In March 2004, the Hornery Institute hosted a forum to discuss the work of Professor Richard Florida, and specifically his recently released book "Rise of the Creative Class". Viewed in the context of its implications for the Australian business and social environment, the discussion drew upon a diverse panel of Australian opinion-leaders and decision-makers as well as Professor Florida himself. Professor Florida's adopted area of expertise is a product of his time. Growing up in Pittsburgh, he witnessed first-hand the effects that the hollowing-out of industry can have on a community rooted in that industrial base. Later, in studying the forces that are influential in growing a local economy, he seems to draw upon this experience. His thesis is flavoured with equal measures of econometric analysis and humanist examination of how our organisational models leave us detached from our underlying human needs. For mine this is the appeal in Professor Florida's work – it is multifaceted in its approach, and successfully draws together a number of concepts into a coherent model, with application across many aspects of the development and management of communities. For the most part, this forum's discussion was centred on innovation as a goal – a convenient currency with cache for both business and individuals – though the adopted theme could have just as easily been "people-friendly communities", "sustainable growth", or "re-invigorating regional centres". The foundation of Florida's work is the necessary connection between businesses and the community in which it resides. Companies that depend on the knowledge and creativity of their staff (and arguably any on-going enterprise depends on these things to some degree) need to be able to access, recruit and retain such people. However, Florida dismisses as myth the idea that talented people move to where the "good" companies are; rather, companies are increasingly locating in places where they can readily access a pool of the "right" people. This is a critical distinction for it challenges the conventions on how to grow a local economy – attracting some high-tech firms with tax-breaks and building a nice sports stadium is not enough. Florida speaks of the "3 Ts" of economic development (each underpinned by Florida with regional indices derived from measures such as patents per capita, number of proponents of the Arts, etc.):<ul><li>Technology – the presence of institutions that are active in the development of new technologies, innovation, etc. (private sector, government initiatives, incubators, etc.), which facilitate the creative efforts of individuals, and the realisation of new ideas.</li><li>Talent – a community rich in people with the necessary skills, education, and creativity to generate and develop novel ideas and technologies.</li><li>Tolerance – the openness and diversity of a community, and the presence (indeed, encouragement) of a creatively active society which in turn generates its own "creative energy". Hence the centre-piece of Florida's thesis – his "creative capital theory": "regional economic development is powered by creative people who prefer places that are diverse, tolerant, and open to new ideas".</li></ul>It is the latter point that separates Florida from the Human Capital theorists that preceded him. Essentially, Florida argues that just as one is less likely to be able to paint a masterpiece with a palette of one colour, so a creatively active community demands diversity. Moreover, the types of people who are most likely and able to contribute to this creative force are themselves attracted to communities where they see such creativity being tolerated and lauded – communities that do not fear difference and novelty. It was to this point that Dr Ben Greene of Electro Optic Systems – in my opinion one of the stand out contributors to the panel discussion – emphasised the importance of community values in site selection for new facilities for his company. Greene spoke of deliberately considering the "vibe" or "energy" of a community in determining whether it would prove a suitable home for their high-tech operations. In Greene's words: "We used to say that some places had the 'right feel', a certain 'je ne sais quoi', but we can't say that any more – Richard Florida has given us an index!" Clearly there are implications for the social capital of the community also. If we accept that the ability to imagine and create lies at the heart of what it is to be human, then a society that fosters this facility must surely be a more people-friendly place. Discussions such as those around "work-life balance" are dealing with the symptoms of the "Organizational Age", and failing to address the detachment of organised work from our innate human desire to create, build and grow. As Florida puts it, why is that no-one talks about having "a lifestyle with work options?" If the multidimensional nature of Florida's theory is one of its key strengths, then the weakness lying in the shadow of this strength is that his work is susceptible to being adopted piecemeal by parties with a particular agenda. Florida goes to pains to emphasise that it is the combination of specific factors that facilitates economic development for a city / region. Yet it seems too easy for us to focus on the elements that challenge conventional thinking – the importance of diversity, the "gay index", the "bohemian index", etc. – and lose sight of the meaning in Florida's work. This was perhaps the case at the Sydney seminar where the audience discussion at the end of the forum became a grandstanding opportunity for the Arts lobby, the corporate women's lobby, and a clutch of marginal politicians wishing to publicly endorse these causes. I felt sorry for Professor Florida to the extent that he must have felt, after three hours of talking, that the audience had missed the point. To the extent that Florida's work offers a greater voice to elements of our society (e.g. the Arts community) that might benefit from a more tangible link to economic prosperity of the total community, this may be a noble end in itself. However, in doing so we must not fail to recognise that Florida's research provides us with a model for a whole community – over-emphasis of one type of measure of one component of the model may be worse than dismissing the model completely.

2007-10-16T16:07:58+08:00

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"Creative Classes" signal robust, vibrant and competitive economies

2004-03-16T00:00:00+08:00

The work of Professor Richard Florida (author of "Rise of the Creative Class") was discussed at a Hornery Institute forum in March 2004. ABF was there to capture some key insights.

2007-10-26T12:38:18+08:00

I have discussed in past AFR BOSS mentor reports the significance of business clustering for greater innovation in Australian firms and regions. A notable example was detailed in the Australian Business Foundation's study of the global success of the Australian wine industry, and more recently in our regional infrastructure report. In the last few days, the Australian Business Foundation's members and friends have had the benefit of new insights on enterprise networks and clusters from Alistair Nolan, the OECD's leading authority on entrepreneurship, small business, clustering and local economic development. He is visiting Australia courtesy of Smartlink, the National Institute for Manufacturing Management. Let me share with you some of the OECD's current intelligence on what makes for the most successful business clusters and networks. Firstly, Alistair Nolan distinguishes between clusters and business networks. Business networks refer to explicit alliances or contractual arrangements between specific firms to co-operate usually to achieve a particular commercial goal for those who are members of the network, eg joint purchasing or training, information sharing and peer learning or filling export contracts impossible for any individual enterprise. Clusters, on the other hand, describe the phenomenon of the physical agglomeration of firms, supply chains and related businesses that provide a hub of specialised economic activity usually in a geographic region. Silicon Valley is an example, as are Italy's ceramics and textiles regions or the high tech zone around Cambridge University in the UK. Nolan summarised the differing characteristics of clusters and networks as follows: <ul><li>clusters have open membership, networks are restricted;clusters are outcomes of market dynamics, networks are based on contractual agreements;</li><li>clusters attract specialised services to regions, networks allow access to lower cost specialised services by member firms;</li><li>clusters generate demand for more firms with related capabilities, networks can help firms engage in complex production;</li><li>clusters require competition, while networks focus on cooperation.</li></ul> Whatever the distinctions, collaboration for business and wider economic benefit is the thing that clusters and networks have in common. Both facilitate the flow of ideas, knowledge and people, which Nolan describes as "the oxygen for innovation". The OECD observes that in general enterprises which work with others do better. Benefits come in the form of everything from lower transaction costs to superior access to information to economies of scale in production. They also observe that clustering policies seem to be universal – evident in both rich and poor countries, from interventionist regimes as well as by laissez-faire governments, in both the developing and the developed world. The OECD's work concludes that for business networks and clusters to be successful, they must go with grain of the market. It is a mistake to create clusters artificially or to engage in some form of social engineering. Among the key messages are: <ul><li>Let the private sector lead. The public sector should play a catalytic role, eg introducing the concept of collaboration to business, providing start-up financial support for network brokers or feasibility assessments, ensuring access to specialised infrastructure, communications and transport. </li><li>Refrain from seeking to build new clusters of firms, but support existing or emergent clusters. </li><li>Target investment attraction to the areas where the cluster is weakest, to the gaps in a region's economic base. </li></ul>Counter-intuitively, Alistair Nolan counselled against a special policy focus on clusters. He said that policies should be agglomeration–neutral, but collaboration-positive. In other words, the aim should not be to create clusters, but to foster productive linkages between firms to encourage entrepreneurship and new capabilities in small businesses and to make it conducive for new enterprises to be born. The OECD's insights are vital for those seeking to revitalise economically distressed regions or to build prosperous new industries and communities in both metropolitan and regional Australia. More detail can be found in Alistair Nolan's book for the OECD called "Entrepreneurship & Local Economic Development. Programme & Policy Recommendations" available for purchase online from <a href="http://www.oecd.org/bookshop" target="blank""">www.oecd.org/bookshop</a>.

2007-10-16T11:38:11+08:00

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Collaboration - The Oxygen for Innovation

2003-09-16T00:00:00+08:00

Also included below are a series of talks which can be heard on the <a href="http://boss.afr.com.au/" target="blank""">AFR BOSS</a> magazine website. Narelle Kennedy, Chief Executive of the Australian Business Foundation is one of the mentors on the AFR BOSS website where a panel of experts offers advice on the best way to succeed in managing. You can listen to advice and send questions. This is a monthly mentoring service which commenced in July 2000.

2007-10-26T11:41:29+08:00

If you are an IT or internet service provider, in the telecommunications game or running a business in rural Australia, then listen up. The latest research study from the Australian Business Foundation contains some fresh market intelligence about how e-commerce and online technologies are impacting on the way business is being done in rural towns and regional centres. The Australian Business Foundation's research – based on interviews with rural business people in six typical inland towns in northern NSW – was undertaken by Richard Stayner and Judith McNeill of the University of New England. Their findings have just been released, in a report called: "Changing Business Realities? The Implications of E-Commerce Technologies for Rural Non-Farm Businesses". The headline finding is that e-commerce technologies are changing rural business realities, but this change is incremental, not revolutionary. Both the dire threats and the unbounded opportunities from e-commerce predicted for business in the bush have been overstated. The businesses interviewed are taking a cautious but experimental approach. They are taking small steps and making limited investments to learn and to test the possibilities and benefits that online tools can bring to their businesses. E-commerce and online methods were found to be impacting on rural non-farm business operations in the following key ways: <ul><li>Rural businesses are enthusiastically adopting the simplest, lowest cost applications with the most immediate benefits.</li></ul> Online technologies improve business processes and bring significant cost and time savings in mail, banking, information retrieval, document transfer and other administration functions like responding to telephone enquiries, printing brochures and servicing distant markets. Case study examples of this widespread use of e-commerce tools range from a law firm, to a livestock scales manufacturer, to a specialty candlemaker. But for those businesses going beyond cost-saving measures, their interest in e-commerce is motivated either because it is a good fit with their business strategy, or because they are at a critical stage or 'trigger point' in the life of their business, e.g. developing a new product or responding to a new government regulation. <ul><li>Rural businesses are using online tools to cement customer relationships and enhance the attractiveness and value of their products and services.</li></ul> Some firms are using the internet to add new attributes and features to their products and services to better meet the needs of their customers and to differentiate themselves from their competitors. Among the case study examples are a supplier of high quality chemical-free table fish which uses its website to provide customers detailed information on how its fish are raised and fed, nutritional data and preparation advice. An antiquarian and second hand book dealer has significantly improved the speed and coverage of its service to online enquirers by an alliance with a large North American internet book exchange, able to track millions of titles from thousands of book dealers around the world. This has greatly broadened the market and sales of this book dealer in rural Australia. A clothing retailer came up with an imaginative amalgam of 'bricks and clicks' to attract a more youthful market with an online member registration program for monthly prizes, new stock and discount details and links to sites about music and surfing events. This was an attempt at relationship marketing bridging an online site with visits to the physical store. <ul><li>Niche or specialist rural businesses or those who are in the information business are creating new opportunities and wider markets through online tools.</li></ul> Specific craft, hobby or recreational and tourist businesses with a widespread community of interest found that using the web to promote their products and services eliminated the tyranny of distance and brought new sales from around the world. The same applied to rural firms whose stock-in-trade is information or consultancy services. Rural location is irrelevant to their serving wide geographic markets. <ul><li>E-commerce and online technologies are recognised by some rural businesses as a defensive tool against future threats or external pressures.</li></ul> There was evidence that some rural businesses, while not seeing an imminent threat to their business from e-commerce applications, were adopting such technologies to forestall possible loss of market share by matching or pre-empting the actions of competitors or potential competitors. In other cases, they were anticipating a 'customer push' to do business electronically and adopting e-commerce tools to avoid losing business in the future. These sentiments were expressed at interview by a freight forwarding company, a seed, feed and fertiliser merchant and a rural newspaper – among others. Far from showing rural business people as off the pace, the Australian Business Foundation study paints a richer picture of the way e-commerce is influencing business life in rural Australia. We see e-commerce activities being prudently pioneered by local innovators who 'learn by doing' and who experiment when there is a good chance of e-commerce enhancing their business operations.

2007-10-16T11:39:17+08:00

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Rural Pioneers Online

2003-06-16T00:00:00+08:00

E-commerce technologies are changing the realities of rural businesses but this change is incremental rather than revolutionary. In this article for AFR BOSS Narelle Kennedy reflects on the Australian Business Foundation's research on e-commerce use in rural non-farm businesses.

2007-10-26T11:46:41+08:00

Leadership and management has been under considerable stress lately – both in the business community and in the public arena. Massive payouts to executives with less than stellar track records. Directors asleep at the wheel presiding over large scale losses and company closures. And, elected political leaders talking war with the justification of doing what's right not popular. So, maybe it's timely against this backdrop to canvas the talents, skills and attributes that Australian firms should be fostering in their workforce, their managers and business leaders. Firstly, let's look at some of the forces of change impacting on Australian business' quest for talent. <ul><li>In Australia and across the OECD, the workforce is aging, requiring strategy and planning for the loss of skills as this older population leaves the workforce. </li><li>Individuals are facing dilemmas about staying employable when professional and technical competencies learnt early in a career quickly become obsolete, replaced by jobs and expertise not yet invented. </li><li>Increasing workforce casualisation and flexible working arrangements serve to de-couple an employee's skills and learning from any single employer. Employment relationships are more likely to be temporary, fluid and dominated by short-term contracts with numerous employers and only a sporadic long term commitment to a few businesses. </li><li>Skills and knowledge will increasingly rest with the individual, not the enterprise, and be easily transferable between different employers and job functions. </li><li>At the same time, intangible assets like knowledge and capability, are becoming more critical to business competitiveness. To succeed, businesses must compete on the basis of their distinctive know-how, which is mostly locked into their skilled people. </li><li>There is growing evidence that successful business leadership and management capabilities are shaped by factors other than technical job skills, namely experience, emotional intelligence, culture and the like. </li><li>The demand for more highly skilled people will continue to increase as firms and industries grow and reinvent themselves, and as new technology-based industries emerge, e.g. in the convergence between ICT and life sciences. </li><li>In response to the increase of knowledge in industry and the professions, generalists are likely to be replaced by specialists. This trend opens up the prospects not only of more career choices, but of new niche markets to be served by small businesses and willing entrepreneurs. </li><li>The post-baby boom generations (the under 30's and the under 20's) are demonstrating different expectations and attitudes towards work, which will have profound implications for organising workplaces and for the performance of business enterprises. Well-equipped for high-tech work and lifelong learning, these younger workers however have little interest in their employers' needs and a strong belief that work is a means to an end to money, fun and leisure, according to a recent "The Futurist" magazine article on future trends by Cetron & Davies.</li></ul> What should Australian businesses concentrate on to make the most of talent in their enterprises? The short answer is not merely recruiting and training skilled staff, but making the enterprise a learning organisation. It's easy to dismiss the concept of a 'learning organisation' as just the latest HR fad. But take a closer look. In an age of globalisation where continuous innovation and distinctive know-how are survival strategies, it is vital to shape enterprises that continually question and learn, and that build fresh capabilities by being adept at picking up market signals and acting on unanticipated customer needs. An enterprise that is a learning organisation is likely to display: <ul><li>an unusual mix of technical, managerial and collaboration skills; </li><li>the minimum amount of hierarchy needed to get results from a diverse workforce of both young entry level workers and post-retirement experienced consultants, who all thrive on challenge, opportunity and training; </li><li>unconventional relationships with formal educational institutions, both in vocational and higher education, to constantly renew the skills available to the enterprise; </li><li>as a result, we will see multiple and flexible workplace training offerings including mentoring and coaching on the job, university and TAFE courses that blend traditional trade skills with IT or business management competencies, and workplace-specific training that formally credits prior learning and experience; and </li><li>effective ways of recognising and mobilising knowledge in and around the enterprise and rewarding knowledge-sharing behaviour.</li></ul> The centre of attention in the quest for talent must be the organisation, not the individual. As detailed by Bill Ford elsewhere in BOSS' mentor insights, ultimately the competitive advantage of enterprises will be their ability to learn faster than their competitors.

2007-10-16T11:40:18+08:00

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The Talent Quest

2003-03-16T00:00:00+08:00

In the first of her contributions to AFR BOSS for 2003 Narelle Kennedy reflects on the role of talent and skills in the success of Australian enterprises.

2007-10-26T11:46:22+08:00

Let's do some future gazing to 2020 or thereabouts and look at what Australian Business Limited's Sydney North Regional Council is up to. One scenario Well, we might see the Sydney North region as a high performance global hub, a centre of excellence in bioinformatics grown from the convergence of world-class start-up IT and telecommunications enterprises with the latest bioscience advances from Macquarie University and its spin-offs. The region's enterprises are sought-after for leading edge solutions in everything from environmental remediation to remote sensing to telemedicine. It is a mecca for knowledge workers and is largely responsible for reversing much of Australia's brain drain. Not just in the sciences, but in the arts, film, entertainment, multimedia and cultural industries. Sydney North is recognised worldwide as a hotbed of creative industries that started with Australian Academy Award-winning animation, special effects and cinematography skills around the lower North Shore in the late 1990's. Innovation and technological pioneering is not restricted just to high tech or creative elites. Mainstream local businesses, even those just serving domestic markets, know that continuous innovation is a survival strategy. They turn ideas from customers and suppliers into new business offerings that command a premium. They work more intelligently. They harness the skills and know-how of their people, resulting in increasing sales and fresh capabilities in their firms. And of course, they can do all this because of their decades-long membership of Australian Business Limited, with the unrivalled access it gives them to panels of skilled advisers anywhere in the world, tailoring vital services specifically to their enterprises 24/7. And another scenario Or maybe not. In 2020, maybe ABL's Sydney North Regional Council meeting would be a very small affair. A few business stalwarts remembering the good old days of the dot.com boom and the promise of biotech breakthroughs which sadly few in Australia could realise, unable to access the huge amounts of patient venture capital needed to cover the long lead times and high risks inherent in life sciences businesses. A world of chauvinistic nationalism and revived trade barriers makes doing business from Australia a lonely and ill-fated pursuit. It is an age of borders, fragmentation, protectionism and isolation. This puts a swift brake on Australia's energetic film, multimedia and cultural industries, unwelcome as decadent imperialist imports in Asia and the Middle East and a victim of more blatant protection in Europe and in North America. Exports are in decline, which has a knock-on effect to local businesses serving the domestic market. Even how we describe wine and food and whether we can call an Italian restaurant 'an Italian restaurant' is subject to rules set by the EU in Brussels! The only companies doing well are those in the defence industries to support the geopolitical crises, skirmishes and wars that we are either involved in or protecting against. Or those lucky enough to be able to exploit personal business relationships, cultural heritage ties to Asia and hard-won political bilateral trade deals. ABL survives by the careful husbanding of its resources and by the valiant efforts it makes one-on-one for its member companies in hard to reach markets. It succeeds only because of the depth of its business relationships and its alliances with bodies like Austrade, carefully nurtured over decades to weather both the good times and bad. These alternative pictures of the future fortunes of ABL's Sydney North Region and its member companies extrapolates from a scenario-building study by the Australian Business Foundation, with GBN Australia, called Alternative Business Futures and published in 2000. Collaboration & competition They are used to set the scene for my presentation tonight on The Paradox of Competition and Collaboration. From the body of research undertaken by the Australian Business Foundation comes a critical piece of intelligence for business: innovation and knowledge are increasingly at the heart of competitive success; and their active ingredient is collaboration. Paradoxically, it seems that the more you collaborate, the stronger your competitive success. When the Harvard Business School's Michael Porter wrote The Competitive Advantage of Nations in 1990, he gave hard-headed respectability to strategies that had previously been seen as the cosy, soft side of business – networking, alliances, partnerships, collaboration and clustering. This is where the idea took shape that collaboration and competition can co-exist. Porter recognised that this blend of competition and collaboration drove remarkable business productivity and performance because of the concentration (the eco-system) of specialised capabilities and skills, institutions and rivals, related businesses and sophisticated customers. More than that, collaboration was seen by Porter and others as the new driver of competitive success in markets transformed by globalisation, online technologies and the increasing significance of intangible assets such as knowledge, relationships and motivation. Today, these concepts of alliances, clustering and collaboration help us bridge two apparently contradictory ideas of modern business – on one hand the need to be nimble, alert and intimately connected to the customer and changing market demands, and at the same time, to have the scale and critical mass to compete globally. The Australian Wine Industry A home spun example of this is Australia's wine industry, which was the subject of a study for the Australian Business Foundation by Professor Ian Marsh and Brendan Shaw, then of the Australian Graduate School of Management. Marsh & Shaw show how the Australian wine industry has transformed itself over a decade and a half from being a domestic commodity industry to a knowledge-driven cluster producing premium global brands. Marsh and Shaw identify strategic collaboration as the cornerstone of the transformation of the Australian wine industry. The study found that while not orchestrated and centralised, industry-wide collaboration and linkages have facilitated three significant changes in the wine industry: <ul><li>First, wine producers have adopted a global business orientation – they started to think of their industry and its prospects and their individual strategies in an international context. </li><li>Second, within this strategic frame, marketing is king; the industry has become market and consumer led, not producer driven. </li><li>Third, the industry is committed to innovation; there is clear evidence that Australia's competitive advantages have been driven significantly by technical developments. The industry has invested in research – and perhaps more importantly, findings have been widely disseminated and adopted.</li></ul> This collaboration, say our authors, took hold through the existence of: <ul><li>Industry champions, like Brian Croser and Len Evans, who had a vision and led from the front. </li><li>A potent strategic planning mechanism, resulting in a 12 page document in 1996 called Strategy 2025, which documented the vision of what the wine industry could become, set the necessary objectives and targets to achieve this and detailed what the industry needed to do to translate this aspiration into a reality. Strategy 2025 created a kind of strategic envelope, within which risks could be managed, new opportunities could be recognised, and with it, the willingness to adopt previously unthinkable practices like varietal labelling. </li><li>Strong research and development advances and their diffusion throughout the industry. </li><li>Excellent mechanisms for education and skills development in the industry and an array of information exchange media. </li><li>A robust set of interlinked, but specialist, industry associations working in concert to implement the opportunities identified in Strategy 2025, eg Winemakers Federation, Wine Industry Research Institute, Wine & Brandy Corporation and the like.</li></ul> It is important to note that the strategic collaboration in the wine industry was somewhat chaotic and serendipitous, rather than an organised cluster. But, its reality and its performance-enhancing effects are detailed in Marsh & Shaw's study. They conclude that collaboration was the means through which knowledge enhanced competitive performance, especially in terms of reducing transaction and marketing costs, and disseminating and realising opportunities for export and for innovation. Lessons for collaboration If we return for a moment to the alternative visions of 2020 outlined earlier, high performance is lock-stepped with collaboration. High tech businesses link to Universities to commercialise latest research advances. Knowledge that is shared grows new capabilities in the creative industries, which in turn, attracts more investment in a virtuous circle. Even low-tech businesses create new business offerings or work more effectively by listening and responding to their customers and suppliers. Moreover, in our isolationist scenario of 2020, the businesses that succeed are those with robust personal, business and cultural relationships that allow them to fly in the face of trade barriers, investment controls and nationalist and protectionist policies of all sorts. Industry clustering and collaboration has potential to foster strong regional economic development. But, it is not enough just to recognise the natural connections in a geographic area between economic actors. These interactions must be harnessed to create distinctive capabilities that come to characterise the region and drive its economic prosperity. Deliberate and disciplined efforts are required to encourage the collaboration that puts a region's enterprises in touch with the know-how, resources, technologies, skills and motivation that pushes them along an outward-looking, high growth path. The performance and productivity of such firms then serves to attract other investors, suppliers and competitor firms into a critical mass of business capability and community connections that becomes self-reinforcing. The end result is a viable industry cluster (or more likely, multiple clusters), a regional hub with proven capacity for stronger participation in global supply chains. Let me conclude with some thoughts from the latest book of Harvard Business School Professor Rosabeth Moss Kanter, called Evolve! Succeeding in the Digital Culture of Tomorrow. A key message is that collaboration is becoming the competitive weapon of choice for those wanting to master the revolutionary transformations being brought about by digital technology and e-business. Rosabeth Moss Kanter and other management writers believe that the only means of competing will be through messy economic webs of partners and stakeholders that form and disband as needed to capitalise on emerging business opportunities. Competitors, suppliers and customers become blurred. Companies are more dependent on others to achieve their strategies. Control is sacrificed to the ability to influence. Beware, if you believe that outsourcing relieves you of responsibilities; it just changes them to different forms of relationship and customer management. The challenge becomes to nurture your economic web where all the parties can thrive interdependently. Rosabeth Moss Kanter introduces a space-faring analogy and the concept of "collabronauts", a new corporate player charged with searching for collaborative advantage and alliances. "(They) are good at making connections, both human and intellectual. They are constantly on the look-out for new ways to benefit from combining forces with partners. They venture into unfamiliar territory, make deals, and return with knowledge that transforms their home world. They bring organisations closer together, introduce people and build relationships among groups that can initially seem like aliens to one another […] They manage rumours, mount peace-keeping missions and solve problems [….] They convince their colleagues to forget old rules and try something new, something that a comes with having partners." (Kanter: 137) Kanter draws out five lessons from the most effective ''collabronauts'' she has studied in enterprises like Amazon.com, Sun Microsystems, CISCO and Hewlett Packard. They are: 1. Focus on the future and be open to discovery of new and unimagined opportunities from collaboration. 2. Devote resources and pay attention, as nurturing networks is no idle task or after-thought. 3. Get embedded in the partner's business, both as a supplier and as a customer. 4. Exercise diplomacy, work at seamless connections between partners so that customers get what they want, however the relationships are configured. Collaboration is an adult relationship, as your partners may also be in partnership with your competitors. The rules of engagement must be clear – neither isolation nor outright war. 5. Master internal change, so partnerships are real and vital at all levels in the organisation and internal barriers to collaboration are dismantled. Just as we have witnessed the paradox of collaboration and competition co-existing, it may be that excellent business performance in today's volatile, online, connected world will be driven by proficiency in community and relationship-building skills. Rosabeth Moss Kanter, in fact, sums this up in the intriguing idea that tomorrow's successful corporations will not be hierarchical ordered bureaucracies, but will resemble open, inclusive, slightly chaotic communities of purpose, with permeable boundaries, shared knowledge, good grapevines and bonds based on mutual contributions and responsibilities. Now, there is a stretch target for Australian Business Limited's Sydney North Regional Council as it creates its own future for 2020.

2007-10-09T12:06:18+08:00

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Competition & Collaboration-The Paradox

2002-11-26T00:00:00+08:00

At a presentation to Australian Business Limited's Sydney North Regional Council Narelle Kennedy explores some "alternative futures" for the North Sydney region to the year 2020. Collaboration, know-how, resources, technologies, skills and motivation--the creation of distinctive capabilities--will be essential for an outward-looking, high growth path into the future.

2007-10-16T11:49:51+08:00

Contrary to popular belief, manufacturing in Australia is not in decline. In fact, there is an unrecognised dynamism evident in the way both manufacturing and service firms are responding to the competitive challenges of tough and crowded markets by linking and selling packages of products and services in innovative ways. This blurring and bundling of products and services is re-shaping not only manufacturing industry, but the pattern of competitive business activity in Australia. It leads me to the title of my presentation today, namely ''Not lean but expansive''. The competitive strategies evident in Australian manufacturing are not based on manufacturing becoming smaller and thinner, but wider and more connected. This news comes from a study conducted by the Australian Expert Group in Industry Studies (AEGIS) at the University of Western Sydney under the leadership of Professor Jane Marceau. The study, funded over two years by the Australian Research Council and with the Australian Business Foundation as industry partner, is published in a report called Selling Solutions: Emerging Patterns of Product-Service Linkage in the Australian Economy. Professor Marceau and her team delved into what was happening in Australian firms through surveying and interviewing over 500 manufacturing and other companies. The study sought to get a handle on a major international debate about whether manufacturing matters in modern economies. It concluded that current perceptions of the decreased importance of Australian manufacturing and the arrival of the 'service economy' are too simplistic. Let me share with you the headline of findings from this research, which paints a picture of the rich dynamic between manufacturing and services in Australia and the new capabilities emerging: <ul><li>Australian firms are successfully competing by creating fresh customised business offerings by linking products and services together in diverse ways to meet customer needs.</li></ul> Product-service packages were found to be widespread and diverse. Nearly ¾ of the manufacturing firms surveyed as part of the study reported that they incorporated and sold services in their product offerings to customers. Typically these included engineering, prototyping, design and testing services during the production process, and services like maintenance, training and information/help desks at or close to point of sale. This was the case across the board – from metal manufacturers to electronics firms to pharmaceutical companies. Service firms were also adding value to physical products acquired from manufacturers by bundling them with a vast array of services. Typical cases include computer and telecommunications companies selling total solutions of hardware, customised software, finance, technical support and upgrades. Another example is that of the hospital surgical supplies provider now sourcing a variety of products and linking them into packages which have just the right number of sutures, instruments and so on for a given surgical procedure. Large scale, complex and unique construction or infrastructure projects (like building, owning and operating an airport or a sports stadium) provide yet another example of the mixing of products and services to deliver an entire, highly customised, once-off or small batch project. The AEGIS team found several key factors shaping these product-service packages, including: <ul><li>the increasing power of the client and demands for customisation; </li><li>the shift towards outsourcing; </li><li>new products, especially radical or risky ones, generating customer demands for information, training, help desks and similar services; </li><li>efforts to capture distant markets through collaborations with local servicing companies; and </li><li>compliance with regulatory requirements stimulating new services in areas like design, technical and quality assurance, training and environmental impact assessments. </li><li>this emerging pattern of product-service linkage is a sign of Australian firms getting smarter and transforming themselves to provide solutions to customers, not just products or services.</li></ul> Firms are blending and bundling products and services to: <ul><li>retain their customers; </li><li>add value, while reducing costs and risks; and </li><li>distinguish themselves by expanding and customising their offerings and looking for niches which give them long-term advantage.</li></ul> It is a smart move to add services to products because it is less risky to develop new services than new products. Services have ever-expanding boundaries and are not constrained by what the product can be first seen to do. Provision of services means that firms to not have to retool or invest in expensive and untried technologies. It is in effect a risk management strategy. It is also a competitive response so that firms can succeed in an increasingly volatile and globalised business environment of cheaper products, shorter product cycles, faster business limitations and saturated markets. An excellent case example illustrating the findings of Professor Marceau's study was presented at a recent business briefing by Chris Bayliss, the Managing Director of Brevini Australia. Brevini Australia is a modern high performing company that both sells and services planetary gearboxes to customers mostly in the mining, agriculture and construction industries in Australia and offshore. Brevini has succeeded in retaining customers and growing revenues by up to 60% in the last two years. Chris Bayliss tells the story of Brevini taking a hard look at how it could ensure its survival and growth in a climate of intense competition, of customers with little loyalty buying on price and the company's profitability becoming increasingly marginal. Bevini changed their approach, transforming themselves from a manufacturer of a single product to a unique and customised total package service provider. They first added value to their gear boxes with new features and capabilities. They then engaged further with their customers in understanding the end uses of the gearbox and became involved in problem-solving and design. They then added services to the package, including maintenance and upgrades. Brevini's journey proved successful, though not easy. It required a cultural shift in management, sales team changes, major efforts to win customer confidence, a commitment to forming alliances and reorganisation of the capabilities of the business so they could consistently offer a high quality total package of solutions to customers. Competing by linking products and services drives Australian firms to be more innovative and knowledge-intensive. Devising new product-service packages stretches the technical, managerial and marketing capabilities of firms, resulting in distinctive know-how and intelligence which in turn, drives their innovation and competitiveness. Innovation through product-service packaging has far reaching effects on business competitiveness as the firms involved tend to: <ul><li>collaborate with others, including customers, at home and abroad and so, increase their level of knowledge or technical proficiency; </li><li>retain customers and thus spend less energy on recruiting new ones; </li><li>generate new skills inside their enterprise, notably through different mixes of technical and market-related skills; and </li><li>be flexible in reorganising their operations to suit and satisfy customer needs.</li></ul> Such innovation, because it does not always require R&D investment, often goes unrecognised in Australia. Manufacturing remains central to much productive activity and is not in decline, just changing configuration to increase the levels and variety of services. This study holds a warning against making public policy or business strategy decisions based on a simplistic view of manufacturing in decline and services on the rise. The lessons for business from this, irrespective of their sector of the economy, are: <ul><li>Collaborate with other firms and organisations, like research and education bodies. </li><li>Increase the number and broaden the range of services you offer. </li><li>Stay close to customers. </li><li>Re-think the internal organisation of your firm's activities. </li><li>Invest in new skills. The ''Selling Solutions'' study contributes to the lean manufacturing debate by making the point that there is more business success to be had from adding value than from cutting back. It's hard to imagine an enterprise downsizing its way to greatness! </li></ul>

2007-10-16T16:48:04+08:00

false

Not lean but expansive; new competitive manufacturing strategies

2002-10-16T11:30:00+08:00

Narelle Kennedy--participating in the 2nd Annual Smartlink Forum & Workshop--observes the blurring of the boundaries between manufacturing firms and service providers in a re-shaping of the pattern of competitive business activity in Australia.

2007-10-16T16:48:04+08:00

The annual release of the State of the Regions Report by National Economics and the Australian Local Government Association always makes good reading. The recently released 2002 Report is no exception, prompting headlines like: New Creative Elites Prefer Big City Vibe; Poorest Regions Slipping Behind; and Creative, Gay & Bohemian, as the descriptor for those cities and regions winning in the new economy. The report argues that regions with the highest concentrations of creative energies and talented people also have the greatest levels of innovative and high tech industries and consequently, show superior economic growth and an ability to compete in the global economy. Global Sydney and inner Melbourne perform well on these scales, while much of suburban and rural Australia runs a poor second. At the heart of National Economics' analysis is the proposition that: (i) a region's endowment of skilled, creative, well-educated human capital drives its economic prospects; and (ii) this new mobile class of people are attracted to places that are open, tolerant, diverse and vibrant. While there is much debate about how far a region's economic development is determined by its score on a creativity/knowledge worker index, there is widespread recognition that clusters of world class knowledge, technology, relationships and capability foster a region's competitiveness and bring considerable social and economic benefits. The value of industry clustering for regional, indeed for national, economic development was on display in Australia recently at the 5th Global Conference of the Barcelona-based Competitiveness Institute. With around 200 delegates from as far afield as Thailand, Slovenia, Jordan, North America, New Zealand and Scotland, the Competitiveness Institute probed different models of industry clustering, how they worked and their track record in boosting innovation, trade and investment in both developed and developing countries. While not a magic solution to regional economic development, industry clustering of firms and supporting organisations like universities, trade associations, business service providers and development boards, was seen as a potent tool for growing new business opportunities and industries, revitalising declining regions and fostering large scale competitiveness. The work of Harvard Professor Michael Porter – one of the founding participants of the Competitiveness Institute and a presenter at the Global Conference – remains highly influential in the debate about clusters and their contribution to the competitiveness of firms, nations and regions. Despite diverse definitions and fluid boundaries, industry clustering, to quote Porter, revolves around '' the enduring competitive advantages.....arising from concentrations of highly specialised skills and knowledge, institutions, rivalry, related businesses, and sophisticated customers''. (M Porter, 1998, On Competition, Harvard Business School Press). In our efforts to foster regional economic development, it is not enough just to recognise the natural connections in a geographic area between economic actors. These interactions must be harnessed to create distinctive capabilities that come to characterise the region and drive its economic prosperity. Deliberate and disciplined efforts are required to encourage the collaboration that puts a region's enterprises in touch with the know-how, resources, technologies, skills and motivation that pushes them along an outward-looking, high growth path. The performance and productivity of such firms then serves to attract other investors, suppliers and competitor firms into a critical mass of business capability and community connections that becomes self-reinforcing. The end result is a viable industry cluster (or more likely, multiple clusters), a regional hub with proven capacity for stronger participation in global supply chains. The Australian wine industry is a much quoted example and one that is a significant contributor to the economic development of several Australian regions. There are no shortages of other Australian examples – the food industry in Adelaide, environmental management and eco-tourism in North Queensland, an information technology cluster in Western Sydney, mining and engineering in the Hunter region of NSW and around Gladstone in Queensland, to name a few. While still a work in progress, there is mounting testimony that industry clusters are effective vehicles for regional and industry development. Industry clusters around the world are more often defined by their diversity and versatility, than by their similarity. This may be a comfort to those regions that don't see their economic and social future being determined by the location preferences of the creative elites.

2007-10-16T11:41:04+08:00

false

Regional Economic Development--Clusters & Competitiveness

2002-10-16T00:00:00+08:00

The recently released State of the Regions Report by National Economics and the Australian Local Government Association suggests a number of factors critical to the success of cities and regions in the new economy. Narelle Kennedy reflects on the findings of this report and the critical role to be played by "clusters of world class knowledge, technology, relationships and capability" in the competitiveness of cities and regions in this environment.

2007-10-26T11:47:20+08:00

It's no secret that the competitiveness of business is being transformed by globalisation. Globalisation has meant greater mobility of capital, easier and faster access to product and market trends and information and increased transparency of the latest technologies and product and service developments anywhere around the world. Traditional resources that have been critical to competitiveness in the past – capital, raw materials, machinery, local markets, relatively low cost labour – are now less important. While, other resources and capabilities have become absolutely central to business competitiveness – like knowledge, the capacity to innovate and problem-solve, running nimble and flexible operations and being first to market. In an age of globalisation, the relative value of knowledge as a strategic resource has increased. Knowledge lies at the intersection of many of the forces that characterise the new business environment. It contributes decisively to competitive advantage, especially when taking on global competitors. It can help enterprises respond to many of the challenges of making organisations leaner, flatter and more flexible. It fosters new strategic alliances and improves their likelihood of success. It can enable organisations to get the most out of high talent workforces. And, it capitalises on the effective and creative use of advances in modern information and communication technologies. The logical conclusion of this analysis is that enterprises that manage organisational and individual knowledge well will deal best with the challenges of the new business environment. At least, this is the thesis being explored by Dr Richard Hall of the University of Sydney's Australian Centre for Industrial Relations Research & Training in a research study commissioned by the Australian Business Foundation. This study asks the questions: <ul><li>How do organisations use knowledge to gain competitive advantage? </li><li>How well equipped are Australian organisations? </li><li>What are the lessons for small and medium sized enterprises and the implications for business leadership? </li><li>Let me give you a preview of what's emerging from this study into business competitiveness and the management of knowledge in a sample of key Australian firms: </li><li>There is a tight relationship between business objectives and knowledge management strategies. </li><li>Future competitiveness cannot be assured through improved technology, equipment or infrastructure, but only through better deployment of people and processes. </li><li>Knowledge management is therefore not about IT systems, but about building stronger relationships and knowledge flows among key staff and between key staff and suppliers, customers, and other clients.</li></ul> Knowledge management contributes to competitiveness in the following key ways: <ul><li>providing a better understanding of the business environment and the needs, preferences and business processes of customers and end users; </li><li>supporting stronger strategic relationships with suppliers; </li><li>helping companies to enhance their position as leaders in their field, as innovators attuned to emerging trends and new developments; </li><li>achieving continuous improvements in costs, quality and timeliness of products and services; and </li><li>retaining key employees and their knowledge within the business.</li></ul> ACIRRT's findings lead us to some fresh insights to substantiate the cliché that people are the most important asset of a business. Effective knowledge management is predicated on a workplace culture that fosters knowledge-sharing and problem-solving, a high degree of trust and mutual support, a preparedness to seek out and proffer solutions and suggestions and a genuine commitment to both individual and organisational learning. The distinct impression emerging from this study is that knowledge management is no mere management fad or specialist program. High performing businesses view it as a tool of trade. Knowledge and how it is used is "mission critical" in the constant search for new ways to create value and to move enterprises higher up the global "food chain".

2007-10-16T11:42:07+08:00

false

Knowledge: The Antidote to Globalisation

2002-10-16T00:00:00+08:00

Narelle Kennedy reflects on the importance of knowledge as a strategic resource for improved business performance and competitiveness. This speech draws on the preliminary findings from a study commissioned by the Australian Business Foundation and being undertaken by Dr Richard Hall of the Australian Centre for Industrial Relations Research and Training (ACIRRT).

2007-10-26T11:47:50+08:00

Contrary to popular belief, manufacturing in Australia is not in decline. In fact, there is an unrecognised dynamism evident in the way both manufacturing and service firms are responding to the competitive challenges of tough and crowded markets by linking and selling packages of products and services in innovative ways. This blurring and bundling of products and services is re-shaping not only manufacturing industry, but the pattern of competitive business activity in Australia. It leads me to the title of my presentation today, namely ''Not lean but expansive''. The competitive strategies evident in Australian manufacturing are not based on manufacturing becoming smaller and thinner, but wider and more connected. This news comes from a study conducted by the Australian Expert Group in Industry Studies (AEGIS) at the University of Western Sydney under the leadership of Professor Jane Marceau. The study, funded over two years by the Australian Research Council and with the Australian Business Foundation as industry partner, is published in a report called Selling Solutions: Emerging Patterns of Product-Service Linkage in the Australian Economy. Professor Marceau and her team delved into what was happening in Australian firms through surveying and interviewing over 500 manufacturing and other companies. The study sought to get a handle on a major international debate about whether manufacturing matters in modern economies. It concluded that current perceptions of the decreased importance of Australian manufacturing and the arrival of the 'service economy' are too simplistic. Let me share with you the headline of findings from this research, which paints a picture of the rich dynamic between manufacturing and services in Australia and the new capabilities emerging: <ul><li>Australian firms are successfully competing by creating fresh customised business offerings by linking products and services together in diverse ways to meet customer needs.</li></ul> Product-service packages were found to be widespread and diverse. Nearly ¾ of the manufacturing firms surveyed as part of the study reported that they incorporated and sold services in their product offerings to customers. Typically these included engineering, prototyping, design and testing services during the production process, and services like maintenance, training and information/help desks at or close to point of sale. This was the case across the board – from metal manufacturers to electronics firms to pharmaceutical companies. Service firms were also adding value to physical products acquired from manufacturers by bundling them with a vast array of services. Typical cases include computer and telecommunications companies selling total solutions of hardware, customised software, finance, technical support and upgrades. Another example is that of the hospital surgical supplies provider now sourcing a variety of products and linking them into packages which have just the right number of sutures, instruments and so on for a given surgical procedure. Large scale, complex and unique construction or infrastructure projects (like building, owning and operating an airport or a sports stadium) provide yet another example of the mixing of products and services to deliver an entire, highly customised, once-off or small batch project. The AEGIS team found several key factors shaping these product-service packages, including: <ul><li>the increasing power of the client and demands for customisation; </li><li>the shift towards outsourcing; </li><li>new products, especially radical or risky ones, generating customer demands for information, training, help desks and similar services; </li><li>efforts to capture distant markets through collaborations with local servicing companies; and </li><li>compliance with regulatory requirements stimulating new services in areas like design, technical and quality assurance, training and environmental impact assessments. </li><li>this emerging pattern of product-service linkage is a sign of Australian firms getting smarter and transforming themselves to provide solutions to customers, not just products or services.</li></ul> Firms are blending and bundling products and services to: <ul><li>retain their customers; </li><li>add value, while reducing costs and risks; and </li><li>distinguish themselves by expanding and customising their offerings and looking for niches which give them long-term advantage.</li></ul> It is a smart move to add services to products because it is less risky to develop new services than new products. Services have ever-expanding boundaries and are not constrained by what the product can be first seen to do. Provision of services means that firms to not have to retool or invest in expensive and untried technologies. It is in effect a risk management strategy. It is also a competitive response so that firms can succeed in an increasingly volatile and globalised business environment of cheaper products, shorter product cycles, faster business limitations and saturated markets. An excellent case example illustrating the findings of Professor Marceau's study was presented at a recent business briefing by Chris Bayliss, the Managing Director of Brevini Australia. Brevini Australia is a modern high performing company that both sells and services planetary gearboxes to customers mostly in the mining, agriculture and construction industries in Australia and offshore. Brevini has succeeded in retaining customers and growing revenues by up to 60% in the last two years. Chris Bayliss tells the story of Brevini taking a hard look at how it could ensure its survival and growth in a climate of intense competition, of customers with little loyalty buying on price and the company's profitability becoming increasingly marginal. Bevini changed their approach, transforming themselves from a manufacturer of a single product to a unique and customised total package service provider. They first added value to their gear boxes with new features and capabilities. They then engaged further with their customers in understanding the end uses of the gearbox and became involved in problem-solving and design. They then added services to the package, including maintenance and upgrades. Brevini's journey proved successful, though not easy. It required a cultural shift in management, sales team changes, major efforts to win customer confidence, a commitment to forming alliances and reorganisation of the capabilities of the business so they could consistently offer a high quality total package of solutions to customers. Competing by linking products and services drives Australian firms to be more innovative and knowledge-intensive. Devising new product-service packages stretches the technical, managerial and marketing capabilities of firms, resulting in distinctive know-how and intelligence which in turn, drives their innovation and competitiveness. Innovation through product-service packaging has far reaching effects on business competitiveness as the firms involved tend to: <ul><li>collaborate with others, including customers, at home and abroad and so, increase their level of knowledge or technical proficiency; </li><li>retain customers and thus spend less energy on recruiting new ones; </li><li>generate new skills inside their enterprise, notably through different mixes of technical and market-related skills; and </li><li>be flexible in reorganising their operations to suit and satisfy customer needs.</li></ul> Such innovation, because it does not always require R&D investment, often goes unrecognised in Australia. Manufacturing remains central to much productive activity and is not in decline, just changing configuration to increase the levels and variety of services. This study holds a warning against making public policy or business strategy decisions based on a simplistic view of manufacturing in decline and services on the rise. The lessons for business from this, irrespective of their sector of the economy, are: <ul><li>Collaborate with other firms and organisations, like research and education bodies. </li><li>Increase the number and broaden the range of services you offer. </li><li>Stay close to customers. </li><li>Re-think the internal organisation of your firm's activities. </li><li>Invest in new skills.</li></ul> The ''Selling Solutions'' study contributes to the lean manufacturing debate by making the point that there is more business success to be had from adding value than from cutting back. It's hard to imagine an enterprise downsizing its way to greatness!

2007-10-16T12:57:31+08:00

false

Not lean but expansive; new competitive manufacturing strategies

2002-10-16T00:00:00+08:00

2007-10-26T12:24:22+08:00

2007-10-16T17:13:31+08:00

false

Regional Economic Development--Clusters & Competitiveness

2002-10-16T00:00:00+08:00

2008-07-11T13:19:44+08:00

In the tradition of the Hills Hoist and the wine cask, Australia has scored another world's first according to UK-based company director, consultant and author of "The Creative Economy" John Howkins. Addressing an Australian Business Foundation business briefing as part of National Science Week, John Howkins paid tribute, with some amusement, to Australia as the originator of the first and perhaps only Government report to contain a recommendation exhorting the nation to use its imagination and wit. He was referring to the 1992 "Creative Nation" arts policy by the then Keating Government. But a central point in John Howkins' work is that artists don't have a monopoly on creativity. It can equally be the province of scientists, of business people, and even, of economists. Howkins presents a simple definition of creativity – generating something new. But he specifies the attributes of a creative idea that works, as being personal (ie, it's yours, owned by the person it springs from); original (ie, no one else has had it); meaningful (ie, you can communicate it to others) and practical (ie, it is useful). How to make money from ideas brings the economy into the picture. This is what interests the Australian Business Foundation:<ul><li>how creativity can be a key driver of commercial advantage and sustained business performance;</li><li>how firms and industries can compete through creativity, leveraging ideas and innovation to generate real growth.</li></ul>There is a wealth of scholarship on just how decisive intangible assets like know-how, skills, design and intelligence are to successful business performance in today's volatile, knowledge-based economy. The transition from mind to market, from the creative idea to the saleable product and knowing the difference is a critical factor in the relationship between business success and creativity. John Howkins emphasises that managing creativity is a disciplined process. In particular, he urges us to take a closer look at intellectual capital, patents, reputation and brands. Intellectual property is not an arcane technical matter to be left to the lawyers, but the active ingredient for business competitiveness for any enterprise that deals in ideas and inventions. Individuals and businesses need to be able to protect their own ideas and to value, literally to take account of, what their enterprise knows. They have to recognise and then unleash their intellectual capital, which is often hidden or obstructed by hierarchical structures or operational rules. At the core is a company identifiying its own distinctive know-how and generating fresh capabilities from ideas. Howkins in The Creative Economy reminds us that "it is likely that the world's intellectual capital exceeds the value of its financial and physical capital. In other words, the intangible value of what we have created, may exceed the value of the physical material that surrounds us". To give an example – health care depends on the staff's total knowledge about medical and nursing matters; not just accredited professional skills, but everything they know about doing their job effectively from comforting visiting relatives to the logistics of management of a ward. Another example of intellectual benefits exceeding financial benefit is the theatre producer who spends $50,000 on producing a play and sells $50,000 worth of tickets. The accounts will show nil assets and nil liabilities, but the producer has accumulated valuable know-how in the form of skills, competencies and contacts to improve his likelihood of future success. Identifying, tracking and managing intellectual capital is a key message in achieving business success through creativity. From his 20 years at the forefront of the multimedia, entertainment, communications industries, John Howkins' conclusion about the convergence of the creative and conventional economies is summed up in one key quote: "People with ideas – people who own ideas – have become more powerful than people who work machines and in many cases, more powerful than people who own machines".

2007-10-16T13:00:55+08:00

false

The Creative Economy

2002-09-16T00:00:00+08:00

Narelle Kennedy reflects on key messages from John Howkins, author of "The Creative Economy" who spoke at a business briefing hosted by the Australian Business Foundation as part of National Science Week.

2007-11-12T16:58:12+09:00

Anyone interested in the future of Australia's manufacturing industry should take heed of the latest research from the independent business think-tank, the Australian Business Foundation, that contrary to popular belief, manufacturing is not in decline. In fact, there is an unrecognised dynamism evident in the way both manufacturing and service firms are responding to the competitive challenges of tough and crowded markets by linking and selling packages of products and services in innovative ways. This blurring and bundling of products and services is re-shaping not only manufacturing industry, but the pattern of competitive business activity in Australia. This news comes from a study conducted by the Australian Expert Group in Industry Studies (AEGIS) at the University of Western Sydney under the leadership of Professor Jane Marceau. The study, funded over two years by the Australian Research Council and with the Australian Business Foundation as industry partner, is published in a report called Selling Solutions: Emerging Patterns of Product-Service Linkage in the Australian Economy. The study sought to get a handle on a major international debate about whether manufacturing matters in modern economies. On one hand, we see: <ul><li>the share of GDP contributed by manufacturing declining in all advanced OECD countries; </li><li>the share of employment in manufacturing dropping; and </li><li>the advent of new service industries taking manufacturing's place in the economy</li></ul> This has led to the commonly accepted perception that all advanced nations are characterised by their post-industrial or service economies. On the other hand, we also see that:<ul><li>innovation in manufacturing is higher than in any other sector; </li><li>manufacturing is creating the most stable and highly skilled jobs; and </li><li>the recent decline in manufacturing employment and contribution to GDP has levelled out.</li></ul> Professor Marceau and her team delved into what was happening in Australian firms through a survey of 479 manufacturing companies in NSW and 63 detailed interviews with companies and industry associations across sectors. The headline findings from their research were as follows: <ul><li>Australian firms are successfully competing by creating fresh customised business offerings by linking products and services together in diverse ways to meet customer needs.</li></ul>Product-service packages were found to be widespread and diverse. Nearly ¾ of the manufacturing firms surveyed as part of the study reported that they incorporated and sold services in their product offerings to customers. Typically these included engineering, prototyping, design and testing services during the production process, and services like maintenance, training and information/help desks at or close to point of sale. This was the case across the board – from metal manufacturers to electronics firms to pharmaceutical companies. Service firms were also adding value to physical products acquired from manufacturers by bundling them with a vast array of services. Typical cases include computer and telecommunications companies selling total solutions of hardware, customised software, finance, technical support and upgrades. Another example is that of the hospital surgical supplies provider now sourcing a variety of products and linking them into packages which have just the right number of sutures, instruments and so on for a given surgical procedure. Large scale, complex and unique construction or infrastructure projects (like building, owning and operating an airport or a sports stadium) provide yet another example of the mixing of products and services to deliver an entire, highly customised, once-off or small batch project. The AEGIS team found several key factors shaping these product-service packages, including:<ul><li>the increasing power of the client and demands for customisation; </li><li>the shift towards outsourcing; </li><li>new products, especially radical or risky ones, generating customer demands for information, training, help desks and similar services; </li><li>efforts to capture distant markets through collaborations with local servicing companies; and </li><li>compliance with regulatory requirements stimulating new services in areas like design, technical and quality assurance, training and environmental impact assessments.</li></ul> This emerging pattern of product-service linkage is a sign of Australian firms getting smarter and transforming themselves to provide solutions to customers, not just products or services. Firms are blending and bundling products and services to: <ul><li>retain their customers; </li><li>add value, while reducing costs and risks; and </li><li>distinguish themselves by expanding and customising their offerings and looking for niches which give them long-term advantage.</li></ul> Such behaviour is evidence of Australian firms transforming themselves from just a manufacturer or service provider to a total package problem-solver for their customers. It is a smart move to add services to products because it is less risky to develop new services than new products. Services have ever-expanding boundaries and are not constrained by what the product can be first seen to do. Provision of services means that firms do not have to retool or invest in expensive and untried technologies. The move made by Australian firms to "selling solutions" is a competitive response so that they can succeed in an increasingly volatile and globalised business environment of cheaper products, shorter product cycles, faster business imitations and saturated markets. An excellent case example illustrating the findings of Professor Marceau's study was presented at a recent business briefing by Chris Bayliss, the Managing Director of Brevini Australia. Brevini Australia is a modern high performing company that both sells and services planetary gearboxes to customers mostly in the mining, agriculture and construction industries in Australia and offshore. Brevini has succeeded in retaining customers and growing revenues by up to 60% in the last two years. Chris Bayliss tells the story of Brevini taking a hard look at how it could ensure its survival and growth in a climate of intense competition, of customers with little loyalty buying on price and the company's profitability becoming increasingly marginal. Brevini changed their approach, transforming themselves from a manufacturer of a single product to a unique and customised total package service provider. They first added value to their gear boxes with new features and capabilities. They then engaged further with their customers in understanding the end uses of the gearbox and became involved in problem-solving and design. They then added services to the package, including maintenance and upgrades. Brevini's journey proved successful, though not easy. It required a cultural shift in management, sales team changes, major efforts to win customer confidence, a commitment to forming alliances and reorganisation of the capabilities of the business so they could consistently offer a high quality total package of solutions to customers. Competing by linking products and services drives Australian firms to be more innovative and knowledge-intensive. Devising new product-service packages stretches the technical, managerial and marketing capabilities of firms, resulting in distinctive know-how and intelligence which in turn, drives their innovation and competitiveness. Innovation through product-service packaging has far reaching effects on business competitiveness as the firms involved tend to: <ul><li>collaborate with others, including customers, at home and abroad and so, increase their level of knowledge or technical proficiency; </li><li>retain customers and thus spend less energy on recruiting new ones; </li><li>generate new skills inside their enterprise, notably through different mixes of technical and market-related skills; and </li><li>be flexible in reorganising their operations to suit and satisfy customer needs.</li></ul> Such innovation, because it does not always require R&D investment, often goes unrecognised in Australia. Manufacturing remains central to much productive activity and is not in decline, just changing configuration to increase the levels and variety of services. This study holds a warning against making public policy (and business strategy) decisions based on a simplistic view of manufacturing in decline and services on the rise. It allows us to better understand the rich dynamic between manufacturing and services in Australia and the new capabilities emerging. To foster such capabilities, the messages for all Australian businesses, irrespective of their sector of the economy, are: <ul><li>Collaborate with other firms and organisations, like research and education bodies. </li><li>Increase the number and broaden the range of services you offer. </li><li>Stay close to customers. </li><li>Re-think the internal organisation of your firm's activities. </li><li>Invest in new skills.</li></ul> The pattern of providing new business offerings and customer solutions through product/service linkages is an indicator of innovation and new competitive capabilities at work in Australian industries and enterprises. Therefore, the characteristics associated with product-service linkages can serve as a checklist for public policy making decisions as to the health, untapped opportunities or appropriate focus for future industry support measures for any specific industries or firms requiring the attention of State or Federal Governments. The Selling Solutions study provides a timely and potent new tool for discerning and deft industry policy making in Australia. The story told in the Selling Solutions study should be music to the ears of those committed to advancing Australian manufacturing industry. It makes a refreshing change from fruitless debates about whether Australia is an old or new economy.

2007-10-16T13:02:42+08:00

false

Manufacturing New Competitive Strategies

2002-08-22T00:00:00+08:00

Anyone interested in the future of Australia's manufacturing industry should take heed of the latest research from the Australian Business Foundation, that contrary to popular belief, manufacturing is not in decline. Presentation by Narelle Kennedy to the Department of Industry, Tourism and Resources, Canberra, 22 August 2002.

2007-11-06T15:56:47+09:00

The Australian Business Foundation recently celebrated its fifth birthday as an independent, business-sponsored, not for profit research think-tank. The Australian Business Foundation was founded with a single mission – to conduct and disseminate groundbreaking research that advances knowledge and fosters new thinking and best practice on Australia's business competitiveness, prosperity and jobs. So, it is timely to take stock of what we've learnt from our body of research to date on innovation, emerging business models and new forms of competitiveness in a knowledge-based economy. AFR BOSS readers can examine the Foundation's research first hand by visiting our website at www.abfoundation.com.au, but let me share with you some of the key insights. If I had to crystallise a single piece of intelligence from the Australian Business Foundation's research, it is this: Fundamentally different competitive strategies, based on innovation and knowledge, are vital in the face of an increasingly volatile and globalised business environment. A seachange has taken place in the environment facing Australian enterprises, both big and small. It transcends meaningless distinctions between the so-called 'old' and 'new' economies. The new economy is exactly like the old economy – only faster, more interconnected and knowledge-driven. Business competitiveness is being profoundly affected by potent trends and forces for change like:<ul><li>globalisation in the form of free and fast flows of information, skills, ideas and capital worldwide that increase the ease and speed of business imitations;</li><li>the truly revolutionary way online technologies are transforming how business is being done and increasing the power of consumers in production decisions; and</li><li>the greater significance of intangible assets, like knowledge and relationships, to where money can be made in a business and value delivered to customers. </li></ul>In the face of such factors, innovation – for firms and for nations - is a survival strategy. Competing on the basis of innovation and know-how creates greater growth and prosperity, than a focus on efficiencies and low-cost production alone. Innovation goes beyond technological advances and inventing new products. It means doing business more intelligently and reinventing business offerings in response to market changes. Innovative enterprises are adept at creating or enhancing products and services in response to customer feedback, advances by competitors, emerging technologies or new consumer demands and preferences. Successful firms compete by recognising, creating and mobilising their own distinctive sources of know-how. Such assets are often intangible ones, like market intelligence, skills, tacit knowledge, experience, technical know-how, customer relationships and the learning gathered from past mistakes or failures. The challenge remains to harness and manage this knowledge so that it can be turned into new competitive capabilities for the enterprise. The most prized business skills in this new, volatile and customer-focused business environment are the twin arts of inspiring and retaining talented people and effective working teams, and collaborating strategically with changing webs of partners and stakeholders over successive business cycles and projects. There are lessons for Australia's public policy here too, if the key to Australia's future competitiveness lies with business enterprises being continually innovative, nimble, close to customers and globally-connected. Government policies, regulations and institutions have a critical role to play in creating the environment that allows businesses to take risks, access new opportunities and global markets and capitalise on technological advances, knowledge and innovation. In the past, industry policies have been about debates on protection and tariffs and interventionist approaches by government like tax breaks, decentralisation incentives and business bail-outs. But, modern industry policy is about economic growth, business competitiveness, productivity and distinctive competitive advantage. These are not achieved just by sound economic management and freeing up or reforming markets, but by deliberate actions to foster business innovation, market development and clusters of world class capability here in Australia. On many counts, Australia is punching above its weight, as shown by our recent sound economic performance and by examples of resurgent Australian enterprises competing through innovative business strategies both at home and abroad. But, there are warning signs too – in our relatively low levels of business R&D, too few exporters and seeming inability to reverse the research and technology brain drain or to commercialise new ideas. The Australian Business Foundation's future research efforts are being geared to combating the Aussie tendency towards 'She'll Be Right' complacency.

2007-10-16T11:44:24+08:00

false

Innovation - a retrospective

2002-08-16T00:00:00+08:00

Taking stock of what the Australian Business Foundation has learnt from its research to date.

2007-10-26T11:51:44+08:00

The Australian Business Foundation recently celebrated its fifth birthday as an independent, business-sponsored, not for profit research think-tank. The Australian Business Foundation was founded with a single mission – to conduct and disseminate groundbreaking research that advances knowledge and fosters new thinking and best practice on Australia's business competitiveness, prosperity and jobs. So, it is timely to take stock of what we've learnt from our body of research to date on innovation, emerging business models and new forms of competitiveness in a knowledge-based economy. AFR BOSS readers can examine the Foundation's research first hand by visiting our website at www.abfoundation.com.au, but let me share with you some of the key insights. If I had to crystallise a single piece of intelligence from the Australian Business Foundation's research, it is this: <ul><li>Fundamentally different competitive strategies, based on innovation and knowledge, are vital in the face of an increasingly volatile and globalised business environment.</li></ul>A seachange has taken place in the environment facing Australian enterprises, both big and small. It transcends meaningless distinctions between the so-called 'old' and 'new' economies. The new economy is exactly like the old economy – only faster, more interconnected and knowledge-driven. Business competitiveness is being profoundly affected by potent trends and forces for change like:<ul><li>globalisation in the form of free and fast flows of information, skills, ideas and capital worldwide that increase the ease and speed of business imitations;</li><li>the truly revolutionary way online technologies are transforming how business is being done and increasing the power of consumers in production decisions; and</li><li>the greater significance of intangible assets, like knowledge and relationships, to where money can be made in a business and value delivered to customers. </li></ul>In the face of such factors, innovation – for firms and for nations - is a survival strategy. Competing on the basis of innovation and know-how creates greater growth and prosperity, than a focus on efficiencies and low-cost production alone. Innovation goes beyond technological advances and inventing new products. It means doing business more intelligently and reinventing business offerings in response to market changes. Innovative enterprises are adept at creating or enhancing products and services in response to customer feedback, advances by competitors, emerging technologies or new consumer demands and preferences. Successful firms compete by recognising, creating and mobilising their own distinctive sources of know-how. Such assets are often intangible ones, like market intelligence, skills, tacit knowledge, experience, technical know-how, customer relationships and the learning gathered from past mistakes or failures. The challenge remains to harness and manage this knowledge so that it can be turned into new competitive capabilities for the enterprise. The most prized business skills in this new, volatile and customer-focused business environment are the twin arts of inspiring and retaining talented people and effective working teams, and collaborating strategically with changing webs of partners and stakeholders over successive business cycles and projects. There are lessons for Australia's public policy here too, if the key to Australia's future competitiveness lies with business enterprises being continually innovative, nimble, close to customers and globally-connected. Government policies, regulations and institutions have a critical role to play in creating the environment that allows businesses to take risks, access new opportunities and global markets and capitalise on technological advances, knowledge and innovation. In the past, industry policies have been about debates on protection and tariffs and interventionist approaches by government like tax breaks, decentralisation incentives and business bail-outs. But, modern industry policy is about economic growth, business competitiveness, productivity and distinctive competitive advantage. These are not achieved just by sound economic management and freeing up or reforming markets, but by deliberate actions to foster business innovation, market development and clusters of world class capability here in Australia. On many counts, Australia is punching above its weight, as shown by our recent sound economic performance and by examples of resurgent Australian enterprises competing through innovative business strategies both at home and abroad. But, there are warning signs too – in our relatively low levels of business R&D, too few exporters and seeming inability to reverse the research and technology brain drain or to commercialise new ideas. The Australian Business Foundation's future research efforts are being geared to combating the Aussie tendency towards 'She'll Be Right' complacency.

2007-10-16T13:04:26+08:00

false

Innovation - a retrospective

2002-08-16T00:00:00+08:00

Narelle Kennedy's August 2002 contribution to the AFR BOSS Web site. Narelle takes stock of what the Australian Business Foundation has learnt from its research to date; particularly with respect to Innovation.

2007-10-26T12:27:31+08:00

The Australian Business Foundation recently celebrated its fifth birthday as an independent, business-sponsored, not for profit research think-tank. The Australian Business Foundation was founded with a single mission – to conduct and disseminate groundbreaking research that advances knowledge and fosters new thinking and best practice on Australia's business competitiveness, prosperity and jobs. So, it is timely to take stock of what we've learnt from our body of research to date on innovation, emerging business models and new forms of competitiveness in a knowledge-based economy. AFR BOSS readers can examine the Foundation's research first hand by visiting our website at www.abfoundation.com.au, but let me share with you some of the key insights. If I had to crystallise a single piece of intelligence from the Australian Business Foundation's research, it is this: <ul><li> Fundamentally different competitive strategies, based on innovation and knowledge, are vital in the face of an increasingly volatile and globalised business environment. </li></ul>A seachange has taken place in the environment facing Australian enterprises, both big and small. It transcends meaningless distinctions between the so-called 'old' and 'new' economies. The new economy is exactly like the old economy – only faster, more interconnected and knowledge-driven. Business competitiveness is being profoundly affected by potent trends and forces for change like:<ul><li>globalisation in the form of free and fast flows of information, skills, ideas and capital worldwide that increase the ease and speed of business imitations;</li><li>the truly revolutionary way online technologies are transforming how business is being done and increasing the power of consumers in production decisions; and</li><li>the greater significance of intangible assets, like knowledge and relationships, to where money can be made in a business and value delivered to customers. </li></ul>In the face of such factors, innovation – for firms and for nations - is a survival strategy. Competing on the basis of innovation and know-how creates greater growth and prosperity, than a focus on efficiencies and low-cost production alone. Innovation goes beyond technological advances and inventing new products. It means doing business more intelligently and reinventing business offerings in response to market changes. Innovative enterprises are adept at creating or enhancing products and services in response to customer feedback, advances by competitors, emerging technologies or new consumer demands and preferences. Successful firms compete by recognising, creating and mobilising their own distinctive sources of know-how. Such assets are often intangible ones, like market intelligence, skills, tacit knowledge, experience, technical know-how, customer relationships and the learning gathered from past mistakes or failures. The challenge remains to harness and manage this knowledge so that it can be turned into new competitive capabilities for the enterprise. The most prized business skills in this new, volatile and customer-focused business environment are the twin arts of inspiring and retaining talented people and effective working teams, and collaborating strategically with changing webs of partners and stakeholders over successive business cycles and projects. There are lessons for Australia's public policy here too, if the key to Australia's future competitiveness lies with business enterprises being continually innovative, nimble, close to customers and globally-connected. Government policies, regulations and institutions have a critical role to play in creating the environment that allows businesses to take risks, access new opportunities and global markets and capitalise on technological advances, knowledge and innovation. In the past, industry policies have been about debates on protection and tariffs and interventionist approaches by government like tax breaks, decentralisation incentives and business bail-outs. But, modern industry policy is about economic growth, business competitiveness, productivity and distinctive competitive advantage. These are not achieved just by sound economic management and freeing up or reforming markets, but by deliberate actions to foster business innovation, market development and clusters of world class capability here in Australia. On many counts, Australia is punching above its weight, as shown by our recent sound economic performance and by examples of resurgent Australian enterprises competing through innovative business strategies both at home and abroad. But, there are warning signs too – in our relatively low levels of business R&D, too few exporters and seeming inability to reverse the research and technology brain drain or to commercialise new ideas. The Australian Business Foundation's future research efforts are being geared to combating the Aussie tendency towards 'She'll Be Right' complacency.

2007-10-16T16:55:01+08:00

false

Innovation -A Retrospective

2002-08-16T00:00:00+08:00

2007-10-26T14:21:07+08:00

Three disparate events have caused me to reflect on whether there is enough energy and 'high octane' thinking being devoted in Australia to where new business growth and jobs are going to come from in the future. The first was a refreshing report from the Textile, Clothing , Footwear & Leather Forum, a body of industry leaders who came together to rise above the undeniable challenges of their industry and chart a new course to capitalise on opportunities, skills and markets of the future. One particular aspect of their strategic plan made me sit up and take notice. I refer to what their report identifies as a myth, namely that local manufacturing is central to a vibrant industry. The report argues that globalisation and technology allows for quality manufacturing anywhere in the world, that a variety of different combinations of production processes are evident across the industry and so, manufacturing has become increasingly optional in the supply chain of some textile, clothing, footwear and leather sectors. Consequently, they conclude that local manufacturing is not a core requirement for Australian TCFL industry success, but that 'going global' and 'going niche' certainly is. The polar opposite of this thinking is at the heart of the second report that took my attention. It is a discussion paper from the office of ALP Senator for NSW, George Campbell, entitled "Why Manufacturing Matters". As part of the Federal Opposition's policy development deliberations, this paper has been released to prompt widespread discussion. It puts the case for constructing a high growth strategy for Australian manufacturing by R&D and export incentives for manufacturers, investment, commercialisation and venture capital programs, support for clusters and technology parks and strategic use of government purchasing policies and sectoral plans. The third event that prompted my reflection about Australia's future competitiveness was the announcement of a new privately funded research and development group, the Australian Innovation Association, chaired by former Coalition Government Minister, Jim Carlton. Motivated by concern about the lack of successful research and development in Australia, this new group aims to come up with pragmatic policy proposals to boost industry investment and activity in R&D. The Australian Innovation Association say they want to redress the situation where many great Australian ideas go unrecognised and inventions are not commercialised for the benefit of the economy. What these events have in common is their aspiration for generating a quantum leap in the capabilities and performance of Australia's business enterprises, industries and the economy as a whole. Similarly, all are motivated by a dissatisfaction with the status quo and while first to celebrate the not insignificant number of Australian success stories, they are not lulled into thinking that this represents a long-lasting shift in the pattern of Australia's trade, industry and employment structure. Finally, all are activists. They share an obvious conviction that those in Australian business and government can profoundly influence their own future. The precise prescriptions differ, but at their core is the imperative to reinvent Australia's place in traditional value-adding industries, where competitive advantage is created by the superiority of local know-how, market intelligence and external relationships. Australia deserves much more of its public debate and intellectual endeavour to be devoted to this form of aspiration politics.

2007-10-16T11:46:43+08:00

false

Aspiring to a new Australian competitiveness

2002-07-16T00:00:00+08:00

Narelle Kennedy reflects on whether there is enough thought going into where new business growth and jobs in Australia are going to come from in the future.

2007-10-26T11:52:22+08:00

We often hear claims that Australia is a branch plant economy. It is said that Australia is not really in control of its prosperity and competitiveness, but rather it is at the mercy of decisions taken in overseas corporate boardrooms. On the other hand, proponents of free trade and investment put the case that investment by foreign owned multinational corporations in Australia has been an unalloyed boon to our country, since our earliest days as a trading nation. A recent research project commissioned by the Australian Business Foundation aimed to throw some light on these debates. Under the title Friend or Foe: Leveraging Foreign Multinationals in the Australian Economy, Dr Lyndal Thorburn, Managing Director of Advance Consulting & Evaluation Pty Ltd, a technology and innovation management consultancy, with Dr John Langdale and Professor John Houghton, sought to go beyond the usual quantitative measures of direct investment and employment by multinationals and examine how multinationals are interacting with local firms and consequently, how best to foster those linkages which advance Australia's capabilities, knowledge and global reach. The Friend or Foe study provides information on the degree to which multinationals influence, either positively or negatively, the growth, capacity and skills of Australian firms. Well, are multinationals friends or foes? The authors conclude that multinationals operating in Australia give more than they take, but the relationship is fragile and tenuous. Consequently, local businesses and policy makers must get smarter to maximise the benefit of multinationals, particularly Australia's access to global knowledge and skills and stronger participation in the delivery of global products and services. The impacts of foreign-owned multinationals (MNC's) uncovered by Lyndal Thorburn and her colleagues can be summarised as follows: Capabilities and Critical Mass MNC's improve suppliers' product and service standards by being demanding customers. MNC's work with their local suppliers in researching and understanding the market and therefore enhance Australia's marketing system. Selling to MNC's improves the market standing of Australian firms. Strategic alliances, for some, give increased international exposure, access to projects and sales not usually available, and the development of concepts for new product development. On the negative side, however, multinationals do little R&D in Australia, with the majority focusing on product modification and with the intellectual property being registered offshore. Further, many MNC's are reducing their manufacturing capacity in Australia and few industry clusters that add to Australia's capability, are evident. Global Reach Australian suppliers selling to MNC's can access overseas markets by selling to other subsidiaries of the MNC or to unrelated firms introduced by their MNC customer. In some instances, Australia is a testing ground for new products or systems roll-out by the global multinational, thus providing Australian firms with a first-mover advantage when these products and systems are introduced around the world. On the downside, many MNC's have limited engagement in Australia, being just sales and marketing outlets and so are failing to provide Australian firms with a global gateway of any lasting significance. Knowledge and Skills Australian-based subsidiaries of MNC's which have a strong role in the multinational worldwide will bring greater benefits to Australia. For example, if the Australian MNC subsidiary is a global centre of excellence that develops new products and services for the global firm or is a key R&D or design hub, then it is more likely to contribute to the growth of local services, technology and know-how. Subsidiaries of foreign MNC's can use their links with parent and sibling firms to access global knowledge that would otherwise be inaccessible to Australian companies. There are opportunities for Australian staff of MNC's to gain international experience and training which benefits Australia's skills base. Improvements in product and service quality and exposure to new management skills and international best practice are found to occur in some cases. In short, the story of multinationals in Australia has both positives and negatives. They are not always friends, but it is not helpful to treat them as foes. The challenge in capitalising on multinationals as friends lies in encouraging these global giants to deepen their innovation, research and product development links here. This involves deliberate action on: Investment attraction – not all investment is equal and Australia should only pursue that which deepens our local level of expertise and anchors it here, and which in turn, acts as a magnet for further investment in a virtuous circle. Capitalise on multinationals as demanding customers and standards setters which "pull" Australian suppliers into innovative products and services and into world markets. Draw on multinationals for new skills and competencies, so that Australia is a partner in the inner circle of the global MNC for knowledge, technology, research, training and product and market development. If Australia is to avoid the tag of the 'branch plant economy' and to maximise the benefits of foreign investment, then it is clearly in our interests to get up close and personal with multinational corporations.

2007-10-16T17:18:17+08:00

false

Multinationals in Australia: Friend or Foe?

2002-05-16T12:00:00+08:00

Contribution by Narelle Kennedy to the AFR BOSS website, June 2002, on leveraging foreign multinationals in the Australian economy.

2007-10-16T17:18:17+08:00

2007-10-16T11:51:29+08:00

false

Multinationals in Australia: Friend or Foe?

2002-05-16T00:00:00+08:00

Contribution by Narelle Kennedy to the AFR BOSS website on leveraging foreign multinationals in the Australian economy

2007-10-26T11:52:54+08:00

The size of the challenge facing early stage Australian companies seeking to go global was graphically brought home to me in a recent presentation by Professor George Foster of Stanford University, which the Australian Business Foundation hosted with the Australian Stock Exchange. Professor Foster was presenting the findings of research commissioned by the Australian Stock Exchange delving into what drives company fortunes in the high tech sector. Professor Foster and his colleagues asked the question: is it 'country' or 'company' factors that are decisive in the comparative pricing of technology stocks? They come down firmly on the side of company-specific variables, such as profitability, leverage, firm size and revenue growth as the major factors driving stock valuations, rather than the geography of where companies are listed or doing most of their trading. The challenge for Australian firms comes because for most of these company-specific fundamentals, there is a premium on being a large-scale player. Unfortunately, Australia struggles with scale on a number of dimensions, as Professor Foster's study points out:<ul><li>In absolute dollar terms, the total Australian high tech market is small on the global stage. </li><li>The relative importance of the high tech sector on the Australian capital market is also sizeably below that of the US market. </li><li>Early stage Australian firms have few Australian-based partners who themselves have a global presence. There are few players of global stature in general. </li><li>The Australian market is highly concentrated, dominated by a small number of companies who account for the lion's share of ASX high tech market capitalisation, very different from the US picture. </li></ul> Professor Foster examines five cases of high tech companies that have recently and rapidly become successful global players, including Australia's Resmed and eBay. Several key factors to aid firms in going global emerge from these case studies.<ul><li>The importance of a highly focused product or service strategy.</li></ul> The message is 'stick to the knitting' and don't be distracted, at least for the first few years. But, there is a risk that a single product or service focus can in time be blown away by fast follower imitations or by a totally new disruptive technology that changes the market. <ul><li>Alliances are pivotal.</li></ul> Leveraging third parties is a must, whether by piggy backing on larger multinationals who can push your products and give you credibility or by aggressive distributorships in multiple markets or by formal joint ventures. <ul><li>Be opportunistic and maintain flexibility.</li></ul> An element of chaos in capturing opportunities when and where they emerge is needed to balance a high level of focus and well-planned strategy. <ul><li>Early revenues from serious customers are needed to validate the product.</li></ul> Real resources from real sales at an early stage are vital not only for the company's balance sheet, but for position and profile in the market place. <ul><li>Successful global entrants invariably have a few key individuals who 'laser-beam' on the company's growth and global footprint.</li></ul> This refers to the entrepreneurial champions with the passion, drive, vision and stubbornness to take the firm global against all the odds. <ul><li>Think global, act local.</li></ul> While the company's strategy is global, there is sensitivity to different, idiosyncratic local market conditions and specific localisation strategies put in place accordingly. <ul><li>Anticipate surprises.</li></ul> This is a warning that today's business environment is fast-paced and volatile, so it is advisable to keep an eye out for as yet unrecognised threats and opportunities and be prepared to meet them. While Professor George Foster's study for the Australian Stock Exchange focuses on the experience of the high tech sector in the lead-up to its boom and shake-out, the insights ring true for any Australian company with aspirations of growth and global reach.

2007-10-16T11:53:03+08:00

false

Going global

2002-04-16T00:00:00+08:00

Commentary on Professor George Foster's research study "Global Market or Backwater" commissioned by the Australian Stock Exchange.

2007-10-26T11:54:35+08:00

I am pleased to report that there's an unrecognised dynamism at work among Australian businesses, at odds with the uncompetitive old economy image often used to portray Australian industry. This news comes from the latest Australian Business Foundation research conducted by the Australian Expert Group in Industry Studies (AEGIS) at the University of Western Sydney under the leadership of Professor Jane Marceau. The study, funded over two years by the Australian Research Council and with the Australian Business Foundation as industry partner, is published in a report called Selling Solutions: Emerging Patterns of Product-Service Linkage in the Australian Economy. Let me share with you the headline messages from this research. <ul><li>Contrary to popular belief, manufacturing in Australia is not in decline.</li></ul> Current perceptions of the decreased importance of Australian manufacturing and the arrival of the 'service economy' are found to be too simplistic. To the contrary, both manufacturing and service firms are responding to the competitive challenges of tough and crowded markets by linking products and services in innovative ways. This blurring and bundling of products and services is reshaping not only manufacturing industry, but the pattern of competitive business activity in Australia. <ul><li>Australian firms are devising new competitive strategies that are creating fresh customised business offerings by linking products and services together in diverse ways to meet customer needs.</li></ul> Product-service packages were found to be widespread and diverse. Nearly ¾ of the manufacturing firms surveyed as part of the study reported that they incorporated and sold services in their product offerings to customers. Typically these included engineering, prototyping, design and testing services during the production process, and services like maintenance, training and information/help desks at or close to point of sale. This was the case across the board – from metal manufacturers to electronics firms to pharmaceutical companies. Service firms were also adding value to physical products acquired from manufacturers by bundling them with a vast array of services. Typical cases include computer and telecommunications companies selling total solutions of hardware, customised software, finance, technical support and upgrades. Another example is that of the hospital surgical supplies provider now sourcing a variety of products and linking them into packages which have just the right number of sutures, instruments and so on for a given surgical procedure. Large scale, complex and unique construction or infrastructure projects (like building, owning and operating an airport or a sports stadium) provide yet another example of the mixing of products and services to deliver an entire, highly customised, once-off or small batch project. <ul><li>This emerging pattern of product-service linkage is a sign of a modern dynamic economy transforming itself to meet the demands of new markets where the customer is king.</li></ul> Firms are blending and bundling products and services to:<ul><li>retain their customers;</li><li>add value, while reducing costs and risks; and</li><li>distinguish themselves by expanding and customising their offerings.</li></ul>Such behaviour is evidence of new competitive strategies being adopted by Australian firms so they can succeed in an increasingly volatile and globalised business environment of cheaper products, shorter product cycles, faster business imitations and saturated markets.<ul><li>Competing by linking products and services drives Australian firms to be more innovative and knowledge-intensive.</li></ul> Devising new product-service packages stretches the technical, managerial and marketing capabilities of firms, resulting in distinctive know-how and intelligence which in turn, drives their innovation and competitiveness. Innovation through product-service packaging has far-reaching effects on business competitiveness as the firms involved tend to:<ul><li>collaborate with others, including customers, at home and abroad and so, increase their level of knowledge or technical proficiency;</li><li>retain customers and thus spend less energy on recruiting new ones;</li><li>generate new skills inside their enterprise, notably through different mixes of technical and market-related skills; and</li><li>be flexible in reorganising their operations to suit and satisfy customer needs.</li></ul>Such innovation, because it does not always require R&D investment, often goes unrecognised in Australia. Australian businesses can use the lessons about new competitive strategies from this study as a yardstick to improve the performance of their own enterprises. This study holds a warning against making business strategy (and public policy) decisions based on a simplistic view of manufacturing in decline and services on the rise. The reality is an emerging convergence between manufacturing and services that points to new competitive capabilities in Australian firms. To foster such capabilities, the messages for all Australian businesses, irrespective of their sector of the economy, are:<ul><li>Collaborate with other firms and organisations, like research and education bodies.</li><li>Increase the number and broaden the range of services you offer.</li><li>Stay close to customers.</li><li>Re-think the internal organisation of your firm's activities.</li><li>Invest in new skills.</li></ul>The Australian Business Foundation believes the findings of this study are important because it allows us to better understand the rich dynamic between manufacturing and services in Australia and the new competitive capabilities emerging. This makes a refreshing change from fruitless debates about whether Australia is an old or new economy.

2007-10-16T11:54:27+08:00

false

Australia's New Competitiveness

2002-03-16T00:00:00+08:00

Contrary to popular belief, manufacturing in Australia is not in decline.

2007-10-26T11:56:49+08:00

Over recent days, I have been reviewing the body of research work produced by the Australian Business Foundation to distil the key messages for business briefings to companies and for advice to politicians in the lead-up to the Federal Election. Nothing stands out more than the choice facing Australia that was captured in the title of the Australian Business Foundation's inaugural research study by Professor Jane Marceau, Derek Sicklen and Dr Karen Manley, namely The High Road or the Low Road. This referred to the choice of taking the high skill, high wage, knowledge-intensive road, where we compete on innovation and the quality of our technical know-how and skill. This road leads to more jobs and higher living standards Or we can choose a low technology, low skill path, where we compete by cutting costs, particularly wages, and by specialising in standardised commodities and products for fragmented markets. This will doom us to going head to head with low wage countries for a decreasing share of world trade and fewer job opportunities. This is not really a choice. It is a race to the bottom – with severe social as well as economic consequences. So, innovation is really crucial for Australia. It is at the heart of taking us up the value-added curve, especially in a world of free and fast flows of information, and the reduced shelf-life of ideas, first mover advantage and the product cycles of business. The High Road or the Low Road pioneered much of the thinking that has resulted in the Howard Government's "Backing Australia's Ability" statement and the Federal Opposition's announcements on the Knowledge Nation. The High Road or the Low Road concluded that competing on the basis of innovation and know-how creates greater growth and prosperity than a focus on efficiencies and low cost production alone. But, what does that mean for the average Australian business enterprise? The short answer is simply for companies to focus on doing clever and smarter things in business. This does not mean just high tech breakthroughs and inventions, but it also involves: <ul><li>doing old things more intelligently; </li><li>turning new ideas into businesses; </li><li>adapting and gradually improving the way we work, how we organise, manage people, or operate our supply chains, distribution, logistics, and the like; and </li><li>creating or enhancing products and services in response to customer feedback, problems and failures or emerging consumer demands.</li></ul>Innovation is not something you do once. It must be done systematically and continually. This means creating, sharing and transferring knowledge. It also means keeping ahead of the pack; developing novel ideas and capitalising on them early before they can be imitated; and to keep on doing this again and again. This kind of innovation applies equally to traditional and mature industries, as it does to the dot.coms or biotechnology start-up firms. And size doesn't count. Innovation is equally open to small enterprises as it is to big multinationals. Innovation, in a nutshell, means reinventing your business offerings as the market changes. Let me give a couple of examples of ordinary Australian businesses that have done this. <ul><li>Firstly, there is the courier business based in Parramatta and servicing clients along the Eastern seaboard. It was just an ordinary freight business, with drivers on the road delivering and collecting packages and equipment like computers and related hardware for business users. With a class piece of lateral thinking, this firm decided that it could add value and create new business activity by training and improving the skills of its drivers to also install the equipment they were delivering. Eventually, this led to these staff also undertaking trouble-shooting and service support, as their product knowledge and skill level was enhanced.</li></ul><ul>As a result, this firm has seen a fivefold increase in business, an expanded workforce now including computer programmers and trainers, and further new business growth areas in sales, installation and maintenance of smart card point-of-sale terminals, as well as further innovations in the original freighting business by way of fast-call and just-in time delivery systems.</ul><ul><li>Another example is a classic of applying Aussie ingenuity to leading edge technology to open up totally new business opportunities and markets, effectively redefining and expanding the industries in which the business operates.</li></ul><ul>It is the case of a company manufacturing knitted fibres and resins from polyesters and vinyl-based elements. These composite materials are used in diverse applications in industry, one main one being fire-resistant fabrics for firefighters' protective gear and luminous clothing.</ul><ul>In a leap of logic, these innovators have found radical new uses for their composite materials and new export markets at the same time. They completed a contract in Malaysia to manufacture domes for Islamic mosques using their advanced high-strength composite materials, which have a significant weight and cost advantage over traditional building materials used for this purpose.</ul><ul>Such advanced technology and the brainwave that saw it applied to such a different use – textiles to construction – has resulted in new opportunities not only for building work worldwide, but also for the manufacture of fast ferries and similar shipping vessels where stability and weight ratios are crucial.</ul>Many more examples of Australian business innovation and the lessons to be learnt, can be found in a self-help Innovation Kit of videos, CDRom and workbook produced by my parent organisation, Australian Business Limited. The conclusion all this leads me to is that innovation is Australia's only choice.

2007-10-16T11:55:31+08:00

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Innovation - Australia's Only Choice

2001-09-16T00:00:00+08:00

Narelle Kennedy reflects on the options before Australia in the lead up to the 2001 Federal Election, and champions the high skill, high wage, knowledge-intensive road where we compete on innovation and the quality of technical know-how and skill.

2007-11-06T15:59:09+09:00

In recent weeks we've witnessed the mixture of horror and hilarity that has greeted the Federal Opposition's release of its Knowledge Nation taskforce report, prepared under the intellectual stewardship of Barry Jones. I have taken an interest in the reception of this report, because it, together with the Federal Government's $2.9 billion "Backing Australia's Ability" innovation statement, represent a seachange in our political debates. It is unusual to see concerns with Australia's capabilities in science, innovation and education described as make or break election issues. Despite the commentaries that Knowledge Nation is a political misjudgement, the forceful and thoughtful retorts from several senior Government Ministers suggests that Australia's ability to capitalise on its inventiveness matters to ordinary Australians. From a business perspective, we should welcome innovation and knowledge being on the political radar screen, but we must also recognise the blindspots from both the Government and Opposition. Both concentrate on formal R&D and boosting and commercialising knowledge from universities and educational institutions as the key to Australia becoming a strong location for innovative and leading edge capabilities in both traditional and emerging industries. Unfortunately, both parties underplay the reality that much business innovation comes about in response to new market demands and customer preferences. Similarly, the skills and knowledge required by business enterprises to compete in a fast changing market is less likely to come from the formal education sector alone than it is from collaborations with customers, suppliers and even competitors or from experimentation and improvisation by employees. Witness the international success of Australia's wine industry, which derives from the industry's decision to tackle global markets, based on superior market intelligence and knowledge of consumer preferences, and reliable supply of high quality, premium product resulting from technical innovations in viticulture and wine making spread widely through the industry. The question becomes one of how a nation creates, distributes and uses knowledge to build lasting capabilities and industries whose growth and productivity underpin the prosperity and living standards of its citizens. That's where some recent work by the Australian Business Foundation on economic infrastructure comes in. We are engaged in a research project exploring how more imaginative and coherent approaches to infrastructure could boost the economic prosperity of three of Australia's established industrial regions, namely the Hunter, the Illawarra and Greater Western Sydney. Our project takes a wide definition of infrastructure to cover the movement of not only goods, services, energy and people but also of information, ideas and data. The new angle we have factored in is knowledge infrastructure. Business success tends to be characterised by the growing knowledge-intensity of industries where there is more value in intellectual capital, e.g. design, know-how of skilled workers and market and customer intelligence, than in plant and equipment and the physical means of production. Therefore, information and telecommunications technology and knowledge and learning infrastructure become important elements to consider. There is a challenge to make the transition from the infrastructure investments of the industrial age to growth based on new intangible knowledge-based assets. Infrastructure can be used to create critical mass and capability and to form new industry clusters, linked geographically or virtually, that secure a place in global markets and international value chains, by continually upgrading skills and tapping into new sources of learning. We might just find that the Australian electorate is quite sophisticated in understanding that despite the rhetoric and the diagrams, using Australia's brain power and ingenuity is the only way to ensure our kids have jobs and that we can pay our way in the world.

2007-10-16T11:56:58+08:00

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A new angle on Knowledge Infrastructure

2001-08-16T00:00:00+08:00

Narelle Kennedy speaks of the practical outcomes for real Australian business innovation and success, as a result of the Federal Government's 'Backing Australia's Ability' and the Federal Opposition's 'Knowledge Nation'. In her regular contribution to AFR BOSS Magazine, Narelle Kennedy talks of how "...Australia's ability to capitalise on its inventiveness matters to ordinary Australians."

2007-10-26T12:03:50+08:00

Have you noticed that the term "knowledge management" is making ever more frequent appearances in conference agendas, on book lists, in job titles and even as a university discipline. I guess it's no wonder when all the leading thinkers and analysts are telling us that competing on the basis of intellectual effort is critical to sustained business performance in today's new knowledge economy. Value in business is created more by intangible assets – what and who you know – than by the physical assets, plant and equipment you own and deploy to produce goods and services. Consequently, it is now making sense for business leaders to examine the knowledge underlying their businesses and how that knowledge is used for enhanced business results. This is enormously aided by the sophistication and ease that modern information technology brings to the codifying, storage and dissemination of knowledge. But managing knowledge remains a tricky task. It is a bit like herding cats. We are confronted by dilemmas and divergent approaches to knowledge management – technology vs people solutions; codification or personalisation; how to capture knowledge without destroying creativity. I have a keen personal interest in solving these knowledge management dilemmas. My own organisation, the Australian Business Foundation, is a research think-tank whose core purpose is the generation and communication of break-through ideas that boost Australia's competitiveness and prosperity. In other words, a knowledge-based organisation. Therefore, several excellent analyses of knowledge management reported in the Harvard Business Review have caught my attention. Firstly, in the May/June 2000 edition, John Seely Brown and Paul Duguid contrasted process re-engineering with knowledge management as radically different approaches for managing in the new economy. Re-engineering focuses on top-down restructuring of business processes, people and information to gain sustainable competitive advantage. It assumes that value creation can be described and documented and readily repeated in a relatively predictable competitive environment. Knowledge management, on the other hand, is a more bottom-up, practice-based approach. It assumes managers can best foster knowledge to enhance the effectiveness of their enterprise by responding to the inventive, improvisational ways people actually get things done. It recognises that value-creating activities are not always easy to pin down, and that the business environment is constantly changing and essentially unpredictable. Seely Brown and Duguid see the challenge as a balancing act to capture knowledge without killing it. Unharnessed, ill-disciplined ideas are unlikely to turn a profit, but too much structure constrains the freedom of thought that drives the continuous innovation on which businesses in the new economy depend. They cite the experience of Xerox and the difficulty of knowing what you know about your company's best practice. Customer service reps who fix Xerox machines are supposed to go by the book – the manual or expert system in the machine that identifies error codes and consequent instructions for repair. This is a fact, but Seely Brown and Duguid identify that their real success comes from how the reps learned from one another by sharing stories about how they had fixed the machines and adapted to the idiosyncrasies of individual units in different circumstances. This sharing of tacit knowledge occurred at informal breakfast gatherings before work over coffee, questions, laughter at mistakes and gossip. Hansen, Nohria and Tierney in the March/April 1999 Harvard Business Review draw distinctions between a codification and a personalisation strategy for knowledge management. Codification involves extracting knowledge from people, codifying and documenting it and storing it in databases, where it can be accessed and used easily by anyone in the company. Large consulting firms like Ernst & Young and Accenture are examples, achieving scale in knowledge re-use and allowing cost savings and volume business without diminishing quality. Personalisation strategies closely tie knowledge to the person who developed it; sharing is mainly through direct person to person contacts and IT systems are used more to communicate knowledge, not store it. Strategy consulting firms like McKinseys or the Boston Consulting Group, which focus on highly customised services to clients at a premium price, are examples of this personalisation strategy. These authors make the point that an enterprise's knowledge management strategy should reflect its competitive strategy for creating value for customers and returns for itself. In particular, its choice depends on its answers to the following questions: <ul><li>do you offer standardised or customised products? </li><li>do you have a mature or an innovative product? </li><li>do your people rely on explicit or tacit knowledge to solve problems?</li></ul> Codification approaches make more sense when operating with mature, standardised products and where explicit knowledge, like software codes or market data, are used to solve business problems. Personalisation approaches are more appropriate in enterprises with highly customised service offerings or innovative and novel products and where tacit knowledge (like business judgement, operational know-how or scientific expertise) is more crucial to business outcomes. Finally, another angle is introduced by Hansen and Oetinger in the March 2001 Harvard Business Review, coining terms like "t-shaped managers" and "human portals". They define the t-shaped manager as one who freely shares ideas and expertise horizontally across the company, while simultaneously remaining fiercely committed to vertical business unit performance. Using an in-depth study of BP Amoco, Hansen & Oetinger explore how best to promote and discipline formal peer group assistance and knowledge-sharing arrangements so they demonstrably contribute to bottom line business results. Knowledge sharing in BP Amoco is institutionalised in job descriptions, promotion criteria, key performance measures and work organisation. As a result, Hansen & Oetinger clearly come down in favour of knowledge management strategies which are about brainstorming between people, rather than electronically moving documents around, provided that these efforts are aligned to specific business performance targets. Undoubtedly, we will hear a lot more about knowledge management in all its guises. Let's not forget that the end game is how we become genuine learning organisations and thrive by competing on the basis of cleverness and know-how.

2007-10-16T11:59:26+08:00

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Knowledge Management

2001-07-16T00:00:00+08:00

Narelle Kennedy, speaks of the challenges with managing knowledge, "...managing knowledge is a tricky task. It is a bit like herding cats."

2007-10-26T12:04:29+08:00

The Prime Minister and other MP's were faced with protesters at the recent commemoration of the Centenary of Federation calling for their manufacturing industry jobs to be reinstated. This was just the latest demonstration of what seems to be a wider community concern about Australia's loss of manufacturing jobs through factory closures, corporate takeovers by overseas interests or loss of markets to cheaper imports. There is the view that manufacturing's decline means a serious loss of real jobs and national capability, which ultimately equates with lower living standards for ordinary Australians. This will not be compensated for by an increase in ephemeral service jobs in call centres, lawn mowing franchises or even by high growth IT or tourism activity. In the other corner, various economists and analysts dismiss these fears as groundless. The decline of manufacturing and the rise of services is just the natural order of things in a developed economy, where basic needs are satisfied and consumer demand for differentiated services increases. Manufacturing and secondary industry is no more "real" or valuable than primary industry or service sector jobs. It depends on countries specialising in what they are endowed with or good at, and trading for the rest. The danger lies in governments interfering, through protection or subsidies, with the free operation of the global market, which will invariably produce the greatest good for the greatest number. This squaring off between manufacturing and services might be relegated to debates between ideologies, except for its impact on crucial business strategy decisions by Australian firms and on important public policy settings. A closer examination of the manufacturing versus services debate shows that making clear distinctions between product and service or between buyer and seller is a trap for those hoping to succeed in the fast, connected and informed world of the new economy. One of the more illuminating presentations of the challenges businesses face in the turbulence of the new economy is found in a 1998 book called Blur – the speed of change in the connected economy by Stan Davis and Christopher Meyer of the Ernst & Young Centre for Business Innovation at Cambridge, Massachusetts. To Davis & Meyer, the blur represents the whirlwind of transition based on increases in speed, connectivity and the value of intangible assets, like knowledge and relationships. Business rules and strategies are being fundamentally changed by: <ul><li>the shrinking of time; </li><li>the explosion of online connections between everyone, everything, everywhere; and </li><li>the ascendancy of intangible assets where there is more value in what and who you know than what you own.</li></ul> As a result, mass production, segmented pricing, neat supply chains and standardised jobs are giving way to merged offers of products and services, customers making production decisions, floating prices set by online auction and real time information, employees who are also entrepreneurs and messy economic webs of partners and stakeholders. So, beware if you are making business or public policy decisions based on an orthodox view of manufacturing in decline and services on the rise. The reality is more complex, chaotic and blurred. Products and services are coming to resemble one another. Blur gives examples like the anti-theft car lock device that radio-signals its location to police and then disables the stolen car. Sensors in elevators monitor the need for maintenance, detect failure, and dispatch repairers with precise knowledge about the location and nature of the fault – computer-aided services that add considerable value to elevator manufacture and installation. Or, the often quoted direct sales relationships with customers that allowed Dell Computers to personalise their product to an individual buyer's specifications, gaining ongoing intelligence and cutting transaction costs at the same time. Davis & Meyer challenge businesses to create a truly new offer by giving their products the adaptability of services, and giving services the economics of products. They say one dimensional seller to buyer exchanges are being replaced by rich multi-dimensional exchanges which involve not just economic returns, but value generated from the information and emotional attributes of the offer. To better understand the dynamics of the manufacturing and services blur in Australia, Professor Jane Marceau and her team at the Australian Expert Group on Industry Studies are about to release the findings of a two year study, supported by the Australian Business Foundation, on product/services linkages. Such intelligence is crucial if we are to break out of unproductive binary mindsets and create new capabilities for Australia as the industrial age morphs into the new knowledge economy.

2007-10-16T12:01:08+08:00

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Manufacturing & Services - a false fight

2001-06-01T00:00:00+08:00

Beware if you are making business or public policy decisions based on an orthodox view of manufacturing in decline and services on the rise. The reality is more complex, chaotic and blurred.

2007-11-06T15:50:16+09:00

The Year 2000 was a great year for Australian team success on the sporting field, with Olympic medals for women's and men's hockey, women's water polo, women's softball and women's basketball, among others. Not to mention world class performances in men and women's cricket, netball, rugby union and rugby league. So, why would a country known for its laconic individualism also excel in team sports? Maybe it has something to do with the Australian spirit of mateship – when faced with a common challenge, we're prepared to do things for other people. But, can mateship contribute to success off the sporting field and in the offices and cubicles of business organisations? How do different cultures see mateship and does mateship translate to successful teamwork in business? In the business world, most work is now being carried out in some form of team from the manufacturing floor to the executive suite. Work and business is also being globalised, which raises the further complication of teamwork across different cultures. Some cultures have a strong focus on the individual (Australia and the U.S. for example), and others have a cultural preference to focus on the group or collective (Japan, China, India, Vietnam, Thailand and Singapore, to name a few). Recently, I was involved in doing cross-cultural training for several groups of executives from Charles Schwab, the international broking firm, to prepare them for leading a joint venture in Sydney. As I researched American multinationals with operations in Australia, I came across some surprising findings. I was prepared to find the usual cultural differences and disconnects around work ethic, attitude to authority, sense of humour, sexism, leadership, trade unions and the like. But, I also heard from a number of sources particularly positive comments about the capabilities of Australians in team situations. Take the example of Hatteras Yachts, located in North Carolina with operations around the world, including Australia. Several years ago, they researched the reasons for success and failure of their various design teams. They noted that a significant number of their design teams around the world had an Australian who was particularly influential in its success. On closer inspection, they discovered the Australians were focused on both task and process, and expressed a point of view made more palatable with self-deprecating humour. Yet, Australians struck a cultural balance between the directness and task focus of other Northern European/American cultures and the more indirect and relationship based cultures of Southern Europe, Asia and Latin America. In the language of team and group work, the Australian team members were comfortable with the two main functions associated with effective teamwork - task and process skills. Task skills include initiating discussion, providing or asking for information or opinions, clarifying, elaborating and summarising in order to get a job done. Process skills are about keeping the group together and on track, including gate-keeping, harmonising, checking group norms and encouraging team members. These observations have been confirmed by executives from some of my client companies. They report that in regional team situations in Asia-Pacific, it is often the Aussie who listens to the views of others offline and encourages and represents that voice if the team's process or task focus ignores that perspective. Do these insights have wider implications? Australia and many other Western economies have what is often referred to as an individualist cultural preference. People in these cultures make their primary commitments to themselves. Another cultural preference is a collectivist or group oriented one, where people distinguish between their own group, clan or organisation and other groups. In this view, group members hold common goals and expect protection and security in return for their loyalty to the group. I suggest these two cultural dimensions, while appearing to be diametrically opposed, are in fact quite complementary. The individualist and collectivist preferences can be integrated into successful teams. The glue for this integration to occur is having a common purpose or challenge. In individualist cultures, whether in business settings or at the larger societal level, individuals need to be actively involved in the development of this shared purpose or common goal, so they make it their own. Similarly, in cultures with a group preference, like many of Australia's trading partners, clear initiatives with individual accountabilities will be supported if they produce the shared or agreed on purpose to which the group as a whole is committed. Mateship is a very useful cultural analogue for understanding what drives group and team behaviour in Australia. Mateship is the active choice by individuals to support each other around a common challenge or purpose. This choice has to be freely made. In the organisation or business team, it is just plain good practice to have employees participate and shape the development of the organisational or team vision. Without an explicit shared vision, each person defers to his or her own. At the end of the day, Australian concepts of mateship could be at the heart of world class business performance, as well as renowned sporting prowess. As global competition increases, so does global collaboration.

2007-11-05T15:01:16+09:00

153

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Australian Mateship: an ingredient of successful teams?

2001-05-01T00:00:00+08:00

Michael Burns examines why and how Australians are known around the globe for their successful team performances.<td> </td>

2007-11-05T17:28:43+09:00

Have you been following the recent debate about Australia becoming a branch plant economy? Australian corporate icons are deciding to merge with off-shore interests, moving headquarters and listing overseas. Successful home-grown businesses are becoming likely prey to foreign take-over bids with their increasingly undervalued share prices. The declining Australian dollar, despite Australia's decade or more of sound economic fundamentals, seems to be making us less attractive for global investment and diminishing Australia's claim as a credible international financial and business centre. The blame is variously placed with Australia's competition laws inhibiting efficiency gains through global mergers and acquisitions. Others point to our burdensome and uncompetitive tax treatment of profits and turnover generated overseas by Australian companies. From another angle, some business leaders bemoan the lack of incentives to boost private sector R&D or the obstacles to introducing widespread Employee Share Ownership Schemes which effectively puts Australia out of the race to recruit and keep the best people. Also part of the mix are the more popularist, anti-globalisation pleas, coming from both political and business quarters. These voices reflect a backlash against global, open and free trade policies which are seen to result in disproportionate economic loss for those involved in Australia's traditional industries and to those living in the suburban fringes and in regional and rural Australia. But, could these fearful "branch plant" commentaries be a case of looking through the wrong end of the telescope? Perhaps what we need is a perspective on globalisation that brings the world closer to Australia, allowing our business enterprises to secure a sustainable place in international value chains. A vision where Australian firms themselves can create reputable global brands. In fact, we need to "play above our weight" when it comes to our share of world capital markets, customers, investments and attracting the attention of the average multinational CEO. I noted some reflections on how an Australian-based company can be a genuine global business in the 2001 Warren Centre Innovation Lecture recently delivered by Peter Fogarty, the CEO of the Perth-based ERG Group, an IT systems solutions company for fare collection and smart card technology. ERG has achieved a compound sales growth rate of over 40% for the past ten years, with operations in Asia, Europe and the Americas, as well as Australia. It has increased its turnover from A$600,000 in 1986 to A$416 million in 2000 and ranks in the Australian Stock Exchange's Top 50 Index. It continues to be the recipient of leading edge e-commerce and information technology awards globally. While claiming ERG is still very much a work in progress, Peter Fogarty's assessment of the crucial factors in operating a global business from Australia centre on four key elements:<ol><li>Reinventing the business to ensure an increasing percentage of recurring revenue. This involved ERG moving from fare collection and telecommunications equipment manufacture and supply to being a provider of software and systems solutions, necessitating the creation of an expert in-house software engineering capability.</li><li>A long-term but totally adaptable vision and business strategy, where global customers and sensitivity to shifting markets are the life blood of the enterprise. Treating global customers as partners not only drives continuous innovation and technical excellence in the business, but it also brings international recognition and working showcases. Both are vital ingredients to an Australian company being accepted and achieving global status, says Fogarty.</li><li>Growing the company through successful, hard-won alliances with many multinational corporations, starting notably with Nokia and Philips and now numbering 18 global enterprise alliances. These have been the source of organisational learning within ERG, as well as a crucial means for more rapid acceptance and market penetration than a remote Perth-headquartered company could otherwise expect.</li><li>Serious ongoing investment in research and development at between 8% and 15% of revenue is a commitment that is bringing strong returns to ERG over time. Fogarty says innovative Australian companies that are succeeding globally show a consistently high level of investment in R&D. In ERG's case, in addition to generating new commercial technological breakthroughs, R&D investment allows ERG to maintain a lead over their competitors and builds and maintains the skills base vital to the company's performance. To avoid the worst fears of Australia being a branch plant economy, it is clear we need to multiply the ERG story a thousand-fold.</li></ol>That's the challenge that must be put before Australia's political leadership in this Federal Election year. Getting the answer right on this one will do more for the living standards of ordinary Australians than any amount of fiddling with the prices of petrol and beer.

2007-10-16T12:02:17+08:00

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Australia - Branch Plant or Global Brand?

2001-04-16T00:00:00+08:00

"Perhaps what we need is a perspective on globalisation that brings the world closer to Australia, allowing our business enterprises to secure a sustainable place in international value chains."

2007-10-26T12:07:46+08:00

Silicon ValleyWhat a difference a couple of months make. In December 2000 with a talent shortage and full employment, CEO's of some companies were repeating the phrase "talented people are our company's No.1 asset". Only months later in March 2001 the same CEO's were announcing major workforce reductions in an attempt to reduce costs. On the one hand, employees are valuable assets contributing to the company's profitability; on the other hand, they are dispensable when profitability is at risk. Is there another way to view the relationship of employees to profitability? Changing the role of employees from being hired hands to active business partners and owners became the focus of one Silicon Valley company in their quest for profitability. This article will illustrate how this company challenged traditional beliefs and adopted an alternative way of management that not only has been successful but also has resulted in sustainable profits for several years. COMAC Inc. From Problem to Profit COMAC Inc.'s distribution centre had over 115 employees in 1992. They were organised by 8 managers into 11 departments each with a supervisor. Revenue was $US 6.5 million or $US 56,500 per employee. There was no profit, largely because of the cost ($10K per month) of compensating customers for the company's mistakes. Employee turnover was about 20%. <tbody></tbody>COMAC Established in 1970, COMAC Inc. (<a href="http://www.comac.com/" target="blank""">www.comac.com</a>) is a provider of product and trade literature for small and large companies in North America. So if you are a medium to large company with extensive product and marketing literature rather than warehousing and distributing this information yourself, you can outsource this to a company like COMAC who will be able to store digitally, track and distribute on demand this information to prospective customers, salespeople and distributors. COMAC expedites 95% of their orders on the same day with a 98% satisfaction rate from their customers. The company is privately held and recently became a subsidiary of Iron Mountain. The entire company (all eight US locations) had revenues in 2000 of $22.5 million and profit before taxes (and after bonus payouts) of $5.7 million. Work satisfaction as measured by employee turnover was reduced from 20% to 2% in 7 years. CEO Mike Smith expressed his frustration: "I wasn't enjoying running this business, it wasn't creative. The work was stressful for me and everybody else. There had to be a better way of becoming successful and enjoying work." Mike came across Jack Stack's book "The Great Game of Business" in which the concepts of open-book management were described (see Open-Book Management) He distilled Stack's ideas of open-book management into his own approach, added incentive-based compensation, and began to apply it with COMAC employees in 1993. <tbody></tbody>OPEN-BOOK MANAGEMENT Jack Stack and his colleagues developed many of their ideas at Springfield Remanufacturing Corp. (SRC) <a href="http://www.srcreman.com/" target="blank""">(www.srcreman.com</a>) in the early 1980s and outlined these ideas in a book "The Great Game of Business". All the employees at SRC - from janitor to CEO - know exactly what they contribute, what they cost the company and how they depend on each other to be successful. Their common scorecard is the income statement, cash flow statement and balance sheet. Everybody is an owner and partner. The results of 'playing the game' at SRC have been a spectacular growth in sales, above market salary and stock rewards for everyone, job security and an employee satisfaction rate that led SRC to be included in the list of the 100 Best Places to Work in America. Six years later in 1999 the distribution center had 43 employees with 3 managers, no departments or supervisors. The fulfilment centre was reorganised into 2 primary teams – Operations and Customer Service. Revenue was $7.5 million or $176,000 per employee. Profit was $2.7 million. Employee turnover was down to 2% and all business partners earned above market salaries. The COMAC Solution In addition to open-book management, and incentive-based compensation, employer-employee partnerships and teamwork are important factors in COMAC's success. These four principles are explained and illustrated below. Principle 1: Employee - Employer Partnership In the traditional model of running a business employees do only what is directed by their manager, have little control over raises or bonuses and feel that profits are often made at their expense. Managers in this environment withhold information because they assume employees are incapable of understanding their problems and responsibilities. Additionally their focus is on their own department/function, reducing costs and meeting budget - controlling rather than growing the business. Mike Smith (CEO): Borrowing on Stack's ideas we took them further. We challenged the assumptions upon which the traditional employee-employer model is based and adopted different ones: Assumption 1: Employees can comprehend high-level problems and understanding the financials if they are given the relevant financial information and it is explained to them. That's what CEO's have to do; many of them aren't MBA's. Assumption 2: Employees are interested to know about Profit & Loss statements and other financial measures when it affects their interests, e.g. take-home pay. Assumption 3: Employees have to rely on themselves and as independent contractors are willing to take risks and learn in order to earn above market rates for their work. Assumption 4: Creating a culture that brings out the best in every individual is far more interesting and fun for everybody involved. A good test of the efficacy of some of these assumptions is the problem of increased workers compensation premiums that faced the company in 1992. A rash of back injuries had significantly driven these costs higher. Sayeed Chaudhury (24 years at COMAC - was Managing Director of the distribution center and now COO): Mike asked me to look into reducing the costs of injuries — this was before we started open-book management and incentive -based compensation. So in 1993 I brought in videos on safe lifting and back and shoulder harnesses for people lifting boxes and other heavy items. I thought this would fix it but what I did had absolutely no impact on back injuries. However, by 1995 we had no back injuries that year and with the exception of one minor injury we continue that record today! It's very clear to me there was no ownership of the problem until everyone had a financial interest in controlling the cost of workplace injury. Effectively everybody in the organisation has evolved from a hired hand to become a business partner. Where formerly the norm was defending turf or position, in this environment the focus is on what tasks have to be done. Principle 2: Open-Book Management In order to treat employees as business partners they need to be given information on how their business is performing. The greatest source of power for business owners, CEO's and Managing Directors is information. Giving up control and sharing all information may be difficult for some senior managers to embrace. At COMAC the whole team reviews the income statement every month against budget and last month's results in a meeting that may last two hours or more. People learn the numbers - what they mean, where they come from and what impacts them. All financial goals for the month, quarter and year are clear and available to all. Similarly the salaries of every business partner - including their base and bonus— are known to everyone. The objective for all involved is to generate profits. Mike Weston (6 years at COMAC —was Operations Supervisor and now Managing Director): In the other companies I've worked for the supervisor/managers' role was to hand down edicts. It's very different at COMAC. For instance in our April meeting I reviewed our March performance. Questions were asked, for example, "Why were meals and entertainment $2000?" If no one knows the answer we will look at the general ledger after the meeting to get the details. We also ran some 'what-if' scenarios, looking at the impact of the economic slowdown on COMAC's high-tech customers. Is every single person at the meeting interested in understanding these numbers? No; but more than 90% of our business partners are engaged. The reason we do these meetings monthly is to continually learn and improve our business and keep us all focused on the scorecard. Mike Smith (CEO): The job of the manager at COMAC is to openly share good news and bad news. In a partnership a manager doesn't hide mistakes from employees or juggle the numbers or push the benefits of a particular action and withhold information about the risks. The complexities of business keep us all humble. Principle 3: Incentive Compensation Incentive compensation is about creating and distributing wealth to those who produce it. Employees are not rewarded for length of service nor do they receive annual raises or bonuses. At COMAC business partners begin with a base salary that's a bit below market rates. They have the potential to earn significantly above those rates from incentive compensation. The Milpitas fulfilment center has had a bonus payout every quarter since 1994. But this bonus is always at risk. There is no guarantee partners will continue to receive a payout. At the monthly meeting every partner sees how much profit came in, and after subtracting retained earnings for company expenses and capital investment, how much profit will be applied to the quarterly bonus pool. The bonus is allocated to the Operations or Customer Service team on a percentage basis depending on the contribution of each team to the outcome. Within each team each partner receives an equal distribution. The net effect is that company performance and team performance very directly impact individual salaries. Nancy Schwab (9 years at COMAC— Client Services Manager): During the interview process I was told about the incentive compensation program. I didn't believe them initially. I was surprised positively. If I slack off it directly impacts my salary. 50% of my salary comes directly from the incentive bonus program. But more importantly this program makes my job a lot easier. I am very confident when I market our services to potential customers that other team members in the warehouse will deliver what I am promising. This is risky business. This approach isn't for everyone. Prospective employees that need a predictable paycheck and are not willing to take a calculated risk will not choose this type of company. Mike Weston (Managing Director): I checked them out before making my decision to come here. They had a good track record of profitability, good leadership and good systems. Like any other employment decision, you have to do your own due diligence. Principle 4: Teamwork Mike Smith (CEO): Team rules!! It becomes very clear in the monthly profit and loss meetings that what each individual partner does impacts the company, their team and ultimately their family. From a compensation perspective the participating unit is by definition team-based so individuals in the team have a vested interest in improving the performance of other team members by providing feedback. Mike Smith (CEO): We don't coddle non-performers. None of our teams can afford to. One way of minimizing the risk to the team's profitability is to hire people on a temporary basis. This ensures time for learning and for other team members to assess the capabilities of the temp. Buck Walters (Managing Director in Chicago): I was concerned about orders not being processed and that the Customer Service team might need more people. The team responded that time by redistributing workloads and hours to minimise the impact on profitability. But other times the pie will be bigger with an additional headcount. But it is a team decision; they know the tradeoffs. Lessons for Business Leaders Well what are the lessons from COMAC? <ul><li>Actions do speak louder than words. Leaders need to organise their company differently if they are to avoid 'dumbing down' their people assets</li><li>Financial information and financial incentives creates motivated business partners</li><li>Employees are as capable of learning to analyse the financials as CEO's</li><li>Building a sustainable enterprise, increasing work satisfaction and job security are not mutually exclusive outcomes for business</li></ul>Where to begin? The transformation of COMAC began with a leader who was willing to take risks and try something new. Are you willing to be the Jack Stack or Mike Smith of your organisation? Who could argue that harnessing the power of many minds rather than just the boss's or the senior managers is not a far better way to succeed in business.

2007-11-05T15:00:08+09:00

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Profitability: all for one and one for all

2001-04-01T00:00:00+08:00

Michael Burns explores the synergies between company profitability, sustainable enterprises, employees as valuable assets and business partners.

2007-11-05T17:28:08+09:00

As Australians, we are all too familiar with the commentary that Australian managers and business leaders just don't rate against their international counterparts. Australia regularly finds itself in the bottom half of global league tables of competitiveness, with poor levels of business investment in research and development, lower numbers of engineering and science graduates than our competitors and generally underperforming on various similar benchmarks of innovation. In recent weeks, the media has featured political and business figures concerned about Australia being a branch plant economy. They worry about Australia's lack of critical mass, capital and skills and our unfavourable taxation and regulatory infrastructure. They say all this serves to ensure that our business enterprises are the reserve grade team in the global game. So it's refreshing when an alternative view is put – complete with the mandatory sporting analogy! Michael Burns is an Australian business consultant who has been advising top Silicon Valley firms from his base in California for more than a decade. He is the latest author to contribute to the Australian Business Foundation's Tales from Silicon Valley on-line business forum. Michael Burns' first article for Tales from Silicon Valley reflects on Australia's world class performance in team sports, at odds with a culture of laconic individualism. He goes on to suggest that the concept of Australian mateship can translate into successful teamwork in business. Australia's spirit of mateship manifests itself in business teams as an active choice by individuals to support each other around a common challenge or purpose. Michael Burns cites examples from his business clients of the superior performance of Australians in team situations and their significant influence on the business success of the team. Among the reasons, says Burns, is that Australians can strike a cultural balance between the directness and task focus of the American and Northern European cultures and the more indirect, relationship-based cultures of Southern Europe, Asia and Latin American. Australians can express a point of view and argue a case, frequently made more palatable with self-deprecating humour. Often, it is the Australian in Asian-Pacific business environments who becomes the voice of the team, after hearing dissenting or alternative views not otherwise able to be expressed in the "group think" that can accompany a team's focus on the task at hand. If Michael Burns is right, it may well be that Australian character traits are culturally appropriate business behaviour – the laid back approach, sense of mateship, egalitarianism and a fair go. Moreover, they may even represent a competitive advantage in a world where being inventive, thinking divergently, and being adept at collaboration makes for successful business performance. Or are we just kidding ourselves? The Australian Business Foundation invites your comment and experiences.

2007-10-16T12:06:38+08:00

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Aussie mateship: a business winner?

2001-03-16T00:00:00+08:00

As Australians, we are all too familiar with the commentary that Australian managers and business leaders are not internationally competitive. Narelle Kennedy asks if this is true and if it is not, does Aussie Mateship provide a distinguishing advantage over our overseas counterparts?

2007-10-26T12:08:35+08:00

Rosabeth Moss Kanter's latest book, Evolve!, is exuberant, upbeat and to the Australian eye, a touch too evangelical. At its worst, there is the option of an Executive Summary presented as corny song lyrics!! But, Evolve! is also thoroughly researched, well-presented and most importantly, delivers new insights and substantial guidance for corporations to become change masters in the face of truly revolutionary transformations brought about by digital technology and e-business. Rosabeth Moss Kanter grounds the book in realism. Both successes and failures are presented and cases where the jury is still out. Consequently, unlike many other analysts of the pace and scope of e-business change, she understands that we must learn from previous experiences of innovation. The book charts the nature and challenges of adopting "e-culture" in an organisation. It is informed by detailed contemporary corporate examples, bird's eye view commentaries from those involved and Harvard-style disciplines and expertise that brings Kanter to her interpretations and expositions of best practice. Here are lessons for Australia's traditional corporations, as well as new high tech ventures. It is not enough to base a business on clever cool technology, youthful staff and the trappings of open plan offices, casual clothes and music in the workplace. Rather, it is about fundamental change to business models that genuinely adds and sustains new value for customers. This means mastery of technology to create new offerings and innovations that change the "genetic code" of the enterprise. It means a constant customer focus; adaptability and experimentation; a premium on partnerships, collaboration and alliances; and professionally run organisations that inspire and hold talented people. To capture the benefits of e-business seems to be less about meeting the technological challenge, and more about proficiency in human relationships. Case study after case study illustrates themes like: leadership through the power of ideas; persuasion to build support and neutralise opposition; nurturing multiple and complex strategic partnerships and effective working teams; and achieving outrageous targets by fostering creativity, improvisation and flexibility. Rosabeth Moss Kanter sums this up in the intriguing idea that tomorrow's successful corporations will not be hierarchical ordered bureaucracies, but will resemble open, inclusive, slightly chaotic communities of purpose, where people have shared understandings, things in common and good grapevines. Now, there's a stretch target for the average captain of industry!

2007-10-16T16:28:18+08:00

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Book Review: "EVOLVE! succeeding in the digital culture of tomorrow"

2001-03-01T00:00:00+08:00

Narelle Kennedy reviews Rosabeth Moss Kanter's latest book "Evolve!" for AFR Boss magazine. Read this concise summary to pick up some quick tips for successful businesses of the future.

2007-11-06T16:12:21+09:00

I'm always attracted to ideas that question conventional wisdom. So, I sat up and took notice of the latest story filed on the Australian Business Foundation's online forum, Tales from Silicon Valley, by business journalist, David Forman – who has recently returned to Australia after two years in San Francisco. This story explored why Australia is not perceived to be in the same league as the United States in the new economy stakes – notwithstanding our credible economic performance and growth record, and the gloss coming off high tech investments in the USA over recent months. David Forman's message was that the measure of a new economy is not just how many dotcom companies are being created. It is about the degree to which the new possibilities being opened up by IT and internet businesses are being adopted in the wider business community. Forman quoted an anecdote recounted by Scott McNealy, Chairman and CEO of Sun Microsystems about the dynamism and productive new businesses spawned by his swapping of business ideas and insights with Jack Welsh, Chairman and Chief Executive of General Electric, whose corporate leadership is legendary. McNealy, who is on the Board of GE, advised Welsh to wire all its light bulbs to GE light bulb factories through the internet. That way, McNealy said, the lights in remote buildings could tell the factory when they were about to blow, a light could be produced to replace them and be dispatched, along with a map to the location of the faulty product and an invoice. In one move, GE would have gone from a light products manufacturer to a lighting services company, and made it extremely difficult for rivals to steal its clients. This is a classic case of knowledge diffusion, of person to person networking that crosses industrial sectors. It's the new knowledge economy at work. It shows us that companies right across the economy must take advantage of fresh opportunities and new thinking and convert these to an international competitive advantage. But, Australia has a major obstacle in doing this. We don't have the critical mass of people, ideas and money on our doorstep. We are out of the loop. There are no Scott McNealys in our neighbourhood with whom we can brainstorm and incubate new imaginative business endeavours that can be bankrolled and test marketed in short order. So, here's where David Forman abandons conventional wisdom by suggesting that Australia should actually encourage our brain drain to places like Silicon Valley. He argues that the value of Silicon Valley lies less in its inventive information industries and products and more because it operates as a hothouse of the best start up companies and the entrepreneurs and financiers who create and sustain them. Exporting Aussies into this environment would allow its entrepreneurial culture to rub off on them. Exposure to new ideas and opportunities; learning how to develop start-ups and to commercialise blue sky ideas; experimenting; meeting and networking with others. And potentially bringing all this back home and spreading the know-how and the contacts. It's an engaging idea. In the new economy, maybe by exporting people temporarily, the brain drain can become the brain gain.

2007-10-16T12:07:30+08:00

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Could 'Brain Drain' be 'Brain Gain'?

2001-02-15T00:00:00+08:00

Narelle Kennedy looks at turning Australia's travelling talent into a home-grown advantage. You may either read the text here, or listen to the audio on the AFR BOSS website

2007-10-26T12:09:53+08:00