#think - uts business school

#thinkUTS BUSINESS SCHOOL 2014

Redesigning business

Medicine for Medicare

The leadership dilemma

#think is the official magazine for students, alumni, partners and friends of UTS Business School.

EditorLesley Parker 02 9514 3054

[email protected]

UTS Business SchoolDr Chau Chak Wing BuildingBuilding 8, 14-28 Ultimo RdUltimo NSW 2007www.business.uts.edu.au

#think is published by Mahlab Media.

Art DirectorSuzanne Cengia 02 9556 9126

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Managing EditorMartin Wanless 02 9556 [email protected]

Managing DirectorBobbi Mahlab

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© All material copyright UTS Business School 2014. Apart from any fair dealings for the purposes of private study, research, criticism or review, as permitted under the Copyright Act 1968, no part may be reproduced by any process without written permission. Enquiries should be addressed to UTS. While all reasonable attempts have been made to ensure the factual accuracy of this publication, Mahlab Media and UTS accept no responsibility for any errors contained in this publication. The views expressed in this publication are not necessarily those of UTS.

UTS CRICOS PROVIDER CODE: 00099F

3

4 WELCOME

6 HEAD & HEART Theongoingchallengeforfundraisers.

12 BACK TO EARTH Whydon’tmorecompaniestestforassetimpairment?

15 MORE THAN JUST A NUMBER Spreadsheetsthenandnow–25yearson.

16 MEDICINE FOR MEDICARE Healthspendingisnotincrisis,butitdoesneedcare.

20 HOW TO DESIGN A BUSINESS WhydosomebusinessesbetternavigateAustralia’s

high-costenvironmentthanothers?

24 COMPLETING THE CIRCLE Thecirculareconomyismorethanrecycling.

28 SENSE OF SELF Areleadersbornormade?

32 TIGER OR CUB? Gaugingtheimpactofforeignbuyersonhouseprices.

35 THE HERO MYTH The“heroentrepreneur”asamythicalcreature.

36 MAKING MARKETS Marketdesignaimstofindbetterwaystoachieve

thegoalsofgovernment,businessandsociety.

40 THE MONEY TRAIL Dobusinesseventsaddupfortheeconomy?

44 SCHOOL FOR SCANDAL Thedarksideofcelebrityendorsement.

49 THE INVISIBLE HAND Assigningadollarfigureshortchangesthevalue

ofvolunteering.

50 ABOUT UTS BUSINESS SCHOOL

CONTENTS

4

WEL

COM

E

5

It’s inevitable that the new home of UTS BusinessSchool,theDrChauChakWing

Building,willattractattentionforitsstriking

architecture.Designedbyinternationally-

renownedarchitectFrankGehry,itjoins

afamilyofbuildingsthatincludesthe

GuggenheimMuseuminBilbao,Spain.

Butrightfromthestartthefocusforus–

hereattheUniversityofTechnology,Sydney

(UTS)andwithintheBusinessSchool–

hasbeenwhatwillgooninsidethebuilding.

Asonhisotherprojects–including

educationalfacilitiessuchasthoseat

WeatherheadSchoolofManagement,MIT

andPrinceton–GehrydesignedtheDrChau

ChakWingBuildingfromtheinsideout.The

arrestingbrickworkandglasscurtainwalls

cameonlyafterhehadenvisagedaninterior

thatwouldfacilitateamore“integrative”

approachtobusinesseducation.

Wewantedabuildingthatwouldbring

transformationalchangetotheBusiness

School’sresearchandteaching.We

wantedspacesthatwouldencourage

greaterinterdisciplinarycollaboration

andcross-pollinationofideas,notonly

betweendisciplinesandresearchersbut

alsowithindustryandpractitioners.

Inthismagazine,you’llfindexamples

ofthethinkingthatisgoingonatUTS

BusinessSchoolasweenterthisnew

eraofbusinesseducation.Thesestories

providejustatasteoftheeducation,

researchandindustryengagementthat

hasoccurredoverthepastyearacrossour

coredisciplinesofaccounting,economics,

finance,managementandmarketing,and

withinourdiverseresearchcentres.

Theconsultingprojectinvolvingour

ExecutiveMBAstudentsandtheWestmead

MedicalResearchFoundationillustratesour

approachto“experiential”learning,which

occursnotjustatthepostgraduatelevel

butforourundergraduatestudentstoo.

Real-worldengagementwithbusinesses

andotherorganisationsdevelopsinour

studentstwokindsofskills:practicalones

thatpreparethemfortheworldofwork

andwhatwecallboundary-crossingskills

–skillsthatbuildontechnicalknowledge

toencompassbroadercapabilitiesin

communication,teamwork,problem-

solving,criticalandcreativethinking.

Thesearetheskillsemployersare

lookingforastheymeetnewchallenges

inafast-changing,globaleconomy.They

arealsotheskillsthatwillhelpsomeof

ourgraduatesshapetheirowndestinies

throughentrepreneurialstart-ups.

Ofcourse,theseprojectsalsohave

benefitsforthebusinessesandcommunity

groupsthatbecomeinvolved–allowingthem

totapintothefreshthinkingofourstudents

and,insomecases,gainingaccesstothesort

ofadvicetheycouldnototherwiseafford.

Ourresearch,too,isbasedinreality.We

produceknowledgewithimpact–impact

forindustryandalsosocialimpact,asyou’ll

seefromtheexamplesinside.Ourthinking

feedsintocommercialandpolicydecisions

beingmadebybusinesseslargeandsmall,

andbygovernmentatalllevels.Italso

supportstheworkofthegroupsincivil

societythathelpshapethosedecisions.

Wehopeyou’llenjoyreadingthis

magazineandthatamongitscontents

you’llfindthemesandissuesthat

provokenewthinkingabouttherole

ofbusinessinaglobalcontext.

Professor Roy Green

Dean, UTS Business School

WELCOME

7

All charities face the continual challenge of maintainingandexpandingtheirfundraising,

withsomanycausescompetingforthe

financialsupportoftheAustraliancommunity.

Ericd’Indyistheexecutivedirectorofthe

WestmeadMedicalResearchFoundation,

whichraisesmoneyforWestmeadHospital

andforWestmeadMillenniumInstitutefor

MedicalResearch.Bothsitproudlywithin

westernSydneyandserviceadiverse

andrapidlyexpandingpopulation.

“Thefirstchallengeoffundraisingis

buildingtrustwiththecommunity,by

continuallydeliveringonyourpromise,”

saysd’Indy.“Peopleneedtoknowthat

youarebringinggenuinevaluetothe

causeyourepresent,andthattheimpact

oftheworkiseasilydemonstrable.Then

inchoosinganapproachtotakeyour

messagepublic,youcombineacompelling

articulationoftheneedanditsurgency,

whiletappingintotheemotiveconnection

thatpeoplehavewithyourcause.

“Ifyourbrandstandsforsomething

easilyunderstoodbythecommunity,and

hassomeequity,thenyouarealready

halfwaythere,”hesays.“Luckilyforus,

everyoneinwesternSydneyknows

Westmead,sothat’sagoodstart.”

Thecalibreofresearchbeingfunded

bythefoundationisdemonstratedbythe

recentlypublishedwork(Nature,2014)

ofDrJamesChongfromtheInstitute.

Incollaborationwithscientistsatthe

UniversityofWashington,DrChonghas

succeededinusingstemcellsinsufficient

quantitytorepairdamagedheartmuscle

afteraheartattackinaprimate.With

20,000Australiansdyingeachyearfrom

chronicheartfailure,thisisbeinglauded

asasignificantstepforwardandhas

receivedworldwideattention.»

Westmead Medical Research Foundation has a crucial role as a fundraiser. A group of EMBA students helped

ensure its strategy was a truly 21st century one.

#thinkSTRATEGY

Headheart

EMBA graduate Clare Ferguson and Eric d’Indy of the Westmead Medical Research Foundation

8

DONOR PYRAMIDFord’Indy,thetraditionalapproachof

raisingmoneyforsuchworkthroughbig

charitygalaeventsdoesn’taddup.Such

eventsdon’tactuallygeneratesignificant

netincomeandcanleadto“donorfatigue”,

becausere-inventinggalaballsyearonyear

isresourceintensiveandexpensive.

Moreimportanttohimisbuildinga

“donorpyramid”,withabaseofdonorswho

giveseveraltimesayear,andacquiring

donorswhoarecommittedtogivingmonthly.

“We’verecentlyinvestedinaregular

givingprogram,commonlyreferredtoas

face-to-face(F2F),whichinvolvestrained

staffapproachingthepublicandasking

themtocommittobecomingaregulargiver,”

hesays.“InourfirstyearofF2Foperation,

thecampaignacquired1600newdonors.”

Theseregulargiversformthebaseof

thedonorpyramidandprovidecharities

withasustainablefundingmodel.Asmall

proportionofthisbasewillengageinmajor

giftsandbequests,activitiesthatcanbe

extremelybeneficialthoughnotasfrequent.

In2014,studentsfromtheUTSBusiness

SchoolExecutiveMBA(EMBA)program

becamepartofWestmead’sefforts,

undertakingaprojecttodevelopa21st

centuryfundraisingstrategy.

EMBAcandidatesaremid-stagecareer

executivesreadytomakethemovefroma

tacticaltoastrategicrole.AtUTSBusiness

Schooltheyareassignedwhatprogram

directorJimHutchincalls“real,meaty

businessproblems”tofix.

Studentsworkinteams,engagingin

intensive,liveconsultingprojectswithclients

suchasWestmead.Eachteamissupervised

byaprojectexecutivewhoiseithera

BusinessSchoolacademicwithindustry

experience,oraseniorbusinessexecutive.

PaulThambarofUTSBusinessSchool,

whohasacademicandindustryexperience

instrategyandaccounting,wastheproject

executivefortheWestmeadproject.

“Theroleofprojectexecutiveisakey

differentiatorinourprogram,becausethey

helpstudentstoapplypriorlearningand

toobtainprofessional,consulting-grade

outcomesforclients,”hesays.

TheEMBAprogramalsohasanAdvisory

CouncilmadeupofC-suiteexecutiveswho

volunteertheirtimetoreviewthework

donebythestudentsbeforeitgoestothe

client.OneoftheBigFouraccountingfirms,

PricewaterhouseCoopers,providessenior

stafftoserveonthisAdvisoryCouncil.

CHARITY DOLLARClareFergusonwaspartoftheEMBA

groupthatworkedwithWestmead.

“WelookedatwhattheFoundationand

othermedicalcharitiesweredoingand

undertookresearchintothenot-for-profit

environmentinAustralia,andcompetition

forthecharitydollar,”saysFerguson,who

isnowanEMBAgraduate.“Wethenlooked

atthetargetmarketofwesternSydney,

whichisverymulticultural,withmanyfirst-

generationimmigrants.

“WiththesupportofUTS,weinterviewed

people,didourownresearch,analysedthe

informationandturneditintoconclusions,

recommendations,andstrategies.”

Afterthreemonths’work,thestudents

presenteda70-pagereporttothe

FoundationBoardforconsideration.

Akeyrecommendationwasthe

integrationofmultiplebrands–Westmead

Hospital,WestmeadChildren’sHospitaland

theMedicalResearchInstitute–intoone

campus-wideWestmeadbrand,toavoid

duplicationand“donorcannibalism”.»

THE TRADITIONAL APPROACH OF RAISING MONEY FOR SUCH WORK THROUGH BIG CHARITY GALA EVENTS DOESN’T ADD UP

9

#thinkSTRATEGY

10

Executivedirectord’Indysaysit’sa

recommendationthat’sbeingdiscussed.

“Weseethelong-termbenefits,andthisis

astrategythatseveralorganisationshave

contemplatedforlonger-termstrengthening

oftheWestmeadbrand,”hesays.“Weneed

togetagreementfrommultiplestakeholders

[todothis],anditisstillinnegotiation.”

Anotherrecommendationwastolook

atthepossibilitiesfordigitalcampaigning,

somethingtheFoundationalreadyhadin

developmentwithitsnew“ShareSome

Love”program.Forasmalldonation,

participantscansendadigital“heart”and

apersonalmessagetoalovedone,viathe

sharesomelove.org.aucampaignpage–

perhapstotheparentsofanewbaby,or

tosomeoneundergoingtreatmentinthe

hospital,oreventoshowtheirgratitudetoa

doctororanurseforthecaretheyoraloved

onereceived.Themessageisdisplayedona

massivemonitorinthemainentrancetothe

hospital,whichalsofeaturesanine-metre-

longwallpromotingthecampaign.

Thestudentssuggestedalsocreating

anappforvisitorstothehospital,totiein

withthisstrategy.Suchanappwouldsupply

usefulinformationaswellastheopportunity

toquicklydonate.

Theyalsosuggestedexploring

non-fundraisingrevenuestreamsfrom

thesmall-to-mediumenterprisesector.

TheFoundationiscurrentlyresearching

andbuildingabusinesscasetolauncha

corporatehealthchecksprogramthattaps

intotheresourcesofWestmeadHospital.

“TheEMBAstudentswerevery

professional,veryengaged,andputinalotof

hoursinrapidlydevelopingtheirknowledge

ofthenot-for-profitsector–whichwas

foreigntoallofthem,”d’Indysays.“They

werewellsupportedbyUTSandcameup

withwell-tested,fullfinancialanalysisand

well-researchedideas.”

Fergusonsays:“Itwasagreatfeelingto

knowthattheworkIwasdoingwashelping

thisorganisationcontinuetheamazingwork

thatitdoes.”

IT WAS A GREAT FEELING TO KNOW THAT THE WORK I WAS DOING WAS HELPING THIS ORGANISATION CONTINUE THE AMAZING WORK THAT IT DOES

11

REALITY DRIVENFergusoncametotheEMBAprogramafter

workinginoperationsrolesfor15years

acrossindustriesasdiverseascargo

shipping,taxconsultancyandnowlegal

services.Shehadfoundnothavingan

undergraduatedegreewasholdingher

back.“Iwantedtogetabroaderbusiness

understandingoftheindustriesIwasin,

andtomovemyselfuptheladder,”shesays.

ShewasattractedtotheEMBAcourse

mainlybecauseofitscohortmodel,with

studentsbeingformedintogroupswith

whomtheycompletetheentirecourse.

“DespitebeingfromSydney,Iworked

overseasformostofmy20s,sothecourse

alsoallowedmetodevelopanetworkof

localbusinesscontacts,”Fergusonsays.

Foranothermemberofthegroup,Parambir

Sandhu,theprogramwasasteppingstone

fromHRintoacareerinconsultingwith

PricewaterhouseCoopers(PwC).

LynetteNixon,director,DealsInnovation,

PwCAustralia,says:“BecauseParambiris

abletocombinethecontentshehaslearned

viatheEMBAwiththepracticalexperience

ofworkingontheclientprojectsduringthe

course,shebeginsherconsultingcareer

astepupfromothergraduatesinterms

ofstrategicknowledge,knowingtheright

questionstoaskandtheoverallquality

ofherthinking.Itisalwaysgroundedin

outcomesfortheclientversusthe‘theory’

ofhowsomethingisdone–theseareterrific

attributesforconsultantstohave.”

AssociateProfessorHutchinsaysthe

valueofreal-worldengagementswithclients

likeWestmeadisimmense.

“Whatwe’retryingtoachievewiththis

programisverydifferentfromaconventional

MBA,”hesays.“Thefocusisonpractical,

experientially-basedlearning–whatwecall

reality-drivenrigour.”

Ratherthanporingovercasestudies

fromtextbooks,theEMBAcandidateswork

with“live”subjects.“Fromourperspective,

casestudiesaretobusinessschools

whatcadaversaretomedicalschools,”

AssocProfHutchinsays.“Theyprovide

forwonderfullearning,butthelearning

isincompletebecauseyouknowthe

outcomebeforeyoustart–andyoudon’t

getanylivefeedback.”

#thinkSTRATEGY

12 Professor Peter Wells and Dr David Bond

Back

Q

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nally

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. But

rese

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it is

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13

#thinkACCOUNTING

When Qantas reported a $2.8 billion net lossforthepastfinancialyear,impairment

charges–whichbringtoaccountfalls

inthevalueofbusinessassets–wereby

farthebiggestcontributor.

Theairlinerecordedanimpairment

chargeof$2.56billiononitsinternational

operations,alongwith$387millionin

impairmentsonotherbusinessassets.

Thenewspromptedmediareportsof

a“horrorloss”butcameasnosurprisetoa

groupofresearcherswhohadbeenworking

onaprojectevaluatingtheassetimpairment

decisionsofAustraliancompanies.

“Theseimpairmentsshouldnothave

beenasurprise,”saysProfessorPeter

Wells,headoftheAccountinggroup

atUTSBusinessSchool.Qantas’book

valueofequityhadexceededitsmarket

capitalisationbythisamountforyears–

anindicatorthatimpairmenttestingwas

necessary,ProfWellssays.Italsohada

recordofpoorprofitability.

“So,whatwasunexpectedwasnotthe

magnitudeoftheimpairmentsbutthatit

tooksomanyyearsfortheimpairments

toberecognised.”

ENDEMICAccountingstandardAASB136identifies

arangeoffactorsthatcouldindicate

impairmentandprovideapromptfora

businesstoreviewitsvaluations.Italso

setsouttheproceduresbusinessesmust

followtoensureassetsaren’tbookedat

morethantheir“recoverableamount”.»

14

Therecoverableamountisthevaluethat

arisesfromtheuseoftheasset(knownas

valueinuse)ortheamountthatcouldbe

recoveredbysellingtheasset(fairvalue).

Iftherecoverableamountfallsbelowthe

bookvalueoftheassetintheaccounts,the

businessmustrecordanimpairmentloss.

UTSBusinessSchoolresearchers

havegonethroughhundredsoffinancial

statements,from2000to2012,toexamine

impairmentdecisions.Amongotherthings,

theywantedtocomparedecisionsbefore

andaftertheimplementationofthecurrent

accountingstandardonassetimpairment,

AASB136,inthemiddleofthatperiod.

Theresearchers,ProfWells,DrDavid

BondandDrBrettGovendir,wantedto

betterunderstandhowcompanieswere

implementingthestandard,especiallyas

biggapsbetweenbookvalueandmarket

capitalisationwereapparentforanumber

ofhigh-profilecompanies–something

thecurrent,moreprescriptivestandard

identifiedasanindicatorofimpairment.

Itquicklybecameclearthissortof

gapbetweenmarketandbookvaluewas

“endemic”,saysDrBond.“Thismarket-

to-bookmeasuresuggestscompanies

shouldatleastbetestingforimpairment,

ifnotrecordingimpairmentlosses.”But

thiswasn’toccurring,oritwasdelayed.

“Whenthere’sagaplikethis,in

essencethemarketissayingtheassets

ofthebusinessareworthalotlessthan

thedirectorsaresaying,”DrBondsays.

“Someonehastobewrong.”

InthecaseofQantas,DrBondsays

thatforthepastthreeyears–upuntil

themostrecentearningsannouncement

–Qantas’marketcapitalisationwasless

thanhalfitsbookvalue.“Itwasanindicator

ofimpairment,butupuntiltheearnings

announcementinAugusttherehadn’tbeen

amaterialassetimpairment.”Norwasthere

anycommentaryfromQantasoverthis

periodtoexplainanydecisionnottoimpair

assets,hesays.

Thecircumstancesunderwhich

companiesshouldberequiredtopublicly

addressadecisionnottorecordan

impairmentmaybeaquestionforregulators

toconsider,DrBondandProfWellssay.

BOOK TO MARKETTheimpairmentannouncementbyQantas

lastAugustlargelyclosedthegapbetween

itsmarketandbookvalue.

FairfaxMediawasanotherprominent

exampleofacompanywiththissortofgap,

DrBondsays.Itreportedabookvaluein

excessofmarketvalueforanumberofyears

beforefinallymakingassetimpairmentsof

$2.87billioninitsearningsreportfor2011-12.

Altogether,theUTSBusinessSchool

researchershaveanalysed1853financial

reportsfromcompanieswherebookvalue

exceededmarketvalue.Onlyaquarter

ofthecompaniesintheresearchsample

recognisedanassetimpairment.When

impairmentsoccurred,theyweregenerally

relativelysmall.

Onapositivenote,therewasagreater

recognitionofassetimpairmentafterthe

introductionofAASB136,butthesizeofthe

impairmentsremainedgenerallyquitesmall,

theresearchersfound.

DrBondsaystheresearchaddresses

severalquestions:Arefirmscomplying

withthenewstandard?Istheresufficient

disclosureaboutdecisionsnottoimpair

assets?Whenimpairmentsoccur,dothey

gofarenough,especiallywithregardto

intangibleassets?“Thesequestionsareof

concerntostandardsetters,financialmarket

regulatorsandusersoffinancialstatements,

includinginvestors.”

#thinkACCOUNTING

THE MARKET IS SAYING THE ASSETS OF THE BUSINESS ARE WORTH A LOT LESS THAN THE DIRECTORS ARE SAYING. SOMEONE HAS TO BE WRONG

15

#thinkACCOUNTING

More

Twenty-five years ago, not many Australianshadamobileletalone

anemailaddress,laptopswerefor

peoplewithstrongarms,andfor

mostaccountantsspreadsheetswere

actuallythat:largesheetsofpaper,

notavitalpieceofsoftware.

TheBachelorofAccounting

programattheUniversityof

Technology,Sydney,ismarking

its25thanniversary,havingbeen

establishedaquarterofacentury

agoasauniquepartnershipbetween

UTSandtheaccountingindustry.

Thisprestigiousprogramattracts

500-plusapplicationsayearfor

about35placesandhasgraduate

employmentofabout95percent.

Today,asin1990,everystudent

selectedreceivesafullscholarship

andallcompleteinternshipswith

“bluechip”industrysponsors.

Amongthem,LendLease,Coca-Cola

AmatilandWestpachaveallbeen

involvedsincethestart;National

AustraliaBank/MLC,Allianzand

PricewaterhouseCoopershavebeen

onboardformorethan20years.

“Wewerealwayslookingfor

specialpeople,”recallsArieSietsma,

foundationcoursedirectorwhenthe

firststudentsfiledintotheroomall

thoseyearsagoin1990.

Whilemanystudentscome

withhighATARscores,theprogram

hasalwayslookedbeyondthisto

otherqualities.

Inparticular,theprogram

looksforstudentswithleadership

potential.Sietsmarecallsone

studentfromanunderprivileged

backgroundwhohadmadeahuge

impactathishighschool–rebuilding

theschool’sspiritbyleading

socialactivitiesandprojectsto

improvetheschoolenvironment.

Ifleadershippotentialwas

whattheprogramwaslookingfor,

itcertainlyfoundit,withalumni

includingbusinessleadersofthe

calibreofKateGoodman(managing

director,KimberlyClarkVietnam)

andCourtenaySmith(group

financialcontroller,LendLease).

CURIOSITY“Mydegreemademecurious

abouttheworld,asallgood

educationshould,andalsotaught

mehowtothink–ratherthan

whattothink,”saysAdrianCoppini,

whowasinthatfirstintake

andisnowgeneralmanagerof

StrategyandBusinessServices,

WealthManagementAdvice,at

CommonwealthBankofAustralia.

AkeyattractionforCoppiniwas

beingabletocompletethecoursein

threeyears,includingprofessional

experience.HeinternedwithLend

LeaseandIBM,bothconsequently

providingpart-timeworkthathe

undertookintandemwithhisstudies.

REAL WORK“Thecoursesponsorswerereally

goodatgivingstudentsrealwork,

morelikegraduatejobsthan

internships,”herecalls.Thissort

ofworkexperiencemeantCoppini

wasabletocompletehisCPAby

age21–atthetimetheyoungest

evertodoso.

Coppini’sfirstjobongraduation

waswithAMP,oneoftheoriginal

sponsors.There,heacquireda

mentorinBruceNation–“always

sopassionateaboutaccounting”.

“Ifyoucangettheright

opportunitystraightoutofuniversity,

itsetsyouontherighttrajectory.”

Ultimately,Coppinibelievesthe

programprovidesstudentswitha

veryrealisticexpectationoftheworld

ofwork,atthesametimeproviding

employerswithgraduateswhoare

quitedriven.“It’sallaboutputting

peopleintherightenvironment

wheretheycanflourish.”

A ground-breaking accounting degree has been turning out leaders for 25 years.

than just anumber

16

THE COST OF LIVING IS STAYING RELATIVELY LOW. IT’S THE COST OF DYING THAT’S SO EXPENSIVE

17

#thinkPOLICY

Medicine

Professor Jane Hall

Medicare

We are repeatedly told that Medicare as we knowitisunsustainable.Treasurymodelling

showshealthcareeatingupmoreandmore

ofournationalwealthincomingdecades.

Australiacurrentlyspendsaboutnineper

centofitsgrossdomesticproduct(GDP)on

health.TheCommonwealthGovernment’s

shareaccountsforaboutfourpercentof

GDP,andthisfigureissettoalmostdouble

tomorethansevenpercentofGDPby2050.

“Treasurerslookatthosenumbersand

theydon’tlikeit,”saysUTSBusinessSchool

ProfessorofHealthEconomicsJaneHall.

“Theythinkhealthcareisgoingtoeatthe

Commonwealthbudget.”

Nowonderthere’spublicconcern

aboutwhetherwe’llbeabletocounton

Medicaretodeliverinthefuturewhatwe

gettoday.Butresearchandanalysisby

ProfHallandcolleaguesattheCentrefor

HealthEconomicsResearchandEvaluation

(CHERE)attheUniversityofTechnology,

Sydney,suggestssomeofthemoredire

prognosesforoursystemofhealthfunding

maybetoopessimistic.Theresearchalso

pointstoconsideredstepswecantaketo

ensureMedicareremainssustainable.

MIDDLE OF THE ROADSo,what’sbehindtheprojectedincrease

inhealthspending?Demographicsispart

oftheanswer–thoughonlypart,saysProf

Hall.In1970,onein12Australianswasaged

over65;by2050oneinfourAustraliansis

expectedtofallintothisgroup.

“Deathreallyhasgoneoutoffashionthis

century,”ProfHallsays.“Inthepast60years

thedeathratehasfallentoaboutathird

ofwhatitwasjustagenerationago.That’s

remarkable,andit’ssomethingweshould

becelebratingnotbemoaning,”shesays.»

Is the Medicare system as it exists today sustainable in the long term? Professor Jane Hall says health spending is not in

crisis but it does need care.

18

Nevertheless,anothercompelling

statisticisthefactthata75-year-oldman

todayusesdoubletheMedicare-funded

serviceshisfatherwouldhaveused,ifhe

survivedto75,twodecadesago.

“Thequestionpeopleareaskingis,can

thecountryaffordtherisingcostofhealth

careforthisageingpopulation?”ProfHall

says.IstheMedicaresystem,asitexists

today,sustainableinthelongterm?

Inseekingtoanswerthisquestion,Prof

HallfirstpointstohowAustraliacompares

withotherdevelopednationsinspendingon

health.Therealityisourhealthspendingis

modestbyinternationalstandards,shesays,

andevenifAustraliaachievesonlymoderate

economicgrowthwewillhavemorethan

enoughfundstomeettheprojectedincrease.

“Infact,Australiaisverymiddleofthe

roadwhenitcomestospending,”shesays.

“We’renotseeingablowoutofhealth-care

costs;we’reactuallydoingquitewellin

internationalterms.Comparedwithother

countries,theimpositiononourbudget

doesn’tlookunmanageable.”

Butwillthatremainthecaseifhealth-

carespendingcontinuestogrowsoquickly?

ProfHallsaysit’simportanttoconsider

thatwhilehealthspendingwillgrow,so

tooshouldournationalwealth.Thesums

improveifwefactorinatleastamodest

increaseinGDP.

“Ifweassumethatweexperience

economicgrowthatavery,verymodest

rate–atthelowestratethatwe’veseen

inthepast40years–in40years’timewe

willhavealotofextrawealthtospend,”she

says.“Evenifhealth-carespendingdoubles

asforecast–growingatamuchfasterrate

thanoureconomicwealth–itwillstillbea

relativelysmallproportionoftheincreased

nationalwealthwe’relikelytohave.

“WhenIlookatthenumberslikethat,

Ican’tseethesustainabilityproblem,”

ProfHallsays.

END OF LIFEEvenso,lookingforsavingsandgreater

efficienciesinthehealthsystemis

worthwhilewhensomuchofournational

productionisatstake.Thisisnotacrisis

thatneedsemergencymeasures,however,

ProfHallsays.Rather,itrequirescareful

andconsideredstrategies.

ProfHallpoints,forexample,to

researchonhealthspendingattheendof

life.Thisresearchcomparesthehealth-

carecostsofover-65“survivors”,wholive

fromoneyeartothenext,andtheover-65s

whodieinthatsameyear.

“Whatweseeisthecostofliving

stayingrelativelylow,”shesays.“It’s

thecostofdyingthat’ssoexpensive.”

Why?“Well,ifwelookatwherewe

die,whatweseeisthatthemajorityof

Australiansdieinhospital,”ProfHallsays.

DatafromastudyinwhichCHEREhas

beeninvolved,lookingathealth-carecostsin

thesixmonthsbeforedeath,showsthere’s

notmuchchangeinspendingonmedicines

andout-of-hospitalhealthservicesinthat

period,andthatemergencydepartment

visitsrisejustalittleattheend.

“Itisin-patienthospitalcarewhereso

muchmoneyisbeingspentinthefinalsix

months,”ProfHallsays.

That’sdespiteresearchindicatingthat

mostofusdon’twantmajorinterventions

asthisstage.“AsurveyofAmerican

physiciansaskingthemtoimaginethey’re

inaterminalstageofillnessfoundthatthe

onlythingtheywouldreallywantwaspain

relief,”ProfHallsays.

“Alltheothermore,shallwesay,

‘heroic’interventions–CPR,ventilation,

surgery,andsoon–mostpeopledon’t

wantthem.Butthat’swheresomuch

moneyisgoing,”shesays.

Finally,whataboutquestionsbeingraised

aroundthedegreetowhichweare“entitled”

togovernment-fundedhealthcare?

19

#thinkPOLICY

A 75-YEAR-OLD MAN TODAY USES DOUBLE THE MEDICARE-FUNDED SERVICES HIS 75-YEAR-OLD FATHER WOULD HAVE USED TWO DECADES AGO

SHARE THE RISKProfHallsayshealth-carefinancingrequires

someformof“insurance”.“Theriskofillness

isveryuncertain.Wedon’tknowwhichof

uswillgetsickandwhichofuswillgetsick

withreallyexpensivediseases,”shesays.

“Thereforeweneedsomeformofrisk

‘pooling’–weneedtosharetherisk.”

Butweknowthatifweleavehealth

financingtothestandardinsurancemarket,

someindividualswillbeexcludedfrom

coverbecausetheyaredeemedtoohigha

risk.“Wealsoknow–andcandemonstrate

theoreticallyverysatisfactorily–thatthose

peoplewhoarelowrisks,intermsoftheir

chanceofillness,willbuylesscoverthan

thelevelthatwouldoptimisetheirwelfare.”

Governmentfinancingofhealthcare

isalsoaformofinsurance,ProfHallsays.

“Andit’sperfectlylogicalandrationalto

wantgovernmenttoprovidethat–notas

anentitlement,butasinsurancepaidfor

byourtaxes.”

Ifdeathandtaxesareinevitable,ProfHall

says,thenthemessageisthatweneedto

reclaimdeathandhowwedie,andweneed

toreclaimourtaxesandwhattheyarefor.

“Weneedtoknowexactlywhatwe

wanttohappentousinthelastpartofour

lives,andifwebelievethemosteffective

andfairestwaytoprovidehealthcareis

throughgovernment-providedinsurance

thenthatisnotanentitlement,itisthe

government’sjob.”

21

#thinkINNOVATION

Professor Sam Bucolo

It’s a stark statistic: over the past 50 years themanufacturingsectorhasshrunkfrom

nearlyathirdofAustralia’seconomytojust

10percent.It’snowonderthedecisionby

thebigcarmakerstoceaseoperationsin

thiscountrybetweennowand2017has

becomeengravedonthepublicmindas

“thedeathofmanufacturing”.

There’snodenyingthechallenges

Australianmanufacturers,bigand

small,face.Yetit’salsotruethatsome

manufacturershavemanagedtoprosper

despitehurdlessuchasrelativelyhigh

labourcostsandthestubbornlystrong

Australiandollar.

Whydothosebusinessessucceed

insuchanenvironmentwhenothers

fail?Whydosomebetternavigatethe

challengesthanothers?That’sthe

questionProfessorSamBucoloofthe

UniversityofTechnology,Sydney,andDr

PeterKingofAustralia’snationalscience

agency,theCSIRO,soughttoanswerin

researchforthefederalgovernment.

Whattheyfoundwereanumber

ofattributesthatthesesuccessful

manufacturershadincommon,centering

onwhathasbeendubbeda“design-led”

approachtoinnovation.

“InAustralia,weareverygoodat

technology-driveninnovationandwe’re

verygoodatefficiency-driveninnovation,”

saysBucolo,ProfessorofDesign

InnovationatUTSandco-founderwith

ProfessorKeesDorstofitsnewDesign

InnovationResearchCentre(DI:rc).

Butinahigh-costenvironmentthere’s

littlepointintryingtocompeteonprice.

“Inthisenvironment,it’snon-technological

innovation–aroundcustomerexperience,

forexample–that’sjustasimportant,ifnot

moreimportant,”ProfBucolosays.

InthereportDesigningforManufacturing

Competitiveness,ProfBucoloandDrKing,

managerofDesignIntegrationinCSIRO’s

FutureManufacturingFlagship,lookat

14high-performing,globallycompetitive

manufacturingfirmsthatusedesign

principlesinareasasdiverseasmining

equipmentandmicrophones.

TheseincludeRØDE,whoseaward-

winningmicrophonesareusedinmore

than100countries;Codan,whichsupplies

sophisticatedcommunicationsequipment

andmetaldetectors;andSuperior,whose

flotationdevicesareusedinmarineand

miningoperations.

Whattheresearchersfoundwasthat

thesebusinesseshadfivethingsincommon.

First,theywereclearabouttheirpurpose.

ProfBucologivestheexampleofabusiness

that“killed”181projectssoitcouldredirect

itseffortsintojustfour.Ittookclarity–and

leadership–toshutthoseprojectsdown.»

Why do some businesses succeed in a challenging environment when others fail? A different way of thinking may be the answer.

NON-TECHNOLOGICAL INNOVATION IS JUST AS IMPORTANT, IF NOT MORE IMPORTANT

22

Second,thesuccessfulbusinesseshad

“become”theirmarket.They’dimmersed

themselvesintheworldoftheircustomers,

andtheircustomers’customers.“Everyone

ofthemgotoutoftheofficeandoutoftheir

labs,”ProfBucolosays–notjustthesales

teambutalsotheC-suite.“Itwasabout

activelysharingtheirideasandprovoking

thecustomer,”hesays.

Inaddition,theywerethe“disruptor”,

ratherthanbeingdisruptedbyothers.“All

ofthemwouldactivelydisruptthemselves,

bysaying,‘Ifwe’renotthinkingaboutthis

maybeourcompetitorsare’.Theylookedat

alternativefutures.”

Theyfocusedontheverticalintegration

oftheirbusinessmodels–breakingtheir

businessmodelsapartandputtingthem

togetheragaininnewways.

Finally,they“owned”thechange

experience,investingtime,peopleand

financialresources.“Thishastohavesenior

leadersupportandworkitswaythroughthe

organisation,”ProfBucolosays.“Youcan’t

outsourcethis.”

Allfiveoftheseprinciplesneedtobe

presentforsuccess,notjustoneortwo,Prof

Bucolosaysoftheframeworkthatcame

togetherintheDesigningforManufacturing

Competitivenessreport.

DESIGN AS A VERBUnderpinningthisframeworkisthe

applicationofpracticesborrowed

fromthedesignworld.

ProfBucoloisaformerindustrial

designerwhobecamefrustratedthathe

was“designingsolutionsforthewrong

problems”.Forbusiness,designshouldnot

beanounbutaverb,hesays.“It’saprocess,

andquitearigorousprocess.”

Sohowdoyouthinklikeadesigner?

“Designthinkers”startwithempathy,Prof

Bucolosays.“It’sapeople-firstapproach.”

Designthinkingisalsointegrative;designers

trytodrawasmanythreadstogetheras

possible,hesays.

Designersarealsoveryoptimistic.

“Theyalwaysassumethere’sonemore

answerandtheykeepbuilding.Theyuse

experimentsandtheyconstantlylearn–

thatlearningcultureiscritical,”hesays.

Anddesignersareverycollaborative.

Withtraditionalbusinessthinking,“asa

leaderyouarerewardedforgettingtothe

answerfirst.Yourationaliseyourthought

process,takeoutallthevariablesandtryto

gettotheonerightanswer.Designthinkers

dosomethingverydifferent.”

Theyconstantlyreframeproblems,he

says,drawingoutthecontradictionsand

constraints,andtheyrecognisetherewill

bemultipleanswers.

THEY ALWAYS ASSUME THERE’S ONE MORE ANSWER AND THEY KEEP BUILDING

23

#thinkINNOVATION

GLOBAL LEADER NigelSpork,managingdirectorofCentor,a

companyfoundedmorethan60yearsago

byhisgrandfather,hasbeenthroughthis

design-ledinnovationprocess.Asaresult,

Centorhasjourneyedfromfinancialdistress

in1997tobecomeagloballeaderinwindow

anddoorsystems.

Itwasthebusinessthatthreeyears

agocancelled181projectstofree

23full-timestaffto,inSpork’swords,

“designanewfuture”.Theresultwasnot

justanewdoorbutanewcategoryof

door–theIntegratedDoorthatincludes

featuressuchasinsectscreensaspart

ofthedesignratherthanhavingthem

separateandvisibleevenwhennotin

use.Theprojecthasproduced16patent

applicationsandrecognitionincludinga

UKGrandDesignsaward.

Today,SporkisaDesignLedInnovation

“champion”sharinghisexperiences

throughtheDesignThinkingforExport&

CompetitivenessHub,whichisaninitiative

ofMETA(ManufacturingExcellence

TaskforceAustralia)thatisbeingfacilitated

byDI:rcatUTS.

AnotherMETADesignLedInnovation

ChampionisNickWhite,chiefexecutive

ofGourmetGarden,whorealisedabout

fiveyearsagothecompanyneededto

dosomethingdifferenttogetbeyondthe

15percentmarketpenetrationithad

achievedwithitsherbproducts,knownfor

theirtubepackaging.

Thedesign-ledinnovationprocessthat

followedresultedinaworld-firsttechnology:

lightlydriedherbsandspiceswhichrefresh

totheirnaturalstatewhenusedincooking.

Theirinnovativepackagingwona“bestin

category”awardintheAustralianGood

DesignAwards.

Thereisevidencethatbusinesseslike

these,thattakethetimetorethink,do

endupachievinggreatergrowth,Prof

Bucolosays.“We’veseenthatintheUS,

theUKandNewZealandandnowwe’re

seeingithere.”

Driving change

Tapped on the shoulder, 10 of BMW’s best engineers were pulled out of its huge research and development campus in Munich and closeted away in an innovation “war room” carved out of a dirty car assembly shop.

It was 2007 and BMW had just announced a new strategic plan to address challenges such as rising materials prices, the depletion of fossil fuel reserves, stricter regulation, growing environmental awareness and limits on mobility in densely populated areas.

The team of 10 was tasked with “reshaping the future” and nothing was off limits, says Volker Richter, BMW vice-president for Customer-Focused Quality Management and today an international member of UTS Business School’s Advisory Board.

The German manufacturer had decided its strategic objective was to be “the leading provider of premium products and premium services for individual mobility”. In other words, it didn’t just sell cars, it sold mobility; it didn’t just sell products, it sold services.

“This was a revolution,” Richter says, and it opened up lots of possibilities. “All of a sudden the car itself was no longer the only solution.”

Given the freedom to imagine a new future, the hand-picked team focused in on the electric car, lightweight carbon fibre-reinforced plastic (CFRP) as a material and, longer term, fuel-cell technology.

The public result of their work was the new BMW i3 and BMW i8. On the factory floor, it was a new production process. The traditional linear movement from press shop to body shop to paint shop to assembly was replaced with the simultaneous production of two assemblies to be joined at the end – halving production time.

The third part of the equation was services, with BMW innovating around leasing and add-ons such as parking apps.

24

Inbuilt obsolescence is obsolete – welcome to the new industrial model known as the circular economy.

The circular economy is an idea that has beengainingtractioninbusiness,political

andenvironmentalcircles.Itwasthesubject

ofareportreleasedattheinfluentialWorld

EconomicForumin2014andithasearned

itsownchapterinChina’sfive-yearplan.

Prominentbusinessessuchas

electronicsgiantPhilipsandconsumer

productsmultinationalUnileverareamong

thosebuildingitsprinciplesintotheir

operations,tacklingnaturalresourcelimits

withnewwaysofdoingbusiness.

InAustralia,it’saconceptthatunderpins

thethree-yearWealthfromWasteresearch

collaborationtargetingthe$2billionayear

losttotheAustralianeconomyfromfailure

torecyclewastemetals.

Butthecirculareconomyisn’tjust

aboutrecycling,saysUTSBusinessSchool’s

ProfessorofSustainableEnterprise,

SuzanneBenn.Thisnewmodelofindustrial

productionrequiresanewwayofthinking,

fromdesign,throughproduction,andin

useandreuse.

Currently,thedominantmodeofmaking

andusingthingsinoureconomyinvolves

diggingupresourcestomakeproductsand

buildinfrastructure,thenlaterdiscarding

thosematerialsaslandfillorrecyclingthem,

saysAssociateProfessorDamienGiurcoof

theInstituteofSustainableFuturesatthe

UniversityofTechnology,Sydney.“Thisisa

‘take,makeandmostlydispose’economy.”

Manypeoplemightbesurprised–and

concerned–toknowthat,globally,only

about20percentofthevalueofmaterials

usedintheconsumergoodssectoris

recoveredwhile80percentgoestowaste.

InAustralia,abouthalfofourwasteis

recycledbutthevolumeofwastegoing

intolandfillcontinuestorisebecauseour

economicoutputisgrowingatthesame

time.Sorecyclingisn’ttheansweronitsown,

ProfBennsays.“Oftenwearethrowingaway

valuableresourcesinthislinearmodel.”»

CIRCLE

Professor Suzanne Benn

Completingth

e

THIS NEW MODEL OF INDUSTRIAL PRODUCTION REQUIRES A NEW WAY OF THINKING, FROM DESIGN, THROUGH PRODUCTION, AND IN USE AND REUSE

#thinkSUSTAINABILITY

26

Thingscanonlygetworseasthreebillion

newmiddle-classconsumersenterthe

globalmarketinthenext15years,shesays.

CRADLE TO CRADLEThisiswherethecirculareconomycomes

in,buildingonideassuchas“cradleto

cradledesign”toaddresstheseunnecessary

resourcelosses.

“Morerecyclingispartofit,butthe

circulareconomygoesmuchfurther,”

ProfBennsays.“It’samodelofindustrial

productionthatinvolvesdesigning

productssotheylastlonger,sotheycan

berepairedandupgraded,sotheycanbe

reusedorresold,andsotheirmaterials

canbeusedinremanufacture.”Carpet

companiessuchasDesso,forexample,

havecreatedsystemstotakebackcarpet

fromitscustomerssothecompanycan

reuse,sellorrecycletheyarn.

“It’samore‘restorative’process,

wherecomponentsandmaterialscan

bereusedmanytimes,”ProfBennsays.

Inacirculareconomy,thereuseand

remanufacturingofproductsbecomes

standardpractice,sothatcompaniesstart

to“closetheloop”ontheiroperations,

ProfBennsays.

“It’sanexcitingapproachbecauseit

encouragesnewbusinessmodelsand

opensupopportunitiesforconvergence

withrevolutionarydigitalpracticeslike3D

printing,”saysAssocProfGiurco,whois

leadingtheUTScomponentoftheWealth

fromWasteproject.

Butitdoesrequireashiftinmindset

onthepartofbusinessesaccustomedto

generatingongoingrevenueviaplanned

orinbuiltobsolescence.

Oneexampleofthesortofswitch

thatmightbeinvolvedisforbusinesses

tostartsellingservicesinsteadof

products–forexample,selling“hours

behindthewheel”ratherthanselling

cars,whichiswhathappenswithcar-

shareschemessuchasGoGet,Hertz

24/7andGreenShareCar.

Thissortofchangeisstartingtohappen,

butthereportlaunchedbytheWEFandthe

EllenMcArthurFoundationatDavoswas

abouthowtoscaleupthecirculareconomy

model.TowardsaCircularEconomyspelled

outabusinesscasewherethecircular

economymodelwouldleadtoatleast

$1trillioninsavingsimmediately,and

potentiallymuchmoreinyearsahead,ina

worldeconomythat’s$72trillioninsize.

ThealliedProjectMainstream,which

involvespartnerssuchasPhilips,Unilever,

techcompanyCiscoandcarmakerRenault,

isdesignedtopromotecollaborationin

pursuitofthecirculareconomy,particularly

acrossthemassiveglobalsupplynetworks

ofkeyindustrysectors.

MAINTAIN PROFITSTheforecastsavingswouldflowfromwaste

reductionandlowercapitalrequirementsfor

businesses,ProfBennsays.

RemanufacturingandrecyclinginEurope,

forexample,employsmorethanonemillion

people.Renault,forone,hasfoundthatwhile

remanufacturingismorelabourintensive,

profitsaremaintainedbecauseofreduced

wasteandlowercapitalexpenses.

Otherpotentialbenefitsincludegreater

innovation,jobcreationandlessvolatilityin

thepricesofbusinessinputs.

“Anumberoffactorswillhelpdrive

progresstowardsacirculareconomy,”

Bennsays.“Businesseswillincreasingly

bemotivatedtodomorewithlessas

water,energyandresourcesbecomemore

expensiveincomingdecades.”

Companieshavealreadyexperienced

massivepricerisesforoil,energy,metals

andfoodsofarthiscentury.

“Inwhatisachallengingtimefor

manysectorsoftheAustralianeconomy,

unlockingthepotentialofthecircular

economywillensureAustraliancompanies

retaintheircompetitiveadvantage,”Prof

Bennsays.“Thecirculareconomyoffersthe

potentialofjobcreationandinnovationand

apathwaytoaresilienteconomicgrowth.”

27

#thinkSUSTAINABILITY

Wealth From Waste

Wealth From Waste is a three-year research program that aims to identify viable options for reusing, remanufacturing and recycling metals from existing products in Australia.

Teams drawn from various universities and disciplines will undertake four distinct but interconnected research programs that draw academics from a range of disciplines to develop a better understanding of possible pathways for change. An international reference panel of 12 industry, government and research organisations has been established to help guide the direction of the work and provide expert review.

The Wealth from Waste Cluster will run from 2013-2016 and will seek input from industry, research, government, community and other stakeholders at different times over this period.

The cluster partnership is funded by the Commonwealth Scientific and Industry Research Organisation (CSIRO) Flagship Collaboration Fund, with significant investments by partner universities, including the University of Technology, Sydney (UTS), Monash University, the University of Queensland, Swinburne University of Technology, and Yale University in the United States.

The CIRCULAR ECONOMY model would lead to at least

$1 TRILLION IN SAVINGS IMMEDIATELY, and potentially much more IN YEARS AHEAD

29

SELF

#thinkLEADERSHIP

Professor Emmanuel Josserand

There’s a long-held view that great leaders areborn,notmade–thatsomepeoplecome

intothisworldwithcertainpersonalitytraits

whichwillmakethemleadersinthefuture.

“Thatdoesn’tleavemuchroom

forimprovement,”saysProfessorof

ManagementandOrganisationStudies

EmmanuelJosserand.“Fortunately,

thereareothertheories.”

Ontheothersideofthetablearethose

whosubscribetothebehaviouraltheory

ofleadership.Leadershipisregardedas

somethingyoucanlearn,somethingyou

candevelop.

Thenthere’sthe“contingent”approachto

leadership,whichrecognisesthere’snotjust

onetypeofleaderoroneformofleadership,

saysProfJosserand,DirectoroftheCentre

forManagementandOrganisationStudies

(CMOS)atUTSBusinessSchool.

“Ittellsusthatsomebehavioursare

moreusefulinsomecontextsthanothers,

andthatyouhavetobeabletoadapt

yourbehaviourstospecificcontexts,”Prof

Josserandsays.“Thereisnotonlyonetype

ofleaderandonesetofcompetencies.There

aredifferentleadersindifferentsettings.”

Thesethreebroadtheoriesconverge

in“self-leadership”,anapproachthat

acknowledgesinherentstrengthsand

personalitytraits,butonlyasastartingpoint

fromwhichtodevelopleadershipbehaviours

adaptedtospecificcontexts.

“So,thestartingpointinself-leadership

istoknowone’sstrengthsandtodevelopa

leadershipstylethatwillworkinyourcontext.”

BORN LEADERSUnderthetraditional,deterministicviewof

leadership,somepeoplearebornleaders

whowillrisetohigherroles;peoplewill

naturallyfollowthem.Thisinvolvesa

“universal”imageofleadership,whereall

leadersarethesame,ProfJosserandsays.

TheimageisofaMartinLutherKingfigure

–someoneborntoriseabovethecrowd.

“Buttherearenotthatmanypeoplewhocan

achievethatlevelofleadership,andinmost

organisationsit’snotnecessarilywhatyou

areaimingfor,”hesays.“Youmightwantabit

ofthatinyourCEO,buttherearemanyother

characteristicsyoumightwanttodevelop.»

Is leadership inherent or learned? The concept of ‘self-leadership’ makes that question redundant.

SenseOF

30

“Themoreweprogressourthinking

aboutleadership,themoreweunderstand

that,actually,oneofthekeycapabilitiesofa

leaderistobeabletochangeyourbehaviour

dependingonthesituation,onthecontext,

onthepeopleyou’retalkingto.

“Andso,progressively,leadership

theorieshavecometoincludeaspects

suchassituationalleadership,leadership

that’smoresupportive,leadershipthat’s

moredistributed.

“It’saboutleadershipasmentoring,

coaching,”hesays.“Wewantleaderswho

havethecapacitytodevelopothersas

leaders,ratherthantojustbefollowedby

others.Becauseattheendofthedaythat’s

whatyouwantifyouwantyourorganisation

tobesustainableandresilient.”

It’struethatsomeofusmightbemore

naturallygiftedatleadership,butitisstill

possibletodeveloptherightleadership

behavioursinspecificcontexts,Prof

Josserandsays,whichisamoreoptimistic

messagethanbeingtoldleadershipisa

birthrightonlyforsome.

“Allofuscanimproveourleadership

capabilitiesbyreflectingonwhoweare,who

weareinspecificcontexts,andthebestway

touseourassetstodevelopothersandto

achievemorepositiveoutcomes,”hesays.

OUTSIDE THE BOXThatmeansself-leadershipisnotasetof

genericskillstobelearned.It’snotabout

thefive,orsevenor10“goldenrulesof

leadership”.Norisitsomethingthatcanbe

taughtusingtraditionalclassroommethods

orpickedupatatwo-dayconference.

“Leadershipisstillapproachedinterms

of‘training’andIdon’tthinktrainingis

theanswer,”ProfJosserandsays.“Thisis

aboutself-reflectionandreflexivity–the

capacitytoquestionassumptionsabout

others,assumptionsaboutthesituation,

assumptionsaboutwhoweare.

“Ifyouwantto‘thinkoutsidethebox’,

ifyouwanttocomeupwithnewsolutions

thatwillbemorethanawin-lose,zero-sum

THERE IS NOT ONLY ONE TYPE OF LEADER AND ONE SET OF COMPETENCIES. THERE ARE DIFFERENT LEADERS IN DIFFERENT SETTINGS

The dark side

Business bestseller lists are heavy with tales of inspirational leadership, but a group of academics is gleaning lessons for management from the “dark side” by studying the methods of Pol Pot, the dictator responsible for Cambodia’s killing fields.

As commander of the Khmer Rouge, Pol Pot orchestrated the genocide of an estimated 1.7 million people, killing one in five in the then Kampuchea in five years, in pursuit of his “utopian vision” of a classless, peasant society.

Totalitarian regimes are not only social and political movements but also “organisational projects”, says the Executive Director of the Centre for Management and Organisation Studies at UTS Business School, Professor Stewart Clegg.

“The processes that produced [the killing fields] can and should be analysed,” says Prof Clegg, who is internationally recognised for his work on power. “Scholars in the field of organisational studies have an ethical responsibility to analyse not just the best in organisations but also the worst,” so we can avoid the excesses that organisations are capable of.

Prof Clegg and his fellow researchers have isolated 20 principles that underpin totalitarian organisations. For instance, leaders within such organisations demand conformity, maintain their distance, are selective in their “mercies” and favour certain people with perks and benefits. They also ensure a ceaseless round of activity leaves little room for reflection.

“These 20 principles or rules for constructing totalitarian institutions are phenomena that you might find present in everyday, normal organisations,” says Prof Clegg. “It just needs a little accentuation of some of these aspects to begin to produce ethically very dubious organisations.”

Prof Clegg says that, rather than having staff “singing from the same sheet”, very strong corporate cultures are to be avoided. “I don’t think they’re a very good idea. I think it’s from dissonance, from resistance, from polyphony that you get creativity and innovation.”

31

#thinkLEADERSHIP

gamebutwhichwillactuallyaddvalueforall

parties,youneedtobecreative,youneedto

respectothers.Thereforeonekeyaspectis

toknowyourselfbetter.”

Inthesmall-groupself-leadership

programsatCMOS,participantsgothrough

afour-stagereflectionprocessovera

numberofmonths.

Isthissortofleadershipdevelopment

justfortheC-suite?ProfJosserandsaysif

wearetoclosetheworkplaceleadership

gapinAustraliaidentifiedinasuccession

ofreports,startingwithKarpinin1995,

itneedstostartmuchearlier.

“Ifwelookatwhatwearetryingto

achieveinorganisationstoday,Idon’tthink

wecanaffordtopaythetypesofsalarieswe

payforwellqualifiedandexperiencedpeople

tojustexecuteorders,”hesays.“Assoon

asyoustarttoallowpeopletomaketheir

owndecisionsaroundwhattheyaredoing,

assoonasyouaskthemtobecreativeand

developnewideas,youneedtodevelopin

themthistypeofself-reflection.”

Self-leadershipisparticularlyimportant

inenvironmentswherepeoplemusthavethe

highestethicalstandards,hesays.“We’ve

donesomeworkinthefinanceindustry;

ifyouthinkabouttheexampleofpeople

workingintradingrooms,therearethings

thatself-leadershipcoulddothatprocedures

willneverachieve.”

Measuring leadership

The Centre for Management and Organisation Studies at UTS Business School is leading a project to develop a new leadership “standard” for Australian managers.

The 18-month-long project is looking at the individual and organisational factors that drive leadership performance and will involve a survey of Australian managers and business leaders.

The findings of this research will form the basis of an Australian Leadership Capability Standard. This standard will provide a benchmark for businesses and inform the development of self-assessment and leadership auditing tools. The project will feed into the work of the federally funded Centre for Workplace Leadership, based at the University of Melbourne.

TIGERor cub?

The conventional wisdom is that Chinese buyers are driving up Sydney house prices. But measuring the impact of foreign

buyers is more complex than you might think.

33

#thinkFINANCE

Dr Lorenzo Casavecchia and Dr Adrian Lee

Australians love discussing house prices. Inthepastyear,though,thefocusofpublic

conversationturnedfromcapitalgains

toconcernthatforeignpurchaserswere

“pricingout”locals.Withanecdotalevidence

quicklybecomingconventionalwisdom,

tworesearchersdecidedtoinvestigate.

“Mediaattentionwasfocusingon

ChinesebuyingofAustralianrealestate,”

saysDrAdrianLee,aPostdoctoralResearch

FellowatUTSBusinessSchool.“Wewanted

totestwhethertherewasanytruthinthe

beliefthattheaverageChinesebuyerwas

willingtopaymorethanothers.”

WhatheandfellowresearcherDrLorenzo

Casavecchiafoundinapreliminarystudy

surprisedeventhem:analysisofarandom

sampleof74,000salesfoundthatindividual

Chinesebuyers–historically,atleast–paid

lessthantheaveragepurchaser.

Now,theresearchersareintheprocess

ofreplicatingthisinitialstudyacrossapool

of600,000transactions,andextendingit

tomorerecentsales,withtheresultsofthis

broaderinvestigationdueinearly2015.

Theresearcherswillinvestigatewhether

increasedactivitybyChinesebuyersasa

groupincreaseshouseprices,especiallyin

lightofmorerecentpolicychangesinChina.

“Inturn,thatwillallowustoconsiderwhat,

ifany,impacttherewouldbefromapolicy

shockinChina–suchasacredittightening

–onahousingmarketsuchasSydney,”Dr

Casavecchiasays.

DISCOUNT EFFECTIntheirpreliminarystudy,DrCasavecchia

andDrLeeuseddataonSydneyhomesales

frompropertyinformationserviceAPM

Pricefinderthatincludesnotonlythesale

price,transactiondateandsuburb,but

alsocharacteristicssuchasthenumber

ofbedrooms,andthebuyer’sname.

Whattheyfoundinthisfirststudywas

that,onaverage,between2000and2011,

Chinesebuyerspaidtwopercentlessthan

otherbuyers.Thatwasadiscountofnearly

$14,000ontheaveragepriceof$676,300

forthepropertiesinthesample.

Thiswasevenaftermakingallowances

forcharacteristicssuchashousingquality.

Thediscounteffectheldtrue–though

varyinginsize–whentheyranthenumbers

yearbyyear,peakingatafivepercent

discountin2006.Thediscountsurfaced

regardlessofwhetheralocationhadahigh

orlowpercentageofChinesebuyers,alarge

orsmallChinesecommunity,andregardless

ofwhetherasuburbwasprestigiousornot.

Andthiswasoveraperiodwhenthere

wasasignificantincreaseintheproportion

ofsalestoChinesebuyers.Inthestudy

sample,Chinesebuyersaccountedfor6.5

percentoftheyear2000salesbutdouble

thatby2010.

“Theimplicationofourfindingswasthat

Chinesebuyers,onaverage,donotoverpay

forhousing,ascommentarysuggests,”Dr

Casavecchiasays.Thiswillbetestedfurther,

however,intheextendedstudy.

Theresearchersadmittobeingsurprised

bytheoutcomeoftheinitialstudy,inlightof

thewidelyheldviewtothecontrary,butsay

thediscountwasstatisticallysignificantand

robustwhentested.

Italsomesheswiththeviewofthe

ReserveBankofAustralia,expressed

ataparliamentaryinquiryintoforeign

investmentinrealestate,thatrisingprices

inthe$5trillionresidentialpropertymarket

mainlyreflectincreaseddemandfrom

Australianresidentsandcitizens,partly

becauseoflowinterestrates.»

DATA GAPSDrLeeandDrCasavecchiaalsopresented

theirresearchtotheinquiryin2014,sharing

withtheRBAtheviewthattherearegapsin

ourknowledgeofwhetherbuyersareforeign.

Fortheirstudy,theresearchershadto

relyonthesurnamesthatappearedinthe

APMdatatotrytoidentifyChinesebuyers.

TheysearchedforChinesesurnames,then

filteredthatlistbyremovingthoseChinese

surnamesthatwerealsocommonKorean

andVietnamesesurnames.

“Whenweappearedbeforetheinquirywe

wereaskedwhywewerepresentingresearch

thatlookedspecificallyatChinesebuyers,

astheinquirywasn’tfocusingoninvestors

fromanyparticularcountry,”DrLeesays.

“Onereasonwasthelackofdataonwhether

abuyerisaforeigner.

“Infact,theBureauofStatisticsandthe

ReserveBanktoldtheinquiryitisdifficultto

knowexactlyhowmuchforeignbuyingthere

is.TheForeignInvestmentReviewBoardtold

theinquiryitcollectsapprovalsbutdoesn’t

knowwhetherallapprovalsgoontobecome

actualpurchases.”

Theresearchersacknowledgethat

relyingonsurnamesmeanstheirinitialstudy

willhavecapturedsomelocalChinese-

Australians.“Wedon’tknowtheproportion,”

DrCasavecchiasays.“ButiflocalChinese

areaveryhighproportion,thenforeign

Chinesebuyersaretoosmallaproportion

tobeofconcern.Iftheyareaverylow

proportion,thenitjustconfirmsthatforeign

Chinesebuyersarenotaggressivebuyers,

onaverage,historically.”

DrLeesaysit’sclearfromtheirwork

sofarthatbetterqualityhousingdatais

needed.“Withoutsuchdataitisdifficult

tomakeinformedpolicy.”

WITHOUT SUCH DATA IT IS DIFFICULT TO MAKE INFORMED POLICY

#thinkFINANCE

35

Much of the hype surrounding entrepreneurshiptodayfocuses

on“heroentrepreneurs”–the

stereotypicalimageofVirgin

founderRichardBransonand

hisextroverted,risk-taking

personality.Butthispicture

doesn’taccuratelyreflectday-

to-daylifeasanentrepreneur,

accordingtoresearchinto

Australianstart-ups.

AstudybyDrDanielleLogue

ofUTSBusinessSchoolbusts

themyththatentrepreneurs

succeedbecauseofinherent

personalitytraits–becausethey

arebornthatway.

Sure,theymaybedetermined

andpassionate,buttheyalso

followprocessesandpatterns

ofdevelopingandtestingideas,

buildingsupportnetworksand

developingcertaincommunication

andbusinessskills,shesays.

Forseveralmonths,DrLogue

observedandinterviewed

individualentrepreneursat

leadingincubatorAustralian

TechnologyParkInnovations

(ATPInnovations),whichcounts

UTSBusinessSchoolamongits

shareholders.Shetracedthe

journeysof20start-upfirms.

WhatDrLoguefoundwasthat

mostentrepreneursdidn’tfitthe

stereotypeofbeingyoungrisktakers.

PROBLEM SOLVERS“Whatwastheirtypicalcareer

journey?Manyoftheyounger

cohortemergedfromuniversity,

mainlyfromtechnicalfacultieslike

scienceandengineering,tofurther

developtheirowntechnologies,”

DrLoguesays.“Butmostofthe

entrepreneursinthestudycreated

start-upslaterintheircareers,

afterseeingaproblemintheir

industryandidentifyingasolution

butbeingunabletoimplementit

withinanorganisation.”

Thenotionthatbeingan

entrepreneurisahigh-risk/

high-rewardactivitywasnot

prominent,shesays.“Leaving

full-timeemploymentfora

start-upisrisky,butmanydoso

havingbeensuccessfulintheir

careersandwiththesecurityof

astrongprofessionalnetwork

andafallbackposition.”

Whiletheseentrepreneurswere

morecomfortablewithuncertainty

thansomepeoplemightbe,they

werenotnecessarilywhatothers

mightconsiderrisktakers.

Ratherthanbeing“born”

entrepreneurs,thestudy’s

subjectstalkedabouttheneed

todevelopspecificskillsin

marketingandnetworking,suchas

learninghowtoarticulateavalue

proposition,howtounderstand

theneedsofthemarket,howto

pitchandsellanidea,andhow

topersuadeinvestorsofthe

meritsofanidea,DrLoguesays.

ECOSYSTEMDrLogue’sresearchalsolooked

athowentrepreneursmeasure

andcommunicatesuccess(to

eachotherandtoinvestors),

theartandscienceofvaluing

start-ups,andthestructureof

entrepreneurialnetworks.

Suchinsightsintothe

entrepreneurialecosystemare

neededasgovernmentsconsider

waystosupportinnovationin

Australia,DrLoguesays.

“Abetterunderstandingof

therealitiesofentrepreneurial

lifeinAustraliawillleadtobetter

informedindustrypolicy,and

perhapsincreasedsupport

foranecosystemthatisakey

driveroffuturegrowthand

developmentforAustralia.”

#thinkENTREPRENEURSHIP

Insights into the real life of entrepreneurs are needed so they get the support they need.

TheHEROmyth

36

Making

37

Markets don’t always work as intended. Whilederegulationofthephoneindustry,

forexample,hasbroughtgreatbenefitsfor

consumers,theglobalfinancialcrisisshows

whatcanhappenwhenmarketsgowrong.

Somemarketsjustdefytheusuallogic

–thepopularityofopen-sourcesoftware,

forexample,seemscountertostandard

economictheoriesabouttheroleof

incentivesandpropertyrights.

Thisiswheretherelativelynewfieldof

“marketdesign”comesin.“Marketdesign

studieswhatmakesinstitutionsworkand

howtofixthemwhentheydon’t,”says

ProfessorJacobGoeree,Directorofthenew

CentreforPolicyandMarketDesignatUTS

BusinessSchool.Besidesstudyingexisting

institutions,marketdesignalsoprovidesthe

toolstocreatenewones,hesays.

“It’slikethedifferencebetweenstudying

biologyasanabstract,academictopicand

atsomepointwantingtodosomething

goodwithit,perhapsbybecomingamedical

doctor,”ProfGoereesays.“Amarketdesigner

issometimesthecreatorofamarketand

sometimesthedoctorofamarket.”

Marketdesigncanbefoundin

settingsasdiverseasGoogleads,eBay

recommendationsystems,crowdsourcing

platforms,kidneyexchangeprograms,

fishingrights,theprivatisationofpublic

assets,schemestoreducegreenhouse

gasemissions,andvoting.Marketdesign

drawsoninsightsfromgametheory,

experimentaleconomics,computer

scienceandoperationsresearch.“It’s

aninterdisciplinaryfieldwheregreat

synergiesarerealisedwhenresearchers

withdifferentbackgroundscome

together,”ProfGoereeexplains.

ENGINEERING APPROACHInmarketdesignthereareno“one-size-fits-

all”solutionssinceoftenthedevilisinthe

detail,ProfGoereesays.“Justasthedesign

ofanewairplanerequiresknowledgeof

manyengineeringdetailsbesidesBernoulli’s

basicprinciple,designingnewinstitutions

requiresmorethantheoreticalinsights

alone,”hesays.

Andjustasanewlydesignedplane

wouldn’tbeputtocommercialusewithout

extensivewind-tunneltesting,proposalsto

improveeconomicandsocialinstitutionsare

scrutinisedinlaboratoryexperimentsbefore

beingimplemented.This“engineering”

approachtomarketdesignensuresthat

newlycreatedinstitutionsworkwellin

practice,notjustintheory.

“Ineconomics,wehavepowerful

theoreticalmodelsabouthowpeopleshould

bidinauctions,forinstance,”ProfGoeree

says.“Butthenthere’stherealworld–how

peopleactuallydobid.Anybodywhohasbid

foranapartmenttheyloveknowstheymay

nothaveexactlyfollowedthetheoretical

model.Yougetexcited,youreallywanttowin

thisthing.Youtellyourself,‘Ishouldstop’–

butyoudon’t.”»

#thinkECONOMICS

There are no ‘one size fits all’ solutions in market design, a relatively new

branch of economics aimed at finding better ways to achieve the goals of government, business and society.

Professor Jacob Goeree

38

Soanewbreedofeconomicscientistsis

movingtheirpracticeclosertothepractices

foundinthenaturalsciencesbyconducting

“experimentaleconomics”.

“Inexperimentaleconomics,wetake

peopleintoalaboratoryandimplement

onthecomputerscreenthesituationwe’re

interestedin.Iworkalotonauctions,for

instance.Soanexperimentmightinvolve

havingpeoplemakeon-screenbidsunder

differentauctionconditions.Thiswaywe

cancomparedifferentauctiontypesina

verycontrolledway.”

Thisispreciselywhathedidwhile

atCaltech(theCaliforniaInstituteof

TechnologyinLosAngeles)intheUnited

States,whereheworkedwiththeFederal

CommunicationsCommissionondesigning

the2008auctionofthe700MHzspectrum.

Theauctionofthisspectrum–airwaves

abandonedasUStelevisionmovedfrom

analogtodigital–wasdescribedatthe

timeasbeingthemostsignificantairwave

auctioninUShistory.

THE WHOLE PIEProfGoereedesignedabiddingmechanism

foroneparticularpartoftheauction,using

a“hierarchy”oflicencepackages.Potential

buyerscouldbidforindividualpiecesofthe

spectrumonofferorthecompletepackage

oflicencesasawhole.

TheprinciplebehindtheHierarchical

PackageBiddingsystemhecameupwith

isrelativelysimple:Somebuyerswillbid

moreifit’sthe“pie”asawholethatthey’re

beingoffered;they’llpaylessifforcedtobid

onindividual“slices”inthehopeofending

upwiththewholepiebutwiththeriskof

perhapsfallingshort.

ProfGoereetestedhisideasforthis

hierarchicalauctionsysteminthesortof

behaviourallabincludedintheDrChau

ChakWingBuilding,thenew,FrankGehry-

designedhomeofUTSBusinessSchool.

Caltechstudentswerebroughtintoa

computerlab,placedinfrontofscreens

andaskedtoplacebidsundervarious

parameters.Theyearnedreal,butmodest

sumsiftheyhadthewinningbid.

Intherealworld,inAuction73oftheFCC

sale,companieswerepermittedtobidfor

anyof12individuallicencesorforapackage

dealthatwouldgivethemcoast-to-coast

spectrumcoverage–somethingofgreat

valuetobigtelcoslikeVerizon.Thispartof

theauctionendedupgeneratingaquarter

ofthetotal$US19billionraised.

Thefishingindustryisanotherplace

wheremarketdesignisbeingused

aroundtheworld,toaddresstheproblem

ofoverfishing.Theissuehereishowto

designgovernmentbuybackschemesthat

removetheleastefficientboats–rather

thanthebestfishingbusinesses–from

theindustry,andatnottoohighacost

tothegovernment,ProfGoereesays.

39

“Thisindustryisspecialbecauseit

includespeopleforwhomfishingismore

ofalifestylethanabusiness,aswell

aspeoplewhofishefficientlyandwith

profit.Sohowdowedesignschemes

whereallofthesepeopleknowtheywill

bebetteroff,whethertheystayorgo?”

Emissionstradingschemesareanother

areaofmarketdesign.IntheUS,Prof

Goereewasinvolvedinsettingupa“cap

andtrade”marketforgreenhousegas

emissionpermitsforagroupofnorth-east

statesthatweren’twillingtowaitfora

nationalprogramoncarbon.

TheRegionalGreenhouseGasInitiative

capsandreducesCO2emissionsfromthe

powersector.Thefundsthestatesraised

fromtheinitialauctionofpermits–where

ProfGoereeadvised–wereinvestedin

energyefficiency,renewableenergyand

otherconsumerbenefitprograms.

KIDNEY EXCHANGEButmarketdesignisn’talwaysabout

marketsthatinvolvemoney.ProfGoeree

givestheexampleofakidneyexchange

programdesignedbyAlRoth,jointwinner

withLloydShapleyofthe2012NobelPrize

forEconomicsforhisworkonmarket

design.(ProfGoereesucceededRoth

aspresidentoftheEconomicScience

Association,theinternationalsocietyfor

experimentaleconomists.)

“Rothwasalreadyatheorist,abigname

inwhat’scalledmatchingtheory,”Prof

Goereesays.“Butheturnedtothepractical

problemofkidneys–theproblemofpeople

havingtowait,ondialysis,foradonorkidney

foralongtime.”

Heknewthatwhilefamilymembers

wouldbehappytodonateakidneytoa

lovedone,theirkidneymightnotmatch.

Meanwhile,thesamesituationmightarise

inanotherfamily,andathird,andsoon.

Maybethedonorkidneyinthethirdfamily

mightbeaperfectmatchforthepatientin

thefirst,butwhyshouldthatfamily’sdonor

givetheirkidneytoastranger?

Rothcameupwithasystemwhere

incompatibledonorscouldbeswappedwith

compatibleones,insingleormultiplepairs

ofdonorsandrecipients.

Australiahaditsfirstsuch“pairedkidney

exchange”in2014,withachainof12donors

andrecipientsundergoingsurgeryonthe

oneday.Sixkidneyswenttosixstrangers,

buteachofthedonorsknewtheirlovedone

wouldgetakidneyaspartofthecycle.

IntheUS,kidneytransplantshavesoared

asaresultofthisinnovation.

InSwitzerland,whereheestablished

theEngineeringSocialandEconomic

Institutions(ESEI)marketdesigncentreat

theUniversityofZurich,ProfGoereeand

histeamadvisedtheDutchandAustralian

governmentsonthedesignoftheir

spectrumauctionstoo.FortheUSTreasury,

hedevelopedareverseauctiontobuy

troubledassetsatthetimeofthesubprime

mortgagecrisisthatprecededtheglobal

financialcrisis.

InAustralia,heenvisagesprojectsthat

addressmajor,unresolveddesignproblems

suchashowgovernmentprocurement

processescouldbeusedtostimulate

innovation;howtoaddressthefactthat

somevoterscaremoreaboutaparticular

outcomethanothers;andhowtheelectricity

marketcouldbebetterdesignedinaneraof

“smart”meters.

“Practicaladviceforpolicymakers

andforbusinessisanaturaland

importantactivityforanymarketdesign

group,”ProfGoereesays.“Afterall,this

iswhereourtheoreticalandlaboratory

studiesareputintopractice.”

A MARKET DESIGNER IS SOMETIMES THE CREATOR OF A MARKET AND SOMETIMES THE DOCTOR OF A MARKET

#thinkECONOMICS

41

#thinkMANAGEMENT

Rubbery figures don’t do anyone in the tourism

industry any favours. Now we have a way of knowing the true value of business

events to host destinations.

Dr Carmel Foley and Dr Deborah Edwards

moneyThe

trail

42

The sorts of dollar figures bandied about in

connectionwithmajoreventscansometimes

beeyebrowraising.Thatmuch?Really?

Frequently,thesenumbersarebasedon

modelsthatincludecertainassumptions

–forinstance,thatforevery$1avisitor

spendsatavenueoreventthey’llspend,

say,afurther$3elsewhereintheeconomy.

Differentmodelswithdiffering

assumptionsmeanthatitisn’talways

possibletomakedirectandfaircomparisons

betweenevents,citiesandevencountries

whenitcomestotourism,yetaccurate

informationissomethingthat’svitalwhen

governmentsmakespendingdecisions.

“Expenditurestudiesarenotoriousfor

inflatingtheeconomicimpactofevents

onhostdestinations,”saysDrDeborah

Edwards,aSeniorResearchFellowwith

UTSBusinessSchool.

Now,DrEdwardsandcolleague

DrCarmelFoleyhavecomeupwithanew

measureofthevalueofbusinesseventsto

hostcities–onetheysaydoesn’t“inflate”

resultsbyusinggenerousdefinitionsof

eventspending.

DevelopedinpartnershipwithBusiness

EventsSydney(BESydney),thisnew

“inscope”expendituremethodology

isbelievedtobethefirsttoaccurately

measurethevalueof“newmoney”

generatedbybusinessevents.Itfocuses

onwhat’sknownasthefirst-round

expenditureeffectofabusinessevent.

Usingthismethod,spendingcountsonly

ifitisdirectlylinkedtotheevent.

“Theinscopeexpenditurecalculations

weuseareconservative,andwedon’tuse

economicmultipliers,”DrEdwardssays.

Thismeansspendingsuchasairfaresand

conferenceregistrationfeesareexcluded,

asisspendingbydelegateswhowere

comingtothedestinationanyway.

“Iftheindustrytakesonthismethodology

asthestandarditwillallowfairandtrue

comparisons,”saysDrFoley,aResearch

AssociateoftheAustralianCentreforEvent

ManagementatUTSBusinessSchool.

Inparticular,itwillallowuseful

comparisonstobemadebygovernments

andfundingagencieswhenmaking

decisionsaboutfinancialsupport.

43

#thinkMANAGEMENT

Already,theresearchbyDrEdwardsand

DrFoleyhasfedintothebusinesscasefor

anewconventioncentreatDarlingHarbour

inSydney.

Applyingthemethodologytorecent

businesseventsinNSW,theUTSresearchers

foundthatinternationaldelegatesspend

anaverageof$694adayduringanevent,

andinterstatedelegates$493.

Asforlocaldelegates,themeasure

focusesonwhattheresearchersdub

“retained”localdelegates:thoselocals

whowouldhaveattendedtheeventeven

ifitwereheldoutsideNSW–asopposed

tothosewhoattendedjustbecauseit

happenedtobeathome.Thesedelegates

spend$319onaverage.

OTHER LEGACIESTheexpenditurestudybuildsonworld-

leadingresearchbyBusinessEvents

SydneyandUTSBusinessSchoolinto

thebenefitsandlegaciesofbusiness

events–notjustindollarterms,but

alsoingeneratingnewknowledgeand

partnerships,andsharingideasand

technologies,amongotherthings.

“Businesseventsshowcasethe

capacitiesofacity,theyenhance

reputations,interculturalbondsare

formedandnetworksarefostered,”Dr

Edwardssaysofthelonger-termbenefits.

Theresearchersarenowworkingon

morefullyquantifyingthevalueof

theseeconomicandsociallegacies.

“It’simportantthatgovernmentsand

communitiesunderstandthebenefitsthat

conferencesbringtotheirdestinations,so

theygettherightsupport,”DrFoleysays.

“Governmentsareinterestedin

thebottomline,andthebottomlineis

important,”DrEdwardsadds.“Butit’snot

justaboutshort-termdollargains.It’salso

abouttheselesstangiblebenefits–the‘long

tail’benefitsofbusinesseventsthatcanlead

tosustainedeconomicdevelopment.”

INTERNATIONAL DELEGATES SPEND AN AVERAGE OF $694 A DAY DURING AN EVENT, AND INTERSTATE DELEGATES $493

44

SCANDALSchool for

Brands like to attach themselves to celebrities. But they need to know how to react to avoid becoming

collateral damage when the local footballer, or international film star, ends up in hot water.

45

#thinkMARKETING

Associate Professor François Carrillat

46

THERE IS A FEAR REACTION TO ANY FURTHER COMMENT – WHETHER DISTANCING OR SUPPORTIVE

47

#thinkMARKETING

INVESTORS RESPOND MORE NEGATIVELY TO THE REACTIONS THAN TO THE ANNOUNCEMENT OF THE SCANDAL ITSELF

THERE IS A FEAR REACTION TO ANY FURTHER COMMENT – WHETHER DISTANCING OR SUPPORTIVE

The roll call of celebrities who’ve found themselvesinthenewsforallthewrong

reasonsisalongone:TigerWoods,Lance

Armstrong,OscarPistorius,RolfHarris…

It’sprobablynotrealistictoexpect

everyonetobeaGeorgeClooney–theactor

andhumanitarianwhosecachethasmade

coffeepodsahouseholditem–butthescale

ofrecentscandalscan’thavefailedtoshock.

Inthepastfiveyearsalone,golferTiger

Woods,cyclistLanceArmstrong,“Blade

Runner”OscarPistoriusandAustralian-born

entertainerRolfHarrishavebeenembroiled

inallegationsaroundinfidelity,doping,

manslaughterandindecentassault.

Sucheventsraisethequestionofwhata

businessshoulddowhenthepositiveglow

fromcelebrity–whetherlocalfootballer

orinternationalfilmstar–turnsnegative.

Howshouldcompaniesendorsedby

celebritiesreact?Shouldthecompanyissue

astatementofsupport?Shoulditbreakoff

therelationship?Shoulditsaynothingitall?

REPUTATION RISKCelebrityendorsementisamarketing

strategythatcanbringmanybenefits

tobrands.Butwhenthereputationofa

celebrityishurt,brandreputationcanbe

atriskaswell,saysAssociateProfessor

FrançoisCarrillat.

Thatcouldhurtthebottomlineifthe

loweredopinionofabusinessresultsin

consumersforgoingitsgoodsorservices.

Forlistedcompaniesandtheirinvestors,it

canmeanlossofvalueonthesharemarket

asinvestorsreacttothescandaltoo.

Howabusinessshouldrespondwill

dependtosomeextentonwhetherthe

celebrityhasdeniedtheallegations,whether

thepublicbelievesthosedenials,andhow

closelythebrandandthecelebrityare

connected,saysAssocProfCarrillat.

“Whenthere’sstrongevidencethat

thecelebrityisinthewrong,it’sgenerally

inthebrand’sbestinteresttoatleast

acknowledgetheallegations,”hesays.The

decisionbecomesalittlemorecomplicated,

however,forapubliclylistedcompany.

“Scandalsafflictingcelebritieshavebeen

showntolowerthesharepricesoffirms

associatedwiththem,”saysAssocProf

Carrillat,whohasbeenconductingresearch

inthisarea,investigatingthetrajectoryof

scandalsforpubliclylistedcompaniesinthe

UnitedStates–birthplaceofthecelebrity.

TheseincludeincidentssuchasJanet

Jackson’s“wardrobemalfunction”atthe

SuperBowlin2004andactorCharlie

Sheen’sarrestin2009forassaultinghis

wife.AffectedsponsorsrangefromAmerican

ExpresstoNikeandMcDonald’s.

Theresearchlookedathowfirms

responded:whetherthatwaswith“silence”

(whenabusinesschoosestosaynothing),

“disavowal”(ifanendorsementiscancelled,

forinstance)or“support”(wherethefirm

standsbythecelebrityinsomeway).

Inturn,theresearchersrecorded

whetherthecelebrityreactedwithsilence,

madeanapologyorissuedadenial.»

48

RIPPLE EFFECT“Whatwelookedatwastherippleeffect

onsharepricesofthereactionbyafirmor

celebrity,notjusttheinitialimpactwhen

scandalstrikes,”AssocProfCarrillatsays.

Otherstudieshadsuggestedthat

scandalscaused“abnormal”fallsin

sharepricesonthedaytheinitialnews

broke.WhatAssocProfCarrillatandhis

collaboratorslookedatwaswhathappened

onthedaythecelebrity,orbusiness,

reactedtothescandal.Theyfoundthat

sharepricesexperiencedabnormalfalls

evengreaterthanthoseupontheinitial

newsofthescandal.

“Thissuggestsinvestorsrespondmore

negativelytothecompanyorcelebrity

reactionsthantotheannouncementofthe

scandalitself,”hesays.

What’smore,theimpactworsensthe

morecloselythebrandandthecelebrity

areconnectedinconsumers’minds–for

instance,whenasportsstarhasendorsed

asportsbrandratherthanahousehold

cleaningproduct.

“Sucha‘match-up’,whentheendorser

andthebrandfitwell,canbeverypotentin

marketing,butthisresearchsuggestssuch

anassociationcanbackfireinthecaseofa

scandal,”AssocProfCarrillatsays.

Perhapsthemostsignificantresultwas

that–contrarytoconventionalwisdom–

silencewasgolden.Disavowthecelebrity

orspeakupinsupport,eitherreactionwas

morenegativeforabusiness’sshareprice

thanjustsayingnothing.

“Anymore‘buzz’followingtheinitial

breakoutofthenegativeeventcauses

themarkettoreactinanegativeway,”

AssocProfCarrillatsays.“Thereisafear

reactiontoanyfurthercomment–whether

distancingorsupportive.”

Therefore,simplyweatheringthe

storminsilencemayprovethewisest

strategy,hesays–forpubliclylisted

companies,anyway.

Sep 1988ATHLETE

Ben Johnson disqualified for steroid

use after breaking 100m world record

Jan 1989SINGER

Madonna’s Like a Prayer video

condemned by Pope

Jul 1991BOXER

Mike Tyson arrested for rape

Aug 1993STAR

Michael Jackson accused of child abuse

Apr 1996ACTOR

Robert Downey Jr arrested for drug

possession

Jun 1997BOXER

Mike Tyson disqualified for biting

a piece out of his opponent’s ear

Feb 2004SINGER

Janet Jackson’s breast exposed

during Super Bowl performance

Nov 2009GOLFER

Tiger Woods admits to serial

infidelity

Dec 2009ACTOR

Charlie Sheen locked up for

assaulting wife

Jan 2013CYCLIST

Lance Armstrong admits to doping

Feb 2013BLADE RUNNER Oscar Pistorius

charged over death of girlfriend

Aug 2013ENTERTAINER

Rolf Harris charged

with indecent assault

Falling stars

#thinkMARKETING

49

#thinkSOCIAL IMPACT

The economic and social value of community-basedorganisations

andvolunteeringinAustraliaisbeing

underestimated,accordingtoa

groupofUTSresearcherswhohave

comeupwithanewtooltobetter

appreciatesocialimpact.

Servicesarebeingmeasured

onlybytheirshort-term,dollar

replacementvalue,theresearchers

say,ratherthanfactoringinthelonger-

termandmultilayeredcontributions

oforganisationslikeSurfLifeSaving

Australia(SLSA).TheCosmopolitan

CivilSocieties(CCS)ResearchCentre

attheUniversityofTechnology,

Sydney,hasbeenworkingonasocial

impacttoolwiththehelpofSLSA.

Justover6millionAustraliansspend

timevolunteering,accordingtothe

BureauofStatistics.“Everyday

volunteersdevelopandimplement

solutionstoaddressvitalsocial

issuessuchashomelessness,safety

onthebeach,emergencyservices

andcarefortheelderlyandlessable,”

UTSBusinessSchoolresearcher

DrMelissaEdwardssays.

Governmentsandprivate

donorsrightlywanttoensurepublic

andphilanthropicfundsareused

efficientlyintheseoftenhighly

sophisticatedprograms,DrEdwards

notes.Thiscaninvolvetryingto

putadollarfigureontheimpact

ofaprogram–itsoutputsand

perhapsmonetisingthisasarate

ofreturnoninvestment.

Butthissortofmeasurement

doesn’ttakeintoaccounttheother

importantandmeaningfulimpacts

suchorganisationshave,asthey

create,buildandmaintainflourishing

civilsocieties.

HUMAN CAPITAL“Impactsarefeltfarbeyondthemere

deliveryofprogramsandreverberate

intothewidercommunity,”she

says.“Bytryingtomonetisethe

ratherqualitative,long-termand

multilayeredoutcomes,thetrue

valueofvolunteeringactivitiesand

ofthecoordinatingorganisationsis

largelyunderestimated.”

“Peoplewhoareactivecitizens,

throughvolunteering,support

andcreatecivilsociety,”shesays.

“Theyaretheinvisiblehandsof

socialprosperity.”

Thenew“ripplemodel”uses

statisticalindicatorstomakevisible

allthecontributionsorganisations

likeSLSAmake–ripplingoutfrom

theindividualandclubtowider

networksofpeopleandorganisations

andsocietyitself.TheProductivity

Commissionhasinthepastcited

SLSAasanexemplarforitsreporting,

forexamplebyvaluingthedirect

replacementcostofitsbeachpatrol

activities.ButaUTSsurveyofits

volunteers–fromdirectorstotoe-

in-the-sandmembers–uncovered

amuchbroaderanddeeperimpact.

VanessaBrownoftheSLSA

saystheripplemodelhashelped

theorganisationbetterunderstand

itswidersocialcontributionand

developmoreeffectivewaystoput

avalueonit.

“Wecouldputavalueon

thehoursvolunteered,thelives

saved,onthegearandequipment.

However,thesocialimpactisnotas

quantifiableandoursurflifesavers

doalotmore,”shesays.

“Thestudyhelpedustodefinea

wayinwhichwewillbeabletosee

thebenefitsmembersexperience

frombeingpartoftheirlocalsurfclub

…thedevelopmentofthishuman

capitalhaseffectsthatrippledout

intowidersociety.”

Asaresult,theSLSAisbetter

abletodemonstratehowitis

achievingitsmissionof“savinglives,

developinggreatAustraliansand

buildingbettercommunities”.

One in three Australians volunteer and that’s worth measuring properly.

The

hand

50

INTEGRATED, FLEXIBLE COURSEWORKIntegrative and practical

approach–preparingstudents

foraworldthatdemandsmore

thanspecialistexpertiseina

particulardiscipline.

Reality-based rigour–ouraward-

winningacademicsbringamixof

industryexperienceandacademic

leadershipintotheclassroom,while

capstonesubjectsandinternships

allowstudentstodevelopsolutions

torealbusinessproblemsin

consultationwithindustrypartners.

OUR ACADEMIC PROGRAMSUndergraduate programs

• BachelorofBusiness

• BachelorofManagement

• BachelorofAccounting

• BachelorofBusiness

Administration

(Indigenousprogram)

• Combineddegreeswith

InternationalStudies,Creative

IntelligenceandInnovation,Law,

IT,Engineering,Science,Medical

ScienceandBiotechnology

Postgraduate programs

• GraduateCertificates,Graduate

DiplomasandMasterDegrees

• MBA

• ExecutiveMBA

• ProfessionalAccounting

• AccountingInformationSystems

• AccountingandFinance

• Finance

• QuantitativeFinance

• Marketing

• Management

• HumanResourceManagement

• StrategicSupplyChain

Management

• Not-For-ProfitandSocial

EnterpriseManagement

• ArtsManagement

• EventManagement

• SportManagement

• TourismManagement

INNOVATIVE LEARNING SPACES• Upto24/7accesstostate-of-the-art

teachingfacilities,labsandlearning

resourcesthroughoutthecampus

• UTSBusinessSchool’s

contemporaryandcollaborative

approachtoeducationhasbeen

embodiedinthedesignofitsnew

home,theDrChauChakWing

Building,designedbyinternationally

renownedarchitectFrankGehry.

The Dr Chau Chak Wing Building

ThenewhomeforUTSBusiness

Schoolfeatures:

• a240-seatpublicauditorium

• a120-seatcollaborative

theatrethatfacilitatesmultiple

formsofengagementincluding

presentations,collaborative

groupworkandtechnology-

enabledactivities

• 11seminar rooms,includinga

specialtradingroomseminar

room,featuringinteractivewhite

boardsandLCDsandflexible

learningspaces

• Twouniquehigh-techoval

classroomsthatenable

moreinteractiveengagement

betweenstudents

• ExecutiveEducationfloorfeaturing

customisable learning spaces

• General access computer areas

andstudentloungesthatfacilitate

individualandgroupstudy,

reflectionandrelaxation

• Over200officesand230

workstationsforacademic

andsupportstaff

a different school of thought

UTS WORLD RANKINGS

21st QS 2014 University Rankings, Top 50 under 50

47th

Top 100 under 50 universities, Times Higher Education World University rankings 2014

UTS BUSINESS SCHOOL RANKINGS

TOP 75

For employer reputation, QS World University Rankings 2014 – Social Sciences and Management

TOP 100

For Accounting and Finance, QS World University Subject Rankings 2014

TOP 150

For Economics and Econometrics, QS World University Subject Rankings 2014

TOP 200

Shanghai Jiao Tong Academic Ranking of World Universities in Economics/Business 2014

51

ABOUT UTS

CONNECTING WITH ALUMNI AND INDUSTRY• Solve your complex business

problemswithourstudents

throughalivecasestudy

consultancywithinour

ExecutiveMBAorthecapstone

unitsinourundergraduateand

postgraduateprograms

• Develop your staff capacity

throughshortcourses,customised

learningsolutionsorwhole

postgraduatedegrees

• Tap into our academics’

expertiseviaaccessUTS,the

whollyownedconsultingarm

ofUTStoprovideindependent,

relevantandreal-world

knowledgewithimpact

• Discover,trialandrecruit the

best emerging talentin

yourfieldandtacklespecific

challengesfromanew

perspectivewitheitherone

talentedindividualorawhole

teamofdiverselyskilled

undergraduate interns

• Joinouradjunctprofessors

andshare your knowledge

withleadingstudentsthrough

guestlectures

• Enable the leaders of the future

tohavetheeducationexperience

theydeservethroughour

scholarshipsprogram

• Supporttheinitiatives

ofUTSandtheBusiness

Schoolbymakinga

philanthropic gifttofund

scholarships,teachingand

learning,andresearch.

Toliaisewithspecificstaffabout

thefollowingareaspleasevisit

www.business.uts.edu.auor

[email protected]

• AlumniRelations

• CareersandInternships

• DevelopmentandDonorRelations

• ExecutiveEducation

• ExternalEngagement

• InternationalRelations

• Marketing,Mediaand

Communications

EXECUTIVE EDUCATIONAGILE, ADAPTIVE, APPLIEDCreativity and Innovation–focused

onexecutionaswellasideas–

matchingtherightideawiththeright

businessmodelandtherightculture.

Short courses–includingLean

SixSigma,FinancialAcumen,

BigData/DataAnalytics.

Intrapreneurship and

Entrepreneurship–embracinga

leanstartupmethodologywhatever

yourorganisation.

Leadership and Management–

workingwithleadersacrossall

sectorstofosteragility,build

capabilities,createalegacyand

leadthroughtransformative

businessmodels.

Resilience and Positive practices–

individualandorganisational

resilienceandpositiveorganisational

scholarshiptoincreasewellbeing,

productivityandstaffretention.

EXCELLENCE IN RESEARCH

Knowledge with impact

Our research is not just about cutting edge research but its practical application to solving real problems faced by business and the wider community.

Top 5 Australian business schools

Excellence in Research for Australia 2012, with Australia’s strongest rankings for Applied Economics and Econometrics, and producing research at or above world standard in Accounting, Banking, Finance, Management and Marketing.

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