Never Stop Learning: A window into our research

never stop learning A window into our research Edition 1, 2012

Unleashing innovation

RESEARCH

Fuelling insights

PARTNERSHIPS Seal the loop

LIFELONG LEARNING

Corporate Responsibility

Deeper insights in an ever changing world Every year the Faculty of Business and Economics (FBE) produces two editions of this ‘Never Stop Learning’ magazine to highlight our research and engagement activities. Research of the highest quality across all of our disciplines is embedded into the very fibre of this Faculty and the quality and impact of this research is widely recognised both internationally and domestically.

Within the ‘Research’ section of this magazine you will read about research activities that provide powerful insights in the fields of social policy, economics, finance, accountancy, management and marketing. This research develops a deeper understanding of the core problems and challenges in these fields and contributes to a greater knowledge of pertinent issues in today’s economy and society.

The ‘Partnerships’ section reflects on activities that we as a Faculty conduct in collaboration with the wider community.

An overarching goal of our strategy is to ensure we both contribute to, and learn from, the broader community and society in general, and we are constantly seeking out new partnerships that can

enhance business and economic activities in our community.

Within the ‘Lifelong Learning’ section you can read about ever evolving issues and problems that organisations and companies are facing today and how our talented researchers and teachers respond to these challenges by providing cutting edge, tailored education through the Graduate School of Business and Economics’ executive education programs.

As the global economy tilts in the direction of the Asia-Pacific region, this University, and this Faculty is ideally positioned to respond to the challenges that tomorrow’s leaders will face. The University of Melbourne is consistently ranked

number one in Australia and the Faculty of Business and Economics is regularly ranked as one of the leading business and economics schools in the world.

This strength, built on the foundations of excellence in research, teaching and engagement, will assist us in supporting our economy and our society with deeper insights in an ever changing world.

We hope you enjoy this magazine and we encourage you to become part of a community that never stops learning.

Professor Paul Kofman Dean, Faculty of Business and Economics Sidney Myer Chair of Commerce

contents

Catch up on the latest news, events and cutting edge research at the FBE. See: www.benews. unimelb.edu.au

RESEARCH

3 A dynamic centre for research 4 Cooking the books 5 Surfing the tribal wave 6 Politicians and business: Connections over the long run 8 Fuelling insights 9 Wheel of fortune 10 Unleashing innovation PARTNERSHIPS

12 Seal the loop LIFELONG LEARNING

14 Knowledge from the frontier of Corporate Responsibility

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A dynamic centre

for the education of future leaders and researchers Research by academics can challenge the frontier of knowledge. It leads to new insights and allows for a deeper understanding of subjects. Within this Faculty excellence in business and economics research has been embedded since its formation in 1924.

Our research combined with our teaching and engagement activities has contributed to the present situation whereby the Faculty of Business and Economics (FBE) is a dynamic centre for the education of future leaders and researchers. The FBE is a hub for collaborative research with a staff of prominent academics who are specialists across the major fields of business and economics. We enjoy relationships with over 100 institutions worldwide so that staff and student knowledge exchange and collaboration can occur. This work has ensured that our Bachelor of Commerce is the most highly sought after program of its kind in

Australia and that our Graduate School of Business and Economics (GSBE) has one of the most active graduate research programs in the country.

Meanwhile the Melbourne Institute, within the Faculty, continues to provide powerful economic and social insights through its ground breaking research. The creation of statistical tools such as the Household, Income and Labour Dynamics in Australia (HILDA) Survey and the MABEL, national longitudinal survey of doctors, combined with regular economic and social policy forecasts and updates ensures an informed debate on economic and social subjects can occur in Australia.

The consistent performance in international rankings confirms the FBE’s position as Australia’s leader in business and economics research and teaching and the most recent evidence again highlights this fact. We place above any other business and economics faculty in Australia when it comes to our research outcomes being published in the world’s best journals. Engaging in groundbreaking research to provide deeper insights will always remain embedded within the FBE.

Anne-Wil Harzing

Associate Dean Research Faculty of Business and Economics

Never stop learning 3

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Cooking the books How the work culture of a firm impacts on accountancy manipulation

By Eoin Hahessy

Enron, ‘Bernie’ Madoff and Freddie Mac – companies and fallen individuals that have become globally synonymous with accounting fraud and corporate scandals in recent years. Gaining an understanding into what motivates and drives accounting manipulation, which is a ‘slippery slope’ to accounting fraud, is imperative if we are to adopt measures to minimise ethical transgressions. Research conducted at the Department of Accounting within the Faculty has sought to achieve a deeper insight into why accounting manipulation occurs and what boards of management and senior management within the firm can do about it.

Accounting manipulation occurs more often in firms that have a work culture that is centered on self-interest, according to a study co-authored by Professor of Accounting, Margaret Abernethy with colleagues in the Tilburg University in the Netherlands.

The study, which analysed 550 senior managers in The Netherlands, found that these manipulations included everything from deferring needed expenditure or accelerating sales to shifting funds between accounts to avoid budget overruns.

Additionally the study found that where the work culture is one that is focused ‘on self’, firms use expensive performance incentive work contracts in order to encourage their employees to consider the impact of their actions on shareholders, investors and colleagues.

Professor Abernethy, who holds the Sir Douglas Copland Chair of Commerce, conducted the study with Professors Jan Bouwens and Laurence van Lent of the CentER and Department of Accountancy at Tilburg University.

Professor Abernethy said changing the ethical work climate of a firm was difficult, but “...the type of performance incentive contract could mitigate some of the adverse consequences associated with a focus on self.”

“This research is a unique analysis as it presents information from the very coalface of this issue and from senior

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managers who engage with these issues on a daily basis. The results clearly highlight that ethical values play an important role in the daily practice of a firm. Our study demonstrates that the ethical work climate of a firm has a strong relationship to incidences of accounting manipulation and to the types of incentive contracts that firms decide to use.”

Firms are now required to disclose if they have adopted a code of ethics and stock exchanges across the globe require companies to disclose codes of ethics for all directors and employees of firms.

“However the simple codification of ethical behaviour through legislation does not ensure that ethical transgressions will not occur and increasingly firms must adopt

Managers with a certified-accountant degree background are less likely to engage in manipulative activities than their colleagues.

Professor Bouwens said that the background of the managers plays a significant role. “We found that, with all other conditions being equal, managers with a certified-accountant degree background are less likely to engage in manipulative activities than their colleagues.

This tells us that with education and training we can significantly affect the likelihood of people resorting to unethical behaviour. During these programs accountants learn that it is always in their best interest not to cross the line.”

Professor Abernethy said unethical business behaviour had been under the microscope for more than 10 years, but that changes still needed to be made.

“The creation of the Sabranes Oxley Act in 2002 and its ripple effect across the world led to a stronger attempt to tackle unethical behaviour within companies.

mechanisms that embed ethical behaviour into the very ‘fibre’ of the firm.”

The study has implications for Boards of Management concerned with ensuring that the firm embeds cultural norms that encourage desired ethical behaviors from top management right through to individuals at the lowest level. “We know the tone at the top influences the actions of individuals within the firm,” Professor Abernethy said.

Study accounting with us

Major in accounting as part of the Bachelor of Commerce. Find out more at www.bcom.unimelb.edu.au Explore your graduate study options in accounting at: www.gsbe.unimelb. edu.au/courses/accounting/

research

Surfing the tribal wave

By Danielle Roller

How does an activity transform from an indigenous pursuit in Hawaii and Tahiti to a hippy sub-culture in the space of a few hundred years?

Dr Robin Canniford says the surfing community, with its roller coaster ride through history is a perfect case study for his research into consumer or marketplace communities.

from one type of group to another, from sub-culture to brand community. He believes market saturation doesn’t dilute brand loyalty, it simply transforms the community into a new kind.

Dr Canniford, along with Dr Gergely Nyilasy, both of the Department of Management and Marketing in the Faculty of Business and Economics are hoping to come up with a theory of how one kind of consumer community transforms into another and what the major forces are that drive change.

The surfing community represents elements of all three types of communities and has seamlessly slipped from one to another over the course of several hundred years.

Dr Canniford explains, “Community is bound together by a sense of group think, moral responsibility towards each other and a shared passion, in some cases for a particular brand.”

Consumer communities are split into three different types: Brand communities: A single brand is central to these long-term communities. Members get together based around brand use, such as Kombi clubs, Harley riders or Apple users.

Consumer tribes: These communities often congregate only for a short time, to share feelings of passion and shared activity.

They don’t rely on a single brand. The main attraction is the link with other people through the activity, eg. flash mobs.

Subcultures of consumption: Subcultures are made up of people with a long-term commitment to an activity. Forms of consumption often hold them together, but these don’t necessarily involve just one brand. Traditionally disenfranchised youths.

So what happens when the activities of biker or tattoo sub-cultures become the norm? When a niche brand community like Apple takes over the world and everyone has an iphone, an ipod, and an ipad?

This gap in the research is what fascinates Robin Canniford. He believes that when the economies that communities consume change, that’s when groups transform

“The surfing community is a long term activity with decades of major change.

It began as an indigenous pursuit in

and sensitively, rather than shape or manage them.

“It’s all about understanding. If businesses understand their communities, they’re going to get the strategy right. If you interact with people in a positive way they’re going to love you. I’d like a lot of businesses to treat consumers with a bit more respect and understand that just like wildlife can be in danger, sometimes consumer culture can be endangered by heavy-handed marketing managers.

Businesses don’t own their communities, they should be supporting consumers, not pushing people around.

Hawaii and Tahiti before Captain Cook, then it was smashed by the missionaries of the mid-late 19th century. The surfing culture virtually died out in Hawaii and completely died out in Tahiti.

“Then in the early twentieth century it was revived for wealthy white tourists in Hawaii, the Prince of Wales even had a go with Lord Mountbatten, so it was very upper class for a while.”

It became a middle-class pursuit in the 1930s and 40s before exploding into popular culture through music, films and television in the 1960s. In the 1970s surfing went sub-cultural, becoming an alternative, hippie, beat scene, with lots of drug use.

And since the 70s, Robin Canniford says it’s been a mixture of all three, with the efforts of mainstream brands like Rip Curl, Billabong and the Association of Surfing Professionals helping to drag the scene from deviant to main stream.

Robin Canniford hopes that his insights into the shifting of these groups from one form to another can help educate companies to work with their loyal consumer communities more generously

Businesses don’t own their communities, they should be supporting consumers, not pushing people around.”

The obvious way in which many organisations interact with their communities these days is through social networking tools such as Facebook, but Robin Canniford says that just barely scratches the surface.

“Communities don’t just live on the web.

That’s not where authentic community operates, that’s not where real life is.

Dance music tribes, bikie groups, surfers, they’re right there in real life, with real bodies, real sweat, real smiles, real tribes.

Social networking can be a resource for these communities. But it is when you facilitate real community that you become authentic.”

STUDY MARKETING WITH US

Major in marketing as part of the Bachelor of Commerce. Find out more at www.bcom.unimelb.edu.au Explore your graduate study options in marketing at: www.gsbe.unimelb. edu.au/courses/marketing/ Never stop learning 5

research

Politicians and business:

Connections over the long run

By Rees Quilford

Business and politics have had a long and intertwined relationship. Gaining a deeper understanding of that relationship and how it has developed over time is important in the development of robust policies and procedures covering ethical practices at the intersection of business and public office.

Dr Lyndon Moore of the Faculty’s Department of Finance is working to provide a deeper understanding of this relationship.

Business and politics have always gone hand in hand. But if a firm happens to have a director who is also a politician – they become a director or are elected to parliament – how is that likely to affect business? At the beginning of the twentieth century it was common for elected officials to have a diverse range of business interests but the situation has changed dramatically over the past century.

Dr. Lyndon Moore, Senior Lecturer in the Department of Finance, is working on a research project examining the links between business and elected politicians in the United Kingdom from the 1880s through to the present. Dr. Moore and his collaborator, Assistant Professor Andriana Bellou from the University of Montreal, are examining how political directors differ from non-political directors and how that relationship has changed over time.

“At the 1900 election in the UK more than half of the MPs elected to parliament were company directors. Almost everyone was in on the action. Then you look at today and in the UK it’s something like 5-6%,” says Dr Moore.

Examining this reduction in participation rates of politicians in business directorships is a primary concern but also what can be learnt from it. “We know it was 50% at the start of the twentieth century and it’s around 7% at the end. So what we are looking at is what has happened in that intervening time period and more importantly why,” says Dr. Moore.

The connection between politicians and businesses has attracted a great deal of interest amongst academic circles in recent years. According to Dr. Moore most studies adopt a cross sectional approach, which takes a certain point in

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time and examines which firms had political directors and how they differed from firms without political directors. Dr. Moore and A/Professor Bellou’s study differs in that it utilises a time series approach and focuses on the director’s point of view. “If there is a politician, who is a director, as he or she stays in power, do they tend to pick up more directorships or fewer directorships?

Also, does the industrial composition of those directorships change over time?”

A related issue is the matching between firms and politicians: is that matching assortative? That is, do politicians tend to be involved in businesses that mirror their educational background?

Dr Moore cites the increased scrutiny of those in public office as a point of interest.

“Over the twentieth century, government regulation of all forms of public life and particularly business life has increased.

So one thing that could be useful is: you’re a business and you want to have MPs there going in to bat for your industry.”

According to Dr. Moore factors such as this may correlate to changes in the involvement rates of politicians in certain

of historical data available. The annual publication, the Directory of Directors, dates back to the 1880s and lists every person in the UK who held a directorship with a company. “If that data source didn’t exist, while you could possibly track these people, it would be terribly time consuming,” says Dr. Moore.

Around the time of an election, if the director [of a company] is elected to parliament then the stock price goes up by around 2%. industries over time. “What we suspect might be happening is that as certain industries come up for regulation, or as they are regulated, they want to have a politician involved and that politician’s business interests might shift towards those industries which are being regulated or at threat of regulation.”

The United Kingdom provides an ideal case study due to the quality and wealth

The Directory is studied to identify MPs and the firms they were directing. Approximately 40 general elections have been held since 1880 and with roughly 600 MPs involved in each election it is a large data set. Moreover, to put that data into context a random sample of directors who are not politicians is also collected. “We go through and take whoever is the first name on each page.

Who was that person, what titles did they

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“One of the things we think is that having a politician on your board makes it easier to raise funds, either through issuing new equity to the market or new debt,” says Dr. Moore.

have and then how many firms were they directing and what were they? Then we will see whether politicians are systematically different to an average director.”

While the process of cross referencing an MP and the performance of the firms they were involved with is time consuming it raises the prospect of examining what effect having an MP involved can have.

“First of all we will need to say what do we know about those firms? Are politicians involved in a vastly different sort of firm to non-political directors? Are they bigger firms, smaller firms, in particular industries, in industries that are highly regulated?

Do they tend to be involved with more directorships? Are they just prominent people who are going out and selling themselves to companies or are they really business people first?”

According to Dr. Moore the effect of having a politician directly associated with a firm can vary depending on the political climate.

“Currently, around the time of an election if the director is elected to parliament then the stock price goes up by around 2%.

It’s not huge but it’s reasonable. To put it in some kind of perspective one recent paper looked at businesses in Germany in the 1930s that were connected to the Nazi regime and for them the kind of magnitude we are looking at is around 6% [increase in the stock price].”

Identifying possible factors that contribute to this increase in the stock price is the next step. “One of the things we think is that having a politician on your board makes it easier to raise funds, either through issuing new equity to the market or new debt,” says Dr. Moore.

Another aspect of the study involves analysing the personal characteristics of political and non-political directors, identifying traits such as age and background to see if that has had an influence on their involvement in business.

The work of Dr. Moore and A/Professor Bellou aims to provide greater historical context to the multi-layered association between business and politics. Their examination of the similarities and differences between your average director and those in public office is sure to provide a more rounded picture of the diverse factors that influence the composition of the business interests of politicians over time.

STUDY FINANCE WITH US

Major in finance as part of the Bachelor of Commerce. Find out more at www.bcom.unimelb.edu.au Explore your graduate study options in finance at: www.gsbe.unimelb.edu. au/courses/finance/

Never stop learning 7

research

Fuelling insights: Driving a deeper understanding of petrol price markets

By Eoin Hahessy

Dr. David Byrne is an economics researcher in the Faculty of Business and Economics with a deep interest in petrol prices. He has been studying in detail petrol price markets in Canada and America and now he and his team have turned their expert attention on Australia. Their research will provide valuable information for policymakers in Australia, and offer significant benefits to consumers.

Petrol is the lifeblood of modern existence and the springboard for economic activity.

The average Australian spends $51.02 per week on petrol, or 4.1% of their total weekly expenditure. After food and rent or mortgage costs, petrol is the next major item in the budget of most consumers.

As such a common feature of our lives and as a vital ingredient to our economic strength, it is highly advisable that we gain a deeper understanding of the dynamics of petrol pricing.

75% of the petrol market in Melbourne and Sydney is held by four large petrol chains.

The Australian Competition and Consumer Commission (ACCC) closely monitors competition in Australian petrol markets, but additional economic research in this area can prove beneficial, as Dr Byrne outlines, “Policy makers need to benchmark economic models that predict how prices should behave if stations set prices competitively. With such a model, authorities can effectively monitor petrol stations’ conduct, identify collusive

8 Faculty of Business and Economics

behaviour, and design policies that help ensure consumers pay fair petrol prices.”

Extensive academic research has been conducted in this field and it has found that petrol price cycles occur in markets where there is a prevalence of smaller independent stations. In effect, smaller independent stations look to undercut the prices of some larger petrol retail brands and this leads to occurrence of price cycles as the price of petrol goes up and down over a period of time. Dr Byrne and his team are building on this research and providing insightful information from the Australian marketplace.

Their initial research shows exactly at what time during the week petrol price rises occur in the major cities of Sydney and Melbourne and how the dynamics of these markets work. Dr Byrne explains, “75% of the petrol market in Melbourne and Sydney is held by four large petrol chains and due to the dominance of such large petrol brands, both these cities experience regular petrol price cycles.

You can think of price cycle like a conductor and an orchestra. The conductor is the big brands who typically lead the jump in prices and everyone

follows, the independent petrol retailers are the ones who usually lead the price cutting as they seek to gain business.

Independents in the marketplace lead to a disciplining of the big brand petrol retailers.”

Dr. Byrne is currently using data he has obtained from working with industry partners such as gasbuddy.com in North America and Motormouth.com.au in Australia to create an econometric model that will be of benefit to policy organisations such as the ACCC. In addition Dr. Byrne and his colleagues are examining the commonly held assumption that petrol prices are increased over long weekends.

When concluded the research will provide sharper insights into the dynamics of the petrol price market in Australia, assist in creating an anti-trust policy that achieves its aims and allow consumers to make an informed decision when purchasing petrol.

STUDY ECONOMICS WITH US

Major in economics as part of the Bachelor of Commerce. Find out more at www.bcom.unimelb.edu.au Explore your graduate study options in economics at: www.gsbe.unimelb. edu.au/courses/economics/

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Wheel of fortune

Young adults who get parental support do better at study and work

By Navina Smith

The Melbourne Institute of Applied Economic and Social Research celebrates its 50th anniversary this year.

Founded by Ronald Henderson, the Melbourne Institute has been providing powerful economic and social insights since 1962. The Director of the Institute, Deborah Cobb-Clark, recently examined the development of the career and work prospects of young adults over a ten year period and found engaging insights.

Young adults who receive parental support are more likely to be studying and have access to better job opportunities than young people from disadvantaged backgrounds, according to co-authored research by Professor Deborah Cobb-Clark, Director of the Melbourne Institute.

The research found that while young people from disadvantaged backgrounds

Children who grow up in disadvantaged outcomes are more likely to leave school early.

year olds over the past decade. They primarily examined data on their families’ welfare experience, such as Centrelink receipts, unemployment, poverty, family breakdown and single parenthood.

“Unfortunately, not all young people will have access to the parental support they want or need. Some families lack the necessary resources, while others may simply be unwilling to continue supporting their children after they reach adulthood,” said Professor Cobb-Clark.

“Children who grow up in disadvantaged outcomes are more likely to leave school early, have less access to resources like gifted and talented classes and have a lower probability of studying.”

receive less financial support from their parents, they are more likely to be residentially and financially independent of their parents at an earlier age than their more advantaged peers.

Professor Cobb-Clark said that while changes in youth allowance over the years have focused on the disadvantaged, it has also raised the threshold for becoming independent.

Professor Deborah Cobb-Clark and Professor Tue Gorgens from the Research School of Economics at the Australian National University looked at interviews conducted with 18-20

“When you access the social system you are doing so on the basis of your parents’ income not your own, therefore parents will often be supporting young adults in the 18 year old age range.”

Professor Cobb-Clark said that support from parents can play an important role in ensuring that young people make a successful transition into adult roles. “A young person’s life chances are shaped by the investments they make in their education and career development in early adulthood,” said Professor CobbClark. “Children who have the option of co-residing with their parents and get their support with education and training costs enjoy higher living standards primarily as a result of improved labour market opportunities.”

The Melbourne Institute is a department of the Faculty of Business and Economics. It is Australia’s leading and longest standing research institute in the field of economics, undertaking cutting-edge research into key issues relevant to contemporary economic and social policy.

To see the work the Institute engages in and how you could partner or study with the Institute visit: www.melbourneinstitute.com

Never stop learning 9

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Unleashing innovation

New research from Professor of Management, Danny Samson has identified the key components of innovation within organisations. Innovation can be a powerful accelerant for the future prospects of a business, and an entire economy.

By Eoin Hahessy Innovation is a much sought-after ingredient by companies in all sectors and policy makers in every economy.

It has the power to catapult a company to become a leader amongst its competitors and ignite a country to become an economic powerhouse.

Neglecting innovation within a company can be fatal and even formerly strong market leaders can be vulnerable.

Just ask Kodak. There are numerous stories relating to companies that were once at the forefront of innovation in their industry but which now litter the corporate graveyard, replaced by companies with faster, simpler, and better technology.

Within Australia there are companies setting the pace when it comes to innovation, illustrating to other sectors of the economy just how innovation can be achieved. Professor Danny Samson recently conducted a project with the Department of Innovation, Industry, Science and Research to identify the key principles of innovation shared among innovation leaders.

Professor Samson says the aim of the project was to show that no matter what size a company is, certain principles can be adopted to drive innovation.

“We wanted to examine in detail both large and small innovative companies that operate in Australia which consciously adopted a competitive strategy that is at least partly – if not significantly – based on their innovation capability.”

The result of this project was the creation of an in-depth report, Innovation for Business Success – achieving a systematic innovation capability, which examined the building blocks of innovation and identified successful principles adopted by ten Australian-based companies across varied industry sectors. Within the report Professor Samson underscores the importance of five key building blocks that can create the foundation for systematic innovation within a company.

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The first block is strategy. A company must take the decision to explicitly and consistently state its strategic aim to be innovative, and actively and relentlessly engage in activities that drive innovation across the company.

The second key building block to ensure innovation within a company, according to Professor Samson, is that the operating practices and resources of a firm must be geared towards qualified risk taking, as opposed to conservatism or a ‘don’t change’ attitude. He describes how Indian company Tata holds an annual competition known as Innovista to inspire innovation amongst its staff. Locally, Lonely Planet has ‘Innovation days’.

Strong, determined, energetic and dynamic leadership was a common feature of all ten companies.

A third crucial building block to create innovation is measures of performance within a company. “If a company wishes to create innovation, key performance indicators related to it are a necessary ingredient,” he says.

Ensuring staff are recognised and rewarded for innovation contributions is the fourth building block towards creating innovation.

“What gets measured gets done, but what gets measured and rewarded gets done very well. Our most innovative firms have systematic ways to measure innovation effectiveness, and they recognise and reward the people who contribute.”

The final building block to cement the process of innovation within a company is to instill a culture and behaviour towards innovation. “Firms must work to ensure innovation is second nature and embedded as part of daily work and not an addendum on Friday afternoons,” he says.

One company cited in Professor Samson’s report which worked hard to ensure this occurs was the Minneapolis-based food manufacturer, General Mills, which sent several employees to observe and learn from the fast changeovers applied in the pits at NASCAR races, which could then be taken away and applied to their production lines. Within months they had reduced changeover time on their production lines from three hours to 13 minutes.

Innovation can be as much about process improvements and cost reductions as it is about new offerings to the market.

In addition to analysing these five crucial building blocks of innovation, Professor Samson’s report identified ten innovative Australian based companies, both foreign and locally owned, that varied in types and sizes, and spanned radically different industries such as tourism, car manufacturing, electronics, textiles, computers and mining.

“We carefully selected a group of companies which were substantial and successful innovators to take part in the study,” Professor Samson says. Interviews were conducted with senior executives in each company and analysis was undertaken to determine the underlying principles common to these effective innovators.

Through this work twenty principles of innovation were ascertained.

“From the companies we studied, we found that although they differed very much in size and structure, industry, and product or service offerings, deep down there were some common success factors.

These were deep principles, not only of innovations, but also of the capability to successfully implement a series of innovations. I call it Systematic Innovation Capability.”

One of the salient principles in the twenty identified in the report is that of leadership. Strong, determined, energetic and dynamic leadership was a common

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feature of all the ten companies’ studied, and was one of the most important principles identified. Without the right leadership, the researchers found that resources would not be allocated nor focused on innovation, measures would not be right, and so firm-wide innovation behaviour would not be in place.

“Sustainable development ideas are by definition innovations. In order to engage in energy use reduction, or staff wellbeing processes, innovation is required and changes are implemented. The concepts of innovation and sustainable development are entirely complementary. One can spur on the other,” he says.

Another principle identified among these ten companies was that innovation was achieved by involving partners from outside the organisation. There was a large degree of openness amongst these companies and they recognised that a firm does not have to work alone in its innovation efforts.

Toyota was one example of this. It placed its staff on secondment for extended periods so their suppliers became familiar with the ‘Toyota Way’.

The Department of Innovation, Industry, Science and Research has now condensed into a booklet the twenty principles of innovative companies identified in Professor Samson’s report, to allow companies to reflect on their own approach to innovation.

Professor Samson is of the opinion that innovation offers Australian companies the possibility of competitive advantage.

An additional feature of these companies was that sustainable development actions such as waste reduction, staff wellbeing, and environmental output improvements, went hand in hand with innovation.

“Australia is an expensive country when it comes to labour costs, so we cannot compete on that front anymore. Likewise the old adage that Australian products while costing more are made better, is also ringing hollow, as low cost countries

Australia is an expensive country when it comes to labour costs, so we cannot compete on that front anymore. improve their quality. Today, superior systematic innovation capability is where this country can compete and offer competitive advantage. Innovation is the ultimate competitive weapon, both in processes and in products and services.”

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Major in management as part of the Bachelor of Commerce. Find out more at www.bcom.unimelb.edu.au Explore your graduate study options in management at: www.gsbe.unimelb. edu.au/courses/management/

Never stop learning 11

PARTNERSHIPS

Seal the loop Business and Economics students are applying their marketing skills to help Melbourne Zoo promote environmental conservation in the Victorian community.

By Eoin Hahessy Twenty years ago, a female Australian fur seal was found tangled in a discarded fishing net off the coast of Victoria. The net had cut so deeply into her neck that it was feared she may not survive her injuries.

It took months for the cut to heal under the care of Melbourne Zoo, who would name the seal Silva. Today, while Silva still bears the scars of the tangled net, she has survived to be the oldest seal at the Zoo and is a visible reminder of the effect pollution can have on marine life.

life, as well as the four seal colonies located around its coast contributes to the attraction of Victoria as a tourist destination.

In recognition of this fact, Zoos Victoria developed the Seal the Loop project to reduce the threat that plastics and fishing waste pose to marine wildlife. The overall

68% of the waste collected was fishing waste. Ben Sanders explained, “These results showed that while both fishing waste and general waste was deposited in the bins there was an obvious demand and desire for their installation.”

This is a real life, tangible problem faced by our community that demands skills in marketing to drive awareness of an issue. Zoos Victoria benefits from gaining the insights of some of the brightest business minds in Australia.

It is estimated that discarded plastic kills up to 1 million sea birds, 100,000 sea mammals and countless fish each year, with plastics being the most common litter item found in Australia. Fishing waste, in particular fishing line, also poses a threat to wildlife when not disposed of properly.

Thousands of marine birds, mammals, reptiles and fish are killed or injured each year due to poorly discarded fishing line.

goal was to energise the community to understand the impact humans have on the health of the marine environment.

The project was rolled out for a trial period of five months, with a key element being the installation of specially designed bins on ports and piers in 20 popular fishing locations across Port Philip Bay.

The coastline of Victoria has some of the most diverse marine environments in the world. 85 per cent of southern Australian fish species and between 90 to 95 per cent of other groups of marine creatures are found here that exist nowhere else in the world. Such a rich depth of maritime

Ben Sanders, community conservation officer with Zoos Victoria explained that the trial period gave insightful learnings, “1.5kms of fishing lines were deposited in these bins. That is enough fishing line to go around the entire Zoo one and half times and this is fishing line that may have

12 Faculty of Business and Economics

otherwise ended up in the ocean and led to marine entanglement.”

In order to fully learn from its experiences to date the Zoo formed a partnership with the Faculty of Business and Economics to maximise the impact of Seal the Loop.

“We wanted to more fully understand human behaviour around the use of segregated bins such as these and to gain insights into barriers and motivators of the public towards engaging in conservation action.” Ben Sanders explained.

Associate Professor of Marketing, Angela Paladino believes the FBE was a natural to help Zoos Victoria maximise the results of Seal the Loop.

PARTNERSHIPS

“When you look at the Seal the Loop project and its proposed goals, you can see it demands skills in the areas of consumer behaviour and marketing more generally. These are skills that we are teaching our students and skills they can apply to the challenges that the Seal the Loop project has to confront.”

Associate Professor Paladino developed a project in collaboration with Zoos Victoria staff for undergraduate and graduate students with the key aim of enhancing the impact of Seal the Loop. Specifically Zoos Victoria’s Community Conservation team is keen to assess both the social and environmental impact of the program in areas where the bins are situated and to identify ways to grow the program. This would include; measuring the awareness of bins amongst local communities, measuring how many people are using the bins when fishing, measuring the attitudes people have toward the Seal the Loop program and the bins as a method for protecting marine wildlife.

The student teams will then propose recommendations to Zoos Victoria of how Seal the Loop can be enhanced so that attitudes towards marine pollution can be changed.

“Due to the operating conditions of Zoo Victoria the proposals that the students come up with must be cost effective and

It is estimated that discarded plastic kills up to 1 million sea birds, 100,000 sea mammals and countless fish each year with plastics being the most common litter item found in Australia.

feasible, which challenges the students to come up with innovative solutions that must be practical,” Associate Professor Paladino explained.

“What you can see with this partnership is that it is mutually beneficial. For the students who are used to case studies, this is the complete opposite. This is a real life, tangible problem faced by our community that demands skills in marketing to drive awareness of an issue.

Equally Zoos Victoria benefits from gaining the insights of some of the brightest business minds in Australia.”

Zoos Victoria is eagerly looking forward to the strategies that the students will present to them later this year. “This partnership has been a fantastic experience so far

and we are looking forward to receiving not just theories but actual strategies that we can put into place to improve our conservation outcomes. We intend to make the most of this opportunity and firmly believe a great outcome will be realised that will help in assuring the health of the marine life that lives within our community.”

Partnering with us

There are many ways in which partnering with the Faculty of Business and Economics can benefit your organisation and staff.

Find out how you can engage with us at: www.fbe.unimelb.edu.au/engage

Never stop learning 13

lifelong learning

Knowledge from the frontier of Corporate Responsibility

By Dr Ben Neville

In the past decade the rise of the importance of Corporate Responsibility (CR) has been dramatically swift.

Once considered voluntary, CR has become vital. But how up to date are firms and organisations with the latest developments in the CR field? Dr Ben Neville reports on key findings in the field and how the Graduate School of Business and Economics is utilising its Executive Education programs to help educate firms.

According to CorporateRegister.com, an independent reference source, fewer than 500 companies issued sustainability reports in 1999. Compare that with the most recent KPMG International Survey of Corporate Responsibility Reporting, which shows ninety-five percent of the 250 largest companies in the world (G250 companies) now report on their CR activities. CR has become embedded

are quickly gaining ground. Only around half of Asia-Pacific companies report on their CR activities and the KPMG report expressly stated that ‘Asia-Pacific will need to redouble their efforts to close the gap with other developing regions’.

Within Australia the enthusiasm for CR has not been dampened. A recent study conducted by the Australian Centre for Corporate Social Responsibility shows

Saying you’re sustainable or socially responsible is no longer going to be enough.

in the very fibre of firms and the incidence of it being compiled into sustainability reports has exploded. Despite this increase in its importance, some regions and some specific industries are taking a lead while others are falling behind.

Traditional CR reporting nations in Europe, such as Germany and the UK, continue to see the highest reporting rates, but the Americas, Middle East and Africa

14 Faculty of Business and Economics

that, as a whole, Australian companies have not cut CR budgets and continue to expand CR activities despite the global economic downturn. Differences between industry sectors and the incidences of CR can also be identified. The mining and forestry, pulp and paper industries are the leading global industry sectors for CR reporting, with trade, retail and transport sitting at the bottom of the list of reporters, according to the KPMG report.

With the Asia-Pacific region needing to redouble its CR efforts and with enthusiasm existing within Australia for CR activities, it is important to gain expert knowledge in this field. The latest trend in CR is the emergence of a suite of voluntary frameworks and standards that guide companies’ responses to their social responsibility and sustainability challenges.

They include such mechanisms as the UN Guiding Principles on Business and Human Rights, the OECD Guidelines for Multinational Corporations, ISO26000 and the Global Reporting Initiative.

These frameworks and standards represent ‘how to’ guides on corporate responsibility. They also represent the maturing of the area and the culmination of the ‘muddling through’ of the pioneers.

While the frameworks and standards are likely to facilitate the scaling up of corporate responsibility across competitors, industries and countries, they also promise to push the boundaries of corporate responsibility beyond the areas that many companies may feel comfortable.

GSBE Executive education

and learning are “ Leadership indispensable to each other.

”

- John F. Kennedy, 1963

The frameworks and guidelines can also help businesses in their business relationships. Large corporations, from Westpac to Walmart, increasingly expect their business partners to reach certain levels of CR. Amongst the reasons, it helps protect these firms from being associated with future ethical scandals.

Saying you’re sustainable or socially responsible is no longer going to be enough. Firms will need to prove this by demonstrating their credentials. The emerging suite of CR frameworks and guidelines will be how firms do this.

The GSBE offers a diverse range of executive education programs.

Scheduled throughout the year, our courses cover a wide range of strategic business areas.

Designed for experienced professionals, these programs are delivered in intensive format.

The GSBE also works with organisations to develop and deliver customised programs in many areas of business and economics. For more information please visit: www.gsbe.unimelb.edu.au/execed

GSBE GSBENever Never stop stop learning learning today’sever-changing ever-changingenvironment, environment, itit is InIntoday’s is vital to understand the principles business and vital to apply cutting-edge ideasofand strategies learn business from experience and innovate toeconomics, maximise your performance. in sustainable ways.

AtAtthe can theGSBE GSBEwe wedevelop combinegraduates academic who rigour with solve problems and provide leadership freshcomplex perspectives to develop graduates who inprovide business, government and thegovernment community.and leadership in business, the community.

Our range of courses cater for early career

Whether you’ve just completed your starters, as well as established professionals undergraduate degree, are looking to change via our executive education programs. career direction or want to acquire specialist Our teachers bring their research to the skills, we have a program for you. rigour with classroom to combine academic

Discover our wide range of full part-time fresh perspectives.

We never stopand learning study options,should scholarships and neither you. and support services at www.gsbe.unimelb.edu.au

Find out more at www.gsbe.unimelb.edu.au

www.gsbe.unimelb.edu.au

Never stop learning 15

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The Department of Management and Marketing recently organised a business breakfast with the GSBE’s Executive Education arm to showcase leading international speakers from organisations such as Oxfam discussing the latest trends in CR. It is vital for Australian businesses to keep up to date with the emergence of these voluntary frameworks and guidelines. Stakeholders are increasingly using them to rebalance the information asymmetry at the heart of CR, by using them as accreditation tools to verify a business’s CR performance.

lifelong learning

Dr Ben Neville co- teaches the subject Strategy, Ethics and Governance as part of the Graduate School of Business and Economics’ flagship Executive Education program Master of Enterprise (Executive).

Become part of a community that Never Stops Learning www.fbe.unimelb.edu.au facebook.com/MelbourneGSBE @BusEcoNews benews.unimelb.edu.au

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Authorised by Dean, Faculty of Business and Economics. CRICOS Provider code: 00116. Intellectual Property For further information refer to Statutes and Regulations. Copyright The University of Melbourne 2012. Copyright in this publication is owned by the University and no part of it may be reproduced without the permission of the University. Disclaimer The information in this publication was correct at the time of printing. The University of Melbourne reserves the right to make changes as appropriate. As details may change, you are encouraged to visit the University’s website or contact the University of Melbourne Information Centre to obtain the latest information.