February 2008 to March 2013, the Concord Music Group). We are motivated because we want to put something back into the Australian community and give kids in the industry a chance to learn and practice their skills.” There is only one major competitor to Village in Australia and that is Hoyts, but Graham is philosophical about competition. “My attitude to them is the stronger they are the stronger the industry sector. We compete with restaurants, hotels, pubs, pay TV and lethargy, so the healthier Hoyts are the healthier we are. In the theme park space we compete with Ardent who own Dream World, we fight for market share, but you don’t want to be only one restaurant in the street. Nobody will go to that street.” Graham is 71 years old and fit. He attends the gym every morning from 5am and though he is a self-confessed shy man, he speaks well for the organisation and the industry in general. He is looking forward to the future and to continuing to reinvent the brand, which means Village will be finding even better ways for people to get comfortable and be entertained. BF

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BF | SPORTS

Taking the

fast break

Andrew Bogut is one of the best basketballers in the world, currently dominating with the NBA’s Golden State Warriors in San Francisco. What most people don’t know, however, is that he is also an astute businessman and champion of Silicon Valley start-ups. Andrew, along with business partner Bruce Kaider speaks with Jonathan Jackson about sport and leadership.

hen you speak with Andrew Bogut there are two elements to his character that strike a chord: his willingness to communicate and his willingness to help others. As one of the best basketballers in the world, he could be forgiven for being a little detached, but he is far from it. He is generous with his time for the kids who attend his basketball school in the South East suburbs of Melbourne, to the clients involved with sports management company One Management Group and Consulting (OMGC). No matter whether he is dealing with those clients, or the kids, or whether he is on court for the four or five times a week during the strenuous, often brutal, NBL schedule, taking that time means he is living by his own ethic of delivering one per centers. “Everything I do, I concentrate on the one per centers. I want things to be perfect. On or off court, life is all about customer service and relationships.” Andrew says. This attitude informs the way OMGC is run.

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“I would rather lose one huge deal to gain ten good deals with great people to work with and form long term relationships with them. If you give people attention and the time of day and build an environment that they can come and enjoy, it makes life easier and people respect that.” Andrew’s business partner is Bruce Kaider, who looks after OMGC operations while Andrew is playing. Bruce was Andrew’s manager for over seven years and the pair has a mutual belief in the importance of relationship building and giving their clients the best opportunity to succeed. While many sports management companies deal with only the on-field commitments, OMGC take a holistic approach to the growth of the athlete. “We thought we could build an agency based on values and culture; we wanted to offer clients a genuine service that helped them in planning their life after sport,” Bruce says. “For us it was about looking at life from the athlete’s perspective. There are alarming statistics that show 60% of NBA players are broke three years after retiring from sport. So it’s important to focus on setting a structure of professional people around these athletes. They need to be informed about how to best use their money whether it be in residential or commercial property or shares. We build a network of advisors for athletes that include lawyers and financial planners. We send them to Open Universities. We look after them with tutors. We don’t want them living on savings, we want to create other revenue sources. We want to make sure they have good education. Education is

really important and allows them to get a better job.” Andrew understands the value of education. He is a learner by nature. “It was daunting when I first came to the US. I didn’t know the first thing about investment – who I should trust or what I should do with my money. So I asked a lot of questions. I hired a financial advisor. I slowly asked more and more questions so that I could become self-sufficient and that’s what we want to provide at OMGC. I have made heaps of mistakes with business and investment, but nothing that has hurt me, because I learnt everything myself. I am an avid listener and had opportunities to listen to people high up in the financial world.” Part of the success of OMGC is due to the ethics of the company. This was no overnight set-up. There was a five-year plan in place that took nine months to put together, policies and strategies that would set the company apart from competitors. Bruce had been in import/export and worked with professional sports people. He too had made mistakes along the way, but his business skills learned over a 16-year career, combined with Andrew’s one per center attitude and skills that he’d learnt were the perfect fit. “For us it was very much about life outside the sport,” Bruce says. “We don’t see anyone as a direct competitor, because we focus on what we believe in and our values. The rest will take care of itself.” Values are highly important in any organisation and indeed in any sporting team and OMGC will not be www.businessfirstmagazine.com.au

SPORTS | BF

The Silicon Valley start-ups.

“

For Andrew personally, he still has several years on court left of a stellar basketball career, but in the meantime he will continue to learn.” compromised on what they believe. “If we have the chance to take an athlete who would be a huge earner, but we don’t feel they fit into our code of conduct, it is unlikely we will take them,” Andrew says. “We don’t want guys doing silly things who will hurt the other athletes. In business that is rare.”

This commitment to the client and to customer service and values has allowed OMGC to grow quite quickly and expand the business offering. Andrew’s positioning also helps. In fact these days, OMGC has Facebook, Google and Twitter on its doorstep. This has come about due to the expansion of OMGC and its implementation of business tours. It began with the California Dreaming Sports & Business Tour in February 2013, One Management Group & Consulting (OMGC) and has continued this year with recently completed ‘2014 Big Time’ Tour. The tour connects Australian startups to Silicon Valley experts and angel investors, while also incorporating a little fun with tickets to the basketball and exclusive VIP dinner with Andrew, along with signed merchandise, a behind the scenes tour of the LA Lakers and Golden State Warriors training facility and guided tours of some of the biggest brands in the Silicon Valley. “You will meet people, have the opportunity to network, and if you have a start up company, this is a great opportunity,” Andrew says. “We had a tech company from Adelaide that was picked up by an angel investor. Anyone who wants to come out here and see how things are started can come. Money can’t buy experience, but the people we have a network through can provide an enormous benefit.” Diversification has been a boon for

the OMGC business and what they can offer. “We have multiple divisions of the company by design,” Bruce says. “It means that one division is not reliant on any other, however there are crossover and complementary factors. We use our strengths to advantage. Andrew is based in San Francisco, so we use his profile and contacts in that tech and entrepreneur space. There are a lot of Australian companies, looking to raise money and set up business in the US, so we use our network to help them expand. Again, it comes back to building relationships.” OMGC will continue to focus on building the business. Bruce says they are nowhere near what they want to achieve, although they are ahead of the business plan and looking to expand the range of services as well as the geographic location. For Andrew personally, he still has several years on court left of a stellar basketball career, but in the meantime he will continue to learn. “I am continuously learning. The best thing about being in San Francisco is that I can ask questions, follow up with emails and seek advice. You are never smart enough.” These are great lessons to learn from someone who is a canny sports star and as stated an astute businessman, who can offer a lot in the way of advice and mentorship and who values helping others achieve their best. BF

A tour of the Warriors’ facilities.

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BF | HEALTH

The Pillars of Good Health These days it seems that we are bombarded with exhortations and messages about health and fitness, some promising ‘the earth’ whilst asking you to do little in return except part with your hard earned dollars. I have a particular issue with ‘weight loss’ messages. That may sound a bit odd coming from someone involved with the fitness industry, but please let me explain.

I Lauretta Stace is Chief Executive Officer of Fitness Australia. fitness.org.au

n my opinion, an obsession with an individual’s ‘weight’ or ‘weight-loss’ is a negative message. Firstly, it focuses primarily on body image as opposed to general health and wellbeing. It also suggests that by being overweight, the person has failed in some way, so it’s very judgmental. Overweight and obesity in society is an extremely complex issue, heavily influenced in Australia and other developed nations by the social determinants of health, which are the conditions in which people are born, grow, live, work and age. It’s not always just simply the product of “energy in/energy out”. We all know that excess weight (read ‘fat’) is an important risk factor for a range of chronic health conditions. However, I don’t think it’s helpful to keep beating this particular drum. I doubt that over 60% of the population have purposefully set out to become overweight. It has happened and now we must focus our efforts on understanding why this has occurred and what needs to change in our society, environment and culture to make some positive and long-term changes to this statistic. The focus for our messages should be on health, activity, fitness and wellbeing, not weightloss. These elements are more positive and inspirational. They are also non-judgmental. But the best thing about these messages is that they are simple to convey and understand.

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When thinking about wellbeing, the simplest method is to go back to basics and look at four foundational pillars of good health – rest, exercise/movement, nutrition and hydration. 1. Rest

Both the quality and quantity of healthy sleep is important. A lack of sleep affects our mental and physical performance and mood. Most adults need 7-8 hours of sleep per night. A restful night will provide you with the energy to tackle your waking hours with gusto and put you in the right mood to better manage everyday stresses. 2. Exercise/Movement

A mix of aerobic exercise plus some strengthening and stretching exercises throughout the week on a regular basis will help to keep you strong, fit and flexible at any age. Exercise also gives you an energy boost and enhances your mood. 3. Nutrition

Your body needs regular nutrients and energy from food to function well. The food that you choose should nourish your body, not aggravate it. Eat more of the foods at each meal that don’t need fancy food labels, like fresh and natural sources of protein, vegetables, wholegrains and fruits. Eat less or avoid highly processed foods that contain excessive sugar, saturated fat and salt.

Another tip – be ‘present’ and purposeful when you eat. If you eat when you are distracted or stressed you are more likely to make less nourishing food choices and/or consume excessive amounts of food. So plan your meals and snacks purposefully and take a break from other distractions when you are eating. 4. Hydration

Water is pure and free! Ditch the processed drinks, save money and improve your health. Limit the intake of drinks that dehydrate the body including alcohol and caffeine. If you are able to get these four elements right most of the time, then better health and wellbeing will generally follow. This includes effective weight management. So, my theory is that if we focus our messages on the four pillars of health and wellbeing, and engage our society more often in these conversations, we won’t need to keep talking about weight management because it will just be one of the outcomes of healthier living. As business leaders, I believe that we have a responsibility to assist others to lead healthy, productive and purposeful and more joyful lives. We also have the reach and influence to make this happen. By living in alignment with the pillars of good health and leading others by example, we can influence many others and make a real difference to the health and wellbeing of society. BF www.businessfirstmagazine.com.au

HEALTH | BF

1. Rest

2. Exercise/Movement

4. Hydration 3. Nutrition

‘

The focus for our messages should be on health, activity, fitness and wellbeing, not weight-loss. These elements are more positive and inspirational.’

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BF | READING NOOK

Reading nook

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The Big Switch: Rewiring the World from Edison to Google. By Nicholas Carr. W W Norton & Company, 2013. $22.95.

Looptail: How One Company Changed the World by Reinventing Business. By Bruce Poon Tip. Hachette Australia, 2013. $24.99.

The way we use computers has changed forever. Once, everything you needed for your computer was contained in the plastic or metal casing. You bought software in a box. Now your devices are access points, a way onto the internet. Software gets downloaded or used through your browser. Nicholas Carr sees a parallel between the way computing has changed and is changing and the way electricity moved from Edison’s controlled, private network to a utility. The old and outdated business model was that you competed and strove for a monopoly. You wanted to quash your competitors. Now, business rivals must engage in co-opetition: Apple must let Google apps on iDevices to satisfy consumers; the full power of Microsoft Office is only just being restored now that it’s available on every mobile platform and in the cloud. Often in investing and business, we’re hungry to know what’s going to happen next. We forget that history is an excellent teacher. Warren Buffett, for example, used history to dodge the dot com bubble. As Carr makes his case, he links where computing is and where it’s going to the evolution of the electricity industry.

If you were going to launch a business in a crowded industry, how would you do it? When Bruce Poon Tip started G Adventures (formerly Gap Adventures), the travel industry was divided into three groups. Backpackers, resorts and packaged tours. Resorts were becoming increasingly self-contained and as a result, little or no tourist dollars were spent in the local economy. With tours, you’d get on a bus, drive around looking at locations, while your Western guide told you stories of the culture. The market was ripe for a company to create travel experiences where travellers benefited from local guides and tourist dollars went into the local economy. G Adventures was born. This is not a book of business theory. On one level it’s the gripping story of a business. On another level, it’s a handbook of innovation. On another, a real-life no BS inthe-trenches view of being an entrepreneur. The G Adventures culture is transparent. As I read, I (@danielgtaylor) Tweeted key ideas that inspired me. Poon Tip (@brucepoontip) Tweeted back. Plus, the QR codes link to videos that make you feel like you know the G Adventures team.

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READING NOOK | BF

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. Reviews by Daniel G Taylor.

The Undercover Economist Strikes Back: How to Run – or Ruin – an Economy. By Tim Harford. Little, Brown, 2013. $32.99.

The Secrets of My Success and the story of Boost Juice – Juicy Bits and All. By Janine Allis. Wrightbooks, 2013. $24.95.

Seven Elements that have changed the World. By John Browne. Weidenfeld & Nicolson, 2013. $29.99.

In his latest Undercover Economist book, Tim Harford puts you – the reader – in charge of an economy and shows you how to make it work. Harford is a microeconomist, meaning he looks at the impact of individuals and firms on an economy. This time round he tackles macroeconomics, which looks at the broader issues in an economy and their possible causes. He introduces problems one after the other that affect an economy, and just as you think you’ve got his point and the required solution; he introduces a twist that reveals more complexity than you first thought. The book is written as a conversation between Harford and you. You ask a question and he answers it, which prompts further questions from you, until you’ve mastered the topic. For investors, this book will help you understand the problems within economies and how those problems affect your investments. When you know what the problems are, you’ll be able to understand what responses are needed from governments to run the economy well. This book will appeal to smart investors who want a guide to macroeconomics in everyday language.

Janine Allis and her company Boost Juice have a unique place in the Australian business landscape – a successful woman with a brand everyone loves. The Secrets of My Success is part business biography, part business success manual. “My Boost Journey” reveals the resourcefulness Allis showed in her youth that would later become a key to her success with Boost Juice. “Thirty Recipes for Success” reveals the traits that make up the culture of Boost Juice stores. “Expanding Skills and Overcoming Obstacles” shares what Allis has learnt from running a business about teambuilding, marketing, franchising, passion, and dealing with challenges. The value for an entrepreneur in this book is that you’ll see that Janine Allis is an everyday person, like all entrepreneurs. Because she’s like you, and shares how she got to where she’s going through sticking with her goals until she achieved them, she will inspire you. The $24.95 price is already cheap for what you’ll learn, but the voucher for any sized Boost juice or smoothie means you can subtract at least another $5 off the price. Her story matters because she’s successful and she started without business skills. Any businessperson can get tips from her.

John Browne has come up with a subjective list for the seven elements that have changed the world. But given he’s former CEO of BP, it’s worth understanding his choices. His chosen elements are: iron, mainly because of its influential role in military history; carbon, because of its use as a fuel source; gold, as the most coveted element of all time; silver, because of its use in photography; uranium, because of its role in ending a war and as a power source; titanium, for its wartime applications but more so for its ubiquitous presence as a whitening agent in a society where white equals purity; and silicon, because of its use as glass and in technology. As Browne devotes a chapter to each element, he blends science, politics and history in a well-written story that combines his personal experience with solid research. You don’t need to agree with his choices to appreciate his reasoning and enjoy the book. From an investment point of view, this book helps you see how markets using natural resources are created – and how quickly those markets can vanish. If you invest in natural resources, or your business is dependent on them, this book will give you indispensable background knowledge.

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BF | HIDEAWAY

Wide Open Spaces, Fresh Air and Nature

The Berkeley River Location The Berkeley River is nestled on the gentle curve of Joseph Bonaparte Gulf on Australia’s remote north Kimberley coast. A stone’s throw from some of the most spectacular untouched coastal wilderness on Earth, this is truly God’s country. The closest town, Wyndham, lies 150 kilometres south to south east, but there is no road or trail leading you here. The only access for the privileged few is by air and ocean. Getting there is half the adventure Departing from Kununurra by float plane, your one-hour flight will take you soaring over epic Kimberley landscapes, from gorge and cattle station country to lush, rainforest-covered escarpments and wild extraordinary coastlines. Be sure to have your camera ready. Scheduled transfers run every Monday and Thursday, but other days can be arranged on a private charter basis. Through the eyes of early explorers The Berkeley River remains virtually untouched since early explorer Charles P. Conigrave visited the area in 1912 and named the river in honour of his brother. So many of the landscapes you explore are much the same as when Mr Conigrave traversed them a century ago. “The scenery thereabouts is, perhaps, as wild as any to be seen in Australia, and years ago I prophesied that some day, when the Far North becomes generally known to the world at large, this great gorge will be the haunt of tourists. “The great chasm mentioned is a

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feature of a large, previously unknown river, that we discovered and named the ‘Berkeley River’ – the mouth of which is some 10 miles due east of Mount Casuarina, a lonely mark on that very lonely coast. The Berkeley Gorge, which extends for 15 miles inland, is guarded by precipitous walls over 300 feet in height, and the waterway in the gorge is about 200 yards wide, patently very deep … All the rivers on this section of the far northern coast, and there are several in addition to those that I have mentioned, are characterised by gorge-like ravines, but that of the Berkeley is infinitely the wildest and the most stupendous.” Charles P. Conigrave Experience True Wilderness Bask in Wild Luxury THE BERKELEY RIVER VILLAS Twenty luxury villas are perfectly positioned along a 65-metre-high dune to command 180-degree panoramas sweeping from Joseph Bonaparte Gulf to Reveley Island, or from the mouth of the Berkeley River to its rugged red gorges beyond. Your air-conditioned private retreat features a king sized bed and open-air ensuite, complete with dual vanities and a free-standing bath tub for bathing in the Kimberley moonlight. And beyond the dramatic glass frontage, the occasional seating and daybed on your deck beckons you to laze away an afternoon. The Berkeley River Main Lodage Designed to blend contemporary architecture into the unique Kimberley coast environment, the main lodge is just a short stroll from your villa. Here,

‘

The Berkeley River is nestled on the gentle curve of Joseph Bonaparte Gulf on Australia’s remote north Kimberley coast. A stone’s throw from some of the most spectacular untouched coastal wilderness on Earth, this is truly God’s country.’

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HIDEAWAY | BF you can cool off or work out in the 20-metre lap pool; lounge with a book or magazine from the lodge library; dine on the freshest fine local produce; or talk business in our small conference centre. Memories to Last a Lifetime ACTIVITIES AT BERKELEY RIVER & BEYOND There are many ways to immerse yourself in the rich natural beauty of Berkeley River and the Kimberley wilderness beyond – some adventurous, some enriching, some romantic and all led by our resident specialist guides. RIVER CRUISES Full-day and half-day Berkeley River cruises led by our resident skipper take in the natural treasures of this tranquil river system. Choose from cruises and gorge hikes to Casuarina Falls, a cooling dip in the secluded waterholes of Berkeley Creek and the chance to spot native flora and fauna, from saltwater crocodiles to rock wallabies and birds of prey. FISHING Here, you have the opportunity to fish where only the privileged few have ever cast a line, with some locations so remote, they can only be reached by helicopter. What’s more, the incredible diversity of habitats offers the chance to chase an impressive array of species, from queen fish, threadfin salmon and mulloway to the elusive barramundi. WILDERNESS PICNICS Feast on a picnic lunch or a late afternoon antipasto platter, prepared by our renowned chef, beside secluded palm-fringed waterholes, the majestic Mount Casuarina or under our unique ‘Candelabra’ tree. HELICOPTER FLIGHTS Jump aboard our luxurious Bell 407 helicopter to venture beyond the four wheel drive tracks to treasures hidden deep within one of the last true wilderness areas on Earth. Gaze

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in awe at the mighty King George and Mitchell Falls. Watch the sunrise atop Mount Casuarina. Swim in crystal-clear rock pools untouched for hundreds of years. Picnic at Eagle Falls. Or fish some of the remotest spots in the world. FOOD Head Chef Paul Seymour has a real passion for remote locations and has worked in high end establishments and award winning venues. With Pauls’ previous roles as Head Chef at Nightingale Wines and Warrenmang Vineyard Resort, prior to taking up the reins in the kitchen at Berkeley River Lodge he has gained a reputation for his culinary genius and meticulous approach to personalising any menu to suit our guests. All chef ’s menus and recipes are available upon request. The Lodge’s cultured yet discerning service amid a casual environment welcomes you at every meal and our resident sommelier will ensure your meals are complemented with wines to enhance the flavours on the palate. www.berkeleyriver.com.au BF

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BF | EXTRAVAGANCE

Hand crafted French

excellence just for the elite... H ow many of us have forgotten we’re fairly highly handicapped and imagined we are on the greens of Augusta putting with Adam Scott or a back-in-time Greg Norman. I know I have. In fact, I’d like to swing like anybody other than myself. I’m a terrible golfer. It doesn’t stop me from tearing up the green … literally, but I’d like to be able to play better, or at least feel like I’m playing better. So I was interested to see what playing Valgrine-style would be like: would it make me putt better, or would it make me feel like I belong on the golf course? Most definitely the latter. This French brand is known for its exclusivity, its exquisite feel and if you’re a decent player its fine shot making. For those who can afford the clubs at a sale price 18.265€ (a little over $27,000 aud), it is well worth the purchase. ValGrine is a club that offers no limits to performance and is created using the most innovative technologies. Designing a putter that offers technical characteristics previously unimagined was the challenge that creator Grégory Moreau set. The result? A stunning object showing that technical perfection is possible. The power, precision, touch, sound, balance, swing

and handling are impeccable. Each putter is manufactured and assembled carefully by hand with more than 20 master craftsmen involved in the process in France. A traditional approach is usually full of compromises. However, Moreau did not take this approach. And it shows. Maison ValGrine makes putters a luxury, full of refinement and capable of extreme performance. Both this philosophy and this brand universe are unique. The clubs are entirely customised and under a guarantee of 100% French manufacturing.

Balance weights

ValGrine has accurately mastered the mass of the putter. This know-how is unique and permits adaptation to the morphology and swing of the player (line and arc). This science optimises performance, tolerance, efficiency and precision. Line of sight

These lines of sight ameliorate precision at address. The morphological position improves the kinematics of swing by placing the legs, spine, arms and eyes in line with the ball. There is just one objective with Valgrine: reinforce your performance and confidence. To give you an idea of the custom nature of this putter, here is a breakdown of The Dandy, pictured here, is made: HEAD

Material: Watch-making stainless steel. Treatment: Ionic l PVD Finishing: polished, satiny, blasted, cote de Genève Engraving and color: according to the card of customizations, upon request for pieces of exception. INSERT

Material: Watch-making stainless steel, Medical Stainless steel, Composite Stainless steel, Aeronautical Aluminum, Aerospace Aluminum. Engraving: according to the card of customizations, upon request for pieces of exception.

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Finishing: polished, satiny. Treatment: color champagne Red, Black, Blue. FASTENING

Material: alloy of brass and gold Finishing: encircled HOSEL

Material: Alloy of aluminum and carbon Finishing: Carbon braid, upon request for pieces of exception: T1000 | T3000. Matt, brilliant. SHAFT

Material: Alloy of Chrome Finishing: blasted, upon request for pieces of exception: polished, satiny, PVD Length: custom-made Grip: Diameter: standard, upon request for pieces of exception Material: Leather full flower, upon request for pieces of exception: shagreen, ostrich, alligator, shark, carbontec Finishing: natural tanning, upon request for pieces of exception Color: black, red, brown, pink, upon request for pieces of exception Sewing: crossed point, upon request for pieces of exception Thread: red, upon request for pieces of exception Flyweight: material: Composite of high-density forged nickel. Finishing: satiny and encircled Crown: Alloy of brass and gold. Finishing: polished, upon request for pieces of exception Weight: Men: 370g. Women: 330g. Junior: 310g, upon request for pieces of exception Ornament: upon request for pieces of exception Special material: Yellow gold, white gold, ruby (bright red) gold, Platinum GGems: Diamonds, upon request for pieces of exception Setting: Watchmaker 4 grains This putter reflects the spirit of maison ValGrine, sobriety, finesse, purity and French elegance. Today, ValGrine is an actor incomparable in the world of haute creation, lifestyle, art of living and especially performance. BF www.businessfirstmagazine.com.au

EXTRAVAGANCE | BF

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EACH PUTTER IS MANUFACTURED AND ASSEMBLED CAREFULLY BY HAND WITH MORE THAN 20 MASTER CRAFTSMEN INVOLVED IN THE PROCESS IN FRANCE.’

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BF | FASTLANE

Lexus’ luxury SUV Lexus is entering the small SUV market and is set to make a splash with the launch of its NX model.

exus has released the first details of its all-new, luxury compact crossover ahead of its unveiling at the 2014 Beijing International Auto Show. Conceived under the development concept of “Premium Urban Sports Gear”, all-new NX combines striking design with advanced technologies. Lexus Australia Chief Executive Sean Hanley said that the NX presents an exciting opportunity for the luxury marque. “Lexus Australia is very eager to secure the NX SUV and we believe it would complement our existing SUV line-up, providing a gateway vehicle to other SUVs and our expansive hybrid vehicle range. “We are now negotiating with Lexus in Japan and expect a decision to be made very soon – it’s a very exciting time for us.”

Exterior design

The NX has been designed to embody an aggressive form combined with segment-leading functionality. From the spindle grille back, the NX appears to have been chiselled from a single piece of steel – with wide flared guards housing 17 or 18-inch wheels that add to the overall muscular stance of the vehicle. Innovative LED headlamps and separate daytime running lamps flank the spindle grille and firmly express Lexus’ bold corporate styling. The side profile is accentuated by a roofline peak set towards the back of the vehicle to provide ample headroom for rear seat occupants while creating a tight silhouette. An innovative outer mirror and a world-first door handle mechanism

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(with a hidden key barrel and integrated lighting) add to the luxury appearance. The rear is punctuated by Lexus’ signature ‘L’ shaped combination lamps, each with seamless LED lighting, while the bodywork echoes the spindle grille design at the front. Interior design

The interior of the NX brings a sense of excitement to the cabin atmosphere that directly evokes a feeling of “Premium Urban Sports Gear”. The core idea was to combine the structural beauty of a high-performance machine with a material feel that maximises functionality. A silver frame flags the instrument panel and symbolises the strength of the crossover vehicle, while kneepads located on both sides of the centre console firmly support the driver and passenger. The intuitive interaction with human machine interface (HMI) technology is located between the kneepads and creates an air of innovation within the cabin. The NX builds on Lexus’ unique display and operation zone concept. Interior space played a significant role in the cabin design, and seating was a major focus. The NX features the lowest hip point in the segment, adding to the connection of the driver to the vehicle and increasing overall head room. NX also boasts the longest luggage load length of its competitors and offers generous front-to-rear couple distance. Technology Available in selected markets globally, the all-new NX offers the choice of up to three drivetrains: a highly efficient hybrid in NX 300h, an innovative all-new 2.0-litre gasoline turbo in NX 200t and a naturally aspirated engine in NX 200 with the choice of front and all-wheel drive. In addition, Lexus’ first Stop and Start system for a petrol drivetrain is available, providing additional fuel savings.

NX will also offer an array of innovative on-board technology, including a Lexus-first Wireless Charging Tray to enable charging of portable devices, the first application of a new Lexus Remote Touch Interface with a touch-pad, Panoramic View Monitor and a comprehensive Multi-information Display (including a Lexus-first G sensor and boost meter), Heads-Up Display, Allspeed Dynamic Radar Cruise Control, Blind Spot Monitor and Rear Cross Traffic Alert. Chief engineer Takeaki Kato said the NX was developed as a vehicle that suits an urban lifestyle. “Much like high quality sports watches, bikes and fashion, the NX represents the ultimate in premium urban sports gear,” he said. “Throughout all development phases we were determined to approach the NX from the perspective of young, urban, luxury drivers.” The NX 300h is expected to borrow the same petrol-electric powertrain from the IS300h sedan, which teams a 2.5-litre naturally-aspirated four cylinder with an electric motor and CVT automatic to produce a combined output 164kW and claimed average fuel consumption of 4.9L/100km. The NX 200t F Sport will debut the company’s 2.0-litre turbo charged four cylinder that is believed to produce in excess of 200kW and offer more than 350Nm of pulling power. The engine is expected to make its way into other Lexus variants, such as the IS and GS sedans and the larger RX SUV. The NX was unveiled at the 2014 Beijing Auto Show on April 20. BF www.businessfirstmagazine.com.au

FASTLANE | BF

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