SEPTEMBER / 2021 / ISSUE #2-01
LETTER FROM MELBOURNE A Monthly Public Affairs Bulletin, distilling and interpreting news and decisions which impact business opportunities in Victoria, Tasmania and Australia.
Lets Do Recovery Together For over 20 years Affairs of State has produced our monthly newsletter to highlight important and relevant news for all decision makers. In a crowded news market we are not looking to create more opinion. Instead, we provide key topic and news summaries to help interpret relevant decisions and policies for today’s public and private sector leadership, and aspiring leadership. We feel this is even more important now, at a time where the public and private sector need to work together more closely than ever before for the benefit of our communities, our society and our economy. We have decided to limit focus on the ongoing COVID-19 debates. It has all been said. We understand the importance of vaccination levels and that being the key to moving on. We also understand the impacts, it is time to start easing restrictions safely as the national plan approaches. We hope you enjoy this issue of Letter from Melbourne. We will survey this issue for feedback and we look forward to your continued subscription of Letter from Melbourne and/or our Letter from Canberra editions. Subscriptions to our publications also provide access to Alistair, as always and to Michael Holzer and Hans van Pelt - your “virtual CIO and COO”. Letter from Melbourne
September 2021
WHAT’S NEW
TAKE A LOOK INSIDE New thoughts, ideas and news in our reboot.
SCHOOLTV Youth Mental Health and COVID
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Released 4 th September – Business Support for Many A jointly-funded support package from the Commonwealth and Victorian Governments will provide a critical four-week boost to small and medium-sized Victorian businesses most impacted by the current public health lockdown. The joint package of up to $2.34 billion will deliver support to around 175,000 Victorian businesses. With lockdown extended until 70 per cent of Victorians have had at least one dose of vaccine – estimated to be around 23 September, the four-week business support payments confirmed today cover the period ending 30 September. Business support payments will be automatically made at rates of $2,800, $5,600 and $8,400 a week over September, depending on payroll size.
Mr Alistair Urquhart, our Chairman Emeritus together with Michael Holzer and Hans van Pelt, welcome you to the latest edition of Letter from Melbourne. We are expanding our firm to combine Affairs of State with Strategic Executive Solutions to create a specialist, strategic advisory with long standing and proven digital services experience for the public and private sectors. We will continue with monthly, electronic productions of Letter from Melbourne and Letter from Canberra. Alistair reached so many people, with such relevant information for such a long time that we are thrilled to have his continued contributions. We trust you enjoy this wide ranging edition. We look forward to your feedback and meeting you soon.
CONTACT
Let us know what you think
Hans: 0438 280 724 OUR EMAILS alistair@affairs.com.au hans@affairs.com.au mholzer@strategicexecutive.com
Letter from Melbourne
September 2021
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Letter from Melbourne
The road ahead will be rough in places. The 18 months of the pandemic and the policies in response have had an impact on how people view their governments, how well economies are positioned to rebound, and how much public and private debt has been accumulated along the way.
Lockdowns have had huge social and economic impact. The important recovery period ahead means working together, supporting local, understanding that people and things have just changed. Governments need to revert to service, ensuring we make this a better place to live, to work, to prosper and, most importantly, to recover.
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Recovery dominates the next steps, but what needs to be done and how can the public and private sectors best work together to avoid more “us and them” comparison?
If we work together, if we add skill and experience within government organisations, if we better align government agencies with the private sector, then optimum economic and social growth is more achievable.
Letter from Canberra
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September 2021
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2021 Victorian State Budget
Budget Notables
Throughout this crisis, government has become a lender, payer, and owner of last resort across a range of industries. Increased government activity has seen involvement in process and an increase in scrutiny as business learns to cope. live with and benefit from increased government involvement in industries and organisations. In May Victorian Treasurer Tim Pallas delivered a state budget that forecasts economic activity to hit $503.6b in 2021/22, $17.1b more – the equivalent of $2,560 for every Victorian – than forecast. Net debt is budgeted to be $102.1b in 2021/22 – 20.3% of the state’s economy – with a budgeted increase to $156.3b by 2024/25. Treasurer Pallas announced an expected spend of $342b over the next four years, including a $90b commitment to state infrastructure projects either commencing or underway.
Victoria’s unemployment rate is forecast to fall to 5.75% in 2021/22 before dropping further to 5.25% two years later. To help achieve the numbers the government commits $431m to support businesses and creating new jobs, including $250m in wage subsidies to help at least 10,000 jobseekers. $1.6b to build 13 new Melbourne schools and upgrade 52 others and a $3.2b for public transport services and infrastructure are key spent commitments to improve service delivery and travel experience. The small business payroll tax-free threshold will be lifted to $700,000 a year ahead of schedule, helping 44,000 businesses.
Mental Health Commitment
Letter from Melbourne
The budget sees a $1.3b commitment to continue the state’s pandemic public health response with further key commitments to women and children, sport, agriculture, city revitalisation, tourism demand generation, the environment and bush fire prevention andbudget, impact with reduction. Mental health has a strong focus in this a new levy on businesses with more than $10m in wages nationally to help fund a record $3.8b spend on mental health overall. Read later about our Affairs of State client SchoolTV. We were shocked to learn that a mental health crisis, starting now, will reach its peak in 18 months. The need to deploy preventative solutions provides care today and potential future demand relief on a mental health system that may not cope.
September 2021
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Digital Transformation A message for Affairs of State customers. With ICT strategy and digital transformation so important and current we are combining the work of Affairs of State with our Strategic Executive Solutions firm. The rise of digital will impact the future of work, the future of consumer behaviour and a better customer experience. It is important to factor this in some detail as part of future business and organisational planning and strategy. Digital transformation highlights a major challenge for governments and for many businesses as they move to develop digital platforms to support core service delivery.
We have been doing Digital Transformation for Years and Years… The design of digital infrastructure will increasingly be a critical policy issue for governments, as well as a source of major business opportunities. For anything Digital Transformation reach out to Michael 0402 225 863 mholzer@strategicexecutive.com
There is a huge strategic opportunity for governments to develop deep ecosystems around these platforms and build large provider economies, offering innovative features and driving true digital transformation while improving efficiencies. Part of digital transformation is the creation of rich real-time data from government and industry platforms. For example, this real-time data flow could be the key to future regulation and operations, giving decision makers instant insight into how markets are operating and consumers full transparency to make choices. We have already seen the power of this thinking with the Australian Tax Office’s single-touch payroll platform. The platform integrates with all the major accounting software packages, enabling pre-filling of forms and radically streamlining tax payments.
Other News and Loose Ends…
Michael is a highly qualified Governance and Assurance consultant operating at a program and whole of business level. Michael has an extensive track record in digital transformation and innovation across many projects in the public and private sectors. With over 25 years industry experience working domestically and international for large Australian and International organisations As part of your Letter from Melbourne subscription Affairs of States provides you with direct access to Michael, potentially as your “virtual CIO”.
Between January and March 2021 destinations around the world welcomed 180 million fewer international arrivals compared to the first quarter of 2020. Asia and the Pacific continued to suffer the lowest levels of activity with a 94% drop in international arrivals over this three-month period. A very positive development in Australia’s economic recovery is the increase in consumer spending and business investment. In turn, that is helping business to strengthen balance sheets and confirm investment decisions on machinery, equipment and a range of other assets to further drive recovery. Stimulus induced business investment was reported at 4% growth for the March quarter. Andrew Forrest has joined Atlassian co-founder Mike Cannon-Brookes in the Sun Cable project that aims to power Singapore form a solar farm in the Northern Territory. The project should position Australia, Singapore and other ASEAN markets as world leaders in intercontinental transmission of renewable electricity.
Letter from Melbourne
September 2021
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in relation to cash flow and additional cost of storage, the balance between having stock on hand to minimise freight impact should now be considered.
Freight Issues Most conversations in this area begin with the phrase “I have never seen it as bad as this” - The level of stress in international ocean freight and air freight is significant on many levels and is a global situation. Inbound and outbound supply chains are broken, suffering from significant congestion and the impact of rapidly increasing freight costs. Available space dominates price, which has increased at least six times or more inside the last year. All indicators are that price will continue to rise, complicated further with reduced capacity and the fact logistics companies are earning more on routes away from Australia. In the next six months, freight issues are forecast to be worse. Solutions for communities and business, freight consolidation and available airfreight for high value, highly perishable exports are much sought after.
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Expect increases in freight costs, significant increases with short notice! Space is being prioritised over price - work with others to aggregate and consolidate.
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Be aware of the free time conditions for use of your container during packing or unpacking. With shortages of equipment, the shipping lines are not as agreeable to free time extensions.
Destination Access For anything Destination Access reach out to Hans 0438 280 724 hans@affairs.com.au
Sea freight demand has significantly outstripped supply. In the air, which comparatively is now more cost effective, capacity supply continues to be disrupted by border restrictions that mean far fewer flights to meet increased demand. With more time at home consumers have significantly increased online purchasing and thereby freight demand at a time where many business sectors are also demanding more freight space to meet growth. Add a much higher volume of prioritised medical supplies and freight demand increases rapidly, with industry looking at modelling and forecasting long term demand levels before additional freight capacity decisions are executed. The peak 2021-22 Australian summer freight season will be tough. Affairs of State recommends the following to anyone importing or exporting: •
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Long term forecasting and planning is essential – inform your freight forwarder, shipping line representative and transport provider of your requirement as early as possible. Do not rely on “just in time shipping”. Delays for export and import cargoes have to be planned and expected. Consider ordering early and holding more inventories. While this is understandably difficult
Letter from Melbourne
September 2021
Hans has extensive public and private sector leadership experience, including recovery and crisis management experience gained through the COVID-19 period Hans is a strong decision maker and negotiator with significant strategy, communications and biz dev experience. In his most recent role Hans led, as CEO, recovery of Launceston Airport in a role that is also part of the Melbourne Airport Senior Leadership Team. Hans, like Michael has led a bunch of other stuff in Australia and in Asia. As part of your subscription to Letter from Melbourne and Letter from Canberra Hans can sit down with you to look at organisational issues as your “virtual COO and CSO” Hans has extensive freight and destination access experience. If you need a hand with Freight & Logistics, let us know. 6
LTMs and WFH - the impact on Melbourne’s CBD LTM and WFH are long term models and work from home. What does it mean and why are there consultancy and business transformation and business restructure projects in these areas starting out at frantic pace? How is this linked to digital transformation, to profitability and operational efficiency? Lets highlight this section with information from Deloitte Economics on workforce return to Melbourne’s CBD. •
Central Melbourne will have fewer workers than before the pandemic for at least another four years, despite signs the city’s economy is showing signs of recovery.
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Will the public service return to work at the office 5 days/week?
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A report for the Melbourne City Council reveals the CBD economy will take at least three years to return to its prepandemic strength.
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Deloitte data showed that an estimated 189,100 workers a day would return to the city over the course of 2021 – circa 56 per cent of the total workforce and that was before lockdown 6!
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By 2025, 332,600 workers were predicted to be working in the city each day, still 19,700 fewer than 2019 levels.
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Then there is ESG, an increase in ethical investments…..people have become and/or want to be different.
WE LOVED THESE RECOMMENDATIONS IN THE DAILY TELEGRAPH ON AUGUST 15 BY AMANDA ROSE: How to answer the job interview question: “what is your biggest weakness?” The question is asked to see if you will be honest about some part of your life that is work related. •
Essentially, they want to know if you will be honest about some part of your life that is work related.”
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Suggest a weakness is that you take on too much, but then follow through with what the solution is for that.
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Don’t ever admit to a weakness if you can’t explain what you are doing to manage it.
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A strategy could be to look at a positive weakness. For example, that you micromanage - you can say that you are passionate about delivering quality work, but to address your weakness now you mentor people underneath you rather than micromanage.
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Don’t talk for too long and keep it light rather than deep or detailed.
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Remember - confident is different
Some say, the city has lost its soul, temporarily we hope but it is an observation very hard to argue with. Congestion tax for the Melbourne CBD! Bizarrely it is being considered. For public and private sector leaders; •
is change now required in long term operating models that factor value creation or revision, a different operating structure, market diversification, M&A, skill development, changes in management?
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what is the plan to create organisational optimum efficiencies whilst maintaining and developing workforce skill, wellbeing, retention and succession?
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are you ready, is anyone really ready to do this well?
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have you started looking at how WFH and a revised LTM can best interact?
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In the likely event the answer to that is no, it may pay to consult an advisor before funding is committed to workforce and digital solutions that do not comply with the most effective LTM.
Letter from Melbourne
September 2021
Loose End… Exxon Mobil Corp. and Royal Dutch Shell PLC suffered legal defeats as part of pressure on the oil industry to address concerns about climate change. A Dutch court found that Shell is partially responsible for climate change, and ordered the company to reduce its carbon emissions.
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Tasmania Update With Hans van Pelt having significant recent experience as the Access Director for the Tasmanian government, being a current director at the Launceston Chamber of Commerce and as the CEO of Launceston Airport through the COVID-19 pandemic we are keen to expand our business model into the Apple Isle. Hans resides in Launceston as well as Melbourne. Premier Gutwein’s Liberal government has been re-elected for a third consecutive term. The Tasmania economy, as reported by Commsec, had become the leading state economy in the period pre-COVID. All macroeconomic factors were performing well and the Tasmanian trade and visitor economies were booming. Last month Commsec again placed Tasmania top of its charts! Tasmania has begun the important recovery period. It is often said that when Victoria catches a cold, Tasmania gets the flu! Current times socially and economically are typically good or equally bad, pending where you look. Many of the challenges described in this edition of the Letter from Melbourne impact Tasmania greatly and we look forward to doing our bit to helping recover Tasmania as a whole and, to do what we can for the North of Tasmania, an incredible part of the country with much potential and so many reasons to visit for a short or a long stay. Speaking of visit, Derby, near Launceston. As a sign of what happens when communities work together to create demand this is one incredible story, published in The Australian on June 18 2021. Six years ago, Derby was a two-pub town of 173 people where you’d be lucky to stumble across a decent pie. The median weekly household income was just $556. With a median age of 58, its residents were, on average, two decades older than the rest of the country. Then came the resurrection. In 2015, the first in a series of high-quality mountain bike trails was quietly opened in the stunning rain-forested hills above Derby. Word spread and cyclists began arriving. Things started to snowball. More trails were built. In 2017 Derby hosted a leg of the Enduro World Series. These elite riders voted Derby the best trail in the world. Cyclists started flying in from around the globe.
Nominate Your Super Beneficiary A very good reminder this month as Hans changed employment status. Did you know that your super isn’t automatically treated as part of your will if you pass away? It is usually managed separately by the super fund trustee. What does this mean and how does this affect you? If you unexpectedly pass away and have not nominated a beneficiary, your family will need to complete the paperwork to gain access to your super funds. However, if you have a beneficiary nominated, they will have the ability to manage how your super money is distributed. There are two main types of beneficiary nominations: •
Non-binding: your nomination is considered, but the trustee still has the final say about how your super money is distributed.
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Binding: the trustee must pay your super according to the way you’ve specified, provided your nomination is valid. Some binding nominations only last three years, then they become non-binding.
We encourage you to login and review your super with your respective provider and nominate a beneficiary if you don’t have one nominated. If you’ve previously made a beneficiary nomination, it is a good idea to review it every so often – especially if your circumstances have changed.
Four years Derby now has the zing and the vigour of a bustling alpine ski village. It’s been a raging success. Derby is now the sort of place where young folk happily spend their gap year, a great story that resonates what Tasmania has become this decade. Letter from Melbourne
September 2021
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Destination Access Plan
Destinations need a recovery plan, which is particularly important for tourism and visitor economy recovery. Hans was part of a team that did so well with an effective destination action and demand generation plan that saw significant increases in the Tasmania visitor economy.
Consider this from a Melbourne and a Victorian perspective:
Tasmania is a great case study and example of growing and converting year round demand appeal. Collaboratively Tasmania developed a range of strategies, stakeholders, events and attractions to build a brand that generated demand, which has driven strong post pandemic recovery. The key work, for domestic and international visitor demand recovery and generation, is to combine and overlap key target market demand generation activities. Tourism demand generation, investment attraction, trade activity, migration, international education and attracting visitation to reconnect with friends and family can be combined as it is often sourced from the same cities and regions. It does work and, it balances out necessary inbound and outbound demand that in turn delivers optimum airplane capacity levels and travel and freight cost price structures. To help support the need for planning destination, travel and tourism recovery this underlying thought: The Australian, on July 18 2021 posted an article by aviation writer Robyn Ironside. Discussing the impacts on airlines and cruise ship operators the article opens with this quote: “International travel is set to once again become the domain of the wealthy, with the world’s major cities expected to limit visitor numbers and airfares tipped to skyrocket in the wake of the COVID pandemic”. Destinations need a plan to recover as good as possible, socially and economically. Pent up travel demand exists, confidence to travel safely and to be able to return as planned needs to be rebuild. Visitors of all kind need to be welcomed again.
Letter from Melbourne
September 2021
A Destination access recovery plan is needed in many places and is effectively the same process around the world: What reasons are there today to come for a visit, a holiday, an event? To what extent will corporate travel recover, how quickly will that happen? How do we best recover international air capacity and how will that be impacted by restrictions - quarantine requirements will be a demand killer that in turn limits capacity and makes outbound international travel, potentially much more expensive compared to 2019. What capability do we now have in aviation, tourism experience, hospitality? How quickly can we rebuild confidence in the ability to travel, and “not be stuck” How do we stand out in a likely sea of competitive destination offers? How can government support visitor economy recovery most effectively?
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Some closing, positive notes…from Melbourne In a different world, in a different time as reflected with the post on this page referencing our client SchoolTV.
From Visit VIC - Stay close, go further:
Deep into the AFL footy finals and Melbourne are a contender, just like when they won a flag the last time the Olympics were held in Tokyo. Michael is very keen to see the Demons get up this year! Due to ongoing uncertainty with holding events the Royal Melbourne Show has been cancelled for the second year in a row. The silver lining? You can still purchase the famous goodie-filled showbags to be delivered to your home. Melbourne is an excellent place to see the seasons change. In summer, take a stroll through our beautiful city. In autumn, experience the glorious foliage of the many European-style parks that fringe the central city. In winter, enjoy the warmth of cosy cafes and bars. Spring is a time for renewal – a great time to head back into our parks and revel in our gardens and on the beach! Melbourne’s official language is English, but more than 100 languages are spoken by the city's residents. The global three letter city code for Melbourne’s award winning airport is MEL, right up there with SIN, HKG, LAX, SFO, AMS , LHR, AKL and NYC, which really is split across LGA and JFK! It has long been said that there is a 100 per cent increase in likelihood for international arrivals to visit Regional VIC if their Australian arrival airport is… MEL.
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Welcome back to your Melbourne and Victoria.
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Our open roads and wide-open spaces are calling. From urban laneways to country roads, high passes and ocean-kissed highways – Melbourne and Victoria are calling you back.
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You'll hear the call from restaurants to cellar doors, from city bars and neighbourhood cafes. From food trails to forest paths, and beach walks to sunsets.
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Rediscover a sense of space – and a sense of place.
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Not too far from where you are, you'll meet the makers, growers, crafters and creators – who strive to make their mark in their own special part of Victoria.
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It's time to rediscover your Victoria. Answer the call. VIC awaits.
In a special report on COVID fatigue and youth mental health, Affairs of State client SchoolTV confirms worse than expected spikes in a range of youth psychological concerns including; depression, anxiety disorder, substance abuse, self harm and loss of motivation as schools have closed, social contact has been disrupted and rites of passage, like formals are lost forever. SchoolTV recommendations to parents today:
Letter from Melbourne
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Focus on health and safety, on student wellbeing over academic results
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Encourage kids to focus on the things they can control: eating, sleeping, exercise, socialising with friends
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Encourage kids to reflect each day on what went well and why
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Remind young people that while we can't control what happens we can control how we respond
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Parents, put our own oxygen mask on first, look after your own wellbeing to help that of your children
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Reach out for help when you need it
September 2021
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Our view of a Strategist, today - by Hans Today, a Strategist is a Coach and an Enabler I set out in my new strategic consulting role knowing deeply how 2020 and 2021 have seen the most impactful change on organisations, on workflows, on people, on interaction, on engagement and on how we work together for common goals and objectives. Today’s unpredictable environment is utterly incompatible with historic chief strategy responsibilities. The weaknesses of traditional strategic planning have been amplified by the importance of agility and resilience in a rapidly changing world. Today, with experience, my strategic focus with organisations suffering revenue loss is on response, building resilience, recovery and prosperity in the shortest time frame. Sometimes the advice can only be "just stop". For organisations who have achieved growth and participation much quicker than anticipated the focus is on retention, skill development, demand analysis and maximising returns, the going might be good but volatility remains. Today, for government entities looking at the important recovery period ahead the focus is on coaching, skill development, recruitment and bringing together effective public private partnerships.
Great communication skills, a knack for articulating vision and collaborative work styles are often tapped as essential attributes for effective leaders. For you, are these skills current? Today, leadership is as important as your organisation's strategies, its viability and its overall appeal. Today, that is even more important with work actively chasing people. As effective strategists we coach and mentor leaders on how best to respond, to build resilience, to recover and to prosper. We coach collaboration, understanding, innovation, compassion, operational control and transformation. Over much of the past 10 years Michael and I have worked on some of this country’s most challenging issues, often at the point where government, private and community interests intersect. Our experience covers areas ranging from industry development to emergency management to pandemic recovery to core economic growth and to matters of Defence, Visitor Economy and Human Services. Have you thought about a virtual CIO, a virtual CSO or a virtual COO? We are here to help.
As a strategist today, we think differently to develop great strategy: with more time engaging broader groups inside and outside the entity, going beyond templates and assessing moods of the external environment. But that isn’t enough. Achieving real impact today requires us to stretch beyond strategic planning to develop at least one of a few signature strengths and identify business development opportunities. We must be able to lead operations and control costs, for strategy to be effective. We need to understand where it is best to invest and best to cut. Without all that today, as a strategist, we should not be in the game. Today, as a good strategist, coach and enabler you understand leadership over management. Letter from Melbourne
September 2021
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Final thoughts…. In a 1996 advertisement for what is now an outdated technology, visitors to a zoo are busily trying to focus their fancy SLR cameras to photograph a fast-paced primate. While they try to get their equipment focussed, the primate instead whips out a Kodak disposable camera and takes a photo of the visitors instead… the slow-movers lost their opportunity…..as did Kodak in years to follow! It’s all about focus. Right now there is much blame, much asscovering, much opinion and much expert advice, which is often and unhelpfully so different across the the same topic. Nobody knows it all, these are unchartered waters! We need to focus on moving on. Private and public sector entities more than ever need to create partnerships to deliver social and economic recovery and outcomes that work. Individually public and private sector entities are unlikely to have the skills and the breadth of vision across multiple parts of the economy and the community to come up with the best next steps. The public and private sector together creates the best experience and capability, the best focus on the things that should be prioritised and done over the so important upcoming recovery period. We are here to help where we can, or to point you in the right direction when we can’t. Till next month, Best regards Alistair, Michael and Hans
Reflecting how globally we are dealing with similar issues a touching Letter from Manila, published in Singapore’s Strait Times provides a comparable analogy that we would like to share. It is OK not to be OK, especially in the situation we now have. The scars in our collective psyche will remain long after the pandemic has passed. There is no vaccine that can magically prop up our mental health, but help exists. It is OK to seek help, it works and it is not a sign of weakness or instability. Giving voice to quiet despair can be the first step to healing. Are you OK?
Letter from Melbourne
September 2021
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