2010-02-17T11:46:16+08:00

Systems thinking, market failure and the development of innovation policy: The case for Australia 266

true

This latest piece of scholarship from Professor Mark Dodgson, Professor Alan Hughes, Professor John Foster and Professor Stan Metcalfe, all of whom are close associates of the Foundation, argues the case for alternative approaches to innovation policy in Australia.

false

Systems thinking, market failure and the development of innovation policy: The case for Australia

2010-02-17T00:00:00+08:00

AbstractInnovation policy is increasingly informed from the perspective of a national innovation system (NIS), but, despite the fact that research findings emphasize the importance of national differences in the framing conditions for innovation, policy prescriptions tend to be uniform. Justifications for innovation policy by organizations such as the OECD generally relate to notions of market failure, and the USA, with its focus on the commercialization of public sector research and entrepreneurship, is commonly portrayed as the best model for international emulation. In this paper we develop a broad framework for NIS analysis, involving free market, coordination and complex‐evolutionary system approaches. We argue that empirical evidence supporting the hypothesis that the ‘free market’can be relied upon to promote innovation is limited, even in the USA, and the global financial crisis provides us with new opportunities to consider alternatives.The case of Australia is particularly interesting: a successful economy, but one that faces continuing productivity and innovation challenges. Drawing on information and analysis collected for a major review of Australia’ NIS, and the government’ 10‐year plan in response to it, we show how the free market trajectory of policy‐making of past decades is being extended, complemented and refocused by new approaches to coordination and complex‐evolutionary system thinking.These approaches are shown to emphasize the importance of systemic connectivity, evolving institutions and organizational capabilities. Nonetheless, despite the fact that there has been much progress in this direction in the Australian debate, the predominant logic behind policy choices still remains one of addressing market failure, and the primary focus of policy attention continues to be science and research rather than demand‐led approaches. We discuss how the development and elaboration of notions of systems failure, rather than just market failure, can further improve policy‐making in the future.

2010-02-17T11:52:36+08:00

2009-10-26T13:41:55+08:00

260

false

Annual Report 2009

2009-10-26T00:00:00+08:00

2009-10-26T13:42:37+08:00

2009-10-26T13:43:51+08:00

261

false

Notice of Annual General Meeting 2009

2009-10-26T00:00:00+08:00

2009-10-29T07:02:05+08:00

2008-12-18T14:07:58+09:00

236

false

Response to Australia's Innovation Review

2008-12-18T00:00:00+09:00

Australian Business Foundation Chairman, Stephen Mills, responded to the release in September 2008 of the Review of Australia’s National Innovation System chaired by Dr Terry Cutler, titled ‘Venturous Australia’. The Australian Business Foundation’s response can be downloaded here.

2008-12-19T12:25:59+09:00

2008-10-30T14:13:39+09:00

233

false

Annual Report 2008

2008-10-30T00:00:00+09:00

2008-10-30T14:27:08+09:00

2009-01-23T09:38:55+09:00

238

false

Innovation in Winning Organisations in Australia: Myths and Realities

2008-10-09T00:00:00+08:00

A 25-year study of 11 top-performing Australian organisations has revealed valuable innovation lessons for companies wanting to emulate them. These findings show that many conventional views on innovation are myths, and provide a practical guide to innovating successfully, overcoming the barriers many companies face. By using a broad definition of innovation and by getting the whole organisation geared for change, Australian companies can greatly improve their innovative capacity.

2009-01-23T09:38:55+09:00

2008-06-18T06:00:51+08:00

211

false

The Development of Australia's Innovation Strategy: Can the public sector system assess new policy frameworks?

2008-05-20T00:00:00+08:00

2008-06-18T06:03:43+08:00

2008-05-16T14:07:41+08:00

208

false

Australian Business Foundation's Research Intelligence Report

2008-05-16T00:00:00+08:00

2008-05-16T14:07:41+08:00

2008-03-04T12:25:25+09:00

204

false

Innovation in Winning Organisations in Australia: Myths and Realities

2008-03-04T00:00:00+09:00

<div>This paper is part of the forthcoming Australian Business Foundation book addressing the human dimension of innovation. </div>

2008-03-04T12:27:30+09:00

2008-03-03T16:08:08+09:00

202

false

New Tools to Map and Manage Innovation Networks

2008-03-03T00:00:00+09:00

This paper is part of the forthcoming Australian Business Foundation book addressing the human dimension of innovation.

2008-03-04T10:57:58+09:00

2008-03-03T14:31:00+09:00

201

false

Annual Report 2007

2007-11-28T00:00:00+09:00

Australian Business Foundation Annual Report 2007

2008-03-04T12:11:58+09:00

2007-10-31T13:03:39+09:00

144

false

Annual General Meeting Forum: Is Australia Prosperous?

2005-11-23T00:00:00+08:00

2007-11-06T15:46:34+09:00

Key Issues Summary Why and in what circumstances do sustainable development practices contribute to business success? The connection between sustainable development and business success depends on the depth and quality of the sustainable development practices, and their fit with the company's distinctive business strategy and culture. In particular, sustainable development practices are most likely to boost long term performance when they serve to stimulate innovation and foster a competitive business advantage. These are the key messages from the Australian Business Foundation's latest research study, undertaken by Suzy Goldsmith and Professor Danny Samson of the University of Melbourne. The study took a thoughtful look at the sustainable development approaches of six diverse companies identified as leaders in this field – BHP Billiton, Blackmores, Eli Lilly, Multiplex, OneHarvest/Vegco and VicSuper. The scope of sustainable development practices covered in this research was based on those listed in the <a href="http://www.globalreporting.org/" target="blank""">Global Reporting Initiative</a>, namely economic practices such as those affecting customers, suppliers and employees, environmental practices, and social initiatives like labour practices, human rights, product safety and community involvement. Background interviews were conducted with fourteen industry associations to examine industry sector effects. Drawing on careful analysis of the academic and business literature, and on their own expertise and experience, the authors distilled several useful concepts linking corporate sustainable development and business success. These concepts will help business executives to think through the increasing and often conflicting demands for more action by companies on sustainability and social responsibility issues. Sustainable development practices should be deep, well-rounded and high-quality initiatives that offer the best available value proposition for the business, not just window-dressing. Sustainable development practices are more likely to contribute to long-run business success when they are: <ul><li>Focused on delivering specified performance improvements or targets in particular areas, like pollution emissions or direct employee involvement in community welfare programs, rather than just compiling an account of effort or budget spend, e.g. donations to charity. </li><li>Integrated with mainstream business practices like health and safety programs or customer service responsibilities. </li><li>Re-shaped over time for depth and effectiveness, noting the progressive results achieved. </li><li>Responsive to evolving stakeholder issues and community concerns. </li><li>Selected to maximise value to the long-term prospects of the business, e.g. a paper recycling scheme in an office environment could improve the balance sheet in multiple ways through waste minimisation, cost savings and greater employee commitment and even, enhanced community reputation and support for the company in some circumstances.</li></ul> Effective sustainable development practices are aligned with, and demonstrably advance, a company's own distinctive business strategy. Information gleaned by the authors from interviews both with specific enterprises and with industry associations indicates that successful sustainable development practices are those that clearly contribute to the company's business strategy. The business strategy of any company is influenced both by its position in the industry in which it operates, and by its own unique circumstances and attributes. Not surprisingly, both of these factors need to be considered by business executives in deciding on their approach to sustainable development. For example, companies in mature industries like mining are likely to focus their sustainable development practices in areas which ensure their continuing access to resources and maintain their licence to operate. On the other hand, an emerging industry (like biotechnology or renewable energy) may view sustainable development practices as a fundamental growth opportunity for accessing new markets or customers. In the study, consistent connections were detected between sustainable development practices and core business strategies. Those most likely to succeed over the long term made good sense in one or more of the following areas: <ul><li>Stakeholder Support – where the aim is to increase and strengthen the company's appeal to and involvement with various groups of stakeholders (including shareholders, employees, suppliers, customers and regulators). This might encompass risk management programs for shareholders, product safety and health information to customers, supply chain partnering and support and shared benefits programs to suppliers. </li><li>Efficiency – those sustainable development practices that make a direct or indirect contribution to the company's financial performance, e.g. waste minimisation or energy efficiency initiatives. </li><li>Market Edge – pivotal to sustainable development practices are those that contribute to enhancing a company's market opportunities, whether through creating new products and services; opening up new markets or being more responsive to existing ones; increasing market share or profit margins; or stimulating innovative new business areas.</li></ul> Leading firms that pursue high quality sustainable development practices share common cultural characteristics – breadth of vision, stakeholder empowerment and being progressive. The sustainable development approach taken by enterprises needs to fit with their culture and ways of working. The researchers developed a new concept, 'sustainability orientation', to describe the deep-seated, high level set of principles that guide the choice of effective sustainable development practices. The sustainability orientation of a company helps business decision makers make the connection between their sustainable development practices and pursuit of the distinctive character and strategic advantage of their business. The researchers consistently found this sustainability orientation in the leading companies. The common cultural characteristics evident in the sustainability orientation of leading firms were: <ul><li>Breadth of vision – big picture thinkers with a reputation for trust and integrity, they view their business in the broadest context, going beyond just compliance to being open to new ideas and mutually beneficial opportunities. </li><li>Stakeholder empowerment – fostering relationships that go beyond transactions to share power with stakeholders for mutual benefits, where stakeholders are genuine sources of new ideas and value for the business. </li><li>Being progressive – long term outlook, enthusiasm for change and new opportunities, with a commitment to growth, progress and high performance through best practice, business excellence and quality programs.</li></ul> Behaviour leads attitude. Modest, iterative steps with an end goal of creating business advantage and stimulating innovation is the best prescription for connecting sustainable development with long run business success. Motives for businesses engaging in sustainable development practices can be many and varied. Despite some of the public commentary, no motive driving sustainable development is more or less pure than another. Sustainable development does not equate to philanthropy. It is quite distinct in that the aim is to contribute materially to business goals and prospects. Companies can gain greatest mileage from their sustainable development practices through 'learning by doing' and by proceeding incrementally - building on, customising and embedding those practices that work best for their particular business and stage of development.

2007-10-31T11:58:55+09:00

139

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Sustainability - Beyond The Rhetoric Towards Better Business Performance

2005-05-16T00:00:00+08:00

2007-10-31T12:01:28+09:00

A creative economy is not Enron style 'creative' accounting says Narelle Kennedy, Chief Executive of business sponsored research think tank Australian Business Foundation, but the leveraging of ideas and innovation to generate real growth. Participating in the Australian Science Festival, the Australian Business Foundation is hosting a business briefing "From Mind to Market: Competing through Creativity", on Monday August 26. Special guest speaker will be Mr John Howkins, author of The Creative Economy. "A key theme throughout the work commissioned by the Foundation is that greater growth and prosperity comes from competing on the basis of innovation, creativity and knowledge, than from cost containment and efficiencies alone", says Ms Kennedy. Going head to head with low-cost producers is a path to failure. But Australian firms can succeed by providing customers with the novel business offerings of clever solutions to their problems. For example, a Western Sydney gearbox manufacturer has ensured its survival in a climate of intense low-cost competition and little customer loyalty by transforming themselves from a manufacturer of a single product to a unique and customised total service provider, designing, maintaining and upgrading their gear boxes in close partnership with their customers. The Australian wine industry is another example of innovation and creativity used to shift Australian wine from a commodity to a world class, premium-priced product. The use of innovation, creativity and know-how in the Australian wine industry is well documented in the Australian Business Foundation study, Australia's Wine Industry: Collaboration and Learning as Causes of Competitive Success by Professor Ian Marsh and Brendan Shaw. Mr Howkins is visiting Australia as an international speaker during National Science Week, courtesy of the British Council and Australian Science Festival Ltd. John Howkins provides strategic advice to leading British and international corporations and public agencies on creativity and communication. Australian Business Foundation, sponsored by leading industry organisation Australian Business Limited, is an independent, private sector think tank founded in 1997 in response to concerns about Australia's declining position on world competitiveness benchmarks and fuelled by the urgency for fresh insights and practical intelligence to boost Australia's capabilities and global competitiveness.

2007-10-26T17:30:13+08:00

123

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Media Release: A Creative Economy Does Not Mean Creative Accounting

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

<td valign="top"> </td><td> </td>An Australian Business Foundation Media Release highlighting the importance of creativity to business competitiveness and prosperity.

2007-10-26T17:30:13+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.

2007-10-31T14:32:34+09:00

150

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Going Global - Commentary by Narelle Kennedy, Chief Executive, Australian Business Foundation

2002-03-26T00:00:00+08:00

2007-10-31T14:32:34+09:00

Global Market or Backwater? A study of comparative pricing of technology stocks, asks the question - what drives stock valuations - country or company? The study is the first analysis of its type with the rigor necessary to permit a conclusion on this important issue, as you will see from the Executive Summary below. If you would like to access the full report please contact Tanya Davey at the ASX - email tanya.davey@asx.com.au. Executive Summary Australian technology stocks are priced as part of a global technology market is the major finding of a joint Australian Graduate School of Management/Stanford University research study. The research examined the pricing of computer/technology stocks and telecommunications stocks listed on the Australian, Israeli, U.K., and U.S.A. capital markets over the January 1995 to December 2000 period. Two key market multiples were examined - - the market capitalization to revenue ratio and the market capitalization to shareholder's equity ook value ratio. Company specific variables - - such as profitability, leverage, firm size, and growth - - are the major factors explaining why technology stocks in different markets differ in their market multiples. Some observers have maintained that country-specific rather than company-specific attributes are pivotal to high-tech stock valuation. These observers argue that the Australian capital market operates with a different pricing regime than exchanges such as NASDAQ, the New York Stock Exchange, and London Stock Exchange. The AGSM/Stanford research team finds that company specific fundamental factors (such as profitability and firm size) are more important than the country-specific factor of the stock exchange trading geography. A shifting of stock trading location from Australia to an overseas market such as NASDAQ, in and of itself, is unlikely to provide a more favorable market multiple to an Australian-based stock. This finding is consistent with the major technology capital markets focusing on business fundamentals" rather than headquarters location or primary trading location in their equity pricing policies. Firm size is a key variable capital markets incorporate into their equity pricing model. Smaller firms have higher market capitalization ratios, after controlling for other variables, for each of the four capital markets examined. This finding is consistent with capital markets recognizing the higher "growth option" with smaller companies – compound growth rates of (say) 50% p.a. over multiple years are more possible for smaller firms than for larger firms. Larger firms run into barriers due to the size of the total market (and even the total economy). While small firms may face many challenges in their product and factor markets, capital markets in each country examined recognize their special upside in terms of value creation. Profitability problems are a feature of many high-tech companies around globe. The front-end investment nature of key high-tech areas (such as software) coupled with the extreme pressure for rapid growth (in part from venture-capitalists), creates sizeable challenges for many early-stage high tech firms. Selected percentages of high-tech firms with negative net income in the 1990-2000 period range as follows: High-Tech Sector <blockquote><blockquote>1994           1997        2000 </blockquote></blockquote>Australia            62.3%      76.5%        68.1% USA                   39.5%      51.1%        62.8% These percentages are typically higher than many other sectors of the economy. The comparable percentages for all non-tech firms are: Non-High Tech Sector<blockquote><blockquote> 1994             1997           2000 </blockquote></blockquote>Australia           37.9%          40.9%        40.3% USA                  32.1%           35.7%        41.0% These results are consistent with the high-tech sector being "high risk" in a relative sense. A predominance of negative net income firms means high-tech firms have less access to retained earnings as a source of finance for growth than do many other companies. The metrics security analysts use for high-tech firms need to recognize profitability issues. Price-earnings multiples for companies reporting negative net income are not interpretable. Variables such as the market to revenue ratio and % revenue growth are applicable to a broader set of high-tech companies in their early years than are price to earnings multiples. Australian High-Tech Sector There is a premium to being a large-scale player in many areas of the high-tech sector. One reason is economics of scale - - for instance, a large customer base enables a software company to lower unit software development costs by spreading the upfront development costs over a larger number of customers. Another source of premium to scale is network externalities - - for instance, an online auction company such as eBay with many sellers in turn attracts many buyers. A virtuous circle of growth is created for one company while companies with fewer buyers and fewer sellers have their growth impeded. The Australian high-tech sector struggles with scale on multiple dimensions. In absolute dollar terms, the total Australian market is small on the global stage. The relative importance of the high-tech sector on the Australian capital market is also sizeably below that of the U.S. market. Moreover, it has fewer players of global stature. The percentage of total ASX capitalization in Telecommunications (ASX Codes 181-184) and Computer/Technology (ASX Codes 226, 228) in recent years (post the listing of Telecom NZ , Telstra, and Cable and Wireless Optus) is: 1998        1999         2000 10.7%     16.3%        10.2% The comparable percentages for the U.S. high-tech sector as a percentage of total market capitalization are: 1998        1999        2000 34.8%      47.8%      40.9% The U.S. capital market has major players in many high-tech sectors. However, the largest player is no more than 8% of the total high-tech market capitalization and the two largest at any time no more than 12%. In contrast, the Australian market is dominated by a small number of companies, predominantly Telecommunications - -Telstra and Cable & Wirless/Optus range between 55% to 70% of ASX high tech market capitalization in the 1998-2000 period. Lessons from companies achieving rapid global footprints Australian early stage companies have few Australian–based partners who themselves have a global footprint. The playing field facing an early-stage Australian company seeking global expansion is decidedly uphill. The challenge of the Australian high-tech sector is positioning companies in an industry where global forces are especially potent and where scale of the enterprise is frequently pivotal. Success stories of high-tech companies that reach scale at a global level indicate several factors. One factor is focus. Checkpoint Software, the Israeli founded security company (with firewall and virtual private network products) has achieved impressive growth in revenues (and profitability). One key attribute is its high focus on security products rather than expanding to a brand range of products (such as authentication, anti-virus, digital rights management, and so on). Companies going global outside the high-tech sector that start from a relatively small economy base also often exhibit a focused product strategy. Cemex, the Mexican cement company, has laser-beamed on rolling out a narrow product offering to multiple countries. Resmed, the Australian sleep disorder product company, has built global growth on expanding market share/entering new markets for its focused product range. Competing in a global market requires sizeable resources. Early stage companies rarely have an abundance of capital and human resources. The high likelihood of retained earnings not being a large source of likely capital adds to the resource constraints. Extensive use of partnerships and alliances is a major source of leverage to a company seeking rapid global growth. Checkpoint Software has levered partners in multiple ways. It uses an indirect sales model in which systems integrators and other resellers work closely with Checkpoint's own sales team. It has also worked effectively with other companies to create an OPSEC platform of related products that provides a broader offering than any one company. Resmed has first used third-party distributors in multiple markets in its global rollout strategy. These distributors leverage the internal resources of Resmed and enable high recognition of localization issues at an early stage. Companies going global via acquisition based strategies face the challenge of doing acquisitions when companies are "in play" rather than when they fit into an otherwise optimal global rollout. Moreover, pre-empting competitor initiatives can motivate a front ending of an acquisition plan for different markets. Computershare has used acquisitions as a key element of their global strategy. Over a short time period it has achieved a sizeable global footprint. This aggressive strategy has added to the pressures on management bandwidth. It has also increased the likelihood of earnings surprises. Research team The research team comprised George Foster, Ron Kasznik, and Baljit Sidhu. George Foster, the Wattis Professor of Management at the Graduate School of Business, Stanford University, has two degrees from University of Sydney and a Ph.D. from Stanford University. He is the author or co-author of 7 books and multiple articles. He teaches courses on startup globalization strategies, managing to IPO, and sports business management. Foster is active in the Silicon Valley business community and travels frequently between Australia and the U.S. He is an advisor to early stage companies. Ron Kasznik is Associate Professor of Accounting at the Graduate School of Business, Stanford University. A prolific publisher, his interests include corporate disclosure decisions, informativeness of financial statements, and intangible assets and the valuation of equity securities. He teaches courses on financial reporting and on the valuation of equity securities. Active in the American Accounting Association, Kasznik holds a bachelor degree from Hebrew University and a masters and Ph.D. degree from University of California at Berkeley. Baljit Sidhu is Senior Lecturer at the Australian Graduate School of Management in Sydney. Her first two degrees are from The University of Otago and she holds a Ph.D. degree from The University of Sydney. Her publications and research interests include the valuation relevance of corporate disclosure, corporate accounting policy choice and investor communications. Sidhu teaches courses in corporate financial reporting and financial statement analysis.

2007-10-31T14:44:40+09:00

151

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Global Market or Backwater? Executive Summary

2002-03-26T00:00:00+08:00

2007-10-31T14:44:40+09:00

The Minister for Industry, Science and Resources, Senator Nick Minchin, today labelled Australia's wine industry as an outstanding success story and commended its development as a shining example for other industries. Speaking while launching the study "<a href="http://www.abfoundation.com.au/ext/ABFound.nsf/a179753ea53913524a256840001f698a/1cf34f0d97d7cca94a2569380009079f?OpenDocument">Australia's Wine Industry: Collaboration and Learning as Causes of Competitive Success</a>", commissioned by the Australian Business Foundation, Senator Minchin said the wine industry had gone from success to success. "In July 1999 the value of Australian wine exports reached $1 billion for the first time and over the past 12 months, sales had further increased to $1.35 billion", Senator Minchin said. "Wine has now become South Australia's biggest export item. The wine industry is not resting on its laurels and has set a target of $4.5 billion in annual sales by 2025." The wine study's author, Professor Ian Marsh, largely attributed the growth and success of the wine industry to intra-industry collaboration. "Strong leadership within the industry has also been an essential ingredient", Senator Minchin said. The wine study also highlighted the role of Government as a catalyst to enable an industry to identify and achieve its objectives. "The Federal Government recognises the importance of helping industry realise its potential and through Action Agendas, Government and industry are working together to develop long term strategies and goals for industries", Senator Minchin said. "The Government is keen to achieve a combination of collaboration and competition in particular industries and I am interested in ideas for enhancing the Action Agenda process. "The wine industry is a wonderful example to every other Australian industry of what can be achieved by collaboration to reach clear objectives through innovation, export orientation and customer focus."

2007-10-26T15:51:57+08:00

112

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Media Release: Australia's Wine Industry sets Shining Example of Success Through Collaborative Endeavour

2000-08-23T00:00:00+08:00

A Department of Industry, Science and Resources media release, where Senator Nick Minchin launched the wine industry study.

2007-10-26T16:13:02+08:00

Australia's wine industry, which has over the past 15 years been transformed from a domestic bulk producer to a high-quality exporter, owes its competitive success to how well it has worked together as an industry. A new study, "Australia's Wine Industry: Collaboration and Learning as Causes of Competitive Success", by Professor Ian Marsh of the Australian Graduate School of Management, explores this paradox of how industry collaboration has bred global competitive success. Professor Marsh says collaboration in the wine industry helped to frame new strategies and possibilities for export and for innovation. Connections between firms, researchers, marketing bodies and other institutions incubated new economic learning. This cuts across the current approach to policy, which stresses the importance of domestic competitive conditions and firms as lone economic actors. The study was commissioned by the Australian Business Foundation, an independent, private sector think-tank. Its mission is to strengthen Australian enterprise through research and policy innovation. The Foundation was founded and sponsored by Australian Business Limited (ABL). Australian Business Foundation Chief Executive, Narelle Kennedy, says the wine industry provides a classic case of the shift from domestic commodity products to premium global brands. "And all based on the ability to marry intense competitive rivalries with robust and aggressive collaboration across the industry and its various suppliers and stakeholders," she said. Professor Marsh's study credits much of the wine industry's performance to the sharing of ideas and risks through various industry champions, institutional arrangements, industry organisations and collaborative planning mechanisms, such as Strategy 2025. This was the keystone of the wine industry's collaboration through the setting of an export objective and a growth target and identifying the actions necessary to realise the outcomes. In the mid-1980s, Australia exported 2% of total production and was a net importer of wine. Since then exports have grown to 32% of total production. Australia produces only 2% of the world's wine, but it holds 2.4% of the world market by volume and 3.5% by value. Ms Kennedy says a crucial reflection from the study is that the process of collaboration is not orderly, orchestrated, centralised or sequential. Collaboration is a more chaotic product of visionary leaders, responsive and capable firms, practical programs, negotiated agreements and government regulations. The industry-wide linkages gave a shared frame of reference, so that individual firms could recognise and take advantage of a strategic opportunity when it came along. "There is a lesson here, not merely for other Australian enterprises to adapt and achieve similar success. But for Australia to use strategic collaboration to overcome its disadvantages of being a small, distant marketplace receiving little attention from world capital markets and investors," she said. "In this way Australian firms can take advantage of their smallness and flexibility on the one hand, and to leverage into global markets on the other." Federal Industry, Science and Resources Minister, Senator Nick Minchin, launches the new report on Wednesday, August 23 at 11am at the South Australian Wine Centre in Adelaide For more information contact: Narelle Kennedy, Australian Business Foundation, ph: 02 99277438 mobile: 0418 286 995 Professor Ian Marsh, AGSM, ph: (02) 9931 9202

2007-10-26T15:47:56+08:00

111

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Media Release: Australia's World Class Wine Industry Proves the Value of Working Together for Export Success

2000-08-22T00:00:00+08:00

An Australian Business Foundation media release, highlighting that industry collaboration was central to breeding global competitive success for Australia's wine industry.

2007-10-26T16:13:44+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.

2007-10-16T16:22:18+08:00

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Going Global

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

2007-10-26T12:44:04+08:00