COVID

What businesses are doing to survive

 LOCKDOWN | DALE KHOURY

AS I write this article, I am well aware of the hardships faced by many individuals, families and businesses as Greater Sydney moves towards its ninth week of lockdown.

In many parts of our great State, employees have been stood down and businesses mothballed as owners come to terms with the challenges of running a business in the face of COVID-induced uncertainty.

Th e 2020 lockdown, in some ways proved to be the curtain raiser for this more extensive, harder lockdown.

But, if there are any silver linings to look for, the fact that businesses were forced to become more agile and more focussed in the fi rst lockdown can surely count as one.

In the segment of the market that I focus on (mid-market businesses across Sydney and Greater Western Sydney) I have seen a number of businesses deploy diff ering strategies and tactics to see them through these economic challenges.

Businesses in 2020 were focussed on employee wellbeing and safety, cash fl ow forecasting and negotiating with key stakeholders – landlords, suppliers and funders.

We also saw a radical increase of board involvement in business decisions – both to (probably) support CEOs navigate the uncharted waters, but also a measure of stronger corporate governance.

Th is lockdown is diff erent. Th e fi nancial pressures are exacerbated given there is no JobKeeper-like package (although smaller State and Federal packages are available to individuals and businesses) and the Delta infection rate remains stubbornly high despite very limited community interaction.

But, on the other side of the ledger there is a sense of familiarity about what lockdown means, how it feels and what we can expect from the economy when we emerge.

Th e rapid rebounding of many parts of the Australian economy aft er the pandemic’s fi rst wave has given businesses and business owners hope and to some extent, confi dence that while times are tough now, the Australian economy is resilient, and things will get bett er. It is for this reason that many business leaders are looking over the parapet and investing in innovation.

Th ere is a renewed focus on post-pandemic business strength. Th is more oft en than not is manifesting in doing things bett er – or innovation.

I recently gave a lecture to the MBA students at the Macquarie Graduate School of Management. Th is is something I have now done for a few years, and every year, the topic of innovation is raised – probably because it is such a well-known, but poorly understood concept.

Many people believe innovation necessitates the launch of a new product or service. Th is could be the case but true innovation moves beyond new products or services.

Ideo – the global design and innovation fi rm defi nes innovation simply as: “Th e ability to generate and execute new ideas”.

And therein lies a defi nition and a lesson for all of us. Innovation can result in the launch of something new but new ideas that are successfully executed also classify as innovation.

Putting the customer first

Businesses can innovate almost any aspect of their business or operating model. Th ink process innovation, price innovation, brand innovation – and the list goes on.

Th rough the challenges of the pandemic, I have been fortunate enough to both see clients innovate and help them design and implement innovations.

Recently, I have spent a lot of time working with the CEO and Executive Team at the Rawson Group (the business that builds Rawson and Th rive Homes).

“Building bett er, together” is the Rawson Group’s promise to the market and to deliver on this promise, the Rawson Group has innovated and continues to innovate across many aspects of its business.

As with many large organisations that deal with multiple stakeholders across their value chains, Rawson Group identifi ed several innovation opportunities to enhance customer excellence.

By putt ing the customer at the centre of their business, the Group CEO and Executive Team identifi ed a need to streamline the customer journey, reduce manual and internal processes and provide certainty and clarity of hand-off points to diff erent teams.

Fundamentally, these innovations were aimed at reducing complexity – and with that, increasing customer NPS and reducing cost to operate.

Is it working – early results are promising. Doug Phillips (Rawson’s General Manager for Sales & Marketing) says year to date sales are ahead of budget, double those of the prior year – and the organisation is winning market share too.

Th ere are many case studies like that of the Rawson Group. If I look across the projects I have delivered over the years, here are the key takeaways: • Organisational alignment greatly enhances the probability of successful innovation. But it should start at the top • There is value to be had by starting small – identify complex or convoluted processes and start from there. Bank the wins along the journey • Leverage existing, or consider investing in technology to drive efficiency and scale. Break the nexus between revenue growth and headcount growth • There are always innovation (or continuous improvement) opportunities – truly innovative companies consider innovation to be part of BAU

Dale Khoury is a partner at KPMG and leads its mid-market advisory practice in Parramatta. Dale’s areas of expertise are in strategy development and implementation, operational improvement, finance optimisation and governance. E: dkhoury@kpmg.com.au

Local entertainment during LOCKDOWN

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ENTERTAINMENT CENTRA L

West HQ’s CEO recounts how it evolved into reality

 ENTERTAINMENT | JADE HOBMAN

IF you had the choice to invest $18M or $100M of your business capital into a bold new venture, rife with critics, what would be your pick?

West HQ’s CEO Richard Errington chose the latt er, and hasn’t looked back, citing the recreation hub’s Sydney Coliseum as being a much-needed entertainment boon.

“We have built a theatre for the people of Western Sydney, who would have never gone to the arts, never gone to the city to see a live production, and we have given that opportunity with not one cent of government money, for such a big community,” Mr Errington said.

Before the theatre idea was conceived, Mr Errington and the management at the formerly named Rooty Hill RSL, had already taken the view that the club needed to evolve into something bigger.

A recent IBISWorld market research report said RSL clubs have faced signifi cant challenges, even within the last fi ve years–from regulators, bars, pubs, online sports bett ing companies, and declining alcohol consumption.

“If we just remained a small suburban licenced club we were going to become irrelevant to future community needs,” Mr Errington said. “And we knew entertainment would be relevant to all ages, and all nationalities.”

Barangaroo

So a ‘Barangaroo of Western Sydney’ dream started with a premise of what the community needed, in a meeting at the Rooty Hill RSL in 2012.

Th e team had been inspired by the former disused container terminal, turned top eatery, and arts hub, Barangaroo on the western waterfront of Sydney’s CBD.

Mr Errington said they were impressed about how quickly it transitioned into the go-to destination it has been.

And so they wanted to do the same revamp for the west, adding extensive key services to their business in Rooty Hill, including brand restaurants typically found at Barangaroo–plus entertainment.

So from what started out as an $18M, 1000-seat entertainment expansion idea eventually extended into a $100M, 2000seat plan, as the club realised, via talks with industry insiders, how much Western Sydney lacked a large entertainment area to that scale.

“We found that west of the Anzac bridge, there was nothing that had 2000 seats, excluding Homebush,” Mr Errington said.

“Th e ability to have things like opera, Sydney symphony, Australian Ballet, musical theatre, bands – the design and our vision expanded and grew.”

Above: drone view of West HQ and below, CEO Richard Errington.

Construction of the theatre and the Barangaroo-inspired restaurants was complete by the end of 2019, with the new theatre offering a vast range of entertainment, including space for large banquets and corporate events.

Criticism

Now all these activities at the club site were not going by unnoticed. Th e entertainment industry was enthusiastic with hope, but the plans also faced a large degree of scepticism.

Mr Errington said opposition, and uncertainty arose from a range of groups: media, promoters, and other licensed clubs.

“We were ridiculed by the industry … there were doubters, who said the people of Western Sydney wouldn’t pay the amount of money to go to the theatre,” Mr Errington said.

If we just remained a small suburban licenced club we were going to become irrelevant to future community needs. And we knew entertainment would be relevant to all ages, and all nationalities.”

– Richard Errington.

“We had to believe that there was a growing population in Western Sydney, who didn’t want to travel into the city.”

“We identifi ed that if we built this, no one in the west would compete or be able to match it, that we would have the ability to become the ultimate entertainment destination.”

In 2017 a media report said the project was funded by poker machines, highlighting the social cost for problem gamblers. Mr Errington told the Sydney Morning Herald that the club would eventually dilute revenue away from poker machines–something he says they were on track to doing before the pandemic hit.

“Our aim, through building and diversifying, was taking our reliance off gambling, away from poker machines. We achieved that in the fi rst month–but then we were disrupted with Covid,” Mr Errington said.

“Because we were increasing our revenue in more entertainment space, gambling became less of a relevance to our business model.”

The pandemic

When Covid hit in 2020 the West HQ venue went from being a bustling hub–with four million visitors annually, to a ghost town–and the theatre was closed for six months.

Th en aft er reopening, the business started to slowly recover, and they were managing up to a 60 percent recovery. Now that has been thwarted again with the current lockdown aff ecting Greater Sydney, now in its seventh week.

“We have lost profi tability to reinvest, because we have had to call on our reserves to keep us liquid,” Mr Errington said. “It has put our plans back two years, and aff ected us fi nancially, but because we are large and diverse, we are able to weather the storm.”

Despite the misgivings, there are still plans and hopes for future expansion at West HQ, with an idea for a large-scale indoor family entertainment, and plans for a 300-room Pullman Hotel, in preparation for the airport opening at Badgerys Creek.