BFM Jan/Feb 2018 by Associated Media Group Pty Ltd

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January/February 2018

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CHANGING STRATEGIC NARRATIVE

A BEGINNERâ&#x20AC;&#x2122;S GUIDE TO CRYPTOCURRENCY

Can SunCentral Maroochydore become the business heart of Australia?

How Cyient is shaping a better tomorrow ASCENDER, PUTTING PEOPLE BACK INTO THE PAYROLL

LEVITT ROBINSON BRINGING MORALITY BACK TO THE LAW

THE AMAZON EFFECT

Is your company prepared for a cyber attack? 4 key things you should do to stay protected

What impact will Amazon really have on Australian retail

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CONTENTS

REGULARS

4 Editor’s Desk 5 News

COVER STORY Cyient: Communicating a Successful Strategy Having a clear, focused strategy is critical to business success, especially when your goal is to shape a better tomorrow.

FEATURES 14 Australian brands close the gap 16 Cryptocurrency Value: Beginners’ mistakes that almost everyone makes 69 Australia unprepared for Google’s new Mobile-First rollout By Jim Stewart 77 How an Aussie small business unleashed their winning business growth formulae

SPECIAL FEATURE – AMAZON 8 Amazon’s Aussie entry: ‘Overhyped but offshore lessons aplenty’ 11 Will Amazon’s Australian launch shake up local retail sector? By Ms Kim Do 12 Australian retailers “Allin” for online marketplaces as Amazon launches in Australia 13 SMB vs Amazon

72 Focused or stressed? The Hidden Costs Killing Australian Productivity 78 CEO Thinking on Social Media and Risk Strategy By Ryan Markis

INVESTMENT FOCUS

ASIA FOCUS 28 Outdated and old – Australia’s transport system needs to follow Asia

BUSINESS FOCUS 30 What it takes to become CEO By David Jones

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18 Saxo Bank 2018 Outrageous Predictions 21 M&A Predictions 2018

36 Making Breaches Irrelevant 44 Why I don’t believe in work-life balance By John Karagounis 46 5 New Truths of Digital Marketing for Any Business 52 You’re reading this, but will you share it? By Sean Smith 54 The importance of strategic partnerships for keeping ahead By Dan Wilson 62 Making the workplace more productive by getting the space right By Belinda Lyone 64 Fulfilling your promise By Dean Taylor 70 Sisters doing it for themselves forcing change to partnership model By Shaaron Dalton

PROPERTY FOCUS 38 Emerging headwinds will dampen demand for new houses 54 Where are we going with food in our centres? By Lawrence Brown 55 Why you should run your property portfolio like a business By Nathan Birch

LIFESTYLE 80 Philanthropic giving via private ancillary funds 82 Australians embrace digital health but privacy remains top concern 84 Wake Up Call: Getting Enough Sleep Is Critical To Your Health and Success By Jo Formosa 86 The Heritage Hotel Kempinski Yangon 88 2018 KIA STINGER www.businessfirstmagazine.com.au

BUSINESS FIRST LOUNGE 48 Ascender: Putting trust into Payroll Everyone likes to get paid, but there’s more to Payroll than meets the eye. 58 Fighting the good fight Taking on the Commonwealth Bank or Macquarie may seem like a scene from a law-based fictional television show such as LA Law or Boston Legal, but for Levitt Robinson it is all in a day’s work.

66 Meeting standards in an evolving society Every business sector is bound by a set of standards. They are hidden in the shadows of industry, but look hard enough and you will find the ties that bind good practice with economic efficiency and sustainability.

32 Building a greenfield city the smart way The construction of SunCentral Maroochydore will create the only greenfield city heart in Australia and the development is expected to create more than 5,000 jobs by 2020. 40 University of Wollongong: Creating lifelong skills Described as one of the best modern universities in the world, the University of Wollongong looks to be going from strength to strength as it continues its climb up international rankings.

58 74 Changing language to create a better world Griffith University’s Institute for Glycomics has positioned itself as a unique biomedical research facility.

48 66

40 www.businessfirstmagazine.com.au

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BF | EDITOR’S DESK

Get ready for the pace of 2018

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Welcome to 2018. Whilst 2017 had its ups and downs, it still moved at a pace that was difficult to keep up with. This year will move just as quickly, so while it’s still quiet (that is until everyone gets back to work after Australia Day), it’s worth taking stock of what went right and what went wrong last year and coming up with an improvement plan. For those of you are still on holiday, take this period to spend some quality time with your family and friends. Sometimes the best ideas come from that cathartic experience of being able to relax around loved ones. For some of us, this time of year is all the time we will get to enjoy quality experiences with the ones we care about, so make the most of it before the tension, long hours, frustrations and elations commandeer your precious time. We have some diverse features for you in this issue. We take a look at the impact Amazon will have on Australian retailers. After a limp entry into the Australian market, some may be thinking Amazon’s impact won’t be as pressing as first thought. Amazon, no doubt jumped the gun and entered the market before they were ready; not having Paypal set up seems like a rookie mistake. However, this is a company run by one of the richest men in the world for good reason: it knows what it is doing. In early 2018, I’d expect Amazon to learn from its mistakes and reignite the retail war that has currently fizzled. Put Bitcoin and other cryptocurrencies on 2018’s must watch list. At time of writing one Bitcoin was worth over $25,000. The question is whether we are seeing a massive bubble, or if the true value of this particular cryptocurrency is yet to be met? No one has an answer, but investors considering this product for their portfolio should seek professional financial advice from a range of financial advisors. We cover a broad range of industry CEOs in this issue. We dive deep into what makes Cyient’s strategy work, talk to Standards Australia about the importance of standards to industry growth, speak with SunCentral Maroochydore CEO John Knaggs about building a new greenfield city and with Ascender CEO Marjukka Mäki-Hokkonen about the intricacies of payroll management. Also in the mix is one of the most interesting topics I’ve written about: glycomics. Griffith University’s Institute for Glycomics has positioned itself as a unique biomedical research facility and is in fact putting the Gold Coast on the map as a biotechnology hub. That is an interesting story in itself, but this institute is also working hard to find cures and medicines for cancer, malaria and infectious diseases. Finally, we speak with Ms Jillian Broadbent – AO Chancellor at Wollongong University about why the university has such a good reputation amongst world leading education providers and to Mr Stewart Levitt, Senior Partner at Levitt Robinson solicitors about the world of law and class actions. It is an action packed issue to kick off the new year, so sit back, relax and enjoy the read whilst hopefully you still have the relaxed, free time to do so.

www.businessfirstmagazine.com.au PUBLISHER Alan Hyman EDITOR Jonathan Jackson SUB-EDITOR Judy Hyman WRITER Leon Gettler DESIGN Gino Hawkins PRODUCTION Caitlin Lacy Bonnie Weigang Contributors Nathan Birch, Lawrence Brown, Shaaron Dalton, Ms Kim Do, Jo Formosa, David Jones, John Karagounis, Belinda Lyone, Ryan Makris, Sean Smith, Jim Stewart, Dean Taylor, Dan Wilson Head Office Level 1, 33-35 Atchison Street St Leonards NSW 2065 Advertising enquiries Phone: 02 8416 5294 Email: bfadvertising@amgroup.net.au Subscription enquiries Phone: 02 8416 5294 Email: bfsubscriptions@amgroup.net.au Associated Media Group Pty Ltd ABN 68 123 058 926 Copyright ©2017 Associated Media Group amgroup.net.au DISCLAIMER Readers are advised that Business First Magazine and Associated Media Group (AMG) cannot be held responsible for the accuracy of statements made in the advertising. Opinions expressed throughout the publication are the contributors own and do not necessarily reflect views or policy of Business First Magazine or AMG. While every reasonable effort has been taken to ensure the accuracy of the information contained in this publication, AMG takes no responsibility for those relying on the information. AMG and Business First Magazine disclaim all responsibility for any loss or damage suffered by readers of third parties in connection with the information contained in this publication. WARRANTY AND INDEMNITY Advertisers and/or advertising agencies upon and by lodging material with AMG for publication or authorizing or approving of the publication of any material indemnify Business First Magazine and AMG, its servants and agents against all liability claims or proceedings whatsoever arising from the publication and without limiting the generality of the foregoing to indemnify each of them in relation to defamation, slander of title, breach of copyright, infringement of trademark or names of publication titles, unfair competition or trade practices, royalties or violation of rights or privacy regulations and that its publication will not give rise to any rights against or liabilities against AMG, its servants or agents and in particular, that nothing therein is capable of being misleading or deception or otherwise in breach of Part V of the Trade Practices Act 1974.

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BUSINESS SNAPSHOT | BFM

Half of Aussie small businesses not online and missing opportunities True Local research has revealed Aussie businesses are missing opportunities online, with one in five Australians (20 per cent) more likely to trust SMBs with a digital presence and almost two-thirds (64 per cent) more likely to trust those with online reviews. Despite this, recent statistics show just half (50.1 per cent) of SMBs have a website, meaning there is a significant opportunity for many business owners to evolve digitally and grow their customer base. Of those businesses who do have a web presence, over one fifth (22 per cent) of new product or service business comes from online engagement and enquiries, and 12 per cent is directed from search engines. With the rise of online shopping behemoths, like eBay, continuing to grow, and with Amazon having now arrived, True Local is offering a helping hand to business owners who need assistance in developing a digital foothold. To equip SMBs to drive growth and stand tall against local competitors, True Local, the go-to online directory and review website for Australian businesses, has launched Digital PowerPacks - a suite of affordable marketing products targeted at small and medium businesses, providing a simple step-bystep process for getting online. The new Digital PowerPacks are designed to provide business owners with digital know-how and the tools to promote themselves online through building websites, developing digital ad-

vertising and creating their own online store. True Local CEO, David Scribner, said: “It’s surprising such a high percentage of businesses still don’t have an online presence. Consumers are increasingly logging on as a first port-of-call to research products and services, so it can substantially benefit a business if they have a digital presence. A website or digital advertising can help SMBs to build positive consumer perceptions and compete effectively against new businesses, particularly timely as Amazon readies itself for launch in Australia. I’d encourage SMBs to actively look at ways to help build their digital reputation.”

Additional research reveals 80 per cent of businesses without a website have internet presence in the form of social media and online directory listings. Of those not currently using e-commerce for their business, 29 per cent intend to add it in the future. Interestingly, 45 per cent of SMBs advertise online and 48 per cent do so on social networking platforms. To build digital presence and use the True Local Digital PowerPacks, no previous digital knowledge is required. Each product is designed to walk the user through the production of content step-by-step, focusing on the following areas: • Get On the Web Digital PowerPack allows business owners to build their first website • Online Promoter Digital PowerPack allows them to create targeted and impactful advertising on major Australian websites and social platforms • Online Store Digital PowerPack - allows them to create an effective online store • Virtual Assistant Digital PowerPack allows them to manage their business online David Scribner continued: “We’ve designed the four unique packages so that business owners don’t need a degree in digital marketing or e-commerce to level the playing field with some of their bigger competitors. Using these tools, they can have a website up and running in minutes, to help Aussie SMBs thrive and drive business growth.” BFM

Regulation under scrutiny at banking stability conference The effectiveness of regulation aimed at stabilising and strengthening the world’s banking industry is still unknown nearly a decade after the global financial crisis, according to a leading finance sector researcher at the University of Sydney Business School. Associate Professor Eliza Wu made the comment ahead of the arrival in Sydney of the world’s leading banking experts and banking regulators for the Business School’s 2017 Banking and Financial Stability Conference. “The fact is that we don’t know what effect these regulations, including www.businessfirstmagazine.com.au

Basel iii and iv, will have in the medium to long term,” said Dr Wu. “We don’t know if the sector is over regulated or if we need more controls. “Here in Australia, regulators have been working to cool the lending market. We are also concerned about the banking sector’s exposure to the real estate market and the lack of regulatory oversight of the fintech and peer to peer lending sectors,” she said. The Future of Banking Regulation will be the focus of the Conference’s Policy Panel Discussion between the Bank of Finland’s Dr Iikka Korhonen, Dr Frank Packer of the Bank for

International Settlements and Mr. Aidan O’Shaughnessy of the Australian Bankers’ Association. The key note address, to be delivered by Professor Steven Ongena, Professor of Banking, University of Zurich, will focus on the Spillovers of Macroprudential Policies. “The heavily disrupted world of banking and finance is evolving very quickly and the regulators and often industry operators themselves, exist under an unforgiving regime of catchup. That’s why this conference is crucial,” said Dr Wu. BFM

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BFM | BUSINESS SNAPSHOT

Elabor8 appoints John Sullivan as Chief Executive Officer Agility-focused business consulting company, Elabor8, today announced the appointment of John Sullivan as its new Chief Executive Officer. John has more than 30 years’ experience as a leader, transformer, creator and developer of diverse delivery teams within the IT industry. Formerly Chief Technology Officer at Vicinity Centres, John’s focus will be on building and executing the company’s vision to become a modern management consultancy for the Australian business community. Co-founder and former managing director, Paul Velonis, has moved into the role of Executive Chairman on Elabor8’s board where he will oversee expansion and investment plans for the next phase of the company’s growth. “We are very excited to welcome one of the founding fathers of Agility in Australia to Elabor8,” said Paul. “John is recognised as a thought leader within both the Agile and technology communities and has a strong track record in building large, high-performing Agile teams in corporate Australia. This experience will be invaluable to our clients who are looking to emulate this change themselves. “John understands the changes in structure, culture and leadership required to enable the move to Agility and intimately understands both sides of the vendor/client relationship – which will bring renewed focus to our own product development and customer centricity.” Starting his career in software development, John has spent the last 12 years working with organisations such as Sensis, MYOB, and Jetstar, guiding them through successful digital transformations and developing sustainable business success based on Agile principles. “Elabor8 is the industry leader in Agile transformation practice,” said John. “I am eager to expand the company’s vision and work with new and existing customers to ensure their businesses reach an optimum level of success.” “My role is ultimately about steering the company through its next phase of growth. I believe in providing pathways for people to grow and succeed, with the aim of building a stronger IT sector to support its expansion and evolution into the future.” Elabor8 was recently ranked 37th on the Australian Financial Review’s Fast 100 List – its fourth consecutive year on the list. BFM

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Broo announces Australia’s largest ever beer deal in China since Fosters’ globalisation Broo Ltd (ASX: BEE) is pleased to announce that as part of its strategy to create strategic distribution partnerships in China, Broo, via its wholly owned subsidiary, Broo Export Pty Ltd, has entered into a Binding Agreement with Beijing Jihua Information Consultant Ltd, to exclusively market and distribute the Broo Premium Lagerbeer products in China for a period of seven years. This agreement is structured to provide Broo with enormous reach and platform to compete with the major International beer brands currently available in China with minimal implementation overheads with Jihua funding the marketing and promotional costs associated with the brand in China. The Agreement is binding on a ‘Take or Pay’ basis for 1.5 billion litres of Broo Premium Lager beer products over the seven year period with Jihua paying a fixed rate per litre. Based on the full seven year term of the distribution arrangement, the aggregate distribution revenue generated for Broo is RMB602 million (approximately AUD $120 million). This exclusive distribution arrangement with Jihua will enormously accelerate the expansion of Broo Premium Lager beer products sales and distribution in the lucrative Chinese beer market as Jihua has interests in a wide variety of industries in China and has established impressive supply and distribution channels with major Chinese organisations across multiple market segments, including: • China National Cereals, Oils and Foodstuffs Corporations (COFCO) China’s largest food processor, manufacturer and trader • China Aerospace, Science and Technology Corporation (CASC) • Hypermarkets, supermarkets and convenience store chains throughout China including Wumei Holdings Inc • Chinese restaurant chains including China Quanjude (Group) Co Ltd • Hotel chains including Huatian Hotel Group Co Ltd • A number of other high profile Chinabased businesses Jihua’s extensive distribution network

in China will expand Broo Premium Lager beer products offering not only into supermarkets and retail chains, but also into the hospitality industry in China. Kent Grogan, Founder and CEO of Broo, was recently present at Jihua’s head office in Beijing to finalise the terms of the binding agreement with Jihua. In commenting, Kent Grogan said: “After an extensive period of product assessment and negotiation I am delighted to have reached an agreement with such a high-calibre Chinese distribution partner. “Jihua’s distribution reach in China will see Broo Premium Lager penetrate the Chinese beer market and expand into a major brand over the coming years. “Our focus is now on continuing discussions in other international markets and domestic expansion.” As part of the seven year Agreement, Jihua will purchase the Broo Premium Lager beer products that are manufactured in China, directly from Broo’s approved Chinese manufacturers. Jihua have committed significant upfront marketing and advertising funds to expedite the growth volume of Broo in the first three years of the distribution and Broo has agreed revenue payments for that term can be accrued and paid upon completion of the third year, with payments continuing on a six monthly basis thereafter. BFM

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BUSINESS SNAPSHOT | BFM

KPMG REPORT SHOWS INCREASING BANKING COMPETITION FROM MUTUAL SECTOR Banking competition is heating up, according to KPMG Australia’s Mutuals Industry Review 2017. The report shows strong growth of Australia’s credit unions, building societies and mutual banks, despite a challenging environment characterised by low interest rates, increased competition, fluctuating property prices and technology disruption. Ian Pollari, National Head of Banking for KPMG Australia, expressed confidence that the government’s acceptance of all eleven recommendations by the independent Hammond Review over ‘Reforms for Cooperatives, Mutuals and Member-owned Firms’ will position the sector for future growth. “With new regulatory rules set to reshape the competitive landscape, Australia’s mutuals sector is in a position to continue their growth in 2018,” he said. Melina Morrison, CEO of the Business Council of Co-operatives and Mutuals, welcomed the KPMG report. “The report shows consumers already consider mutual banks a strong alternative to the big banks. They are in an excellent position to take advantage of the leveled playing field when the Hammond reforms are made,” she said. “Mutual banks have a natural trust advantage for consumers looking for an alternative to the share-holder owned big banks. “At the same time, the mutual banks are investing in new technologies. This is an area in which mutual banks have always been innovators – it’s a little-known fact that the first ATM was

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made available to the public by a mutual bank. Their ongoing focus is to serve their customer-owners better.” KPMG has emphasized its optimism for the future of mutuals, highlighting this technological strength: “KPMG is optimistic about the future for mutuals, with digital technology set to play a key role in future developments. 2017 saw the mutuals continue to expand their omni-channel capabilities through technology such as new mobile offerings, refreshed web designs, and improved digital experiences. This reflects a focus on younger generations of Australians: 91 percent of mutuals are actively targeting younger generations but only 49 percent have been successful in growing market share with millennials.” Some key figures from the KPMG report into the mutual sector: • Residential lending increased by 9.8 percent (2016: 9.8 percent) • Deposits increased by 10.5 percent (2016: 7.9 percent) • Technology spend increased by 12.4 percent (2016: 11.7 percent) • Net interest income grew by 3.4 percent (2016: 5.8 percent) • Non-interest income increased by 1.2 percent (2016: fell 5.0 percent) • Net interest margin declined by 11 bps to 2.03 percent (2016: declined by 4bps to 2.14 percent) • Impairment provisions remained steady at 0.07 percent of average gross receivables (2016: 0.07 percent) • Capital levels fell by 30bps to 17.2 percent (2016: 17.5 percent). BFM

Bojun Agriculture Set to List on ASX & To Collaborate With Australian Agricultural Sector Bojun Agriculture Holdings Limited, the food and beverage manufacturing company, has successfully raised $7.6 million and began trading on the Australian Securities Exchange (ASX) on Friday, 1st December at 11:00am. Bojun Agriculture raised a total of $7.6 million through the issuing of approximately 25.3 million shares at an issue price of $0.30 cents. Taking this capital into account, the Company currently has a market capitalisation of $36.4 million. Bojun Agriculture is engaged in the business of manufacturing fermented beverages and snacks from their unique and patented fermentation of Nanfeng Mandarins. The fruit is unique to the Nanfeng region and its key products include health low sugar beverages and fruit confectionary snack. The Company operates in a growing fruit-based foods and beverages industry. Increased consumer wealth in China has led to increased living standards and heightened demand for healthy beverages, foods and snacks. This presents opportunities for the growth of the Company and its products, which are made from natural fruit produce and are associated with greater health benefits. Andrew Stoner, Bojun Agriculture Chairman, former Leader of the Nationals NSW and former Deputy Premier of NSW, said: “The Board of Bojun Agriculture is delighted to have reached this key Company milestone as it brings about many opportunities for Bojun to continue its development in China, and to become one of the prominent companies in the fruit-based foods and beverages industry. “Bojun Agriculture’s listing on the ASX will enable the Company’s collaboration and research with Australian agricultural entities, and allow us to source Australian agricultural products for distribution in China, and to provide capital to continue to invest in the development of new products to expand distribution. “We also acknowledge Beer & Co as the Lead Manager to Bojun Agriculture’s Prospectus launch and listing on the ASX. Their track record is impressive, as is their network of investors. Their skill and experience was instrumental in this process.” BFM

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BFM AMAZON

AMAZON’S AUSSIE ENTRY: ‘OVERHYPED BUT OFFSHORE LESSONS APLENTY’

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AMAZON| BFM

Martin Currie Australia, a leading Australian equity affiliate of Legg Mason, believes Australian retail sector can, by and large, cope with the arrival of Amazon and that the most vulnerable businesses will be the second-tier ones in the consumer electronics sector, where Amazon has a strong record of success.

onsumer sector research analyst at Martin Currie Australia, Jim Power, who has just returned from a field trip to the US to study the ‘Amazon effect’, notes that “while Amazon will have an impact on the Australian retail landscape, based on my discussions with a wide range of market participants in the US, I remain positive of the Australian retail sector.” Power had in depth discussions with a wide range of US and global retailers and companies active in the supply chain including Walmart, Carrefour, Best Buy, Sainsbury, Hibbert Sports and others as well as Amazon. “My main take away from these meetings was that Amazon’s key advantage is that its strategy is driven by data, not gut feel, and the key source of this data is the Marketplace. “For Amazon’s Marketplace to be successful in Australia, Amazon will need a good product range, including local specialty suppliers. I think this may prove difficult. “We recognise that Amazon’s entry will, of course, impact on the Australian retail landscape, but we view the current price weakness in Australian retail stocks as an over-reaction, given the strengths of major shopping malls, and their leverage to Australia’s employment and population growth. “Amazon has done well in the US and UK against inefficient players, but efficient bricks-and-mortar retailers can compete if they can use their existing scale and supply chain to lower ‘last-mile’ delivery costs and time. However, they need to react quickly. “It is likely that small independent retailers and discount department stores will find it very difficult to compete. However, we see that the good-quality large retailers are likely to survive or even thrive in the face of Amazon.” Mr Power believes Amazon’s impact on Australian supermarkets will be more muted than currently expected as offshore experience suggests consumer interest in online grocery delivery is low. “Goldman Sachs state that less than 3% of groceries and consumer packaged goods are bought online in the US…Carrefour, which is in 30+ countries, also told me that there has only been real interest in online food in the UK, China and Korea. In all other countries, it is only a small percentage of its business even though it has been developing it for 20 years.” Noting the impact that Amazon could have on the consumer electronic sector, Mr Power said:

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BFM | AMAZON

“Consumer electronics are at the heart of Amazon’s commercial offering. Despite concern regarding Amazon’s impact on the Australian market, my trip to the US has made me confident that large Australian electronic retailers can compete with Amazon. Although, it may be at the expense of the second-tier operators that can’t keep up. “On this trip I looked closely at Best Buy, a company that has survived, and even thrived in this space in the US, despite initially struggling to compete with Amazon in the US in the early years. In fact, its earnings per share, and share price are now at a record high. “Here are my key points for Australian retailers to manage the Amazon threat to their business.” 1. Price perception is key I learnt that one of the key reasons that Best Buy initially struggled was that it didn’t react quickly enough to normalise the large price gaps between itself and Amazon. Amazon’s algorithms mean that prices can change multiple times per day, whereas Best Buy’s pricing was less flexible. Some bulky or high-end categories, like televisions, furniture and white goods, are more likely to continue to be sold from physical stores, whereas Amazon is focused on smaller, low-end items. But while Best Buy had only a small overlap in the lower- end space, it was the price ‘perception’ that led to consumers losing confidence in Best Buy in the higher- end space. Now, Best Buy offers a blanket ‘price match’ guarantee no matter the segment, and this has helped to restore the perception of price leadership across the board. 2. Putting power back in the hands of suppliers A key insight gained by retailers was in how they could put pressure back onto their suppliers in terms of enforcing recommended retail prices across all distribution channels (including Amazon), thus levelling the playing field in terms of price and hinder Amazon’s ability to undercut them. While this may be somewhat more difficult in Australia due to Australian Competition and Consumer Commission (ACCC) rulings on the subject, companies such as Apple appear to have been successful in controlling price across channels. 3. Understanding customer data Australian companies, on the whole, already have a firm grasp on the benefits of data analytics. Best Buy was late to the party, but found that the eventual investment in understanding its customer data better (i.e. credit card data, loyalty programs, web traffic) allowed it to improve targeting clients and increase customer loyalty. 4. Enhancing the ‘offline’ experience and service Best Buy deliberately added value that could only be accessed in-store, such as its Geek Squad (a subsidiary

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of Best Buy offering support services); ‘store in store’ installations, where part of the retail space is used by a different speciality company; and delivery and installation. 5. Making the most of infrastructure Existing scale is also a very significant advantage. Incumbents like Best Buy were able to use their own store network for home delivery, rather than from distribution centres, and this helps to shorten the ‘last mile’ (the movement of goods from a fulfilment centre to their destination). The ongoing development of new stores and distribution centres will therefore only strengthen the supply chain. 6. Innovating with innovation The proliferation of the ‘connected home’ trend bodes well for companies that sell innovative home products like Best Buy. This is because for newer, more innovative products, customers prefer to have direct interaction with sales advisors over the use of these new products. Combine this with the ‘price match’ concept above, and bricks and mortar can compete. BFM Martin Currie is an independent investment affiliate of Legg Mason, a global asset management firm. Legg Mason provides active asset management in many major investment centres throughout the world. The firm is headquartered in Baltimore, Maryland, and its common stock is listed on the New York Stock Exchange (symbol: LM).

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AMAZON| BFM

WILL AMAZON’S AUSTRALIAN LAUNCH SHAKE UP LOCAL RETAIL SECTOR? Amazon’s launch into the Australian market was underwhelming to say the least, with many commentators believing that the launch was botched. However, it still has the potential to shake up the retail sector says Ms Kim Do, Senior Industry Analyst for IBISWorld.

ith the entry of Amazon, the Online Shopping industry in Australia is expected to grow at an annualised 13.5% over the five years to 2017-18, to reach $20.1 billion. Although Amazon has largely kept its plans for the Australian market under wraps, IBISWorld expects Amazon will be prepared to make initial losses to help it gain market share within Australia’s online retail sector as quickly as possible. “The company is expected to focus on providing consumers with low prices, a diverse product range and fast delivery,” explained Ms Do. “However, to be successful in Australia, Amazon’s current business model will need to be adapted to the Australian market. For example, Australia’s large geographical size and dispersed population will lead to higher distribution costs compared with Amazon’s home market in the United States. This is likely to limit the company’s ability to offer Amazon Prime Shipping services in the short to medium term.” IBISWorld believes department stores and electronic goods retailers are expected to be the hardest hit by Amazon’s arrival. IBISWorld’s data shows department stores are already struggling to attract consumer demand, with industry revenue

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expected to decline by an annualised 0.9% over the five years through 2017-18. “Technology products are anticipated to be the highest selling category for Amazon, which will disrupt the electronic goods industry. Australian consumers are particularly price savvy when it comes to electronic goods, and will often compare prices across multiple retailers to find the best value. As a result, Amazon is expected to take market share away from local electronic goods retailers such as JB Hi-Fi and Harvey Norman,” said Ms Do. While Amazon will no doubt disrupt the Australian retail sector, IBISWorld believes its entry will also bring some positive changes to Australia’s ecommerce landscape, including increasing the uptake of online shopping. Currently, Australian online sales are expected to account for an estimated 7.4% of total retail spending, although this figure is projected to reach 15.0% by 202223. Amazon’s arrival can also be seen as an opportunity for existing Australian retailers, with the online retailing giant expected to help drive innovation relating to digital transformation, logistics optimisation and multichannel platforms. Amazon will also provide some retailers with another platform to sell their goods. BFM

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BFM | AMAZON

Australian retailers “All-in” for online marketplaces as Amazon launches in Australia A retailer survey released by retail management platform, Neto, has revealed that 95 percent of Australian online retailers plan to sell on Amazon Australia within the next 12 months. Within that cohort, a staggering 18 percent are predicting that more than 75 percent of their sales will come from Amazon and other online marketplaces in 2018.

he survey of more than 200 retailers was conducted over the past three days, just ahead of this morning’s much-anticipated launch of Amazon Australia, and asked retailers about intentions to sell on Amazon or other online marketplaces in 2018. The results reveal that online marketplaces have become a key factor within Australian retailers’ growth plans, with 39% of retailers saying they will sell in as many marketplaces as possible in 2018. The reason most commonly cited was the reach and popularity of marketplaces to ‘put them in front of more potential customers’. Retailers are also bullish about the share of sales to come through online marketplaces. While 18 percent predicted more than 75 percent of their sales will come from Amazon and other online marketplaces in 2018, a more conservative 50% of respondents still predicted between 5-25% of total sales will come from Amazon and other marketplaces over the next 12 months. “I’ve been consistent in my view that Amazon and online marketplaces are a strategic opportunity for retailers,” said Ryan Murtagh, CEO and founder of Neto. “The marketing machine that is Amazon and the quality of customer experience that Australian online shoppers will now demand and expect, is a great outcome for every retailer selling online. There is a huge amount of growth coming for Australian eCommerce and every retailer savvy enough to embrace the power of online and marketplaces such as

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Amazon will get a share of that growth.” A number of Neto’s thousands of retailers are amongst the first to sell on Amazon through the Amazon Australia integration within Neto’s OneTouch Retail management platform. Retailers such as Stuffed with Plush Toys and Cosmetic Capital are already selling products and managing Amazon Australia listings from the same dashboard they use for existing channels such as web-store, physical store or other marketplaces such as eBay. They are also able to manage inventory and control the products and quantities to be sold, as well as manage and fulfil orders directly from Neto. Cosmetic Capital is excited to be involved in Amazon’s launch from day one. According to Danny Marcuson the Managing Director of Cosmetic Capital, retail is undergoing a significant transformation in Australia and the launch of Amazon brings an opportunity to expose their products to thousands of new customers. “Conservatively, we’re hoping that Amazon will represent 15% of orders processed in 2018,” said Marcuson. “This comes from our experience with other marketplaces. Anything more will be a great bonus.” “We’re on a mission to open a retailer’s store to customers no matter where they are. Integrating with Amazon Australia is just the tip of the iceberg, with more channel integrations to launch soon,” said Murtagh. BFM

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AMAZON| BFM

SMB vs Amazon

As new research shows consumers more likely to trust businesses with a digitial presence.

rue Local research has revealed Aussie businesses are missing opportunities online, with one in five Australians (20 per cent) more likely to trust SMBs with a digital presence and almost two-thirds (64 per cent) more likely to trust those with online reviews. Despite this, recent statistics show just half (50.1 per cent) of SMBs have a website, meaning there is a significant opportunity for many business owners to evolve digitally and grow their customer base. Of those businesses who do have a web presence, over one fifth (22 per cent) of new product or service business comes from online engagement and enquiries, and 12 per cent is directed from search engines. With the rise of online shopping behemoths, like eBay, continuing to grow, and with Amazon having arrived, True Local is offering a helping hand to business owners who need assistance in developing a digital foothold. To equip SMBs to drive growth and stand tall against local competitors, True Local, the go-to online directory and review website for Australian businesses, has launched Digital PowerPacks - a suite of affordable marketing products targeted at small and medium businesses, providing a simple step-by-step process for getting online. The new Digital PowerPacks are designed to provide business owners with digital know-how and the tools to promote themselves online through building websites, developing digital advertising and creating their own online store. True Local CEO, David Scribner, said: “It’s

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surprising such a high percentage of businesses still don’t have an online presence. Consumers are increasingly logging on as a first port-of-call to research products and services, so it can substantially benefit a business if they have a digital presence. A website or digital advertising can help SMBs to build positive consumer perceptions and compete effectively against new businesses, particularly timely as Amazon readies itself for launch in Australia. I’d encourage SMBs to actively look at ways to help build their digital reputation.” Additional research reveals 80 per cent of businesses without a website have internet presence in the form of social media and online directory listings. Of those not currently using e-commerce for their business, 29 per cent intend to add it in the future. Interestingly, 45 per cent of SMBs advertise online and 48 per cent do so on social networking platforms. To build digital presence and use the True Local Digital PowerPacks, no previous digital knowledge is required. Each product is designed to walk the user through the production of content step-by-step, focusing on the following areas: • Get On the Web Digital PowerPack - allows business owners to build their first website • Online Promoter Digital PowerPack - allows them to create targeted and impactful advertising on major Australian websites and social platforms • Online Store Digital PowerPack - allows them to create an effective online store • Virtual Assistant Digital PowerPack - allows them to manage their business online. BFM

BUSINESSFIRST MAGAZINE

BFM | FEATURE

AUSTRALIAN BRANDS CLOSE THE GAP SAP Australia launched its 2017 Australian Digital Experience Report, revealing that Australian businesses have significantly improved the digital experience they provide, closing the gap to what consumers expect. However, while performance has improved, consumers are still more likely to be unsatisfied with digital experiences than delighted by them.

he report, based on results from more than 4,000 Australians who rated more than 11,000 interactions against 14 attributes, found overall digital experience has improved from last year. For the first time since the survey was conducted in 2015, five industries posted positive results. Retail grocery brands led the way, improving their combined digital experience score from -4 to 10 over the past 12 months. Banking (7), media and entertainment (6) and retail consumer (4) also returned positive digital experience scores. Air travel achieved an overall score of 1, which means it has an almost even split of delighted and unsatisfied customers. Insurance (-5), telecommunications (-11) and utilities (-15) all have more unsatisfied customers when it comes to digital experience. Overall, the proportion of consumers unsatisfied with their digital experiences has dropped from 40 per cent to 35 per cent, while the number who are delighted has increased from 26 per cent to 31 per cent. This highlights that brands have actively improved the digital experiences they provide, but there’s still much room for improvement. TOP PERFORMING BRANDS AND INDUSTRIES For the second year running, Netflix was singled out by Australians as having the best digital experience among all brands. Other leaders include online retailer Kogan, Vodafone and Suncorp Bank. “The digital performance of brands in Australia has significantly improved since we first launched the study in 2015. When we look at industry-specific scores, retailers are clearly equipping themselves with innovative digital capabilities to prepare themselves for future disruption, such as the impending local launch of Amazon. Banks also face intense competition and are looking to improve customer experience, increasing engagement and responsiveness as a result,” said Colin Brookes, President and Managing Director, SAP Australia and New Zealand.

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“While brands have improved overall, this is still very much grounded on getting the basics right along with a greater focus on the emotional attributes that consumers demand. In order to become a digital experience leader, brands should look to new technologies such as artificial intelligence and machine learning to help integrate and deliver personalised experiences across channels, which delight customers.” MEETING OMNI-CHANNEL EXPECTATIONS New to this year’s research, the report highlights how brands can improve their digital experience scores by enabling customers to interact across multiple channels. Brands delivering an omnichannel experience saw a lift in Net Promotor Score (8 per cent versus -1 per cent) and customer loyalty (43 per cent would remain loyal versus 38 per cent), versus those that offer a single channel. Close to half (43 per cent) of consumers use at least five channels to engage with brands. This includes physical stores, contact centres, mail, websites, live chat, social media and mobile apps. With more consumers now expecting omni-channel interactions, brands need to ensure integrated and cohesive consumer experiences or risk losing customers.

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FEATURE| BFM

While 33 per cent of consumers are delighted with the digital experience in multi-channel environments, compared to 22 per cent in single-channel engagements, the number of unsatisfied consumers demonstrates the complexity brands face managing experiences across multiple channels. Omni-channel experiences disappointed 29 per cent of consumers compared to just 16 per cent in single channel. Head of SAP Hybris Australia and New Zealand, Stuart O’Neill, said: “Consumers no longer view each brand interaction in isolation – they want a consistent experience at every touch-point. The best performing brands across industries are looking outside the box and ensuring each consumer interaction is optimised, personalised and, above all, delightful. “A great example of brands looking critically at the experience they provide and making a change can be seen in the grocery sector, where these brands are under a lot of pressure from digital native competitors looking to take market share. This report is proof that the changes the industry has made over the last year are having a big impact on customer loyalty and NPS.” DIGITAL CHANNELS DRIVE SATISFACTION Consumers have grown to expect digital interaction.

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Websites (41 per cent) scored the highest satisfaction rating followed by email (33 per cent) and mobile apps (25 per cent). These provided a better customer experience than shopfront/in-store/branch (24 per cent), telephone/contact centres (20 per cent) or mail (19 per cent). Newer technologies such as social media (eight per cent) and live chat (five per cent) offered the lowest levels of satisfaction for digital channels. Consumers in the 18-34 age group are more likely to use five or more channels to engage with brands (57 per cent) compared to those aged 35-49 (46 per cent) and 50+ (30 per cent). Similarly, younger consumers reported feeling more satisfied with their experience in social media and live chat channels compared to older consumers. “We need to remember consumers are individuals with preferred methods of engagement. Providing an optimised experience across all channels ensures that, no matter where they choose to reach you, they have an experience that meets their expectations,” said O’Neill. “This is increasingly important with the number of international brands launching in Australia, many of which are defined by robust omni-channel experiences.” BFM

BUSINESSFIRST MAGAZINE

BFM | FEATURE

CRYPTOCURRENCY VALUE:

Beginners’ mistakes that almost everyone makes Bitcoin has profited from the PERCEPTION that it is scarce, but that perception is WRONG.

he crypto-world describes two ways to achieve value in a cryptocurrency. It has suggested that ‘saver coins’ are the best way to achieve lasting savings. The argument is that a rising price, such as Bitcoin has enjoyed, is an important deflationary component to successful long-term savings. ‘Spender coins’, on the other hand, are theoretically inflationary and are not good long-term stores of value. The argument is that as the price of everything goes up, a coin that actually buys things will automatically decrease in value. According to ‘experts’ and many recent blog posts, this makes spender coins a poor choice as a way to build value over the long-run. PROBLEM #1 This line of thinking has many mistakes, but the greatest one is a complete misunderstanding of the meaning of value. A currency – crypto or otherwise – only has value because it can be converted into something the holder wants. Dollars can be converted into a house or a car or a meal, so dollars have value. What individuals who argue that Bitcoin is a saver coin forget is that Bitcoin only has value because it can be converted into dollars! While the original intention was to create a way for anonymous transactions, most people own Bitcoin for the potential price appreciation. They have no intention of ever buying anything with their Bitcoin without first converting the cryptocurrency into dollars (or Euros or some other national currency). It’s true that some retailers are beginning to accept Bitcoin as payment, but the bill that is being paid is still expressed in dollars. Accepting Bitcoin is just a way to make paying in dollars (or Euros or some other national currency) easier. The retailer does the conversion to dollars, and gets a marketing edge over competitors by accepting Bitcoin. PROBLEM #2 Acceptance and use determine value, not intention. The price of Bitcoin has skyrocketed because more and more people are accepting it as a legitimate investment. It’s that simple. Any coin that grows in acceptance and use will see an increase in value. This happens with national currencies too. A loss of confidence in a national currency causes an increase in the acceptance and use of dollars (or Euros or some other national currency) in that nation. So a coin like Dentacoin that is growing in acceptance and use in the global dental industry should see an increase in value, even though it is a spender coin. It will be deflationary and a long-

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FEATURE| BFM

term saver coin even though it is supposed to experience an erosion of value due to inflation in the upcoming years, until 2042, when the planned annual distribution will be completed. In addition, acceptance and use for a spender coin like Dentacoin means getting a dental treatment, dental supplies or a dental review with the cryptocurrency. Acceptance and use for Bitcoin means being able to quickly and easily convert it into dollars. A single incident where multiple investors cannot do this – known in financial circles as a liquidity crisis – would damage Bitcoin’s acceptance and a part of its value. PROBLEM #3 No one can overcome the laws of supply and demand over the long run. Gold has value in part because it is rare. All the gold that has ever been mined in the history of the world would fill less than 3 1/2 Olympic swimming pools. Bitcoin has profited from a perception that it is scarce, but that perception is a mistake. First of all, every Bitcoin can be broken down into 100 million Satoshi. This is the real unit of the cryptocurrency. In comparison, the total amount of Dentacoin that will ever be issued is less than the current supply of Bitcoin units (a.k.a. Satoshi) currently on the market. In addition, new Bitcoin is being added to the supply continually. While much has been said about the ‘total supply’ of Bitcoin as a fixed amount, the reality is that ‘hard forks’ in the Bitcoin blockchain have eliminated this limit. Although the new cryptocurrencies have names like “Bitcoin Cash” or “Bitcoin Gold”, they have value because of their association with Bitcoin and effectively increase the total supply of the Bitcoin brand. SO, WHAT IS VALUE? The acceptance and use of a cryptocurrency gives it real long-term value. This is the next development in the world of blockchain, and it is already taking place. Political arguments regarding decentralized authority are less important than the real-world goods and services that can be obtained with the coin. As a cryptocurrency designed for the global dental industry, Dentacoin is tied to the value of the services it buys. An increasing cost of services will increase the value of Dentacoin. Keep in mind that this is only a measure of value, so better services at a lower price – better value – will also be reflected in the market price of Dentacoin. The Dentacoin Assurance smart contract is another significant value creation opportunity. The unique approach – which will only be available through the Dentacoin Ecosystem – aligns the financial incentives of both dentists and patients in achieving better dental health. This value should also be reflected in the future market price of Dentacoin. Disclaimer: The market is still learning about cryptocurrencies, and so it’s not surprising that someone with no formal training in Economics will make some beginners’ mistakes. Serious students of financial systems will spot them and correctly allocate resources toward blockchains and projects that hold the greatest long-term promise. BFM

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BUSINESSFIRST MAGAZINE

BFM | INVESTMENT

Saxo Bank 2018 Outrageous Predictions Saxo Bank, the online multi-asset trading and investment specialist, recently released its 10 ‘Outrageous Predictions’ for 2018. The predictions focus on a series of unlikely but underappreciated events which, if they were to occur, could send shockwaves across financial markets.

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INVESTMENT| BFM

hile these predictions do not constitute Saxo’s official market forecasts for 2018, they represent a warning of a potential misallocation of risk among investors who typically see just a one percent likelihood to these events materialising. Commenting on this year’s Outrageous Predictions, Chief Economist at Saxo Bank, Steen Jakobsen said: “We have published Outrageous

Predictions for more than 10 years and think this year’s list is one of the best we ever had, encouraging everyone to think outside the consensus box. It is important to underline that the Outrageous Predictions should not be considered Saxo’s official market outlook, it is instead the events and market moves deemed outliers with huge potentials for upsetting consensus views.” Head of FX Strategy, John J. Hardy, who lead the project this year, commented: “A year ago, many thought 2017 would prove a volatile year, given the seemingly impossible rise of Trump and the shock of Brexit. Instead, we got a year of outrageously smooth sailing that inflated risky assets the world around with nary a storm. But in 2018 we see the pendulum swinging back in favour of pronounced volatility risks as the irony of long periods of quiet and complacency in asset markets is that they sow the seeds for future volatility as investors underestimate tail risks and overleverage their bets on a continuation of the cycle.” “That being said, our predictions this year aren’t just about market crash concerns. We wax outrageous on everything from major central banks losing their policy mojo and a new political crisis in the EU, to China eroding the US dollar’s reserve currency status and a new political spring welling up in southern Africa. We may or may not get any of these right but that isn’t the point. Rather, our task here is to stimulate debate and thought on what outrageous direction things may head at major inflection points like those that 2018 will inevitably bring.” 1. The Fed loses independence as the US Treasury takes charge Both the Republicans and Democrats vie for an increased share of the populist vote as we head into 2018 mid-term elections, with budget discipline entirely absent and GOP tax cuts bringing a massive revenue shortfall which will worsen as US heads into

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recession. The weak economy and the higher interest rates and inflation will leave the Fed with no answer on monetary policy. The Fed becomes a scapegoat for the economy’s weak performance, a bond market in turmoil and worsening inequality. The Treasury takes on emergency powers and forces the central bank to cap US government yields to 2.5% on long bonds to prevent a bond market meltdown, a policy which was last in place in the immediate aftermath of World War II. 2. Bank of Japan forced to abandon yield curve control The Bank of Japan’s policy of yield curve control depends on soft global interest rates and low yields, and in 2018 this centre will simply not hold. As inflation rises, yields too will spike, and the result will be a fantastical plunge in the yen. Ultimately, the central bank will need to resort to QE-style measures, but not before USDJPY hits 150, after which it rapidly devalues to 100. 3. China rolls out the PetroRenminbi China is by far the largest oil importer, and many producer nations are already more than happy to transact in yuan terms. With the US’ global power and reach waning, and given the success of CNY-based commodity futures in general, the Shanghai International Energy Exchange’s decision to launch a yuan-based crude oil future is a runaway success. The introduction of the petro-yuan sees CNY appreciate more than 10% versus the dollar, taking the USDCNY rate below 6.0 for the first time ever. 4. Volatility spikes after flash crash in stock markets World markets are increasingly full of signs and wonders, and the collapse of volatility seen across asset classes in 2017 was no exception. The historic lows in the VIX and MOVE indices are matched by record highs in stocks and real estate, and the result is a powder keg that is set to blow sky-high as

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BFM | INVESTMENT

the S&P 500 loses 25% of its value in a rapid, spectacular, one-off move reminiscent of 1987. A whole swathe of short volatility funds are completely wiped out and a formerly unknown long volatility trader realises a 1000% gain and instantly becomes a legend. 5. US voters go hard left in 2018 election Changing demographics in the US which already has the under-35 millennials in place as a larger cohort than the post-war baby boomers will have a dramatic impact on politics in 2018. The general revulsion of younger voters for Trump’s persona, the widening inequality gap aggravated even further by the Republicans’ cynical tax reform, and a new breed of Democratic candidates who are unafraid to tap into Sanders-style populism from the left sees millennials turning out in droves at the polls in November. The Democrats pull the debate away from tax reform to spending stimulus for the masses. True populism means breaking out the chequebook for the 90%, and that means fiscal stimulus, deficits be damned. US 30-year Treasury yields rip beyond 5%. 6. Austro-Hungarian empire threatens EU takeover

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The divide between old core EU members and the more sceptical and newer members of the bloc will widen to an impassable chasm in 2018 and for the first time since 1951, Europe’s political centre of gravity will shift from the FrancoGerman couple to CEE. The EU’s institutional blockage does not take long to worry financial markets. After spiking to new highs versus the G10 and many EM currencies by late in 2018, the euro rapidly weakens towards parity with USD. 7. Bitcoin is thrown to the wolves Bitcoin peaks in 2018 above $60,000 and with a market capitalisation of over $1 trillion as the advent of the Bitcoin futures contract in December 2017 leads to a groundswell of involvement by investors and funds that are more comfortable trading futures than tying up funds on cryptocurrency exchanges. Before long, however, the Bitcoin phenomenon finds the rug torn out from under it as Russia and China move deftly to sideline and even prohibit non-sanctioned cryptocurrencies domestically. After its spectacular peak in 2018, Bitcoin crashes and limps into 2019 close to its fundamental “production cost” of $1,000. 8. Southern African Spring sees South Africa blossom In 2018, after a surprising turn of events, a wave of democratic transition spreads across subSaharan Africa. The forced resignation of Zimbabwe’s longterm president Robert Mugabe at the end of 2017 triggers a wave of political change in other African countries. South Africa’s Jacob Zuma is forced out of power and Congo’s Joseph Kabila faces unprecedented demonstrations pushing him to flee the country. South Africa, however, is the main winner as the ZAR becomes the EM darling and returns 30% against the G3 currencies. It brings the world’s strongest rates of growth in South Africa and satellite frontier economies of the region.

9. Tencent topples Apple as market cap king China, still the world’s most populous country and one with a rapidly rising standard of living, is opening up its capital markets and its reform programmes are driving a rise in investor sentiment. This is particularly evident in Chinese technology stocks with market leader Tencent’s shares rocketing 120% higher in 2017. In late 2017, Tencent moved into the global top five in market cap terms, nearing $500 billion and even eclipsing Facebook at one point. In 2018, though, Tencent leaves the other giants in the dust with its shares advancing another 100% despite the company’s already enormous size , stealing the world market cap crown from Apple at well above $1 trillion. 10. It’s their time – women crash the glass ceiling Over the last generation, women have started achieving higher education levels than men, with US universities now graduating some 50% more women than men at the bachelor’s degree level. Women also now comprise nearly half of all business graduates. And yet in 2017, only 6.4% of the CEOs in the Fortune 500 list are women – though on average they earn more than their male peers. Change is coming – not because it is “fair”, but for the practical reason that women realising their desired potential is the last way left to grow the pie without growing the population in our low-productivity and aging developed economies. In 2018, the chauvinist old boys’ clubs are shaken to their core by shareholders and a woman occupies the top spot at more than 60 Fortune 500 companies by the end of the year. To access the full publication of Outrageous Predictions for 2018 please go to the Saxo Bank website: https://www.home. saxo/campaigns/outrageouspredictions-2018. BFM

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INVESTMENT| BFM

M&A Predictions 2018 The Intralinks Deal Flow Predictor, a predictor of future mergers and acquisitions (M&A) announcements with a proven track record for accuracy, forecasts that the year-overyear (YOY) growth in the number of announced M&A deals in Asia Pacific (APAC) in Q1 2018 is predicted to be up around 14 percent. This growth is expected to be driven by the Real Estate, Materials and Consumer & Retail sectors, according to the report.

ll markets in the region are showing increasing volumes of early-stage M&A activity, with the strongest contributions to APAC’s growth over the next six months coming from Southeast Asia, India and North Asia (China, Hong Kong and South Korea). Japan recorded its first quarter of increasing early-stage M&A activity since Q4 2016, with the number of early-stage deals rising by 6 percent YOY. Despite the political instability on the Korean peninsula and in Myanmar, for most of the APAC region, strengthening global economic demand and supportive fiscal and monetary policy actions are driving vigorous economic growth and increasing dealmaking confidence. Worldwide, the number of announced M&A deals in Q1 2018 is expected to increase by around 2 percent compared to Q1 2017. The dealmaking environment is being supported by a combination of a gradual pickup in global economic growth, subdued inflation in advanced and emerging economies, buoyant asset markets and historically low interest rates. There are risks, however. “The risks to the scenario of steadily increasing M&A activity are twofold: political and financial,” said Philip Whitchelo, VP of Strategy & Product Marketing at Intralinks. “Increases in economic nationalism, protectionism and restrictions on global trade and cross-border economic integration all have the potential to negatively affect dealmaking sentiment. With

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global equity markets at record highs, and almost nine years since the last major trough, a correction that turns into a more serious selloff could also prove negative for dealmaking confidence,” he added. The Intralinks Deal Flow Predictor’s other regional forecasts for the number of announced M&A deals in Q1 2018 are: Europe, the Middle East and Africa (EMEA), predicted to be up around 6 percent; Latin America (LATAM), predicted to be up around 3 percent; and North America (NA), predicted to be down around 11 percent, due mainly to an exceptionally strong Q1 2017 comparison period. The Intralinks Deal Flow Predictor forecasts the number of future M&A deal announcements by tracking early-stage M&A activity - sell side M&A transactions across the world that are in preparation or have begun their due diligence stage. These early-stage deals are, on average, six months away from their public announcement. The Intralinks Deal Flow Predictor has been independently verified as an accurate predictor of future changes in the worldwide number of announced M&A transactions, as reported by Thomson Reuters. ABOUT THE INTRALINKS DEAL FLOW PREDICTOR The Intralinks Deal Flow Predictor provides Intralinks’ perspective on the level of M&A due diligence activity taking place during any given period. The

statistics contained in the Intralinks Deal Flow Predictor represent the volume of virtual data rooms (VDRs) opened, or proposed to be opened, through Intralinks or other providers for conducting due diligence on proposed transactions including asset sales, divestitures, equity private placements, financings, capital raises, joint ventures, alliances and partnerships. These statistics are not adjusted for changes in Intralinks’ share of the VDR market or changes in market demand for VDR services. These statistics may not correlate to the volume of completed transactions that may be reported by market data providers and should not be construed to represent the volume of transactions that will ultimately be consummated during any period nor of the revenue or M&A deal volume that Intralinks may generate for any financial period. Indications of future completed deal activity derived from the Intralinks Deal Flow Predictor are based on assumed rates of deals going from due diligence stage to completion. BFM DISCLAIMER THE INTRALINKS DEAL FLOW PREDICTOR (COLLECTIVELY THE “MATERIALS”) ARE PROVIDED “AS IS” FOR INFORMATIONAL PURPOSES ONLY. INTRALINKS MAKES NO GUARANTEE, REPRESENTATION OR WARRANTY OF ANY KIND REGARDING THE TIMELINESS, ACCURACY OR COMPLETENESS OF THE CONTENT OF THE MATERIALS. THESE MATERIALS ARE BASED ON INTRALINKS’ OBSERVATIONS AND SUBJECTIVE INTERPRETATIONS OF DUE DILIGENCE ACTIVITY TAKING PLACE, OR PROPOSED TO TAKE PLACE, ON INTRALINKS’ OR OTHER PROVIDERS’ VDR PLATFORMS FOR A LIMITED SET OF TRANSACTION TYPES. THESE MATERIALS ARE NOT INTENDED TO BE AN INDICATOR OF INTRALINKS’ BUSINESS PERFORMANCE OR OPERATING RESULTS FOR ANY PRIOR, CURRENT OR FUTURE PERIOD, NOR ARE THESE MATERIALS INTENDED TO PROMISE, GUARANTEE OR ASSURE FUTURE LEVELS OF COMPLETED DEAL ACTIVITY. THESE MATERIALS ARE NOT INTENDED TO CONVEY INVESTMENT ADVICE OR SOLICIT INVESTMENTS OF ANY KIND WHATSOEVER. Tintralinks.com.

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BFM | PROFILE

CYIENT: COMMUNICATING A SUCCESSFUL STRATEGY

Mr Krishna Bodanapu, Managing Director/CEO

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PROFILE| BFM

A clear, focused strategy is critical to business success. More so, when your goal is to redefine market dynamics.

yient, a provider of engineering, manufacturing, geospatial, network, and operations management services, prides itself on creating robust growth strategies that have far-reaching effects for clients and its stakeholders. The Hyderabad-based company’s strategic focus saw it record its highest revenue of $150.1 million in Q2, 2017-18, an increase of 10% year on year. Cyient designs products across aerospace, rail transportation, telecommunications, utilities, medical technologies, oil and gas, navigation, and several other vital industries. As CEO and Managing Director, Krishna Bodanapu oversees the strategic direction of the business across each of these sectors. Krishna is currently steering a company with many accolades to its name including 2017 ACOMM Award for Services to Industry – Professional Services; Leaders in Corporate Innovation Award by the Indo-American Chamber of Commerce (IACC) in 2017; Pratt & Whitney 2016 Supplier Innovation and Productivity Savings Awards; and Boeing 2015 Supplier of the Year Award. That is just a handful of its awards, which leaves little wonder as to why this company with 14,000 employees and $538 million in revenue has attracted the attention of many major global companies, not to mention expectant shareholders. Much of Cyient’s success is due to its strategic focus, evidenced by its recent acquisition of Connecticut-based B&F Design. This family-run business founded in 1965 has built a reputation

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for its high-quality design and tooling capability. Suffice to say, US-based B&F Design, founded in 1965, is a complementary acquisition which gives Cyient high-quality designing tools and capabilities to further expand its growing list of accomplishments. B&F’s capabilities are far ranging with expertise covering design and manufacturing of precision engine assembly equipment, repair tooling, machining of fixtures and gauges, and engine factory modernization services. The acquisition was part of Cyient’s strategy of Design, Build, Operate and Maintain. “Building on our strategy of Design, Build, Operate and Maintain, Cyient Defence Services Inc. signed a definitive agreement to acquire 100% equity shares in B&F Design Inc.,” said Krishna. “This acquisition adds to our tooling design and manufacturing capability.” Interestingly, this was Cyient’s sixth acquisition in the last three years. Cyient also signed an exclusive software licensing agreement with Elpis, a start-up software company from Portland, Oregon in the USA. “Elpis provides an innovative machine learning meter and voltage signature technology that brings significant benefits to the electric utility. Through this agreement, Cyient and Elpis will jointly pursue utility business opportunities by leveraging our complementing solutions and technology respectively.” Another sector that has been key to the company’s growth is rail transportation.

‘MUCH OF CYIENT’S SUCCESS IS DUE TO ITS STRATEGIC FOCUS, EVIDENCED BY ITS RECENT ACQUISITION OF CONNECTICUT-BASED B&F DESIGN.’

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BFM | PROFILE

“WE’VE ALWAYS LOOKED INTO THE FUTURE AND ASKED WHY WE DO WHAT WE DO. FROM THAT, WE CAN ASK OURSELVES HOW WE SPEND TIME, MONEY, AND EFFORT TO PREPARE FOR WHAT IS COMING.”

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“We do a large amount of work for Melbourne Metro including working on the rail signaling systems and rail rolling stock. This has driven the growth of the company, including creating a successful sales arm,” Krishna adds. Cyient aims to improve efficiency through innovative rail engineering solutions, while bringing about significant savings. The company has experience on more than 200+ major rail transportation projects around the world and over the past decade has developed processes that help global rail organizations manage their projects efficiently, whether in

rolling stock, signaling, or rail electrification. Key to Cyient’s success is to drill down to the root cause of an issue and examine why a solution is required—not necessarily what solution is required. Companies should ask why they do what they do, not what they should be doing As in all facets of life, in business and entrepreneurship too, answering the ‘why’ outlines the purpose of your actions. “Changing the question from what we are doing to why we are doing it has helped us evolve,” Krishna says. Cyient evolved from a mapping

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PROFILE| BFM

business found in 1991 into a network design business. “We’ve always looked into the future and asked why we do what we do. From that, we can ask ourselves how we spend time, money, and effort to prepare for what is coming. Business is about changing its narrative in a way that benefits the industry. If a company can do that, it evolves from being a run-of-the-mill service provider to something bigger.” STRATEGIC EVOLUTION IS ABOUT CHANGING THE NARRATIVE As a company heavily involved with telecommunications in Australia, Cyient is looking

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closely at what is happening with the industry. It is doing so, to create better solutions for the telecommunications companies and their clients. In effect, it is looking to change the industry narrative. That is no simple task, but for Cyient it is less of a task than it is a mission. Take voice technology for example. “While we are trying to address issues around voice technology, we must pause to consider that 20 years from now voice technology might become irrelevant,” Krishna says. Cyient must look to change the narrative and bring new, efficient, and cost-effective services to the end customer. Looking at the telecommunications industry more broadly, Cyient has developed a market-leading mobile application called FOMS (founded on emerging iOS and Android applications) for managing field asset information. With telecommunication companies facing challenges in managing their growing infrastructure footprint, Cyient could have the perfect solution. FOMS provides design capability in the field, thus helping to bridge the gap between field visits and powerful Geographic Information System (GIS) platforms. Not only that, it aids telecommunications and utility companies to enhance efficiency and delivery experience by reducing operational expenditure and turnaround time to facilitate on-time delivery of projects. “FOMS offers utility and telecommunication operators the capability to update network geometry in real-time and while in the field.” FOMS was developed in-house and was designed to reduce the time for field visits, eliminate the need for re-entry of data, and increase data accuracy. “It also reduces operational expenses and turnaround time and facilitates on-time delivery of

“MANY HOSPITALS TODAY HAVE SOPHISTICATED MACHINES THAT COST HUNDREDS OF THOUSANDS, IF NOT MILLIONS, OF DOLLARS. HOWEVER, THERE’S ONLY A FRACTION OF PEOPLE THAT CAN AFFORD TREATMENTS, AND THESE PROBLEMS ARE AMPLIFIED IN DEVELOPING NATIONS. projects,” Krishna says. FOMS was recently adopted by leading construction company Visionstream, a provider of design, construction and maintenance services for advanced communication and industrial networks in Australia and New Zealand. Visionstream will use FOMS to implement their FieldVision concept; a smart, cost-efficient field-mobility solution that integrates design capability, time, and budget parameters across the Ultra-Fast Broadband (UFB) rollout program. The medical industry is another sector in which Cyient hopes to make a narrative impact. “Many hospitals today have sophisticated machines that cost hundreds of thousands, if not millions, of dollars. However, there’s only a fraction of people that can afford treatments, and these problems are amplified in developing nations. “With the spiraling cost of healthcare, the key question is around bringing efficient, lowcost health care to the masses. What Cyient looks at is not how to design an MRI or ultrasound machine. That’s just one part of the solution. The real problem is in bringing affordable health care to the five billion people globally

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BFM | PROFILE

“WHEN I TOOK OVER AS CEO, MY GOAL WAS TO DEFINE WHAT WE WERE GOING TO DO AND WHAT WE WOULD AVOID DOING. I FELT WE COULD GROW BIG BY GROWING SMALL.”

who suffer from the lack of it.” Cyient works with MedTech companies to provide smarter manufacturing solutions for medical devices. Here too, costefficiency, quality, and speed to market are of paramount importance. When you consider that the healthcare industry is undergoing rapid changes and developments

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due to an aging population, costeffective healthcare, and high patient volumes, there is a need for evolution that is borne of strategic focus. “When I took over as CEO, my goal was to define what we were going to do and what we would avoid doing. I felt we could grow big by growing small. That means our focus would be on a small number of service offerings and a small number of clients. As it turns out, this has been the key to our success.” STRONG STRATEGIES POSITIVELY AFFECT CLIENTS Having a strong internal strategy and focus manifests itself in what a company does for its clients. Understanding the market, including what clients want, and where that fits into the business framework, is crucial to ongoing success. A company must

articulate a strategy that makes sense to the market. “There is no point in building a product, service, or solution that the market does not need and is not willing to pay for. I believe the key to a successful strategy is taking into account where the market is headed, and what the market dynamics are.” In essence, strategy is about foresight: asking the right questions to find the right solutions to a range of problems that fit a particular business model. If a business has foresight, it can often change a narrative in a positive, meaningful way. The business that gets its strategy and focus right, and understands its purpose within the broader market dynamic is the one that thrives. Cyient has proven its strategy for success many times over. BFM

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BFM | ASIA

OUTDATED AND OLD – AUSTRALIA’S TRANSPORT SYSTEM NEEDS TO FOLLOW ASIA As our Asian counterparts continue to build greater connectivity in their populous cities through world-class advancements in their transportation systems, Australia continues to lag behind our neighbours by decades. By Nick Deeks, WT Partnership.

ith the Australian population growing at an exponential rate, particularly in our major cities of Sydney and Melbourne, Australian policy-makers need to stop debating and start harnessing the transportation technology coming out of Asia. While our policy-makers have started to discuss legislating for 4th industrial revolution (4IR) technologies, the legislation does not support innovation in our transportation system. Instead, our current transport infrastructure projects are built on old thinking, and examples of this are Sydney and Melbourne Metro trains. Metro trains have existed in New York and London since the 1860s. Sydney and Melbourne’s adaptation is not modernisation, it’s catching up 150 years later. These systems were built over a century ago to stimulate growth in the suburbs and mitigate the effects of a vastly growing population. While Australia is currently dealing with the same population issues, Australian transport infrastructure objectives are based on economic development and return on capital. This is at odds with urban planning that supports our population growth. Australian suburbs need transport infrastructure installed before suburban growth, not afterwards. Investment in transport infrastructure needs a long-term approach that supports our major cities, which are forecasted to double in size over the next few decades. The fastest return on investment cannot be the decider of our transport infrastructure. It goes without saying that Asian countries are harnessing technology to create transportation systems that are accommodating their booming populations. Shanghai, China introduced the highspeed Maglev train in 2004 and in 2015, Japan’s Maglev train became the fastest in the world with a record speed of 603km/h. High speed trains are non-existent in Australia. High speed trains that have existed for decades in Asia and are needed in Australia to create greater connectivity between our major cities. Australia needs to seriously look at implementing a Hyperloop – the current technology being tested for high speed travel. A Hyperloop between Melbourne

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and Sydney, and possibly Sydney and Brisbane, would immensely enhance connectivity between our hubs of commerce and activity. Singapore are testing autonomous driving in real time on real roads with shared and public vehicles. The highly advanced nation is already planning to shift freight to night-time with autonomous trucks, whereas in Australia it is illegal to drive a car without human control. The future of our transportation systems need Artificial Intelligence (AI) scheduling of traffic lights, like in Seoul, South Korea, that optimise the flow of major highways and give drivers real time updates. Australia’s current traffic light system mostly works on timing and is incredibly outdated. Policy-makers need to start shifting the use of vehicles from being single user cars to autonomous ride sharing and public vehicles. Organisations in the transport industry, such as the NRMA, also need to start innovating or they will become obsolete. Robotic roadside assistance and maintenance will soon become a reality. However, even with all these advancements, Australia seems to be doing barely anything to prepare our transportation systems for the future. In the absence of a future-thinking mindset, Australia continues to merely widen and upgrade its major roads to retrospectively support its growing population. We are expanding and upgrading major roads and arterials such as North Connex and West Connect, Pacific Highway, West Gate Tunnel, Monash Freeway, City Link, Bruce Highway and Warrego Highway. However, these roads are only accommodating short-term population growth and traditional cars and trucks. They are not considering the growth of electric cars and the arrival of autonomous vehicles. None of these projects have electric charge stations built into these projects, apart from an ambitious and encouraging ‘super highway’ project in Queensland with 18 fast charging locations. The Australian Federal and State Governments are debating future technologies and their advantages and disadvantages, but minimal large-scale testing or prototyping is underway. Our Asian neighbours on the

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ASIA| BFM

The SCMaglev and Railway Park in Nagoya, Japan

other hand, continue to push the boundaries to propel their countries into the 21st century and beyond by anticipating the traffic congestion and transportation needs of their large populations. Australia needs to catch-up. Australia needs to shift our nonchalant approach to growth and have an appetite for progress in our transport and infrastructure projects that goes beyond government terms. This will require government investment in testing technologies and lowering barriers of entry for firms to enter the industry. It is no longer a matter of waiting for results to justify spend. We need to find out what works best in the Australian transport landscape.

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We, in Australia, and some other countries too, are bringing back the ‘tram system’ through Light Rail Project, where this significant expense could have been invested in testing sites for the Hyperloop. It should be a priority for all policy-makers to implement a high-speed rail system in growing populous areas and introduce connective technologies, such as software that allows cars to communicate with the network system and ease congestion. It is in the nation’s interest to emulate the advancements our Asian neighbours have made in transportation, as failure to act now will lead to excessive traffic, exacerbated problems in our public transport system, inefficient freight systems and a disconnect between our major cities. BFM

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BFM | CEO

What it takes to become CEO By David Jones, Senior Managing Director of Robert Half Asia Pacific

hile the journey toward becoming a company’s CEO might not be for everyone or without challenges, many ambitious professionals still aspire, and want to know how to become a CEO. The inaugural Robert Half CEO Tracker, which profiled the background of the ASX 200-listed CEOs, has identified the commonalities they share and the steps ambitious professionals can take to set themselves on the right pathway to C-suite success. WHAT DOES IT TAKE TO BE A CEO? For those aspiring to become CEO, you will require a considerable amount of intelligence, focus, determination and flair for business. The career pyramid becomes very narrow at the top, meaning there is generally no shortage of suitable candidates with management skills interested in any CEO vacancy. Chances of becoming CEO are greater in New South Wales and Victoria as 47% of ASX 200-listed CEOs are based in the Sydney metro area and 27% are based in the Melbourne metro area. The DNA of the modern CEO continues to evolve as businesses operate in an increasingly competitive and changing environment. A strong standout feature of our analysis of the ASX 200-listed CEOs is their background in financial leadership and commercial acumen. Business leaders with strong financial capabilities are highly valued as they can easily interpret the financial ramifications of business decisions, adding a practical, financial perspective to a strategic one, emphasising the value of a strong understanding of the ‘numbers’ underpinning any organisation. Chief executives typically have a strong educational background,

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with wide and varied experience in business, plus a proven track record of success. Unsurprisingly, having a tertiary education is clearly a characteristic most CEOs share. More than eight in 10 (82%) have an undergraduate degree and more than half (54%) have – in addition to an undergraduate degree – postgraduate qualifications, with little over one in five (22%) having completed an MBA. As such, CEOs are predominantly professionals who have acquired knowledge, wisdom and sound judgement over time. Loyalty has its rewards as many have worked their way up to the top job through the company – in fact, 62% of ASX 200-listed CEOs were promoted internally, highlighting succession planning as a top priority for companies looking to replace senior leaders. For those looking to hone their personal attributes, CEOs need to be clear communicators who are capable of both giving direction and accepting expert opinion and as with all leadership positions, exceptional people skills are essential. They must be energetic, calm under pressure and everobjective, while having the creative ideas needed to give the business an advantage over its competitors. WHAT ARE YOUR CHANCES OF BECOMING CEO? Naturally, it takes a very driven individual to become CEO – of any type of company. As organisations operate in increasingly uncertain times, they need to proactively identify the right talent for the top job. Anyone with the requisite skills and experience has the opportunity to become a great chief executive, although it appears some candidates may have an advantage over others.

COULD THIS PERSON BE YOU? Becoming a CEO calls for confidence, leadership and strong communication skills while being able to motivate and inspire a broad range of employees. It is a position that needs a willingness to adopt fresh ideas, embrace new technologies and responsibly explore opportunities to achieve sustainable company growth. Before you decide whether you want to pursue the pathway of a CEO, it’s important to establish your ability to thrive under pressure, juggle multiple demands, grasp new concepts quickly, and recognise potential opportunities that will contribute to a company’s bottom line. And beyond the qualities of a CEO, you need to ensure that you make your own case for selection as strong as possible, by gaining the required skills and experience. With the advancement of automation, digital transformation, regulatory frameworks, and globalisation, companies need leaders who can not only meet business goals, but also successfully take advantage of these changes, whilst also possessing the strong financial acumen in order to keep their organisation afloat during continuously fluctuating economic conditions. Ultimately, when it comes to knowing how to become a CEO – there is no singular pathway. Every professional striving to reach the pinnacle of their career needs to define their own journey to success. BFM Robert Half Executive Search specialises in the search for and placement of executive leadership talent across a broad spectrum of function areas and industry sectors.

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CEO| BFM

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BFM | PROFILE

John Knaggs

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PROFILE| BFM

Building a greenfield city centre the smart way How often do you have the opportunity to be an early mover in what will be the first central business district new build in Australia? SunCentral Maroochydore CEO John Knaggs posed the question to Jonathan Jackson when we caught up to talk about the Sunshine Coast’s extraordinary makeover.

hen you think about the Sunshine Coast, the term ‘business district’ does not immediately spring to mind. Most head north for the sun, beach and sea change this near perfect climate offers. However, there is a change of another kind in the works; a change to the tune of $300 million that will transform the Sunshine Coast and in particular Maroochydore into an international business hub that could be the envy of all Australia. The construction of a new Maroochydore CBD will create the only greenfield city heart in Australia and the development is expected to create thousands of new jobs and provide a $5.9 billion boost to the Queensland economy. “We expect in excess of 15,000 jobs post construction and that number will grow further in the decades to come,” says SunCentral CEO John Knaggs. The benefits have wide-reaching effects. “There’s probably in excess of $4 billion in construction that will occur over the next 15 years that will aid the regional economy,” Knaggs says. “It will provide opportunities in increased employment and value beyond tourism, retail and construction.” Mr Knaggs says the construction of a new $2 billion teaching hospital and new airport runway will internationalise the Sunshine Coast, broadening the region’s economy and deepening business investment including investment in technology and health. Ultimately these projects will

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enable Maroochydore to step up as the capital of a more mature, yet still dynamic lifestyle region. THE NEED FOR A GREENFIELD CBD IN THE SEQ CORRIDOR As the Sunshine Coast’s population continued to multiply, the Maroochydore City Centre needed to address a number of infrastructure challenges. Transport, business opportunity, housing and connectivity became vital components in the mooted rebuild. It was important, however, to maintain the region’s outdoor ethos whilst looking towards creating an international city. About 40 per cent of the city centre will be dedicated to waterways, parks and plazas, whilst the 53ha CBD will comprise commercial and mixed-use premises, residential apartments, retail and dining precincts, a premium hotel, convention and entertainment facilities and proposed light rail. When the project was announced, Sunshine Coast Mayor Mark Jamieson said the city centre development would forge a new identity for Maroochydore by creating the economic and civic heart of a region that stretches from Caloundra to Coolum and west to the hinterland. “This is Australia’s only greenfield CBD within an existing urban area which provides us with the opportunity to build from scratch a city centre that is able to meet the needs of people both now and in the future,” Cr Jamieson said at the sod turning in 2016.

Earthworks began in 2016, with the first commercial buildings to be completed by early 2020. “It is ambitious, but each month we are meeting our construction goals and jobs prospects on site are being realised,” Mr Knaggs says. “More particularly, SunCentral offers the capacity to build a new contemporary city centre from scratch on a greenfield site that is right at the centre of Maroochydore.” BY SCALE THIS WILL BE THE LARGEST CBD NORTH OF BRISBANE “The Sunshine Coast is creating its own identity and taking a trajectory that is of its own making. “It will boost tourism to the area even further, however we are building a contemporary, smart city which significantly positions the Sunshine Coast in a way that hasn’t been seen before.” Essentially, the urban centre will feature retail, entertainment and cultural facilities that aid all of the urban centres on the Sunshine Coast. Add to that a premium hotel site, in addition to business hotels in the new city centre and the opening of the new airport runway in 2020 that will connect the Sunshine Coast to the Asia Pacific rim and this becomes a vital cog in Australia’s business and investment future. “This project is all about people beyond this region seeing the Sunshine Coast and Maroochydore as not just a place to roll out the beach towel, but as an incredible business expansion opportunity in one of the fastest growing regions – South East Queensland.”

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BFM | PROFILE

CREATING A SMART CITY Throughout Australia, urban sprawl has created many infrastructure challenges. Add to that the rising costs of working in capital cities and the impact of a long commute to work as inner city housing affordability becomes a distant memory for many people, and there is a need for change. The Sunshine Coast Regional Council recognised this need and the idea for the Maroochydore City Centre was put forward. It was the perfect opportunity to build from the ground up: to create fresh opportunities beyond traditional markets for business expansion and investment. It was also an opportunity to integrate back of house technology that could have a major national impact. “Applying our smart city framework – which includes digital solutions for the management of street lighting, car parking, water, power and signage that is detected by smartphones and other technologies and where rubbish bins are emptied via automated underground vacuum pipes – means the Maroochydore City Centre will become a nation-leading destination for innovative business,” said Mayor Jamieson at the time. That vision hasn’t changed. “We have begun to embed the latest technology and thinking that goes into a smart city – recognising the opportunities for citizens, business and R&D,” Mr Knaggs says. “We have had an Entrepreneurin-Residence from day one, building smart city technology and engaging nationally to aid and build the Sunshine Coast as a

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city recognised for innovation and entrepreneurship.” Most importantly for Mr Knaggs, a smart city is not just about technology. It is about people and he is looking to attract the sorts of skillsets and outlook that attract business opportunities, partnership and collaboration. “It would be erroneous to limit the growth of a smart city to technology. It is important, but the most significant function is to create a pool of talent that a project like this attracts and then build on that.” Whilst building a new city is a council initiative, SunCentral is an independent company tasked with driving delivery. Mr Knaggs has worked with council previously and understands the machinations, but with an independent licence he is driving the growth of this new CBD hard. With the support of council and the State Government, which he says is a fantastic example of the way informed and well-led local government can set strategy, Mr Knaggs has already had several wins. John Holland is poised to strike a $200 million deal for five super lots. Several leading hotel brands have expressed interest in developing and operating business hotels in the new CBD. Meanwhile the Sunshine Coast has been named on the world’s top 21 smartest communities. Importantly, the State Labor government has pledged to invest $15 million into the Sunshine Coast’s international broadband submarine cable project, which would connect the Maroochydore City Centre directly with global communications systems in Asia and North America.

The Sunshine Coast would be the only landing point for an international sub-sea cable outside Sydney on the Eastern seaboard. Council called for Expressions of Interest in the cable project on 2 December and will begin assessing submissions from mid-January. As reported by the Sunshine Coast Daily, council’s recent feasibility study found the cable and associated facilities would create 864 full-time jobs a year on the Sunshine Coast and provide a potential economic boost of $927 million to Queensland. “Digital connectivity is an important component of diversifying our state’s economy and improved access will ensure we remain an attractive investment destination and are competitive in global markets,” Minister for Innovation, Science and the Digital Economy Leeanne Enoch said. The Maroochydore City Centre project is a game-changing build for not just the Sunshine Coast, but also the broader Australian economy. The dedicated and talented team behind it is working hard to ensure this smart city becomes a hub for national and international business, whilst maintaining its charm. The next 18 months will be crucial, but the trajectory is positive as SunCentral opens up business investment and opportunities that puts it on the radar of all of South East Asia and takes it one step closer to the US. This is probably the largest urban regeneration in Queensland, with pre-approved development rights from the ground up. Indeed, as Mr Knaggs says, this is a rare opportunity. BFM. www.businessfirstmagazine.com.au

Artist’s impression.

BRILLIANT FOR BUSINESS

CBD location in one of Australia’s fastest growing regions. In the heart of Queensland’s stunning Sunshine Coast and just over an hour north of Brisbane, Maroochydore is set to become a thriving hub for commerce, technology, innovation, entertainment and inner-city living. A 53-hectare central business district is being built from the ground up, less than a kilometre from world-class beaches, and 10 minutes from Australia’s newest international airport. Interest is being sought from: • Investors and developers • Future commercial and retail tenants • Tertiary education and training providers • Government and not-for-profit organisations Stage One construction is now underway. Make your move early and reap the rewards.

Expressions of Interest are now open. Visit our website for full details.

BFM | TECHNOLOGY

Making Breaches Irrelevant The new level of ambition and sophistication evident in recent cyberattacks has demonstrated the need for businesses to encrypt sensitive data, in real time, wherever it is stored, used and shared – or risk loss of critical assets and brand reputation that has taken years to build. Jane Melia, VP of Strategic Business Development at QuintessenceLabs discusses how embracing advanced quantum cybersecurity solutions can protect your sensitive data even in the event of a breach. OPPORTUNITY .V. RISK Australian Prime Minister, Malcolm Turnbull said recently that there’s no global institution or infrastructure more important to the future prosperity and freedom of our global community than the Internet itself. For Australian businesses and organisations, the internet is the main gateway to global customers and a key driver of profitability. However, as the laws of nature dictate, along with opportunity comes risk – and in the near future greater responsibilities and penalties as new legislation to protect customer data come into enforcement. The European Union’s General Data Protection Regulation (GDPR) takes effect in May 2018, creating the imperative for global businesses of all shapes and sizes to implement better cybersecurity controls and systems to be compliant, or risk significant financial penalties and exposure. GROWTH OF CYBERATTACKS The number of cyberattacks is growing – according to the Identity Theft Resource Center (ITRC), US data breaches in 2016 totaled 1,093 while there were already 858 in just the first six months of 2017. With such unfavourable odds for companies suggesting that they may well be breached at some point in the future, the smart ones are turning to encryption to protect their data. Few could have foretold the plethora of recent disruption that hackers have created, from the tampering of the US election; WannaCry crippling the UK’s

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TECHNOLOGY| BFM

National Health Service; the Denial-of-Service attack on the 2016 Australian Census; and the international bank heist of $81 million from Bank Bangladesh. It’s headlines like these - and the thousands of other cybersecurity events which have impacted on the domestic and global economy in the past twelve months - that have increased the urgency for business leaders and board members to refresh their thinking on cybersecurity and data protection strategies.

KNOWLEDGE GAP RISKS The global challenge is highlighted by a recent survey conducted by global risk management firm Willis Towers Watson, which found that 79 percent of employees ranked insufficient understanding as the biggest barrier to their organisation effectively managing its cyber risk. It’s worth considering if your business has a knowledge gap when it comes to cybersecurity, or if it’s ready to mitigate its risk. HOME GROWN SOLUTIONS Australia – in the form of the Australian Government, universities and the private sector – has recognised the need and has taken steps to ensure the country will play a significant part of the growth of this industry. Today one of the world’s most respected cybersecurity hubs is located in Australia’s capital, Canberra, where 48 companies are developing new technologies to defend organisations against the damaging effects of cyberattacks. Within this innovative hub sits QuintessenceLabs, a quantum technology company founded in 2008 originated out of the Australian National University by founder and chief executive Vikram Sharma. QUANTUM IN ACTION Consistently recognised by Gartner as a leader in its field, QuintessenceLabs is working alongside the Australian Department of Defence and Australian Defence Force on projects to enhance Australia’s cybersecurity capabilities. It provides the strongest encryption

AUSTRALIA’S CYBERSECURITY FOOTPRINT

• Australian Cyber Security Growth Network (ACSGN), a non-profit entity and key driver of Australia’s $240 million (AUS) Cyber Security Strategy. • The Australian Defense Ministry, which funds a $400 million (AUS) cyber initiative. • In the next decade Australia will need at least 10,000 more jobready cybersecurity professionals to fulfil the needs of global organisations and governments in the quest against cybercrime. • Australian schools and universities will need to step-up to meet the challenge of meeting this vital skills gap and it’s likely we’ll see a variety of programs to engage kids in STEM at all levels of the educational system.

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to create ‘keys’ with truly random number combinations. These fully random numbers are generated from natural quantum effects, and will be an important component of strategies to withstand hacking by quantum computers, the super computers of the future. QuintessenceLabs has cracked the hardest and most complex part of encryption which lies in generating, managing, and securing encryption keys, and provides one of the most powerful key management solutions available. BUSINESS OF TOMORROW Fully aware of the importance of QuintessenceLabs’ offering to the financial services industry, Westpac Banking Corp not only utilises QuintessenceLabs’ quantum technology to protect its business but injected a 16% capital investment and recently recognised them as a ‘Business of Tomorrow’, helping to shape the future. INVESTING IN THE FUTURE Highlighting the scale and complexity of the cybersecurity issue to the nation is reflected in the collaboration partnerships between academia and the corporate world; and investments being made to defend Australian cyber networks from organised criminals and statesponsored attackers. ENCRYPTION KEY As this high-level focus and investment highlights, the issue of cybersecurity will face business, government and everyday Australians for the foreseeable future. Widely publicised mega breaches and cyberattacks have increased the urgency to improve security postures in the enterprise and have led to more companies embracing an enterprisewide encryption strategy. QuintessenceLabs recognises the bottom line for business leaders is driving revenues and profit – it’s therefore worth considering how an enterprise-wide encryption strategy will fortify your organisation to make cyberattacks and breaches irrelevant, so you can continue to do business with confidence. BFM

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BFM | PROPERTY

Emerging headwinds will dampen demand for new houses The upturn in demand for residential land in the major eastern state centres is expected to begin to peter out over 2017/18 as the new housing market faces emerging headwinds, according to leading industry analyst and economic forecaster, BIS Oxford Economics.

ccording to BIS Oxford Economics’ Outlook for Residential Land 2017 to 2022 report series, residential lot production in Sydney, Melbourne and South-East Queensland is around its peak in this cycle and will begin to fall away. In contrast, demand for land in Adelaide and Perth has been weakening and will continue to soften. However, BIS Oxford Economics senior manager and report series author, Mr Angie Zigomanis, said that the forecast downturns in the eastern state centres are likely to be moderate. New supply in these markets has been more pronounced in the unit/apartment sector, with markets continuing to experience a deficiency of detached house stock that is likely to continue to underpin demand. Nevertheless, new housing demand has still risen to high levels. Sydney is estimated to have recorded its highest level of residential land production over 2016/17. Lot production in Melbourne peaked in 2014/15 but has remained close to this peak in the subsequent two years.

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Similarly, the Brisbane, Gold Coast and Sunshine Coast markets have been experiencing a moderate upturn since 2013/14 after an extended period of weakness. “Steady price growth in houses in the initial stages of the housing construction upturn improved land price affordability and shifted some demand from the established house market, to the new house and land market,” said Zigomanis. “This not only encouraged a greater percentage of home purchasers to opt for a new house over an established one, but also established house owners to sell up and upgrade to a new, larger house.” In contrast to the strength of the eastern state capitals, the Adelaide land market has softened considerably, in line with weak population growth and a subdued local economy. Lot production in 2016/17 was well below its peak and there are few key economic drivers on the horizon. Meanwhile, the Perth market continues to struggle both in absorbing the declines in mining investment and in broadening its economic base.

Migration and population growth have fallen to well below their premining boom levels. Despite easing lot production, dwelling supply has remained well above underlying demand adding to a significant dwelling oversupply, which will weigh on any cyclical upturn in the coming years. Lot production in the main east coast capital cities and the Gold and Sunshine Coasts has been underpinned by solid population growth and a housing deficiency, and has been facilitated by recordlow interest rates that drove new house demand. Zigomanis states that the rise in new housing activity is now easing some of the demand pressures in the market, while the deterioration of housing and land price affordability will impact demand for new houses and consequently limit the next round of lots produced. “Most markets saw house price growth outpace land price growth through the early stages of the upturn, which improved the value proposition for a new house,” said Zigomanis. “That

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PROPERTY| BFM

said, land prices have now largely caught up and this gap will have narrowed, making new housing less attractive.” As a result, many cities are expected to see demand for land and lot production decline over 2017/18 and 2018/19. Land production in Sydney was estimated at 11,300 lots in 2016/17; its highest level in the past 25 years. Although a sizeable dwelling deficiency is still estimated to be in place in Sydney, it is now being eroded by new dwelling supply. Meanwhile, the house and land price growth through the upturn has seen affordability diminish, as evidenced by rising net outflows of population from Sydney. This is expected to see lot production begin to ease back from 2017/18. Record population growth has been the main driver of demand for new houses and land in Melbourne. Together with affordable land, this has also seen lot production sustained at record levels since 2014/15. “However, there have been significant rises in land prices in Melbourne in 2017, and this has seen new house affordability deteriorate,” said Zigomanis. “While lot production is likely to remain high in 2017/18 as recent pre-sales of residential lots are delivered, the resultant weaker demand will cause lot production to fall away from 2018/19.” After bottoming out at a 20-year low of 4,800 lots in 2012/13, the resultant undersupply in Brisbane initiated an upturn that has been supplemented by strengthening net interstate migration inflows, with an estimated 9,400 lots created in 2016/17. A further rise is forecast in 2017/18, before significant oversupply in the Brisbane apartment market plays through to demand for new housing. The Gold Coast and Sunshine Coast markets have followed the lead of Brisbane. A weak market and emerging dwelling deficiency saw lot production rise from a

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Average annual lot production out regions (lots) 0

5,000

10,000

15,000

20,000

25,000

Sydney Melbourne Melbourne Gold Coast Sunshine Coast

2015-2017 2018-2020 forecast

Adelaide Perth

low base in 2013/14 through to a peak in 2016/17. Both markets arguably benefit from migration from Brisbane, Sydney and, to an extent, Melbourne, as affordability becomes increasingly constrained in those cities. Lot production in Adelaide has been more moderate than the eastern state centres. Low interest rates and modest house price growth has supported some buyer demand. However, slowing economic conditions and easing population growth are now weighing on the market. Similarly, lot production in the Perth market is now falling after a peak in 2014/15. The decline in mining-related investment has caused net interstate migration to shift from an inflow to an escalating outflow, while overseas migration has fallen. Consequently, demand for new houses has slumped, impacting the land market. Through the upturns in all markets, developers have sought to keep land affordable and maintain margins by steadily reducing the size of the lots sold. However, it appears that median lot sizes have stabilised in most cities in the past two-to-three years. This suggests there is a lower limit

to what the market will absorb. Moreover, it makes the economics of development more challenging as rising costs cannot be met by further reductions to the size of lots. An expected softening in house price growth over 2017/18 and 2018/19 is expected to play through to land prices, which in turn will make it more difficult for developers to maintain margins as construction costs continue to escalate. Together with recent solid rises in land prices making affordability more challenging, and strong construction alleviating some of the undersupply pressures, most markets are expected to experience an easing in lot production in the next two-tothree years. Separately, changing lifestyle choices and affordability preferences have also seen greater demand for medium and high density dwellings, at the expense of new houses, across the country. The downturn in new dwelling supply will eventually see a rising deficiency re-emerge in most markets. Together with an expected acceleration in economic growth by the turn of the decade, this will underpin rising demand through the next cycle. BFM

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BFM | PROFILE

University of Wollongong: adapting to a rapidly changing world The closing weeks of 2017 were dramatic for Australia’s higher education sector, with the federal government backing repeated calls for universities to keep a ‘laser focus’ on their students by announcing far-reaching funding reforms in its Mid-Year Economic and Fiscal Outlook statement.

s shockwaves reverberated through the sector, the University of Wollongong (UOW) quietly went about adapting to these long-anticipated changes in a way that reflected the institution’s history, culture and graduates. UOW is a research-intensive, financially sound institution with an international reputation for producing career-ready graduates whose broad skills and deep sense of purpose make them highly sought after by employers. It’s quite an achievement for a relatively young university. Despite being an independent institution for just 42 years, UOW is described as one of the best modern universities in the world – a fitting accolade considering its overall ranking among the top 2% of universities world-wide and among the top 1% for the categories of law, engineering, arts/humanities and for the quality of its graduates. Domestically, the federal government’s own Quality Indicators for Learning and Teaching (QILT) last year ranked UOW as the best university in New South Wales and the ACT across nine undergraduate study areas and for overall postgraduate study as well as for developing generic skills in postgraduate business. UOW is also Australia’s only

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public funded university to achieve 5-stars in all student experience measures in the 2018 Good Universities Guide: Overall experience; Skills development; Student support; Teaching quality and Learning resources and learner engagement. The university’s international reputation for world-class research and exceptional teaching quality has been paramount to its dramatic growth and success. Total student numbers in the last 10 years have grown nearly 50%, compared to a sector average of 41%, while its international student body has grown 62% compared to the sector’s 43%. UOW Chancellor, Ms Jillian Broadbent AO, believes the University’s strong student focus and stable leadership have been key elements behind this success. “I think the University of Wollongong has always been focused on the learning experience and academic quality. “Since it was spun out of the University of New South Wales 42 years ago, we have only had three Chancellors and four ViceChancellors. This has created stability with the institution’s mission and focus. We aim for quality and that has led us to achieve high international rankings.” Ms Broadbent has an

impressive resume of her own. She is currently on the Board of Woolworths Limited and Chair of Swiss Re Life & Health Australia Ltd and was the inaugural Chair of the Clean Energy Finance Corporation. She has held a number of Board positions, including those of the Reserve Bank of Australia, CocaCola Amatil Limited, ASX Limited, Special Broadcasting Service (SBS), Woodside Petroleum Ltd and Qantas Airways Ltd. “UOW offers a quality student experience that is supportive and personalised. It has always had a good governing Council and as it has grown has remained community focused. It was this fact that attracted Ms Broadbent to take the position of Chancellor in 2009. “I have always been interested

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PROFILE| BFM

UOW Chancellor, Ms Jillian Broadbent AO

in education and making a contribution to the community, so this position was a good fit for me,” she says. UOW holds as its core mission to: “be a global leader in discovery and learning, working to transform people and the world we live in” and encourages its students to find their ‘why’ – that deep sense of purpose for which its graduates are renowned. One of the key inclusions into the curriculum during Ms Broadbent’s time to contribute to this mission has been the UOWx program. Launched in 2015, under the current Vice-Chancellor Professor Paul Wellings CBE, UOWx is an initiative that sees students participating in a wide range of co-curricular activities that the University of Wollongong offers

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outside of academic coursework. The program formally recognises students’ involvement in these activities, which are designed to give them an advantage in an increasingly competitive workforce. There are currently over 150 recognised activities in which students can participate. Some of these include coaching indigenous students and working offshore in aid organisations. “Those sorts of initiatives are consistent with UOW developing career-ready students who show intelligence beyond the facts,” Ms Broadbent says. “We have found that through UOWx, student satisfaction has improved along with skills development and learner engagement.”

As well as creating broad minded graduates with life skills, the program is also helping cultivate career-ready graduates. Students are encouraged to take on internships and industry projects to further their own experiences and help them determine their best career path. To facilitate students’ entry into the workforce, UOW has built up substantial strategic research partnerships and collaborations with universities, institutes, governments, corporations and leading researchers across Australia and internationally. Students work with these partners to tackle some challenging issues. One PhD student recently explored how policies throughout the past century have impacted

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BFM | PROFILE

upon a community she describes as “often voiceless”. She is talking about the conversation surrounding disability welfare. Another graduate is aiming to help revolutionise battery technology. Battery technology is quickly becoming one of the most talked about energy resources of the future. Just consider the rise of Tesla and you’ll have a pretty solid understanding of the impact energy storage breakthroughs can have on future resource use and climate change. These are just two of the big issues UOW is tackling through its collaboration with outside partners and its students are benefitting greatly. Many UOW courses involve units of work integrated learning that are also contributing to its impressive graduate outcomes. Recently released government figures showed 73.1% of UOW graduates

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secure full-time employment within four months of completing their course - well above the national average of 69.5%. “These workplace units are an important part of course development. “The students undertaking these are not only developing as wellrounded, work-ready citizens, but are contributing to the high global standing of our graduates,” Ms Broadbent says. She says good leaders need to have intelligence, focus and application. The university is working hard to develop these skills. “We are developing their intelligence and focus, and the application is enhanced through broadening what they do outside of the university in work integrated learning and UOWx activities. “I am always impressed by the quality of our students, particularly the top performing students I get to meet through my role.” The students who do their homework on where to study and who want a positive experience, now seriously consider UOW, alongside major Sydney universities, as an option. 30% of UOW’s students are from regional NSW, but many across Sydney are now looking at the institution as a serious study destination and career-building opportunity. That is in no small part due to the hard work the university has done to make the learning experience an engaging one, where work integrated learning

and partnerships with research and industry groups, along with selective scholarship support, are creating a fulfilling journey. Add to that its picturesque location between NSW’s bushland and beach just a short distance from both Sydney and Canberra and it’s easy to understand why UOW is a popular study destination for domestic and international students alike. That is a great achievement and the university now hopes to continue the momentum of the last 10 years to firmly establish itself among the top 1% of the world’s universities. And so, the expansion continues… UOW’s new South Western Sydney campus in Liverpool, which officially opened in 2017, is growing steadily and expected to accommodate 7,000 students by 2030. UOW Dubai is planning to move into a larger, purpose-built home by 2020 and UOW’s recently acquired Hong Kong campus is also set for significant growth and development over the coming decade. Meanwhile, construction of new state-of-the-art teaching facilities, student accommodation and medical research infrastructure is already underway in Wollongong. For a modern university so obviously adept at responding to our rapidly changing world, facing the challenge of adapting to the latest changes in Australia’s higher education sector will be familiar territory. BFM

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Meeting the needs of an everchanging world. In this time of unprecedented change, universities have an obligation to lead and contribute to society. At the University of Wollongong, we believe the search for solutions to the world’s complex economic, social and environmental challenges is a global one. That’s why our business courses are created by academics with extensive global business and research experience, to ensure you’re ready to face the challenges of tomorrow’s business world. See how our business courses are meeting the needs of an ever-changing world. sydneybusinessschool.edu.au

Top 1%

for graduate employability1

Top 2%

of universities in the world2

Top 200 QS Global MBA 2018 Rankings

1st in NSW in five postgraduate student experience measures3

1. 2018 QS Graduate Employability Rankings. 2. 232nd in the world – QS World University Rankings 2018. 251-300 band – Times Higher Education World University Rankings 2018 3. Learner Engagement, Learning Resources, Overall Satisfaction, Skills Scale and Teaching Quality – Quality Indicators for Learning and Teaching (QILT) 2017. CRICOS Provider No: 00102E

BFM | LEADERSHIP

Why I don’t believe in work-life balance It took a serious health scare for me to wake up to what I was doing wrong when it came to work-life balance. Like so many people with demanding careers, I had worked myself sick. By John Karagounis.

fter years of working long hours in the banking and finance industry, dealing with its daily stresses, I was low on sleep, high on sugar, and overweight. I had developed chronic back pain along the way too, which discouraged me from exercise. I felt like a mess. As the CEO and Managing Director of The CEO Circle, I could see firsthand that I was not an isolated case. Many of the more than 500 CEOs I have interacted with over the past decade have exhibited the symptoms of this malaise as well. Luckily, my wife Nicky provided the nudge I needed to turn my health around. Her insistence that I get a full battery of tests done to get to the bottom of my health issues led to me being diagnosed with a severe case of sleep apnoea. It also led me to rethink the concept of work-life balance, which is something I’ve explored in my new book Why I Wrote This Book: For Greater Success. Like everyone else I strived for what is called work/life balance. All this striving seemed in vain though. When I was at work I felt like my family was missing out and when I was at home I felt like I was neglecting work. I was constantly weighing one thing against the other and never achieving this elusive balance. I felt like I was perpetually failing. I was applying a quantitative approach to an essentially qualitative problem. For me the penny dropped when I understood there was one crucial element missing, the most important of them all, the one everything intersects through — self. In all my work-life balance bean counting, I had left myself out of the equation. PUT YOURSELF INTO THE EQUATION It was then that I understood this notion of work-life balance doesn’t

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really provide the right framework for thinking about or solving this problem. There is no balance; it’s an imbalance we all have to deal with. Life can be messy. You have to look at all the competing priorities in your life and integrate and calibrate them as best you can, often on the run and improvised. Making it work to the best of your abilities for you, your family, your work, and your community. Essentially, however, you have to be front and centre as part of the solution. There will be times where you have to be focused 100% on work and other times on family or on community. You have to do the best you can and not punish yourself. But importantly, you have to find time for you. Until this moment of realisation, I had thought that by taking from myself, I was giving to others. But that’s not how it works. Instead, by investing in myself I was able to give more to others. I’ll give you a personal example of what I mean. I used to go to the gym on the odd occasion, but I wouldn’t tell anyone. I would put something else in the diary as I thought it was a selfish and unproductive way to spend time. If anyone should see me or find out about it, I would apologise. I was always thinking about the split between the time I spent at work versus the time I spent with family and friends. Eventually I stopped going and my health issues slowly got worse. Yes, that few hours a week at the gym was now reallocated in my work-life balance ledger, away from ‘selfish’ pursuits and back to work or family, but at what cost? I failed to understand that going to the gym was actually providing me with an activity that improved the quality of my time at work and with my family by making me a healthier and happier person.

We shouldn’t have to apologise for spending time on ourselves, whether it’s going for a walk, to the gym, doing yoga or having quiet time for us to simply be. Nor should we feel guilty for focusing and investing time in ourselves by pursuing hobbies and interests. Instead, we should celebrate it. Move, exercise, meditate, breathe, read, eat well — be at the top of your game! Be a shining example to your family, friends and colleagues. Allocate time for yourself to destress and recharge so you can be at your best with family or work. BE THERE FOR YOURSELF AND OTHERS Almost all of us have this sense that we should be doing something other than what we’re doing right now. This is typically what this hamster wheel of thought looks like. I’m at the gym thinking about why I should be at home instead. I’m at home and I’m sneakily looking at work emails instead of actually enjoying the company of the people I love. I’m at work and I’m daydreaming about getting home — so I can check work emails. Be where you are. Be with the people you are with. Do what you are meant to be doing in that moment. Don’t be present in body but absent in mind. This is the essence of mindfulness. Set limits with work so it does not creep into other parts of your life. No work emails or calls when at home. Avoid distractions. When you’re at work, really be at work. Allocate blocks of time with your family in your schedule in the same way you do with meetings and work commitments and ensure that you are present in every moment. Give of yourself. But make sure to give back to yourself too. Approach all of this in the same way you would manage your work obligations. Review how you spend

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LEADERSHIP| BFM

your time during a week. What areas are being neglected and how can you redress this? Review how you spend your time every week to make sure you are doing what is most important to you. Use the amazing technology at your disposal to become more efficient. CREATE HARMONY OUT OF DISCORD When you understand that you are the common factor that runs through your family and friends, work, and community life, you

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shift your thinking from balance to integration. You see that the dischord in your life can become harmony because you become more conscious of the role you play. By focusing on giving back to yourself, you gain the self-awareness to see how you fit into the tapestry of your life. You put yourself back into the picture. What I’m saying is simple: find time for you. Find time to simply be; find time to replenish your reserves; to reflect; and to reconnect to what’s important.

Look after yourself and you will find you can better look after the people and things in your life that matter. BFM A passionate thought leader, keynote speaker and facilitator, John Karagounis leads The CEO Circle, Australia’s leading exclusive peer group forum for business leaders. For more information about John’s new book Why I Wrote This Book: For Greater Success please visit johnkaragounis.com.

BUSINESSFIRST MAGAZINE

BFM | MARKETING

5 New Truths of Digital Marketing for Any Business Over the past few years, digital marketing has encountered rapid advancements, forever changing the world of marketing as we know it.

s a result, an abundance of marketing tools and trends have emerged, not only aiding the marketing industry, but creating opportunities and challenges that must be navigated by marketers. But with, “only 47.1% of Australian businesses having an online presence”1, some businesses are not adapting to the evolving marketing landscape. From my many years of experience as Director of Agent99, a full service communications agency, I believe that in order to survive the ‘new world’, businesses should be aware of these 5 digital marketing truths to be able to reach their desired audience. 1. Engage in data-driven digital marketing The needs of customers are

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rapidly progressing, with higher expectations than ever before, where more personalised experiences from brands are required. This can be achieved through the interpretation, analysis and use of data as insights will allow for improved decision making and increased personalisation. Understanding this, it is not surprising that a survey of more than 7,000 professionals found that, “53% of organisations chose ‘data-driven marketing’ as their strategic priority”2. Through the evolvement of datadriven marketing, marketers are able to gather crucial information that aids in the overall success of their strategy or campaign. Most importantly, data provides

accurate representations of the audience, when, what and how the advertisement or campaign performed. This will allow marketers to define demographics and behavioural trends of their audience. Thus, businesses can develop appropriate products and relevant messages to key target markets, furthering the success of their business in general. 2. There is a continual rise in Chatbots In 2018, you will most likely see chatbots being introduced into more industries with more complex transactions. This type of instant response not only improves internal efficiency but is fast becoming a consumer expectation. Chatbots may make a

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MARKETING| BFM

such as marketing automation, consumer engagement marketing, real time personalisation and marketing management4. Similarly, Hubspot is an inbound marketing platform with worldly recognition due to its services for blogging, social media, SEO and email marketing5. It is through the development of such marketing automation platforms that businesses have the ability to thrive through building and maintaining strong consumer and business relationships.

consumer feel like they are indeed speaking to a human, however, they’re merely computer generated simulations that mimic human interaction. Although their existence is not entirely new, businesses are only starting to deem them trustworthy enough to handle tasks such as customer service. In fact, chatbots have become such a success that the National Bank of Australia are currently trialling their own bot which will aid 200 customers at a time. It is predicted that it will improve overall positive customer experience and free up the time of NAB workers3. 3. Marketing automation tools can streamline multiple tasks Due to the evolving nature of the digital marketing landscape, marketers need to keep up with multiple activities and tasks daily. Marketers must be utilising marketing automation tools now to simplify time consuming tasks and streamline processes to ensure they focus on bigger, revenue generating tasks. I recommend using a multifunctional platform like Marketo which offers a range of tools

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4. High level of mobile usage offers vast opportunities Consumers increasingly depend on their mobile in most aspects of their day, with “40.44% of Australians engaging in data via mobile phones.”6 As consumers are constantly engaging with brands through smartphones, marketing has the opportunity to become more mobile friendly and thus reach a wider audience. As the director of Agent 99, the importance of generating mobile friendly sites and campaigns has become particularly evident over recent years. To accommodate this, we urge our clients to amplify their campaign on a digital level and ensure it is mobile friendly so they can receive the best return on investment possible. Sadly, many businesses are yet to generate mobile friendly sites, essentially missing out on potentially substantial revenue. It is also important to note that mobile devices are becoming consumers’ most valued expert when shopping as they can source recommendations from their network, fact-check and use online vouchers. 5. Overall customer experience can be a source of competitive advantage Customers are interacting with brands across many different touchpoints and marketers need to be aware of how this experience affects the overall customer

journey. Consumers are also seeking more genuine content from brands which is why live content has become so popular over the past years. Customer experience is seen today as a service that can easily separate businesses apart. Businesses that are adapting to the ever changing world of marketing can recognise the importance surrounding customer experience as it has been found that “six in 10 customers are not satisfied with the experiences delivered by brands.”7 Furthermore, “Almost two thirds of consumers (64%) will be more likely to trust a brand if they interact with consumers in a positive way on social media.”8 Our recommendation to clients is to constantly listen to their customers and create authentic and unfiltered content that is appropriate and appealing to them. Owing to the continual expansion of digital marketing, you must keep up to date with the latest trends, implement these five new truths into your digital strategy and watch your business continue to thrive. BFM https://www.smartcompany.com.au/marketing/ stats-that-should-be-shaping-your-marketingplan/ 2 https://blogs.adobe.com/digitaleurope/digitalmarketing/the-adobe-2016-digital-trends-report/ 3 https://www.businessinsider.com.au/nab-islaunching-chatbots-in-its-call-centres-2017-9 4 https://www.ngdata.com/top-marketingautomation-software-tools/ 5 https://www.ngdata.com/top-marketingautomation-software-tools/ 6 https://www.roi.com.au/blog/australian-internetsocial-media-statistics-2017/ 7 https://www.cmo.com.au/article/610597/ predictions-17-digital-marketing-trends-2017/ 8 https://www.sensis.com.au/about/our-reports/ 1

sensis-social-media-report

Sharon Zeev Poole, the Director of highly regarded boutique agency Agent99 Public Relations, has grown the agency from a one-man show to a full service, award-winning PR agency located in the thriving creative hub of Surry Hills, Sydney. The agency specialises in launching or relaunching brands in the food, beverage and travel spaces, as well as working with corporates and individuals to raise their profile in the B2B space.

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BFM | PROFILE

ASCENDER: PUTTING TRUST INTO PAYROLL

Everyone likes to get paid, but there’s more to Payroll than meets the eye. Jonathan Jackson speaks with Ascender CEO Marjukka Mäki-Hokkonen about the intricacies of payroll management.

ayroll is about people. Payroll allows people to put food on the table, fund their children’s education and be confident that they can pay their bills or mortgages. It is not just about putting money into an employee’s bank account. At its very heart Payroll is about trust. Several leading businesses, including convenience store chains, quick service restaurant brands and restaurants run by celebrity chefs, have been in the recent news for underpaying their staff consistently over a period of time. Many of these infringements may not have been deliberate but, in all cases, they resulted in significant erosion of the brand’s reputation and trust amongst its employees and customers. So how does a business prevent breakdowns in trust? Enter Ascender. Ascender is an Australian company with over 800 employees, assisting businesses in 35 countries across the Asia Pacific region and bringing confidence and trust to the Payroll process. This relatively little known, but long-established company (with its roots in businesses formerly known as Talent2 and NGA HR) is a service provider of choice for CFOs and HR Directors across the Asia Pacific region. That is because Ascender’s highly experienced team of Payroll professionals understand that behind every Payroll is not just a process and a procedure, but a person. Ascender connects businesses with their employees through their Payroll and HR solutions by bringing together its technology solutions and deep payroll expertise.

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As one of the leading Payroll service providers in Asia Pacific, Ascender’s client base boasts of some iconic Australian and multinational companies, along with many universities, government agencies and hundreds of small and medium sized enterprises. “We get to work with some incredible organisations and people. Many of our customers are hugely recognised brands, including many global multinationals. We are an extension of their organisation,” Ascender CEO Marjukka Maki-Hokkonen says. Alongside Payroll related services, which are at the core of its solution portfolio, Ascender also offers a full suite of services around Human Capital Management, Talent Management, and Workforce Management encompassing both proprietary and partner IP. Whilst Payroll and HR software solutions underpin Ascender’s service delivery, “people first” has always been their core principle and the company places a great deal of emphasis on building the trust of their employees and customers through continuing feedback and refinement across those services. BECOMING A MARKET LEADER Ascender’s reach extended in January last year (2017) when it announced the acquisition of the Australia and New Zealand business of NGA Human Resources, one of Australia’s leading HR and Payroll Technology and Services organisations. “We led that integration extremely swiftly without any

negative impact to the customer base and we’ve continued to see good momentum on the new business front immediately after the announcement of the acquisition,” says Marjukka. “We have received a lot of positive feedback around the integration process from our customers as well as market watchers and influencers.” The acquisition turned Ascender into the market leader in HR & Payroll software and services in ANZ and the Asia Pacific region, servicing over 3,000 clients and over 1.3 million employees. “In our vision statement we are trusted with the prosperity of millions of employees. This really highlights how critical our work is. Whatever the size or function of the organisation, their people expect to be paid and they trust us to make that happen accurately, compliantly and on-time, so that their employees can pay their mortgages and send their children to school.” Marjukka takes this vision statement personally. She arrived in Australia five years ago to grow and develop NGA Human Resources. She did that successfully before the acquisition, and the mission still continues to be the same albeit with a much bigger mandate. “A lot of our success comes down to the ethos, culture and the joy of working and servicing those customers. Also, it is being proud of what the company stands for and what we can do to help other businesses. It is incredibly satisfying to know that we are trusted to deliver such important services.”

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PROFILE| BFM

Marjukka MÃ¤ki-Hokkonen

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BFM | PROFILE

ENABLING PEOPLE AND PROSPERITY What Ascender does is enable its customers to focus on their core business, whilst it takes care of the expertise surrounding Payroll and HR services. According to Marjukka, this includes process simplification, standardisation and adopting industry best practices vis-àvis Payroll operations. It also includes deploying industry leading platforms to enhance functionality and improve user experience. Ascender partners with businesses to take the risk out of Payroll and to ensure they adhere to the sometimes insurmountable number of legislative changes that are easy to forget or inadvertently ignore. One of the services that Ascender provides is a monthly alert bulletin that details all the recent legal changes and updates relating to Payroll. This can include everything from changes to payment and wages for special non-working days to topics as broad as corporate governance. That is a lot for any business to have to keep up with. Ascender takes this pressure away from businesses, and works closely with companies to help them understand their obligations along with any changes that are relevant to them. For example, in Australia, any business with 20 or more employees should be currently reviewing their Payroll capabilities and platform to ensure they will comply with the new Australian Tax Office reporting requirements, known as Single Touch Payroll, marked to take effect in July 2018.

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Single Touch Payroll is a change in the way the Australian Government requires employers to report Payroll information to the Australian Taxation Office. In its simplest form, the Annual Payment Summary and associated electronic files, used at the end of the fiscal year, will be replaced by a new reporting file that will be sent to the ATO immediately after each and every pay run . Businesses that do not comply may face certain fines from the ATO if the transition is not done on time and properly. “This is a significant change and all technology platforms and organisations with more than 20 employees need to be compliant with Single Touch Payroll,” Marjukka says. “Our product development team has been closely liaising with ATO to ensure our platforms will be STP compliant come July 2018”. THE TECHNOLOGY THAT UNDERPINS THE SERVICE Technology has always played a vital role in Payroll and HR services. “We have a specific advantage in developing payroll and HR technology. Because we deliver outsourced payroll services to hundreds of organisations, we have in-house operators giving us regular feedback on the functionality of our payroll software. That feeds into the development of our technology. For Ascender, Payroll constitutes the core of its offering but it is closely aligned with other HR processes including leave management, time management, recruitment and onboarding.”

“Ascender doesn’t do Recruitment Process Outsourcing (RPO), nor do we design compensation programs, but we have the expertise to implement the technology that underpins these critical functions, as well as deliver the administrative aspects of these processes, together with our Payroll offering.” While, at its heart, Ascender remains a services company, it is supported by and leverages this leading edge, internally developed technology to process thousands of payrolls every year. “We have end to end ownership over service delivery, which gives the company certainty over its outcomes in payroll and HR. We control and develop the technology and we operate, support and run the processes for the technology. It is important that we have that control so that we can quickly get to any issues that arise.” LOOKING FORWARD Ascender’s strong aspiration to continue its growth trajectory focuses on increasing investment in its people, processes and technology. The philosophy underpinning these investments, one that has been around since its foundation, will always be an emphasis on nurturing the trust and relationships with their employees and customers. “We are also looking at strategic acquisitions and expanding our footprint and control but only where it supports our mission to be a trusted brand with the prosperity of employees in mind,” Marjukka says. “Companies want to make sure they are in safe hands and are dealing with an organisation that holds security, integrity and compliance in the highest regard and is relentless in their focus with regulatory, legislative and business compliance.” Ascender is unique in its approach to payroll and has the courage of its conviction when it comes to people. This is a company that identifies strongly in its corporate philosophy of putting trust in matters that are important to people through technology and human expertise, and will continue to lead the future of Payroll. BFM www.businessfirstmagazine.com.au

Payroll. People. Prosperity. Trust.

BFM | SOCIAL MEDIA

You’re reading this, but will you share it? Good news travels fast; bad news goes viral. If you’re in the business of media, marketing and branding, it’s likely you’re keen to understand how a story unfolds; which platforms ignite and which ones placate an issue.

he question of what makes a story spread piqued the interest of storytellers long before the marketing and communications industry existed. It dates back as far as 350 A.D where Aristotle disclosed that so long as his writings adhered to the three basic principles of ethos, pathos, and logos - that is, if his words were credible, evoked emotion and appealed to reason then they would spread freely from person to person. Fast forward a few centuries and today we have an array of data that helps us to fully understand the patterns that underpin successful stories. Using complex algorithms coupled with machine learning, Isentia’s Stories engine is able to track the volume and reach of stories as they develop; drilling down to individual media items where necessary, across traditional, digital and social media channels. In effect, one look at Stories, on any device, will let you identify the key issues of the day and the key influencers and outlets driving them. Often, the accelerator will surprise you.

shut down of ageing coal plants, in Victoria and South Australia, placed enormous pressure on power supply. The situation was covered sparingly in mainstream media, and less so on social: energy policy is not a topic that usually excites Twittersphere. The issue prompted Tesla’s head of energy products, Lyndon Rive,

to appear on ABC radio and suggest that Tesla could solve South Australia’s looming energy crisis within 100 days with high-capacity batteries. Over the next 24 hours Rive completed a number of media interviews on the topic, but the proposal didn’t take flight. That is, until a Twitter exchange fueled the conversation.

TRADITIONAL VERSUS SOCIAL MEDIA As marketers and communicators, we are often asked which platform is most effective in spreading a message - traditional or social media? This is mostly because brands want to know where to best invest their valuable marketing/ communication dollars. The short answer is, neither one nor the other is more effective. In fact, the interplay between the two is what generally prompts a story to ‘go viral’. Take for example the media storm that engulfed South Australia’s energy woes in early 2017. The abridged version is that the sudden (and unexpected)

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SOCIAL MEDIA| BFM

THE ELON MUSK TWEET THAT FLICKED THE SWITCH When Australian tech mogul, Mike Cannon-Brooks, and Tesla founder Elon Musk began trading tweets a day later, suddenly the story went viral. The tweets were candid, novel and authentic, helped along by Musk’s 13 millionplus followers. It should be noted that it is incredibly rare for social media to lead traditional, so what happened next could never have been predicted. TWEETS MAKING NEWS Traditional media began reporting on the tweets which not only amplified but also legitimised the story. Four days later when

Prime Minister Malcolm Turnbull entered the conversation, traditional media coverage reached its highest peak. The interplay between news reports and Twitter played out for over a week gathering more than 1120 news mentions across press, online, broadcast and social media, with the tweets referenced in almost half of the press and internet articles. The sentiment was remarkably positive, with 56% of coverage favouring the use of batteries to save power problems. Elon Musk was praised and renewable energy was widely supported. In this instance, Aristotle would concur that all bases

were covered; Rive’s battery storage proposal was supported by credible sources, it evoked emotion among frustrated bill payers and appealed to reason by offering a sustainable and cost-effective solution for the energy crisis. But no one could have ever imagined that such an open Twitter exchange would ignite an online news explosion that would prompt even the Prime Minister to weigh in. The secret? The tweet offered a rare insight into the world of business that the general public don’t often see. Appealing to our inner voyeur, the tweets between Musk and Cannon-Brooks gave us unprecedented access to boardroom conversations that are ordinarily mediated by press statements and publicists. It’s highly unusual that one platform or person will make a story go truly viral. It’s when traditional and social media converge that the magic happens. Social media provides a platform for the public to weigh into debate, adding fuel to the already developing fire. THE TAKE HOME MESSAGE Audiences are changing, society is changing, technology is changing and the business landscape is changing. The important lesson is to not be caught off-guard. We must be leveraging technology to keep pace with the news at speeds beyond human capacity. This will enable us to create strategies to maximise opportunities or minimise risk when a story goes viral. BFM Sean Smith leads the Media Intelligence at Isentia and is responsible for overseeing the delivery of this specialised service to 5,000 clients across APAC. With 15 years’ experience in the media intelligence industry, Sean has contributed to the growth and success of Isentia’s core business across ANZ, paving the way for Isentia’s successful expansion into Asia. He has extensive client knowledge across corporate, government and public relations sectors, now leading the charge on product development, client success and the implementation of new and emerging technologies.

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BUSINESSFIRST MAGAZINE

BFM | COMMERCIAL PROPERTY

Where are we going with food in our centres?

The future of the old food courts has been in decline for some years now; over the past 10 to 15 years the rental growth has near exceeded the turnover growth and during this period most landlords have added more food competition into an ever oversupplied space.

The older food courts used to be anchored with the usual suspects: McDonalds; KFC and Subway to name a few. The more modern approach today is to bypass these majors as a focus, to spread around the spend dollars to the smaller growing retailers likes Roll’d or Soul Origin. This in turn has led to the downfall of some medium retailers such as Sumo Salad. The problem here is that newer, fresher retailers are becoming ‘category killers’ that cut across the usages of other food operators in the same food courts. When Hero Sushi began we didn’t see the future in food courts and as such we chose to take sites externally to the major supermarket players. This has worked a treat, besides the fact that Hero is super professional and has a great platform with Japanese Sushi chefs. However in many instances the property owners have seen the

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turnover from a Hero store and have placed other competition even as close as ten metres away. There is the need for these shopping centre owners to maintain the rental flows from a declining market, and in so doing are creating a stopgap retail sector (the strong will survive). There is no care taken to try and maintain a credible tenancy mix and it is a lazy approach to a retail market. Fast food courts will always have a place in the current shopping centre environment, however landlords must respect the lives of some of the food operators. I believe that the current fast food courts will be fine for the operators such as the major players remembering that they do not require chefs and can compete with casual labour and junior wages. The emerging brands such as Soul Origin, Roll’d and Gozleme King (to name a few) have the capacity to generate sales without the massive costs of others. However with the growth in wages, electricity and gas, landlords can’t just OK the turnover and assess that the retailer is making a fortune because of the increased turnover. The running costs of a business today far exceed the expectations of even five years ago. It has taken many years for owners to now understand the decline of the fast food courts. The question is where are we going? Well, the latest growth is in casual dining or cafe courts. As the shopping centres need to reinvent themselves the new growth is entertainment and pleasure. As usual WESTFIELD and AMP have been the prime movers in this area with Macquarie

shopping centre Pacific Fair and now the newer Chermside centre in Queensland anchored by cinemas and seconded to bowling, skate parks and the regrowth of amusement centres. The new precinct provides for lower rentals and longer trading hours. With the current pricing of fast food, people are prepared to pay an extra few dollars to be seated within a restaurant rather than an open food court. THE NEW ERA OF FOOD IN CENTRES WILL BE MORE CENTRED ON CAFE COURTS The new WESTFIELD Chermside (Qld) is the perfect example of this. The new area is linked with cinemas, Timezone and children’s play areas thus creating a full day’s entertainment zone. Rentals here are based on a lower rate per square metre and given some incentive to the fitout makes for an easier transition. A food court has a trade period of 2-3 hours per day. The cafe courts have the same timing but can maintain a trade period for the dinner times, thus enabling two serving periods per day. I believe that this practice will continue on for the next 5-10 years. Already many more are planned and due to open throughout Australia. BFM Lawrence Brown has been in the retail property industry for more than 35 years. He has grown Nandos Australia, Hokka Hokka. Hero Sushi, Soul origin and worked with numerous food operators to establish their brand in Australia. Has also consulted to centre owners in Singapore and China and is active amongst all centre owners and operators in Australia.

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PROPERTY| BFM

WHY YOU SHOULD RUN YOUR PROPERTY PORTFOLIO LIKE A BUSINESS When people ask why I got into property, the answer is simple – I wanted to retire early and spend more time doing the things I love. By Nathan Birch, co-founder Binvested.com.au

hen at 24 I was able to retire on a passive income from property, it turned out one of the things I loved most, was in fact property. I continued buying properties, renovating and posting behindthe-scenes videos to Youtube, and before long had people asking for my help to achieve their property ownership goals. Binvested group of companies was a natural progression from what I and my co-founder Daniel Young, had already been doing. We built it from the two of us into a 100+ person business by applying the same principles to building a business as we have to building a property portfolio. These principles include: spending time in planning the next move, setting clear goals, building strong relationships, outsourcing weaknesses and making sure the numbers always add up. A failure to plan is a plan to fail. View every acquisition, sale, or renovation as its own project. Why are you taking the action? What is the desired outcome, and how does it fit into your long-term goal? Assess the possible risks

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and document them. Outline each concrete action required to get to completion, and of course, budget every action and have an amount set aside for contingency. When building a business or a property portfolio, you should always have clear goals in mind, working backwards to map out each step to achieve this. Whether you’re building a business that you one day plan to exit and sell, or buying investment properties to fund an early retirement, your goals need to be specific, measurable, achievable, realistic and timely. We have people coming to us all the time who have purchased properties without first getting clarity on how these fit with their long-term goals. This only makes the journey more difficult. Big picture goals should take into account where you’ll be in the next 10, 20, 30, 40 years. Likewise, starting a business require a clear ‘why’ and goals to work towards. These in turn need to be broken down into specific objectives that can be ticked off along the way. An example might be, within six months, I will save $x amount for a new deposit. This doesn’t mean you need to have everything figured out or that everything needs to go according to plan – it won’t – but with a roadmap you can change directions and still reach your destination. Second, remember that relationships are key. You can achieve your goals a lot faster with qualified help from those around you. Daniel and I were on a similar trajectory and together have built a successful business by hiring our weaknesses and building strong relationships with staff, customers and the industry. You never know where your next opportunity will come from. Our no B/S, genuine approach has earnt the respect and

appreciation of our customers time and again. Whether it’s a business partner, mentor, friends and family, contractors, experts – you can’t do it alone! This brings me to point three – outsource your weaknesses but do so smartly. Just like you might not be an expert at building a website for your new business, you probably aren’t an expert at property management and finance. How much is your time worth? Don’t waste it trying to do a job someone else has spent years training to do. They’ll do it faster and save you money in the long run. That said, you can be smart about outsourcing on a budget – for example, when doing a renovation, I’d often hire a handyman over a professional tiler to save on costs for a job that will be done just as well. Last but not least, make sure the numbers add up. Both your business and property portfolio should be making you money and align with your personal financial goals. No one goes into business to lose money, so why would you buy a property that’s negatively geared and losing you money from the outset? When looking for property we have three core criteria: below market value, high growth potential and strong cash flow. Don’t let emotions dictate your purchase decisions – stick to the numbers and make sure they add up. Once you have a property portfolio, be diligent in documenting every dollar you spend. If you’re not claiming every single expense incurred by your portfolio, you’re still thinking of it as a personal income, and not a business. A financial advisor can help you to identify your position and goals before you’ve signed any contracts. Start with the end in mind. BFM

BUSINESSFIRST MAGAZINE

BFM | PARTNERSHIPS

The importance of strategic partnerships for keeping ahead Strategic partnerships have the potential to create myriad benefits for businesses of all industries and sizes. However they also pose tremendous risk. Particularly for businesses that have built themselves from the ground up, handing their name and intellectual property to a large organisation in the name of a partnership or alliance is rarely an easy decision to make. Finding a partner that shares the same values and goals is a key challenge. Additionally, finding a mutually beneficial arrangement can seem impossible. By Dan Wilson, General Manager of PlantMiner.

owever, in a day and age when almost every industry is facing threat from digital disruption, partnerships can provide security against new entrants and creates opportunities for innovation and to reach new customer segments. There are countless examples of businesses that failed to adapt to digitisation and lost their competitive advantage. Rather than dismiss the threat of start-ups, established players should consider what value can be exchanged through collaboration. The impact of digital disruption is far-reaching. The creation of the share economy, where businesses such as Uber, Airtasker and Airbnb have enabled consumers to capitalise from their assets or skills, has in turn created a demand for collaborative consumption. This empowers consumers to be smarter in selecting where they

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purchase goods and services from and provides more options than ever before. While the Share Economy provides more options for consumers, businesses left in its wake are scrambling to hold on to their customer base. As Amazon begins its expansion into Australia, bricks and mortar retailers are preparing for a period of immense competition and exploring new ways to stay relevant to their customers. This however begs the question of why so many retailers waited until they were confronted with digital disruption before responding to it, rather than pre-empting the threat? Businesses of every size and industry should pre-empt the rise of digitisation. This doesnâ&#x20AC;&#x2122;t have to require immense investment or seismic changes to the structure of the business. Listening to customers and considering how businesses in other industries have

successfully mitigated the risk can provide insight into how to adapt. Offering customers aspects of collaborative consumption or greater control in the purchasing process is one way to keep ahead. Partnering with another business with the technical capabilities required to empower customers helps businesses keep ahead without re-inventing the wheel or starting over. At the core of every partnership should be the customer. Technology can enhance and simplify the customer experience, and it should be essential that customers have access to market leading technology. Exploring partnerships with companies that can provide technical advancements creates benefits, not only for the customer, but also can be more cost effective and involve fewer risks than investing in the technology alone. The construction industry is

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PARTNERSHIPS| BFM

one example where collaboration between big and small business is needed to mitigate threat from disruptors. The 2017 Digital Foundations report estimates digitisation in the Australian construction sector could create $25billion in savings year on year within the next decade. Tech trends, such as the Internet of Things (IoT), Artificial Intelligence (AI), Virtual Reality (VR) and Unmanned Aerial Vehicles (UAVs) create efficiencies and new opportunities in most industries. In construction, GPS tracking and IoT enabled machines offer heightened security and can cut costs for customers and suppliers through analytics. We realised the potential of telematics and IoT to transform the construction industry and saw the value of data. We also received requests from our customers for Trimble GPS equipped machines. This led us to initiate exploratory

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conversations with SITECH to see how we could collaborate to bring our customers Trimble GPS tracking through VisionLink (SITECH is the Australian distributor). To make a partnership work, each party focused on key business objectives that created value, but we also kept communication lines open for any innovative discussion. We recently entered into a formal partnership, allowing PlantMiner to leverage VisionLink’s data, to provide our customers with access to real-time equipment information wirelessly from the field. The partnership creates a value exchange. VisionLink helps equipment suppliers run productivity, health and maintenance on their machines. PlantMiner helps grow a supplier’s business by renting their machines to the contractors and builders who need them. The partnership now connects

the VisionLink information to a PlantMiner supplier’s account – this will help with accurate machine hours for invoicing and reconciliation. SITECH recognise that sales and marketing are important for plant and equipment hire businesses. PlantMiner is the leading platform that helps secure more project work. The partnership helps position the VisionLink data to be useful from a quoting and sales perspective. This is one example that demonstrates how a strategic partnership can create new value for both parties and their customers, and stay ahead of competition from digital disruptors. From listening to customers we know that they want access to more information and we’ve found a way to provide this through cutting-edge technology, providing this service before new entrants can. BFM

BUSINESSFIRST MAGAZINE

BFM | PROFILE

Stewart Levitt, Senior Partner, Levitt Robinson solicitors

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PROFILE| BFM

Fighting the good fight A small firm taking on the Commonwealth Bank or Macquarie may seem like the plot of a law-based fictional television series, like LA Law or Boston Legal but for one Sydneybased lawyer it is all in a day’s work.

tewart Levitt is the 63-yearold founding partner of Levitt Robinson solicitors. Described as both confronting and combative but amusing by many who have crossed his path (successfully or unsuccessfully), Stewart is the man you want in your corner when you take on the fight against legal injustice. He is the lawyer who spearheaded Class Actions against Macquarie, Commonwealth Bank, Bank of Queensland (BoQ) and Westpac, who had lent huge sums to victims of the Storm Financial disaster. For those whose memories of this episode may be a little vague, Storm Financial delivered reckless advice to 3000 to 4000 (elderly) investors in Queensland, New South Wales and Victoria, costing them hundreds of millions of dollars. Levitt Robinson negotiated positive outcomes with the Commonwealth Bank, Westpac, Macquarie Bank and the Bank of Queensland, having sued each of them in separate Class Actions brought in the Federal Court of Australia. In each action it was alleged that the Bank had breached its contracts with Storm clients, that it had engaged in ‘unconscionable conduct’, and that it was liable as a “linked credit provider” of Storm, in respect of Storm’s misrepresentations and breaches of contract. You get the sense from these Class Actions alone, that Levitt Robinson, and in particular Stewart Levitt himself, is undaunted about taking the legal fight to anyone, however high or mighty. Levitt’s fighting spirit was instilled in him as a child.

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His attitude is reflected in the cases his firm takes on and the way they litigate. Levitt has been in practice since 1979 and has been operating as Levitt Robinson since the early part of this century. “We conduct very high level litigation”, he says, referring to several high profile human rights cases. “I follow the Rabbinical injunction: “If not now, when? If not me, who?” “Last year, we won a Class Action against the State of Queensland and Queensland Police Service under the Racial Discrimination Act for the Indigenous residents of Palm Island. We have transformed Indigenous morale on the island since they now stand to receive substantive compensation and an apology from the Police and the State Government.” The Palm Island Class Action occurred after a 2004 Indigenous death in custody. The Federal Court judgment runs for 560 pages. “A major focus of the firm has been on undertaking large scale litigation which has the collateral effect of changing the way people see human rights issues and socially relevant causes,” Levitt says. Levitt is passionate about social issues, particularly human rights abuses and specifically, Indigenous suffering. His passion is evident in his voice when he speaks about such matters and his passion is most likely, aside from his being a very good lawyer, why he and the firm are so successful. “We do a great deal of human rights work for victims of

brutality, including racial violence. Indigenous people are victims of the criminal justice system, particularly when there is barely an investigation into a case when they are the victims. Perpetrators of crimes against Indigenous victims receive inappropriately light sentences in Australia.” He is working hard to effect change in this legal minefield. He believes the Palm Island victory was a step in the right direction and evidence of how Levitt Robinson punches above its weight in big cases. Levitt decries the injustice of the under-investigation and underpunishment of crimes against Aborigines. Given the cases Levitt Robinson takes on, you’d think Levitt is running a big law firm. However, you’d be wrong to think that. The firm consists of 12 lawyers: a diverse and cosmopolitan mix of three lawyers over 50 and nine attorneys under 35. Levitt’s partner, Chrystalla Georgiou, has worked with him for almost a quarter century and she provides discipline and direction to the team. With another clever stalwart, Brett Imlay, she contributes skill, experience and balance. “It is a good balance of youth and maturity,” Levitt says. It is a blend that works well when dealing with such diverse issues, especially when the founder sees himself as someone who takes a stand and agitates against social injustice. “I think we are an activist law firm. We are maverick without being radical and we are courageous without being foolhardy.”

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BFM | PROFILE

“A major role, particularly as a litigator, is to be able to channel legitimate moral grievances through appropriate legal channels,” Levitt adds. Through their mix of energy, wisdom and courage, operating within the confines of the law, Levitt Robinson has established itself as one of the “go-to” legal firms, and is driven by moral imperatives. A case in point is the most recent Class Action against Aveo. In September 2017, Levitt Robinson filed a Class Action in the Federal Court of Australia against the retirement village operator, Aveo Group Limited, relating to Aveo’s new management and sales contracts issued to residents. “I was on a ‘Business’ flight to Melbourne and a passenger returning from a holiday in Memphis, was telling me about the troubles he was having at a retirement village in Melbourne. His partner had died and he wasn’t on the title. He was told by Aveo that he would have to enter into an entirely new agreement with Aveo and would have to repurchase the unit which he had just inherited. I visited him and visited other residents and started a movement which grew,” Levitt explains. The action was brought on behalf of current and former residents of Aveo-run villages who purchased their units before the “Aveo Way” was introduced by the retirement village promoter. In short, it is alleged the “Aveo Way” contracts contain terms which significantly depart from the previous management contracts in Aveo retirement villages. Whilst we won’t go into the details here, Levitt Robinson is alleging changes in the management agreements offered by Aveo have depressed the resale value of the units in Aveo retirement villages. Aveo is disputing the claim. Levitt was interviewed about the Aveo problem by Adele Ferguson on ABC’s Four Corners program on 26 June 2017 and for the “Retirement Racket” series of articles in the Fairfax newspapers. He told Ms Ferguson.

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“Let’s face it, historically, exploitation has always reigned until there was concerted reaction against it,” Levitt says. Levitt is not shy in using media and public relations to bring attention to legal, moral and social issues. The Aveo case is a prime example of media in action. Through many of these cases, Levitt Robinson’s reputation has grown. He was also responsible for bringing the 7-Eleven wages and immigration rorts to the attention of Fairfax and the ABC. “We look for the opportunity to bring our vision to these cases, because it is part of our social responsibility as lawyers.” Levitt is also representing Sydney property owners, fighting the expropriation of their land by the NSW State Government to make way for the Rozelle Interchange, as part of the WestConnex development. “The NSW State Government is trying to fund poorly planned public works by seizing and later flogging for a profit, land which they have commandeered, often on false pretences and which they compulsorily acquire while trying to pay just the minimum compensation.” While the focus here has been about social responsibility and morality in law, it should be noted that Levitt Robinson also does a lot of work in dispute resolution, conciliation, arbitration and mediation. Levitt himself has two Masters degrees, both in Law and in Dispute Resolution, which comes in handy when conversations around the legal strategy for dispute resolution arise. It gives him insight into how his opponents perceive his actions and reactions and helps him to anticipate their next moves. In 2012, Levitt Robinson brought a pro bono case in the High Court in Canberra to vindicate the implied Constitutional right of free speech on political matters. He currently represents over 300 sailors in a Class Action against the Royal Australian Navy, claiming that they were recruited on false pretences, induced to enlist with

Top-bottom: Stewart, Odelia & Barney Levitt

promises of technical education opportunities which were not provided. New York investor-led Commercial Litigation Funder, Galactic, has supported the Navy and Aveo Class Actions. In essence, Levitt feels his firm has made an excellent contribution in the public interest on a range of issues, whilst influencing parliamentarians to change the legal landscape. Levitt feels there is still a lot of work to be done and the poetryloving sexagenarian isn’t ready for retirement just yet. (His anthology of his poetry, “Psalms for the Secular”, was published in 2005: the Reverend Tim Costello wrote the foreword. His next anthology will be published in 2018). “I could keep on doing this for a lot longer,” he says, “but I do need a devolution program.” With that said, Levitt is confident that when he does retire, the firm will be in the safe hands of his Law Partner, Chrystalla Georgiou, who will continue to wage the good fight. BFM

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A brave and strategic approach to litigation and problem-solving

We are known for going out of our way to achieve a commercial outcome for our clients, and have earned a reputation as the lawyers who will fight longer and harder than any others. We often succeed where others have failed, and we are not afraid to take on cases that others are too scared to touch, including against corporations, banks and government. At Levitt Robinson, we never stop until we achieve the best possible outcome for our clients.

Ground Floor, 162 Goulburn Street Sydney NSW Australia slevitt@levittrobinson.com | (02) 9286 3133

BFM | PRODUCTIVITY

MAKING THE WORKPLACE MORE PRODUCTIVE BY GETTING THE SPACE RIGHT Today’s workplace is an ever-evolving environment and a company’s success and growth often depends on its ability to properly fit out their space to support the modern workplace and encourage productivity. A space that addresses the needs of the individuals within it will always be more effective than one that doesn’t. By Belinda Lyone, General Manager of COS Working Spaces.

any employees who work in an office spend the bulk of their time working at a desk. This is where ideas are born, goals are met and growth is achieved. When you consider that these workers are spending an average of 40.6 hours at this desk each week you come to understand just how important this desk, what’s on it, and its surroundings really are. WORKSTATIONS FOR EVERYBODY When it comes to your staff remember that workstations are not one-size-fits-all. It’s important to consider the needs of the individual when fitting out the office and ordering supplies. For example, a designer or developer will need two monitors and therefore more space, whereas a sales employee who rarely spends time at their desk can probably get away with less space, but will need quick and easy access to plug in their laptop when in the office. A newer option to the market is the Mobile Desk, great for multitasking and moving around the workplace. The freedom to move allows you to complete multiple tasks at once and a change of scenery can be beneficial to your attitude towards work and is therefore a big plus for productivity. As an executive you may not sit out in the open plan with your staff but making yourself available

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to your team is the key to open communication and engagement. A workstation that closes you off to visitors is the quickest way to seem unapproachable and distant. You should incorporate plenty of seating spaces around your desk for visitors, while also keeping your space clear and welcoming by using effective storage solutions and space saving desk accessories. ERGONOMICS It’s important to ensure that your staff’s health is of high importance in the work place. Making sure your staff are fitted with comfortable chairs, and a setup that is tailored to their needs can go a long way to prevent issues such as back strains and poor posture. Incorporating flexible options such as sit-to-stand and height adjustable desks will help your employees health and wellbeing. These desks allow your employees to customise their workspace to fit their current needs, and are a great way of promoting movement in the workplace. COLLABORATIVE SPACES While focused work is a part of everyone’s day, there is a strong trend towards embracing collaborative work. In order for collaborative work to be successful, businesses must incorporate a working space that facilitates this. The beauty of a collaborative space is that if you’re careful with the

furniture and equipment you use it can be flexible and changed to suit any need, at any time. This allows businesses to focus on bringing staff members together to work effectively as a team. ACOUSTICS Noise can become a significant issue in the workplace, especially if you have an open plan office. Not only can it reduce productivity, but unwanted sound disturbances can also cause frustration among employees that need to focus on their work. Combat this by taking careful consideration in the acoustic design of your workspace. Implementing acoustic screening to divide the office and prevent noise from travelling across the space. Acoustic screens have evolved significantly over the years, and are now available in different shapes, sizes and colours, so you’re bound to find the right screen for your space. Also, instead of using concrete flooring to emphasise an industrial look within the workplace, try incorporating carpeted areas instead. Carpeted flooring absorbs sound better than concrete, wood or ceramic. By using carpet in office spaces where employees are frequently moving around, you will reduce the level of noise significantly. Perhaps the biggest mistake you can make is believing that all

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PRODUCTIVITY| BFM

people and workplaces are created equal. It is imperative that you consider your own unique needs when fitting out your business with workstations, chairs, monitors and desk accessories to create a happy, healthy and productive workplace for the greatest results possible. BFM

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COS Working Spaces, the furniture division of COS, Australiaâ&#x20AC;&#x2122;s largest privately owned office products supplier, specialises in creating contemporary work spaces. COS Working Spaces is the ideal partner for a new office fit out solution, relocation or upgrade of existing furniture, assisting clients from concept to final

delivery. COS Working Spaces services include design capabilities, access to the latest and widest current product range, and total project management. You can expect a professional and reliable service delivered by individuals who are passionate about work environments. www.cosworkingspaces.com.au

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BFM | LOGISTICS

FULFILLING YOUR PROMISE As an online retailer it’s easy to assume as that most of the work is done once your customer’s order clears the checkout. Sadly, the reality is that getting the order is the easy part. By Dean Taylor, Founder and CEO of Cracka Wines.

t’s actually what happens next, the back-end of the business that is always the most challenging. How you handle the fulfilment of the order versus your customer’s expectations, will make or break your business. Running your own warehouse is certainly a great option if this is an area where you have experience. However, a key challenge with any approach is how you cater for changes in demand, particularly in a rapidly scaling business. Taking on a larger warehouse that allows for growth adds significant overhead on a business, while settling for a smaller more affordable one with limited capacity can restrict growth. For many medium and larger operators, using a 3PL (third party logistics) distribution model is a much better alternative. Typically, costs are linked to throughput and so rise and fall depending on transaction volume. Paying less during quiet periods and more in peak times in line with your business revenue, is often well worth the margin they charge. In addition, you get the benefit of having shared resources and the redundancy that this offers. Critical to getting this right, is finding a 3PL partner who is both capable of understanding and delivering on your needs. Relatively simple things like receiving policies, order cut-off times, picking processes and service levels, which all seem relatively innocuous can make a massive difference in how quickly orders are processed and the impact on the consumer experience. While cost is certainly a key consideration, like most things in life you get what you pay for. Many businesses fail to factor in the costs of getting it wrong – opting for ‘cheap’ options that ultimately can

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more. Having an incorrect order sent back can cost between six and ten times that of the original order, by the time you factor everything in. More importantly, the value of the damage to your brand and goodwill from a simple picking mistake causing the customer to never buy again can be worth thousands of dollars in lifetime value. A bad delivery experience will put the most loyal of customers off. Even if your customer service handles it beautifully, in the end you’ve let your customer down on your promise and consequently have lost their trust. Let’s face it – consumers are becoming used to instant gratification and businesses need to adapt. You can send a bouquet of flowers hand delivered to someone on the other side of the world with a few short hours’ notice and can order anything from clothes to groceries to be delivered to your door in one business day. Even a week turn around just doesn’t cut it with customers anymore and odds are if you don’t catch up, a competitor will. Especially for occasions such as Christmas, weddings, Mother’s/ Father’s Day, they’ll likely give up and find something else if they can’t be certain your product will arrive on time. By building a reliable supply chain with minimal lead times, you open yourself up to the hyper busy professionals, the slightly less organised, or unplannedlast-minute customer base. By taking the onus of time from your customers and putting it on yourself, you increase your potential business dramatically. I often stress that customers should be your first and greatest focus and that growth will follow

– timely delivery is one of the best ways to look after them. A fast and reliable delivery service is one of the most important investments in the growth and longevity of your business. With Amazon in Australia, consumers are going to be spoilt with not only a quick delivery service but in many instances free. If you haven’t already, now is the time to invest in speedy turnaround. BFM

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LOGISTICS| BFM

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BUSINESSFIRST MAGAZINE

BFM | PROFILE

Meeting standards in an evolving society The thickness of your windows, the performance requirement of your toilet, the way your house is wired and the sun protective nature of your clothing all have one thing in common: standards. To understand more about the importance of standards Jonathan Jackson speaks with Standards Australia CEO Dr Bronwyn Evans.

very business sector is bound by a set of standards. They are hidden in the shadows of industry, but look hard enough and you will find the ties that bind good practice with economic efficiency and sustainability. Standards Australia is the country’s oldest standards provider and the nation’s peak non-government, not-forprofit standards organisation. As competitors have arisen, this 95-year-old business has maintained its relevance and market leadership by staying true to its vision: to enhance the nation’s economic efficiency, international competitiveness and contribute to community demand for a safe and sustainable environment. “The role of Standards Australia – if you look at our role over the last 95 years, is to be part of the technical infrastructure of business and to create the documentary standards to allow Australian businesses to trade internationally,” says Standards Australia CEO Dr Bronwyn Evans. The importance of standards for economic operability shouldn’t be underestimated. According to Dr Evans they are necessary for Australian businesses to operate internationally and prepare businesses for trade facilitation. It is thus part of Standards Australia’s purview to create brand new standards that can be taken to the world. It should be noted that the organisation does not enforce, regulate or certify compliance with these standards. Instead Standards Australia facilitates the development of standards by forming technical committees by bringing together relevant parties and stakeholders. What does an appropriate industry

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standards committee look like? According to Dr Evans it is a group of disparate voices that come together with a common goal: stakeholders from all corners of the community and economy whose views are crucial to the balanced creation of relevant standards. “When we work on standards, we make it clear from the start, that it is about consensus. One of the factors that make us leaders in the field is that we allow all stakeholders to be heard and if consensus among stakeholders can’t be reached we go back to them and let them know that there may not be a solution for them through our process at this point in time.” Dr Evans does say that in most cases, consensus is reached as the Project Managers and Chairs gain a sense of being able to reach agreement, with everyone on the committees determined to create standards that becomes locally and internationally relevant. She is clear that the creation of standards may not always be the answer, however it is this clarity that is one of the foundations of this organisation’s continued relevance. “I would say the longevity is due to relevance,” Dr Evans says. “In 1922, Australia was driven by agriculture and industry, then came the war effort and beyond that automation and manufacturing excellence. Through all these periods there was a real need for standards.” Standards Australia has been there at every step change. “Many standards were foundational. Look at the Wiring Rules, we still need to wire our houses.” These standards have been improved over time, but fundamentally the principles

underpinning them remain the same. However, as we have seen industries evolve and new ones seem to crop up at the speed of light. Today we are living in the knowledge economy and within a society that undergoes technological change on what seems to be almost a daily basis. How do we prepare for this? There has been a lot of work done within the walls of Standards Australia to ensure they are as proactive as they can possibly be. “We have done a lot of work inside our own organisation. We have implemented better systems, processes and simplified these operations to ensure that when we release standards they are relevant.” There was once the complaint that standards took five years to write and by the time of their release society and business had moved on. However, as part of Standards Australia’s pursuit of excellence in standards creation and continued dedication to relevance, the time it takes to create or update a standard is now just 17 months. “We still send out the drafts for public comment, but now we reduce our time to market. As an ongoing procedure, we look at every part of the process and how we can make it simpler, faster and better.” Dr Evans has been Standards Australia CEO for a little over four years. She was also appointed as Chair of the Industry Growth Centre for Medical Technologies and Pharmaceuticals (MTPConnect) in 2015 by the then Commonwealth Minister for Industry and Science Ian Macfarlane MP. The Australian government has allocated $188.5 million to establish five Industry Growth Centres in key growth sectors: advanced manufacturing; food and

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PROFILE| BFM

Bronwyn Evans agribusiness; medical technologies and pharmaceuticals; mining equipment; technology and services; cybersecurity and oil, gas and energy resources. That gives you an indication of the depth and breadth of the industries in which standards are required, but the organisation and its development to continue to create relevant standards is in safe hands. Dr Evans is one of the most respected women in business. We won’t go through her entire rap sheet here, however in 2014 and 2015 she was recognised as one of Australia’s 100 most influential engineers, and in 2016 she was recognised as an AFR/Westpac 100 Women of Influence. Like any good leader though, she knows the importance of a strong team. “How do we maintain relevance? I have a fantastic leadership team who get standards,” she says. She also nurtures the organisation as a whole.

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“What I want to make sure is that we create an organisation that people want to work with; an organisation that wants to be part of a changing Australia and a new economy. The economy is transitioning, so we need to make sure Standards Australia is a partner of choice.” We mentioned competition earlier and Dr Evans doesn’t shy away from it; in fact she welcomes the choice and believes it is vital for industry. Yet, Standards Australia remains the best-known organisation in standards creation because it continues to drive forward into uncharted territory. Industry 4.0 is case in point. For those unfamiliar with what this is, it alludes to the current trend of automation and data exchange in manufacturing technologies and includes cyber-physical systems, the Internet of things, cloud computing and cognitive computing. “A senior task force has now

been set up led by Jeff Connelly CEO of Siemens to look into the way forward with regard to industry 4.0,” Dr Evans says. Dr Evans is leading the working group for the design and architecture of what the standards may look like. “Standards will underpin Industry 4.0. Standards Australia and Australia in general will be at the forefront of saying what is the right architecture and framework for Industry 4.0 to be successful.” Businesses will need to establish global networks that incorporate their machinery, warehousing systems and production facilities as Industry 4.0 takes hold. This will only be possible if a single set of common standards is developed. “There is a commitment from both industry and government to create standards that will facilitate new production systems in the context of Australian innovation and competitiveness in the future. “We will also be seeking to establish cooperation at the international level in order to provide industry with a platform that represents their interests,” Dr Evans said. Blockchain is another evolutionary step forward and will again require standards. “We recognise blockchain is an important building block for future systems and business. The international standards committee for blockchain is run by Australia. There are 41 countries involved (27 as participating members and 14 as observer members), all looking to create a common language.” So as you can see, Standards Australia has had its finger on the pulse for almost 100 years and continues to move forward with evolutionary change. The organisation remains as relevant today as it was in the 1920s. This is for two reasons: one, because we need standards for our own protection; two, because Standards Australia remains at the forefront of change and is not only evolving standards, but its own organisational practices to ensure it meets these changing requirements. BFM

BUSINESSFIRST MAGAZINE

THE NEXT GENERATION OF STANDARDS IS NOW. JOIN THE EVOLUTION. The Standards Australia Incubator is a space where we can dream big. It’s a place for testing ideas and proving concepts. It’s a place where you can share your vision of how we could better develop standards and deliver them more intuitively. Bring us your ideas, no matter how big or small, and let’s work through finding solutions, together.

Email: incubator@standards.org.au Visit: standards.org.au/incubator Follow: @sa_incubator 68 BUSINESSFIRST MAGAZINE

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FEATURE| BFM

AUSTRALIA UNPREPARED FOR GOOGLE’S NEW MOBILE-FIRST ROLLOUT Digital marketing innovator and CEO of StewArt Media, Jim Stewart, warns that if you are currently running separate desktop and mobile sites, you shouldn’t be.

“

Everything’s about mobile. Soon, there will only be a mobile index. If you have an m-dot site and a desktop site with a lot more content on it, you will lose that content. The m-dot site is going to get all the Googlebot traffic once this transition happens,” Stewart said. During indexing, the Googlebot processes the words on a page, where they are located, and adds the webpages into Google search. (Googlebot is the search bot software used by Google, which collects documents from the web to build a searchable index for the Google Search engine.) The Mobile First Index would have a huge impact if it was launched with sites as they are currently and a lot of businesses would be devastated. Google revisited its Mobile First index announcement at this year’s Pubcon earlier this month and although the company has not set a date for this transition, the launch is imminent. ‘All that will be on the index after this time will be what is on mobile versions of your website. ‘Many large corporations will lose out when this shift happens. Myer has 185,000 pages on its mobile site and 391,000 on its desktop site. If Google’s announcement was actioned today, Myer would lose over 50% of its content indexed in Google. ‘Any content indexed in Google is basically your traffic at the end of the day. ‘If big brands like Myer don’t prioritise Mobile First, they could lose a lot more in traffic and sales than Amazon’s arrival could affect,’ Jim Stewart warned. Here are some of Australia’s biggest losers ranked: Business: Percentage of indexed content lost: realestate.com.au 99% Bupa 99% Huggies 99% ASX 94% NewsCorp 90% (Of traffic of all local news sites) Huffington Post 83% Australia Victorian 80% Government Bendigo Bank 76% Ticketmaster 74% eBay 73% Wikipedia 48% (Of their pages indexed globally)

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People rely on these sites for information. Can you imagine if the Victorian Government lost 80% of its indexed content, as is predicted? However, Jim Stewart gives three tips to minimise the loss of traffic and sales: 1. Have content parity between mobile and desktop sites. 2. Have structured and meta data parity (data describing other data). 3. Make sure servers can handle increased load. Google is currently in a Mobile First testing phase and there has been no date set for the transition, although Jim Stewart anticipates that this will be in the New Year. BFM StewArt Media is one of Australia’s leading digital marketing companies specialising in SEO, paid advertising, conversion and content optimisation. stewartmedia.com.au

BUSINESSFIRST MAGAZINE

BFM | DIVERSITY

Sisters doing it for themselves forcing change to partnership model As diversity quotas become more common in legal services procurement, Shaaron Dalton has followed the breadcrumbs to where the talented female lawyers from the leading commercial firms have gone and assessed the impact their career choices are now making on the traditional partnership model.

have learned in many years of working with lawyers, if I donâ&#x20AC;&#x2122;t listen properly to individual candidates, they will solve for themselves and leave me in their wake. The large commercial law firms of the world are learning the

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hard way as they try to solve the gender imbalance in partnerships, decades too late. With a view that there was a better option away from the partnership track, female lawyers, individually, in large numbers

have solved for themselves. Partnerships have tried playing catch up, but found it too little, too late. Irrevocable change is now being forced on the traditional partnership model.

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DIVERSITY| BFM

THEY JUST WOULDN’T LISTEN Women’s dissatisfaction with the traditional partnership model is hardly news to the world. At the recent launch of 100 Years in Law by NSW Women Lawyers Association we heard of the example of Marie Byles, the first female practising solicitor in New South Wales, admitted in 1924. A woman before her time, Marie started her own law firm because she felt the male partnership model would give her no decent opportunity. She wanted more control, hired mainly part-time female lawyers and clerks and was known to be unusually timely and responsive for a lawyer in those days. The Eurythmics song “Sisters are Doing it for themselves” was a major hit when I graduated law school generations later, in 1989. 50% of our cohort were female. In 2017 the figure has risen further and now over 66% of Australian legal graduates are women. Very few of the women in my cohort are now partners of law firms, mainly by choice. In the early 1990s when I started in recruitment, female lawyers were seeking high quality work with flexibility to work to live not live to work and juggle family in if they wished. The message from women in the law has not changed in nearly a century. Corporations and government were quicker to offer flexible and part-time options and the gender talent drain began. In large law firms 30 years ago, the choice to move in-house or to government was termed “opting out” and those who did were not seen as serious lawyers. FOLLOWING THE BREADCRUMBS So where are the females who should have been partners of leading commercial law firms now? If we follow the trail, we see that “opting out” has put women in the driving seat and they are now being taken quite seriously. 1. In-house and in GC roles The rate of employment of new female General Counsel globally over the past five years was measured for Fortune 500 Companies in a 2016 survey www.businessfirstmagazine.com.au

undertaken by Womens In-house Counsel Leadership Institute and Russell Reynolds in the USA. They found 35% of new female GC’s were female. In Australia, the 2016 KPMG report for the Corporate Governance Council showed a rise from 33% to 39% from 2011 – 2016 in the percentage of female GC’s of ASX top 200 Companies. This is compared with only 24% women in partnership and 18% in equity partnership in large law firms.

capturing quality senior female lawyers. DLA Piper’s joint venture with Lawyers on Demand, Allen & Overy’s Peerpoint and Corrs Orbit are examples. New marketplace platform Crowd & Co is moving in to capture the ‘gig economy’ opportunity, but in law this is not a no brainer. So called “BigLaw” seeks brand and professional control of the person and the projects. They see the risks to their business model and reputation.

2. Government Legal Departments and Government Agencies and Regulatory Bodies The NSW Law Society data on lawyers with practising certificates shows nearly two thirds of government lawyers are female in this State.

TOWARDS A NEW PARADIGM? The future of private practice law will be dominated by those firms that can rapidly embrace a new model offering diverse opportunity to progress and contribute. Winners in law firm innovation have begun to light the pathway for law firms to pick up the breadcrumbs and offer the same incentives so female talent stays within the firm. Instead of insisting on the traditional partner path and up or out policies, some firms are now taking a lead from their corporate and government clients. Top ten European innovative firm DWF a recent entrant to the Australian market offering three different levels of partnership and three different career routes depending on a person’s different skills. Herbert Smith Freehills with ALS and MinterEllison marketing itself as Legal and Consulting are showing early signs of these progressive career opportunities within their firms. New remuneration models offering team or project profit share / bonus and offering lawyers opportunities in project management, outsourced GC roles and rolling contract opportunities mirroring the offerings in the financial services sector and multinational corporations, enables firms to take control back and become a contender in the war for senior female talent. Rewarding time tied to a desk has never worked to encourage gender balance in law firm partnerships. Sisters have indeed done it for themselves, hijacked the gender agenda and are now in the position to force change that took too long to come. BFM

3. Contracting Platforms and New Law Firms Lawyers on Demand and similar platforms recruit from the ranks of in-house lawyers between roles and women taking career gaps from BigLaw firms for child raising who seek part-time or sessional work. Legal talent marketplace platform, Crowd & Co has partnered with Lawyer Mums for the same reason. New Law aggregator models Keystone Law (UK) and Keypoint Law(Australia) attract female partners of larger firms giving them more control over their inputs and earnings to fit in with the vicissitudes of life. THE GENDER QUOTA – MARKETPLACE AND OUTSOURCED? Faced with the pressing imperative of measurable gender quotas to enable certain panel appointments, the major law partnerships are starting to become concerned. With an average of only 24% female partners and only 18% in equity there is a long way to go to demonstrate diversity with any credibility. The biggest concern we hear from partners and HR Directors is that the pipeline is not in place. Women have literally ‘opted out’ of the partnership track. We see a range of collaborative strategies being employed by firms, in part to assist in

BUSINESSFIRST MAGAZINE

BFM | PSYCHOLOGY

FOCUSED OR STRESSED? The Hidden Costs Killing Australian Productivity

Australians are unaware they spend most of their working life in a lowperformance mind state, due to an expectation to multi-task and the use of stimulants to hide a hidden baseline level of fatigue. This not only leads to reduced productivity, but also has a correlation to an increased number of errors and a barrier to generating innovative and creative thinking that’s essential in modern business.

mon Woulfe, Director of Collective Mind, a neuroscience backed mindtraining program said the problem was “epidemic” across Australian businesses as the minds of our workers are placed under increased pressure to overachieve, with very few tools on how to do that. “It’s like running IOS 2.0 on an iPhone 8, you have to upgrade your operating system to function effectively in the age of accelerating everything,” says Woulfe. “Employers are increasingly asking us to do more with less” says Woulfe. “The more you juggle in the age of distraction, creates a perfect storm of high beta, high stress, and declining performance.” “We now live in an attention economy, and being able to master your attention is your greatest asset. Focus is power. No focus, no flow.” Woulfe believes Australians have come to mistake being stressed, with being focused. “Most people say they focus well, however we find the ‘Focus’ score in our Mind Performance Profile trends very low when we profile most organisations.” Multitasking, he says, has become the new normal and stimulants such as coffee and energy drinks only exacerbate the problem by artificially stimulating beta brainwaves and pushing workers and managers further into a stress response.

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Under stress, it’s easy to mistake our physiological signals for focus, as we are in a heightened state of alertness for danger. The brainwave frequency of stress overwhelms and our brain goes into ‘high beta’ brainwaves. Our senses become heightened. We get tunnelvisioned and near focused. Our mind gets very busy and starts to overthink. Adrenaline is pumping, the stress hormone cortisol is released, leading to impaired decision making ability, lower emotional regulation and the inability to get the mind into a creative brain frequency, essential for innovative thinking. A state of focus however is a relaxed yet highly alert state of readiness, where the mind is quiet. Our attention is focused fully in the moment, and we aren’t distracted by over-thinking or stress-based survival responses. Our vision is clear, our decisionmaking is expansive, our mind is creative, and our physiology is in a state of readiness rather than reactivity. How do we get the mind back to a creative brain frequency? According to Woulfe and colleague Derek Leddie, also of Collective Mind, the creative mind is your competitive advantage and the key to innovative thinking. If you can’t focus and get out of highbeta, you simply cannot access the mindstate needed for creativity and innovation to occur.

FOCUS IS POWER Write ‘single tasking’ into every position description and master the art of focusing on one thing, completing it and moving on to the next. The human mind does not multitask, it just switches rapidly. Eventually you end up spending more time switching, than actually working. A three-second distraction leads to double the mistakes. Researchers tested 300 Michigan State students on their ability to persevere through interruptions while taking a computer test. The interruptions came in the form of pop-ups that required the students to enter a code. In one case, the interruption lasted a little more than four seconds. In another, the interruption was 2.8 seconds. A single interruption to focus, takes us on average 25 minutes to refocus from. Don’t make it a double - coffee that is. Or other drinks that stimulate a stress response, rather than a calm state of focus. Caffeine artificially stimulates beta brainwaves, inhibits our fatigue receptors, and pushes you into a stress response. In a stress response, you think less clearly and can tend to over focus, have reduced emotional regulation, and can become overly self-orientated and lose empathy and connection with those in your team. It also impacts your ability to sleep, and through collated data, Collective Mind have established that most Australians

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PSYCHOLOGY | BFM

are not getting enough deep recovery sleep. Our eyes are closed, but we aren’t recovering, and we are waking up in a state of fatigue. FRIEND YOUR FATIGUE These factors combined are masking a widespread baseline level of fatigue in the workforce. To perform at your best, you must master the fatigue challenge, as everything is built from your ability to be recovered and ready to perform. A $37 million US defence research project into the

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impact of fatigue on cognitive performance revealed that a 20% level of fatigue is equivalent to 0.05% blood alcohol, and a 30% level of fatigue 0.08% blood alcohol in terms of cognitive performance, response times and decision making. Working longer, juggling more, or having another stimulant is only going to send you further into fatigue. We need to train our minds to recover properly, but for most Australians, starting the work day in fatigue is the norm, and

it’s killing productivity and innovation in our economy. Implementing these notions represent the keys to unlocking performance and innovative thinking that the future of business environments demands. Collective Mind is a neuroscience backed mind-training program. The program facilitates everyone from individual leaders, to leading corporates, to elite sporting teams in the AFL and NRL to understand and adopt mind-performance tactics for high-pressure situations. BFM

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BFM | PROFILE

Professor Mark von Itzstein

Changing language to create a better world Griffith University is ranked in the top three per cent of universities globally. It has 50,000 students, over 200,000 alumni and has a five star rating for graduate employability.

hese are impressive numbers, yet it is what is happening behind the scenes that give Griffith University its unique position in the tertiary landscape. In particular, Griffith Universityâ&#x20AC;&#x2122;s Institute for Glycomics has positioned itself as a unique translational biomedical research facility and is in fact putting

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the Gold Coast on the map as a biotechnology hub that could one day rival major biotech hubs such as San Diego. For those unfamiliar with the term, Glycomics is the study of carbohydrates, sugars that are found on and in every cell of our body. The Institute for Glycomics, the only institute of its kind

in Australia, is thus uniquely positioned. It collaborates with leading scientists and research institutes around the world to achieve its vision to bring forward novel diagnostics, drugs and vaccines to the community in the fight against disease. Professor Mark von Itzstein is the Director, Institute for Glycomics. He says that the glycome, the

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PROFILE| BFM

language of sugars, is as important as the genome (an organism’s complete set of DNA, including all of its genes). “What we look at is what changes occur in the body when that language is taken advantage of in diseases. It is particularly relevant in infectious diseases. “We are researching new drugs and new vaccines and taking advantage of our understanding the glycome.” The Institute for Glycomics takes a translational approach to its research which is critical to its progress. “Our aim is to take advantage of our knowledge of the carbohydrate language. Understanding the language helps us understand how new drugs may work for intractable diseases,” Professor von Itzstein says. The fight against cancer is a primary focus and in 2017 the institute established the Australian Centre for Cancer Glycomics’ (A2CG) “We can fingerprint cancers to understand how the language changes and what those changes are on the surface of the cancer

cell. If we can identify the changes that occur that makes a cell cancerous and cause metastatic cancers, we can potentially discover drugs, or block the changes. “That is the beauty of this simple language and our ability to crack the code that makes us truly unique.” Cancer is just one field of interest. In collaboration with the Fraunhofer Institute for Toxicology and Experimental Medicine (ITEM), the Institute for Glycomics is taking on the deadly flu virus and other respiratory disease-causing organisms. Researchers from each institution have teamed up on the Gold Coast for the project called ‘iCAIR – Fraunhofer International Consortium for Anti-Infective Research’ to develop new anti-infective drugs, including new treatments that combat respiratory viruses including influenza and respiratory infection-causing bacteria and fungi. Professor Reimund Neugebauer, president of the Fraunhofer-

THE NEW FRONTIER OF DISCOVERY The language of carbohydrates or the glycome is essential for life and is just as important as water to a healthy functioning body. This exquisite and exact language is unfortunately not only maintaining life but is either taken advantage by disease-causing organisms such as bacteria, viruses and parasites or is altered in all cancer cells. The Institute for Glycomics is working hard to bring awareness to these and other diseases: everything from infectious diseases such as influenza, hand foot and mouth disease, to cancers, such as melanoma, breast, ovarian and prostate cancer. A major research theme is discovering the role that carbohydrates play in disease and with that knowledge to develop new drugs and vaccines that will interfere with the biological process of disease. We provide a multidisciplinary approach to research and education, spanning medicinal and computational chemistry, various biological and physical sciences. This approach presents an exciting platform for the control of a wide-range of medical conditions such as infectious disease, cancer and other disorders.

The ever expanding Gold Coast Health & Knowledge precinct

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BFM | PROFILE

kill the malaria parasite. “You take the malaria parasite and kill it in away so that it can’t grow or cause malaria and use that preparation to stimulate the body’s own immune system so that when exposed to the real malaria the body’s immune system can fight it effectively,” said Professor Good. Through its research the Institute for Glycomics now has four unique entities in human clinical trials: two vaccine candidates and two drug candidates. The institute continues to work closely with funding bodies, research partners and industry to develop drug candidates and cures. As the only institute in Australia working at this level, and one of only a few in the world, Griffith University’s Institute for Glycomics has a real chance of making a difference in the world and change the approach to drug and vaccine discovery forever. BFM

CRICOS No. 00233E

“WE URGENTLY NEED TO DEVELOP NEW DRUGS AND FIND NEW WAYS TO TRANSFER THEM FROM RESEARCH INTO CLINICAL TRIALS...”

Gesellschaft, said antibiotics were becoming less effective against multi-resistant bacteria. “Because bacteria keep developing new resistance to antibiotics there is a desperate need for new medications,” he said. “We urgently need to develop new drugs and find new ways to transfer them from research into clinical trials...” In March 2017, the Institute for Glycomics edged closer to a cure for malaria after human clinical trials of a malaria vaccine developed by the Institute for Glycomics were a success. Professor Michael Good is a Principal Research Leader at Griffith University’s Institute for Glycomics, and looks to be on the cusp of delivering a major breakthrough against malaria, a disease responsible for more than 400,000 deaths each year. Professor Good and his team in his Institute-based Laboratory of Vaccines for the Developing World have developed a way to effectively

Fighting diseases of global impact Be remarkable

The unique research expertise of Griffith’s Institute for Glycomics makes it the only facility of its kind in Australia and one of only a handful in the world. We aim to work in partnership with businesses that seek a proactive role in internationally significant public health issues leading to healthier, longer and better lives for Australians.

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Learn more at griffith.edu.au/glycomics

Professor Mark von Itzstein www.businessfirstmagazine.com.au Director, Institute for Glycomics

FEATURE| BFM

How an Aussie small business unleashed their winning business growth formulae With the boom in technological innovation and the term ‘disruption’ the prevailing buzzword across the business landscape, it may surprise many that a shortage of soft skills in Australia, could actually be affecting the success of such businesses wanting to disrupt, innovate, or simply thrive and grow.

any would consider IT, technical and design skills as the most valuable assets to a business in a world where tech is advancing by the day. However the skills that come a close second behind tech, that are most in demand by Australian employers according to research by LinkedIn, are not what you might think. Cliff Rosenberg, the Australian head of LinkedIn, says, “Our data strongly suggests that tech skills will continue to be most in demand, however, professionals across all sectors also need soft skills to succeed as organisations are looking for well-rounded skill sets.” Critical soft skills missing or under-developed in Australia are currently listed as; • Empathy • Problem-solving • Creativity • Fostering collaboration and innovation With most hiring managers (65%) believing that not being able to recruit soft skills, limits productivity, it therefore stands to reason that Aussie businesses need to plug this gap if they are to succeed. However the challenge lies in where candidates can gain and develop such skills if education is missing this vital element in learning. “Collaboration allows businesses the opportunity to grow their customer base and improve, however the actual skill of collaborating and understanding how to recognise and develop a mutually beneficial partnership, is a skill in itself and not something many businesses, small or large, know how to do well. Having been involved in thousands of partnerships from corporate to start up since the late nineties, I came to understand the most common failure points. In order to help more businesses and make it more widely available I recognised that I needed to put my

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own partnership skills to the test and find a forwardthinking training provider to work with me and adopt my tried and tested model,” explains Simone Novello, one of Australia’s leading collaboration experts and founder of Partner2GROW. accessUTS, a Registered Training Organisation at the University of Technology Sydney (UTS), recognising the significance of the soft skill shortages and the part they play in supporting Aussie businesses with suitably skilled employees, sought to provide the necessary training to better equip their students. Partnerships play a critical role in the way accessUTS connects government, industry and the community with the knowledge and expertise of the University of Technology Sydney. Roula Christodoulides, spokesperson from UTS, explained why they have partnered with Simone to deliver this widely talked about yet little-known skill to their students; “For us to stay current and continually improve our course offerings to reflect the needs of today’s businesses whilst giving our students the best possible chance of achieving their goals, we have to ensure our courses can equip students with the right skills. And although we track data across industry to understand where skill shortages lie and track demand, strategic partnerships and collaborations was not something we had the capability to teach.’ This is a classic case of a small business bringing a skill that adds enormous value, which we could not do ourselves and we are very proud to be one step ahead and now provide a course that brings a skill to ultimately help businesses grow and prosper,” explained Roula. In a world that is moving so rapidly, Aussie businesses need to keep up if they are to survive – and most cannot do it alone. The right collaborations are essential to promote business growth, resilience and the ability to disrupt.” BFM

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BFM | RISK STRATEGY

CEO Thinking on Social Media and Risk Strategy

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RISK STRATEGY| BFM

Is your business leveraging social media as an integral part of your branding and marketing strategy? Phil Scardigno, CEO of Axis Manufacture is a founder, innovator and entrepreneur who steers his business to where the attention is being consumed daily. Written by Ryan Makris

ecent shift in thinking by Axis Manufacture saw it launch a new DYI website called Monstashop.com. Through the website, all types of consumers, whether weekend warriors, professional tradespeople or developers etc. can purchase their products online and have them delivered directly to their door, bypassing traditional DYI retailers. The decison to shift its thinking, was an attempt change Alexis Manufacture’s brand story. “Content in the way it is delivered and consumed is a key focus for our brands, as I believe you’ll kill the social connection if you try to go for the hard sell. Giving value through your content and brand story goes a long way with positioning yourself as an industry player, possibly leader/ expert in your field,” CEO Phil Scardigno says. This new brand strategy was developed from the constrictions on what products Axis could stock on the retailers’ shelves and the unrealistic rules that were imposed on manufacturers. Axis has R&D products ready to be launched and the notion that large retailers could hamper growth was an unpalatable direction Phil Scardigno was not prepared to accept. The quantum shift is the consumer now dictates what is the popular brand and business. The branding must thus target where the consumer spends their time. That’s the internet and spending on the internet is growing year on year. Entrepreneurs on YouTube have been showing us for the past decade how to grow brands using social media. American CEO and Entrepreneur Gary Vaynerchuk is a master at this; he lives, breathes

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and hustles for daily attention for some of the biggest brands in the world through his business Vaynermedia - a fully digital media agency. Vaynerchuk says all businesses are media agencies first followed by their core business e.g. Media Agency – Accountant, Media Agency – Manufacturer or Media Agency – Hairdresser. Vaynerchuk understands a little about this. He grew two businesses: Wine Library from $3 million to $60 million in five years) using Twitter and Facebook and then started Vayner media from zero revenue to $150 million dollars in revenue in seven years. Vaynerchuk has business credentials that everyone should be listening to. Scardigno agrees but says, “The reality is there is no blueprint to follow with social media. “Our social media approach has been to understand where the attention is for our market and understand the demographic behaviour with where they are spending time through various mediums. I’ve guided our marketing department to explore all platforms, we’ve discussed with digital marketers where they have seen the likes of Facebook, LinkedIn and Instagram moving with brands and products, but ultimately we’ve spent the past 12 months trialling both platforms and the different methods of what is done through these types of platforms. “We’ve recognised that each platform needs to be treated differently with what engages the consumer, and continuously learning in this area. “I don’t see our approach changing in the next 12 months, you try to stay ahead of the curve,

look at trends from some of the global successes, but ultimately the engagement and depth of what we do with consumers and followers is key.” Scardigno mentions risk strategies as paet of a diversified business approach. “Obviously the risks taken are assessed in terms of understanding what the worst outcome could be,” he says. “We’ll never gamble on an outcome, but risks are taken throughout the parts of our business that connect to growth and market penetration. We are manufacturers and marketers. “Safety and quality processes are not set up for risk, the key focus in these areas is continuous improvement. However sales, marketing and branding is where risks are taken and need to be. If you have something that works, you need to recognise it may be disrupted or can become obsolete if you aren’t looking to make the modifications needed to stay at the front end. Therefore we focus on innovation and our R&D program that gives the marketing and branding arm of our business an edge. This produces a ‘space’ where we can take risks to grow and extend our brand further,” Scardigno says. If CEOs and businesses desire to be relevant in the new mobile age of communication and consumer demand for retail sales, social media strategy becomes an easy to decision to make. In the next few years many brands and retailers will disappear from the market, so to drive a successful business, not a relic of the pre e-commerce revolution businesses muct make a crucial strategic decsiion. BFM

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BFM | PHILANTHROPY

PHILANTHROPIC GIVING VIA PRIVATE ANCILLARY FUNDS There is a range of planned giving structures including Private Ancillary Funds (PAFs).

oday there are roughly 1,600 PAFs across the country, with 80-100 established annually and total net assets valued at over $7 billion. In the 2013/14 tax year, PAFs gave away $300M in planned giving. In summary, a PAF is an efficient, satisfying and tax effective way to put a structure around philanthropy. It allows a donor to set aside capital to generate investment income for charitable purposes in perpetuity. WHAT IS A PAF? A PAF is a type of private charitable trust established and operated in Australia. It is maintained under a Will or an instrument of trust (e.g. trust deed) under State or Territory law. HOW IS A PAF STRUCTURED AND GOVERNED? A PAF must have a company as the trustee and the company board is usually comprised of family members. It must contain at least one independent director (the ‘Responsible Person’). PAFs are normally exempt from income tax and other federal taxes. They are also eligible to receive cash refunds of franking credits. Testamentary gifts made to a PAF also have Capital Gains Tax (CGT) exemption. A PAF can be endorsed by the Australian Taxation Office (ATO) as a deductible gift recipient (DGR) Item 2 so can receive tax deductible

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gifts. PAFs are governed by ATO Guidelines and have Australian Charities and Not-for-profits Commission (ACNC) compliance obligations. WHEN WOULD A PAF BE CONSIDERED? A PAF can suit individuals, families and companies that: • Can make use of tax deductible donations • Want control of investment and grant-making decisions • Wish to leave a philanthropic legacy in their own lifetime • Desire to foster in their children their own philanthropic values and sense of financial responsibility • Wish to provide charitable causes with long term sustainable funding even when their personal financial situations change • Have at least $500,000 for an initial donation WHAT MUST A PAF DO EACH YEAR? A PAF must make a minimum annual distribution of at least 5% of the market value of the fund’s net assets as at the end of the previous financial year, (subject to a minimum of $11,000). A distribution also includes the provision of property or benefits at market value. Distributions (also called grants) must be made to only DGR Item 1 charities (of which there are over 20,000), never another DGR Item 2

organisation such as another PAF. There are also several annual administrative and compliance obligations including preparing audited financial statements, the ATO Ancillary Fund Return and lodgment of the Annual Information Statement with the ACNC. Managing a PAF needn’t be difficult. Profile Financial Services recommends using a competent PAF administration service such as that offered by Australian Philanthropic Services, to handle all secretariat and compliance requirements.

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PHILANTHROPY| BFM

DONATIONS TO A PAF Donors receive a tax deduction for donations, which can be spread over five years – extending your giving out over a much longer period. A PAF must be private in nature, so the founder (or related party) can make as many donations as they wish. However the PAF cannot solicit donations from the public. It can however, in any financial year, accept donations from un-related entities (as defined) provided the amount is not more than 20% (in total) of the market value of the PAF assets

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as determined at the end of the previous financial year. It is possible to give property, including cash and shares, to a PAF. Although a gift of property can attract CGT, the taxable gain is often offset by a tax deduction equal to the current value of the property as determined by the ATO. HOW ARE PAF’S ESTBALISHED? Expert tax, legal and financial advice is typically required to establish a PAF, however the process is not onerous. The ongoing timing and size of donations should also be subject to

financial advice. A PAF’s trust deed must contain specific provisions and be approved by the ATO. The approval process can take several months. HOW PORTABLE IS A PAF? If there is insufficient capital initially to justify the costs of running a PAF, a sub-fund in a public ancillary fund can be opened, grow the balance over a few years, and then transfer the funds to a PAF. A PAF can also be transferred into a sub-fund of a Public Foundation if the founders of the PAF no longer wish to operate their own structure. BFM

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BFM | DIGITAL HEALTH

AUSTRALIANS EMBRACE DIGITAL HEALTH BUT PRIVACY REMAINS TOP CONCERN Results of a new study commissioned by GlaxoSmithKline Australia (GSK) reveal that Australians are in a bind when it comes to healthcare digitisation - recognising the benefits of healthcare technologies but struggling with anxieties around privacy.

hile nearly three quarters (72.8%) of Australians reported using technology in some form to manage their health, more than half (51%) ranked concerns about the security of their personal information as their top reservation about how technology is affecting healthcare. “As an industry, we have a role to play in ensuring digital innovation continues to enhance patients’ experiences and that data transparency is done right. Upholding these responsibilities will help build confidence that as increasing digitisation propels healthcare in an exciting direction, the privacy of Australians will continue to be respected and maintained,” said David Herd, Director of Healthcare Environment at GSK. Technology continues to change the way healthcare services are being delivered and the widespread introduction of electronic health records is just one such change. Although the Federal Government has committed $374.2 million over the next two years to provide every Australian with an electronic health record by default, only 38% of those questioned said they would consider signing up to have a secure online summary of their

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health information, if given the option. Despite highlighting a reluctance to sign up to online health records, the survey also found that 57% wished their healthcare records could be more effectively shared across health providers - an output that electronic health systems aim to deliver by better connecting national health systems, resulting in better, faster and more efficient care. “The results of this research suggest that greater education is needed to instil trust and understanding of how new healthcare technologies will ultimately benefit the end-patient and our nation as a whole,” said Herd. While technology is valued as a means of support, many Australians still place their trust in humans over machines, with almost a third (29.9%) of Australians worried about the use of artificial intelligence in place of a person to make decisions about their healthcare. Other concerns about the effects of technology on healthcare included being able to find trustworthy and accurate information (34.8%) and a lack of personal contact with healthcare practitioners (31.4%).

“As the scope of possibility increases with the evolution of health technology, so do patients’ expectations of how services should meet their needs. While algorithms and digitisation will bring welcome efficiencies, it is essential that digital innovations reflect the care and support needs of patients,” Herd explained. Moving forward, consumers are still hopeful that healthcare tech will facilitate major gains in the future. According to the survey, these include cheaper, more convenient access to services which are more tailored to the individual as well as services which support filtering accurate, trustworthy and relevant information. “Digital technology continues to change the face of healthcare and is rapidly increasing the scope of how we can help Australians better manage their health,” said Herd. From electronic health records through to wearable health technology, innovation is supporting healthcare to become more personalised, targeted and effective. As a result, Australians are more empowered to take more control of how they manage their health,” he added. BFM

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DIGITAL HEALTH| BFM

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BUSINESSFIRST MAGAZINE

BFM | SLEEP

Wake Up Call: Getting Enough Sleep Is Critical To Your Health and Success Lying in bed, tossing from side to side wondering if there is a way to shut down and finally fall asleep? Here’s a roadmap to get you there. By Jo Formosa.

here’s long been a sleepless elite – like Jack Dorsey, Donald Trump and Tom Ford – business leaders and politicians well known for sleeping four hours or less each night. Do they not realise that getting enough sleep is essential to wellbeing, sustained performance and overall health? I recently read an article in the financial press where some of Australia’s top CEOs shared how much shut-eye they get each night – I was pleasantly surprised. BHP

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CEO Andrew MacKenzie reported that he needs at least 6.5 to 7 hours of sleep to remain at the top of his game. Likewise, Slingshot CEO Karen Lawson, BEAR CEO Sam Leetham, Tech Ready CEO and founder Christie Whitehill, rent. com.au CEO Greg Bader and many more all said they try to get at least six-hours’ sleep a night. HOW MUCH SLEEP IS RECOMMENDED Not everyone needs the same

amount of sleep but there’s no doubt that burning the candle at both ends will impact your ability to function at your peak. Most people need 6 to 8 hours sleep a night. I usually recommend that my clients finish eating by 7pm and are in bed by 10pm, that’s when your liver is regenerating. Your body is designed to restore itself while you’re sleeping. If you’re eating heavy meals or drinking alcohol late at night,

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SLEEP| BFM

it’s going to impact your sleep patterns. It also puts pressure on the digestive system and kicks the body into overdrive at the time it wants to rest. Instead of regenerating, your body will be using energy to digest and process foods when it should be processing emotions. Your body becomes the rubbish tip for your thought patterns of the day. DIFFERENT STAGES OF SLEEP There are four different stages of sleep. Stage one, kicks in just after you nod off – your brain produces alpha and theta waves and your eye movements slow down. This stage lasts up to seven minutes and you’ll be in a light sleep, somewhat alert and easily woken. Stage two, also fairly light, starts with a sudden increase in brain wave frequency and then it slows down – if you’re having a power

nap you’ll want to wake after this stage. Stage three and four is the beginning of deep sleep and when the brain starts producing slower delta waves. The brain produces even more delta waves and you move into a deeper, more restorative stage of sleep. This is when the body repairs muscles and tissues, stimulates growth and development, boosts immune function and builds energy for the next day. You’ll generally enter the REM (rapid eye movement) stage about 90 minutes after falling asleep; each REM stage can last up to an hour. An average adult has five to six REM cycles each night. During this final phase of sleep, your brain becomes more active. REM sleep plays an important role in learning and memory function – this is when your brain consolidates and processes information from the day so it can be stored in your longterm memory. THE ISSUES OF BROKEN SLEEP Most people wake up two or three times during the night. By the age of 50 many women will wake three to four times a night. This can also be the problem with hormonal imbalances that need to be resolved. This is fine, if you wake between sleep cycles, but what I’m seeing is a lot of corporates with broken sleep that are waking between cycles and not being able to fall back to sleep quickly. The time that you wake up, will be an indicator of where the issue originates. If you find you’re waking between midnight and 2am, in Ayurveda this is seen as a pitta (fire or heat) issue and relates to built-up pressure and stress. Waking early in the morning, say between 3am and 5am, is more related to vata (air) which is centred around worry and anxiety. HOW TO FIX SLEEP ISSUES I recently spoke on ABC radio with a sleep specialist from Wesley Hospital, he said sleep problems are dramatically increasing because so many people are staring into their screens late at night and then expecting to easily drift off to sleep.

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He suggested setting a sleep ritual that includes no electronics one hour before bed so your body can calm down. I also tell my clients that they should go to sleep at the same time each night as that sets your body in a natural rhythm. Once you’re in a good rhythm you can also get rid of the alarm clock – it’s better to naturally come out of a deep sleep on your own accord. You can always use the alarm as a back-up. I wake up at 4.45am every morning – it doesn’t matter if I’m in a dark hotel room or in my own bed. I never dream either as I’m not getting woken out of sleep cycles. Meditation works really well as a way of stopping your racing mind. The Art of Living, a humanitarian and educational NGO, says that just 20 minutes of meditation can give you as much deep rest as eight hours’ sleep. It can be tricky in the corporate world, where business execs often work under intense pressure, irregular routines and different time-zones. The alternative, having an unrealistic belief that you’re bulletproof and not allowing your body enough time to rejuvenate in slumber will eventually wear you down though. My executive clients who follow the simple steps to improve their sleep enjoy overall better health, have a stronger drive and faster recovery than the ones that think they can function on thin air. Excess cortisol, or the fight or flight hormone, causes weight gain around the abdomen, can lead to adrenal fatigue and an even bigger crash, so it’s really important to start taking heed of this advice, like many switched on top tier business execs are starting to realise. The ones who take care of their greatest asset, which is their health, are the ones who stay on top of their game. BFM Clinical director of Back to Health, Jo Formosa offers a number of modalities to achieve optimal health in highpressure environments. She recently created Health Dynamics - the world’s first health and personality test. To find out more visit www.healthdynamics360.com

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BFM | DESTINATION

The Heritage Hotel Kempinski Yangon Currently in the final phase of restoration, The Heritage Hotel Kempinski Yangon is scheduled to open its doors to guests in spring 2018.

ocated on The Strand, in the heritage district of Myanmar’s largest city and opposite the new riverside cruise terminal, this outstanding fivestar deluxe hotel will define luxury in the city of Yangon. Built in 1927 as the New Law Courts, The Heritage Hotel Kempinski Yangon was created by architect Thomas Oliphant Foster and built by Doorman Long UK, the builders of the Sydney Harbour Bridge, as the first multi-level steel structure in the Far East. With its imposing columns standing three floors high, the Heritage hotel seems to stretch endlessly along the Strand. Over the last five years the building has been carefully restored from the inside out to preserve the spirit and grandeur of its past. This fine work has been done in partnership with the Yangon Heritage Trust, founded in 2012 by Dr. Thant Myint U, the eminent Burmese writer and

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historian. The building is the first property to receive Conservation Management Plan approval from the Yangon Heritage Trust focusing on local artistry and specialist skills by carefully undertaking the transformation into Myanmar’s finest luxury hotel. The Heritage Hotel Kempinski Yangon will offer 219 spacious rooms and suites with crafted décor and high ceilings. The dining experience will be truly gastronomic: it will feature a modern Cantonese restaurant as well as the Brasserie serving breakfast, lunch and dinner under a skylight. As breakfasts at Kempinski hotels fully reflect the European heritage infused by local customs, guests may expect a sumptuous experience ranging from best bircher muesli, baked bread and pastries right from the oven, freshly squeezed juices and power shots, homemade jams and chocolate spreads, to dishes full of

flavours and traditions from the destination. The hotel will have a classic bar and cigar lounge designed with timeless elegance as well as a roof top bar by the pool where guests and Yangonites alike can enjoy breathtaking views of the Irrawaddy river from dusk to dawn. “We are proud to unveil this magnificent new jewel in the Kempinski constellation, located at the heart of a fascinating city with incredible potential for international and local travellers,” said Markus Semer, Chairman and CEO of Kempinski Hotels. “The Heritage Hotel Kempinski Yangon symbolises our original pioneering spirit and commitment to craftsmanship in this carefully restored heritage building of exceptional beauty.” A dedicated culinary team will create an array of delicious local, Asian and internationallyinfluenced cuisine together with

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DESTINATION| BFM

reinterpretations of regional recipes. These dishes will be complemented by an impressive beverage menu of inventive and classic cocktails in the hotel’s various restaurants and bars. The Brasserie serves a breakfast buffet, elegant lunches, high tea on weekends, Sunday brunches, and intimate dinners with a farm-totable concept, featuring crafted food from local producers. The elegant, contemporary Chinese restaurant will take Cantonese food to a new level in Yangon, while the signature restaurant, presided over by Master Chefs from Hong Kong, will offer one of the finest wine collections in the city selected by expert sommeliers. The Lobby Lounge and Tea Room will serve a modern take on afternoon tea, and will showcase the art of coffee and tea complemented by gourmet chocolates. The Classic Bar & Cigar Lounge will be a haven for cigar aficionados with its curated selection of the finest Cuban cigars, together with a rum and malt whiskey menu, and bespoke cocktails. It’s the perfect place to unwind and relax after a busy day. One of the highlights of The Heritage Hotel Kempinski Yangon will certainly be the chic Roof Top Bar with its spectacular view over the city. The place to see and be seen, it will feature professional mixologists and DJs spinning their tunes in breezy surroundings. “Yangon is not only a stopover for business travellers, but an incredible destination rich with heritage and hidden treasures,” says Ed Brea, General Manager of The Heritage Hotel Kempinski. “Our hotel is also ideal for weekend getaways for discerning guests who enjoy high standards of quality, comfort, refined services and the latest technology.” Art and culture have a special meaning in this legendary building. The Heritage Room will be an exclusive banquet venue for intimate gatherings, elegant private events, chamber music, art exhibitions, wine tastings and antique auctions. The Kareweik Grand Ballroom, the hotel’s

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spectacular ballroom is the ideal space for hosting cinema, theatre and concerts, as well as the perfect venue for luxury weddings and galas. With its extensive facilities spread over three levels of the hotel, Kempinski The Spa, Yangon’s greatest wellness & beauty haven, will invite guests to enjoy soul nourishing and pampering treatments. Designed with a blend of Myanmar’s rich heritage, the Spa & Health Club will feature six treatment rooms, a double VIP Suite, a state of the art gym, a yoga studio, a rooftop pool, a barbershop and a beauty lounge, offering ladies and gentleman a place to relax, socialise and enjoy head-to-toe beauty treatments. “Since we have started to work on this hotel project, we have an even better understanding of the location and are embracing Burmese customs,” adds Ed Brea. “Blended with our European etiquette this cultural empathy creates outstanding and truly original destinations. Within short walking distance to the Sule Pagoda, Maha Bandula Gardens and the Bogyoke Aung San Markets or a short drive to the infamous Shwedagon Pagoda,

the road to Mandalay starts here where European Hospitality is served with the warmth of the Burmese heart.” BFM About Kempinski: Created in 1897, Kempinski Hotels is Europe’s oldest luxury hotel group. Kempinski’s rich heritage of impeccable personal service and superb hospitality is complemented by the exclusivity and individuality of its properties. Kempinski now manages a portfolio of 77 five-star hotels and residences in 33 countries and continues to add new properties in Europe, the Middle East, Africa, Asia and the Americas. Each one reflects the strength and success of the Kempinski brand without losing sight of its heritage. The portfolio comprises historic landmark properties, awardwinning urban lifestyle hotels, outstanding resorts and prestigious residences. Each one is imbued with the quality guests have come to expect from Kempinski while embracing the cultural traditions of its location. Kempinski is a founding member of the Global Hotel Alliance (GHA), the world’s largest alliance of independent hotel brands. www.kempinski.com www.gha.com.

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BFM | FAST LANE

2018 KIA STINGER

A five-passenger sportback poised to redefine a segment currently populated by European automakers, the Kia Stinger promises to be the highest-performance production vehicle in the company’s history. Offered in five trim levels (Stinger, Premium, GT, GT1, GT2) and luxurious accommodations, the Stinger is now available in Australia.

“

Unlike any Kia that has come before it, the Stinger really is a dream car for us and after years of commitment and hard work from a passionate group of designers, engineers and executives around the world, that dream is now a reality,” said Orth Hedrick, vice president, product planning, Kia Motors America. “From its GT Concept-car origins to its tuning and refining on the legendary Nürburgring circuit, no detail was too small to be obsessed over, and the result is simply stunning.” Instantly recognizable as a direct evolution of the concept that preceded it, the all-new 2018 Kia Stinger design was overseen by Peter Schreyer, Kia Motors’ chief design officer, and his talented team of designers in Frankfurt. Ride and handling development was looked after by Albert Biermann, head of Kia’s Vehicle Test and High Performance Development and his group of engineers in Korea and on the grueling Nürburgring racing circuit. But what makes a true gran turismo? This question was the foundation for a years-long journey that began when the GT Concept was first unveiled at the 2011 Frankfurt Motor Show. Although every Kia design study has a purpose, the GT Concept was something considered by many outside the company as little more than a dream for a brand known for producing mass-market transportation rooted in value. But the GT Concept ignited embers of passion that sparked a fire within the organization and, over the next five years, that fire would grow beyond fantasy and morph into reality. Once the Stinger was green lighted, that gran turismo question

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became a mantra as development commenced. Coming from Kia, the design had to be bold. And it was. But it also had to be nimble and fast while also luxurious and quiet. It had to achieve the perfect balance of ride and handling and seat five comfortably with room for luggage. It had to be a lot of things, but most of all, it had to be an authentic gran turismo. And it is. DESIGN Key to its road presence are the rear-wheel-drive proportions; a long hood and short front overhang, an extended wheelbase to deliver a spacious cabin, and a long rear overhang with strong shoulders. The Stinger’s stance and visual balance are designed to lend the car an air of elegance and athleticism, rather than boy-racer aggression. The wide front and rear track, along with the recessed contours along the doors, enhance the visual power of the Stinger’s shoulder line as well as its sportback silhouette. Other functional elements of the exterior design include large air intakes and air curtains in the front, a smooth underbody, and a rear diffuser on the GT trim enhances aerodynamics, while also reducing lift. The rear valance houses four oval exhaust pipes. Kia’s signature ‘tiger-nose’ grille sits proudly between complex LED headlamps. The low-slung cabin with its steeply raked windshield and backlight sits toward the rear of vehicle, creating a fast silhouette. Inside is a space dedicated to the thrill of driving while cossetting the occupants in luxury. Typically a high-cost option on most competitors, all Stingers come standard with a leather-appointed interior. Available ultra-soft Nappa

leather covers the deeply contoured seats and the driver’s seat has available air-cell bladders in the seatback and width-adjusting bolsters for optimal support and comfort. A confident dashboard creates a strong horizontal plane for the driver to work behind. The centre console is intuitively split into two specific areas: the infotainment controls sit neatly below a large colour touchscreen, while the climate and ventilation controls nestle beneath. Front and centre of the driver is a thick handstitched multifunction leatherwrapped steering wheel with paddle shifters; the GT trim gets a “D” shaped steering wheel. The large gauges are ringed in metal and accentuated with sweeping red needles. An available colour TFT screen between the gauges relays performance data such as cornering G-forces3, lap times and engine-oil temperature, along with ancillary information such as the trip computer, driver settings, navigation and diagnostics4. Kia’s aerodynamicists found that reducing the height of the rear of the roof enhanced the fastback’s ‘aerofoil’ shape and improved the Stinger’s aerodynamic efficiency at the same time. The result is a drag coefficient of 0.30 Cd. CHASSIS Joining the company from BMW in December, 2014, Albert Biermann’s first look at the Stinger signaled to him a car that had to live up to its stunning design from behind the wheel. “I think for the Kia brand, the Stinger is a very special moment in time,” notes Biermann. “Because nobody expects such a car, not just the way it looks but also the way it drives. It’s a whole different animal.”

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FAST LANE| BFM

The car’s development took place across Europe, the Middle East, Asia and North and South America, but the Nürburgring’s grueling Nordschleife is where the Stinger was honed. With 73 corners, nearly 1,000 feet of elevation and 17 percent gradients, the “Green Hell” can chew up and spit out a car of lesser mettle in just one lap. Kia’s engineers put every development Stinger through a minimum of 480 laps (equivalent to 6,214 miles) of high-stress driving around the Nordschleife for quality, reliability and durability testing. The constant combination of hard acceleration, rapid deceleration, heavy cornering, changing surfaces and camber offers an unrivaled test of dynamic prowess and the distance covered during the Stinger’s development resulted in nearly 100,000 miles of on-road testing. Setting the manufacturing hardpoints of the body-in-white would define Stinger and the engineers

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looked carefully across a landscape dotted with contenders. At 114.4 inches, the Stinger’s wheelbase is longer than the Audi A5 Sportback, Infiniti Q50, Lexus IS, BMW 4 Gran Coupe and the Lexus GS5. It’s also longer overall (190.2 inches) and wider (73.6 inches) than several others in the segment. With a generous 23.3 cu.-ft. of cargo space, the Stinger’s cargo area is also larger than many of its competitors, with enough space for full-size luggage or golf bags and a power liftgate with Smart Trunk functionality is available. The spacious accommodations provide more interior volume than its competitors, including the BMW 6 Series Gran Coupe, 4 Series Gran Coupe, Audi A5 Sportback, and the Lexus GS6. POWERTRAIN If the chassis symbolizes the bones of a gran turismo, the available powertrains represent its heart. Oriented longitudinally and set rearward beneath the long,

sculpted hood, a choice of two turbocharged engines are available. The 2.0-litre twin-scroll turbocharged four-cylinder Theta II engine produces 255 horsepower at 6,200 rpm with 260 lb.-ft. of maximum torque available from 1,400 – 4,000 rpm, propelling the Stinger from 0-60 mph in just 5.9 seconds8. Performance credentials are further enhanced through the available 3.3-liter twin-turbo V6 Lambda II engine, which produces 365 horsepower at 6,000 rpm and offers 376 lb.-ft. of torque from 1,350 – 4,500 rpm. With more power on tap than the Audi S5 Sportback, BMW 440i Gran Coupe, and Infiniti Q509, the Stinger GT is positioned to be a worthy challenger to the competition. As such, the Stinger GT accelerates to 60 mph in 4.7 seconds10, quicker than the sixcylinder Porsche Panamera11. Pushing the twin turbocharged V6 to its full potential will allow the Stinger GT to achieve a governed top speed of 167 mph12. BFM

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