Issue 1 - UQ Business School Momentum - UQBS.com

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Issue 1 - UQ Business School Momentum - UQBS.com

ISSUE ONE 2012momentumTHE BUSINESS MAGAZINE OF UQ BUSINESS SCHOOLwomenCEOsDramatic new insights onwhat gets women to the topEXTREMEWEATHERIs it time for a business rethink?sustainabilityA revolution in small steps?RAGEWhat takes yourcustomers to the edge?executive payValue for shareholders’ money?WHAT DOLEADERS DO?And why people follow themUOQ 1189_275x235 [P] 48pp Magazine.indd 126/04/12 6:04 PM


Welcome toMomentumThe business magazine of UQ Business SchoolAt UQ Business School we value our reputation as being at the forefront ofbusiness developments. Our close ties to industry and our collaborations withresearch institutes around the world give UQ Business School graduates impact,relevance and global resonance.More than ever before, as business leaders and as business researchers, we arechallenged by a landscape of economic, social and environmental phenomenawith far reaching consequences: economic uncertainty, a game changingtechnology landscape, climate instability, and global population pressures.Businesses that show themselves to be flexible, innovative, informed, and readyto take risks to find new kinds of business solutions, are the businesses that willshape the future. And these businesses will be driven by a new breed of leader.As UQ Business School celebrates its tenth anniversary, we are pleased to offerand share some of our knowledge through Momentum, the new UQ BusinessSchool magazine.Momentum captures business as it happens today, offering UQ Business Schoolresearch insights as they play out across industry and in the consumer landscape.In this issue, you will find out just what a business leader does, what surprisingexperiences our leading business women share, and the how to’s and what next’sof social networking.CONTENTS4 Business barometerBusiness leaders talk about the opportunitiesand challenges for their businesses today.8 Women at the topWhat do our leading business women havein common, and what does that mean for thebattle for gender balance in the top jobs?12 Customer rageWhat pushes customers to the edge, and whenit happens is it a business opportunity?16 Dare you risk theweather today?With extreme weather events on the increase,is business learning resilience?19 Emerging exportersHow does small business settle on the rightexport strategy?22 Social mediaTrends and game changers in socialmedia today.24 Executive payIs there a link between executive payand executive value?28 What do leaders do?UQ Business School experts examine theelusive combination of behaviours that makesome people worth following.32 UQ Business School news33 Does it pay to be green?Green business practices tick theenvironmental responsibility box, but isthere a business case?36 Research to richesBridging the commercialisation chasmbetween breakthrough research andbrilliant new businesses.39 Option-al extrasWhat can option pricing tell us abouthow M&A announcements affect companyvalue? A theory of rational markets.42 SustainabilityrevolutionChange may start with small wins, but it isdelivering big change.44 Look who’s talkingMapping your business’ innovationnetworks gives insight to performanceand innovation.47 UQ Business School news812Customer rage, the challenges for small business export and how to take brilliantideas, and original inventions to market, make Momentum a compelling readboth for leaders of today’s businesses, and anyone considering their future andhow to take their career to the next level.Enjoy issue one of Momentum and many more to come in the future.16Iain WatsonExecutive DeanFaculty of Business, Economics & LawAndrew GriffithsDeanUQ Business SchoolMomentum is also available online – visit uqbs.com/momentumComing soon… The Momentum monthly email newsletter. To receive regular updates,why not sign up to Momentum which will contain the latest statistics, research and comment– visit uqbs.com/momentum/signupMomentum is published byThe University of Queensland Business School, St Lucia, Brisbane QLD 4072, Australiat: +61 7 3346 8100 w: www.business.uq.edu.auManaging Editor Samantha Kennerley Editor Kirsten Lees Contributors Gayle Bryant,Bronwyn Curran, Jackie Dent, Elizabeth Fry, Claire Hanley, Kirsten Lees, Michael PollackDesign, Layout & Production Publicis Mojo, Brisbane Printer Craft InprintAll copyright and trade marks are recognised and all information correct at time of going to press.422 3UOQ 1189_275x235 [P] 48pp Magazine.indd 2-326/04/12 6:04 PM


Businessbarometer1UQ BUSINESS SCHOOL’S LEADERS’ SURVEYOpportunities? Hurdles? Important lessons learnedand risks on the horizon? We ask business leaders fortheir take on doing business in Queensland today.Julieanne AlroeCEO/MDBrisbane Airport Corporation1 Passenger growth at Brisbane Airport isexpected to reach 25 million within threeyears. There are countless opportunitiesfor business development, investment andinfrastructure, as well as the provision ofgoods and services to support the growingneeds of travelling public. Connectivity is keyin this new economy so businesses like ourshave a vital role in the efficient and effectivemovement of people and goods.2 On the flip side, preparing for and managingfuture passenger growth also presentsour greatest challenge as we strive to provideworld-best facilities and relevant services.3 Anything is possible; challenges to yourpeople and business can come in threesand fours (floods, tsunamis, earthquakes andmarkets); embracing digital technologies andexploring the use of emerging technologies issmart and vital.Greg BeashelCEO/MDQSL1 Asian markets are entering a regional supplydeficit for raw sugar. Australia’s proximity tothe Asia-Pacific market and our premium qualityproduct ensure our industry is well placedto capture the strong prices and expand.Ongoing consolidation and corporate investmentin the milling sector are symptoms ofthis bright outlook.2 QSL is set up to serve the interests of thesugar industry. We need to be responsiveto the needs of all our members. We mustmake sure our new members understand thestructure, model and benefits of QSL anddetermine how QSL can best add value totheir businesses. This will be done in a waythat adds value for the whole industry.3 With QSL’s unique structure and changesto the sugar industry, it is important to ensureall our members understand the value weprovide and how we deliver benefits.Gillian BrownPartnerMinter Ellison1 The opportunity for innovation in financingfor the development of common userinfrastructure, rail, ports and dams. Userfunding for these types of developmentpresents challenges associated with usercredit and cross default risk, contractingstructures, cash flows, tenure and taximplications.2 The increasingly multi-jurisdictionalnature of projects and giving your firm theglobal reach to ensure that clients receivehigh quality legal advice in all relevantjurisdictions.3 Choose your staff and your clients carefullyand invest time in each. Life is too short towork with clients that you don’t like or whodon’t value your contribution! I am fortunateto work with a great team and with highlysuccessful clients who share our values.23What opportunities in yoursector excite you right now?What’s the next hurdle for yourorganisation to overcome?What’s one key businesslesson you have learnt in thepast 12 months?Jeff ConnellyCEOSiemens1 Urbanisation trends are putting pressureson our cities, this allows us to create solutions:stable and secure energy supply, intelligentcity infrastructure, grid design for alternativeenergy supplies and transport networks thatreduce congestion and grow productivity.2 The challenge will be access to qualifiedengineers. Siemens has the workforce to providefor future needs, but as volume increasesthere will be a shortage of suppliers for criticalprojects. Mining, oil and gas projects areaccelerating and the demand for engineers indifferent fields is increasing. The demand forlow-emission technologies creates a furtherstrain on the skill-base.3 Global competitiveness relies on our abilityto act on decisions quickly and make changesfor the betterment of society over the longterm. With the worldwide population reaching9 billion by 2050 we need to keep up withdemand. Siemens operates in 190 countriesand we see this as one of the most criticalbusiness issues.Anthony DayCEOSuncorp Commercial Insurance1 The recent series of catastrophic eventshas resulted in greater than ever awarenessof the value of insurance. It plays a vital rolerebuilding communities and helping people intimes of need. There’s an opportunity for thesector to show the contribution we can maketo other areas. As Australia’s largest personalinjury insurer, Suncorp knows there’s morethe industry could do as we move towards anational disability insurance scheme.2 Insurance is an international industry andwe are directly impacted by global financialevents and markets, so the current instability isof concern. The focus for Suncorp CommercialInsurance is to continue to innovate so we canremain competitive and keep responding toour customers’ changing needs.3 The unprecedented number of natural disastershas shown me just how well a businesscan perform when the pressure is on. Thatcouldn’t have been achieved without rigorousscenario planning and risk management, agood lesson for any business.Terry EffeneyCEOEnergex1 Continuing to contribute to improvedenergy sustainability for our customers andcommunities in South East Queensland.2 It is important that we address the rightbalance between environmental outcomes,lifestyle and business requirements with theresultant increases in electricity prices.3 Engaging customers and other key stakeholdersin the discussions on energy pricesand possible solutions is key.David FaganEditor-in-ChiefNews Queensland1 The public is more interested than ever inbeing informed and digital technology givesus more ways to be their preferred informationchannel, a challenge we are relishing.2 The continued technology churn. We needto quickly develop products which meet ouraudiences’ needs.3 Don’t under estimate the resilience ofQueenslanders. Our bounce back from lastyear’s natural disasters has been remarkable.Kate FarrerManaging DirectorQEnergy1 QEnergy is growing beyond Queenslandand into the national market, as regulatoryharmonisation establishes a consistentframework for energy retailing and consumerprotection. This is a very exciting time forQEnergy – new markets, new channels, newproducts – new horizons!2 Because electricity retailing is highlyregulated, our biggest risk lies in the regulatoryoutcomes for customers in each State.From a regulatory perspective, we have a veryuncertain time at the moment – significantreview of tariffs underway in Queensland;the carbon tax and the Government hasindicated that they are looking at rationalisingthe operating environmental schemes; andharmonised legislation across the NationalElectricity Market.3 As an early stage company, cash is withoutquestion king – you need to manage yourcash position daily, focusing on customercollections to ensure you and your customershave a great experience together. I’m enjoyingseeing QEnergy’s cash growth at present– but I don’t feel we can relax because wedon’t want to have lazy cash on our balancesheet.Erin FerosPartnerAllens Arthur Robinson1 Supporting our resources clients in Queensland’snew wave of mine developments andexpansions, following on the opening up ofthe Galilee Basin and the development ofproposed supporting and facilitating infrastructure– both rail and port.2 Attracting and retaining lawyers with theexpertise to meet the current and growingdemand in the resources, environment andinfrastructure space. Recruitment of experiencedlawyers with that skill set is a challenge.3 Confirmation of an ever-changing businessand legal landscape and the importance offlexibility in business plans to respond quicklyto changed circumstances.Maureen FrankCEOEmberin1 Gender diversity and mentoring are booming.An increased focus on understanding thatincreasing employee engagement equates toincreased profit is having a big impact. That’sexciting! E-mentoring will become big in thenext few years as the demand for effectiveand consistent programs increase. There arereal opportunities to make a change in genderdiversity in Australia.2 Our area of work is highly specialised – sofinding good talent to train is tough! Theproblem I have as a CEO of a small business isthat clients want me – so overcoming the ‘howdo you clone the CEO?’ issue is a big one!3 Technology is a huge enabler for businessand learning – however, you need tounderstand all the ins and outs of programs,functionality and what is out there before youengage consultants. It’s easy to be conned!Stuart GrimshawCEOBank of Queensland1 We’re seeing a rapid evolution of technologyin how people do their banking. Thisis particularly true for the payments system.It’s proving an intriguing change. While wedon’t have the deep pockets of some of ourcompetitors, the exciting challenge is to usethe resources we have to provide the solutionscustomers are looking for.2 Moving a traditional banking culture intothe innovation space. Banking is traditionallyrisk-averse when it comes to operations. Weneed a fundamental change. For example, thenotion that the more senior a staff member thebetter his or her ideas are, doesn’t work. Earlyadopters and trend spotters are often morejunior. They have insights worth listening to.3 Never underestimate the value of great cultureand great people. If you don’t have those,your strategy, however smart, is irrelevant. AtBOQ we are building a strong managementteam and have wonderful staff. In tough timesthat pays dividends.Lance HockridgeCEOQR National1 The extraordinary growth opportunities forresource-related Australian companies in theAsian century, especially in coal and iron ore.China and India will continue to drive this incoming decades. QR National’s 80 per centleverage to this sector means we’re wellpositionedto capture the upside.2 Finding the formula to attract the calibreof people in the right numbers to supportour growth aspirations. Being an employer ofchoice will be more about career opportunitiesand the nature of communities in whichpeople can live and work than money alone.3 Resilience born out of crisis can providecompetitive advantage. The company’sresponse to Queensland’s worst floods – interms of community assistance and businessrecovery – was extraordinary. It has given us astrength, a spirit of determination to succeedno matter what. This cannot be captured innumbers alone.4 5UOQ 1189_275x235 [P] 48pp Magazine.indd 4-526/04/12 6:04 PM


UpbringingA male interviewerWhat next?With chairpersons and the broader industryrepeatedly stating that leadership, strategy,integrity and stewardship were the qualitiesneeded in a CEO, Dr Fitzsimmons came tothe conclusion that these sorts of skills weren’tlearnt in the workplace – the process started inchildhood.“A lot of the chairmen were talking aboutwomen lacking confidence and I think thebig difference with the female CEOs that Iinterviewed was that childhood trauma – whilehorrific sometimes, given some of the thingsthey went through – gave them that self confidence.They were able to process the trauma,deal with it and overcome it.” He believestheir small business backgrounds gave theman innate understanding of business, and,combined with their confidence, they quicklyobtained mentors in the workplace.“A lot of the men CEOs attributed captainingthe football team as ‘skilling’ them up forthe workforce – you’ve got a goal, strategy,leadership, teamwork – and they come intothe workplace with an understanding of thesethings,” he says. Meanwhile, most womentended to be involved in the arts or non-teamsports, and needed a mentor to teach themleadership in a workplace context.Dr TerranceFitzsimmonsA charteredaccountant, consultantand lecturer, Terry is particularlyinterested in gender differences inbusiness. His recent research hasfocused on the different careerpaths of male and female CEOs.Having childrenIt has long been understood that a numberof talented women leave the corporate sectorin their late 20s and 30s to have children –often just when their careers are about to takeoff. Studies show over 85 per cent of high-levelmanagers and professional women cited longand inflexible working hours as significantfactors in quitting.Dr Fitzsimmons’ interviews again found astark trend: two-thirds of the women CEOs hadchildren either very early, at 18 to 23 or in theirlate 30s, and all had options, such as grandparents,who could watch the kids when they wereat the office. All these women still identifiedthemselves as being the primary caregiver.“What it paints a picture of, is that thesewomen are superwomen,” he says. “Superintelligent, gifted, born into the right smallbusiness family, they were challenged aschildren, and overcoming their challengesgave them confidence. They had supportivehusbands, they had mentors, they had all thosefactors that enabled them to become CEOs.You can see how the pool narrows considerablyif you don’t have those things.”The full impact of Dr Fitzsimmons’ thesisis that he combines an exploration of whomakes it across the CEO finish line with anexamination of the decision-making processbehind it. The outcome is a startlingdissection on just how disadvantaged seniorwomen are in the private sector – outliningdiscrimination, the myth that men andwomen ‘lead differently’, how women CEOshave to apply for more roles and how theyare more likely to have to leave their industryto get a promotion.Dr Fitzsimmons believes that being amale CEO – coming from the same “habitus”as the people he spoke to – gave him anadvantage in drawing out honest opinions. “Iknow for a fact that I was given feedback thatwould never be said to a woman,” he says,adding that some of the chairpersons wereopenly prejudiced against women and wouldnever hire them for the top job.I know for a factthat I was givenfeedback that wouldnever be said toa woman.Helen Conway, Director, Equal Opportunityfor Women in the Workplace Agency, saysDr Fitzsimmons says many of the CEOsinterviewed were eager to hear his thoughtson how to increase female representation.He had the same answer for them all: there isno silver bullet.“There is nothing you can do right now tofix the problem, no matter how much legislationyou ram through, because you are talkingabout a deep-seated cultural issue.”“As parents we make decisions for ourchildren based on their gender. We allow oursons to do things that we will not allow ourdaughters to do at the same age at the sametime. My research shows that boys have careerrelevant experiences that girls have missedout on. That is a societal problem. That is notabout the elite.”Schools are also part of the problem. Assomeone who runs a business bringing historicalperformances to schools, Dr Fitzsimmonsis well-placed to remark:“When schools implement a curriculum,do they do it in a non-gendered way? AndI’d be inclined to say that they don’t.” He isparticularly concerned about career guidancein schools, which he believes continues tosteer girls towards more traditional roles.In the short-term, he argues the governmentneeds to support expanding childcarehours beyond the normal 7am to 6pm routine.(Indeed, in late March – perhaps identifyingDr Fitzsimmons’ thesis is a valuable contribution to the debate about why so fewwomen are making it to the top in corporate Australia. His findings around the criticalimportance of early life experiences reinforce the need to challenge societal normsaround gender. This is a big undertaking, but without societal change, we will see littlechange in our workplaces. Gender stereotyping starts from childhood and inhibits girlsin having experiences which would equip them to undertake a full range of roles in theworkplace. This is unacceptable. Our society, which is male-dominated in significantrespects, needs to adjust to afford women and men equal opportunities unencumberedby considerations of gender. This must be complemented by efforts by employers, andthere is a good business case for doing so. Organisations which have a competitive edgein the talent game recognise the value of providing broad experiences to women asearly as possible in their careers, and facilitating flexible work options and other supportto ensure women’s careers progress and are sustainable.a popular policy – Tony Abbott reportedlyasked the Productivity Commission to look atsubsidising in-home childcare from nannies.)Dr Fitzsimmons also believes that womenneed to work more in line roles in organisationsto develop the depth and breadth ofexperience that simply has to be on a CEO’sCV. “Firms need to concentrate on thedevelopment of new female talent throughleadership and mentoring. The reward forinvesting in staff is not at the middle end ofcareers, it’s nearly all at the front end.”He appears ambivalent about tacklingthe issue through quotas, which he sees as a“double-edged sword”. While countries likeNorway and Spain have quota systems forwomen on boards, his research suggests thatquotas for CEOs would create massive credibilityproblems for women candidates.Flexibility: the kissof career death?And while government policies aroundchildcare and workplace flexibility havepromoted participation rates of women, executiverecruiters and chairpersons consistentlytold Dr Fitzsimmons that ‘flexible options’ ona CV were the ‘kiss of death’. “When they sawthat a woman has had a part-time role or aflexible role, they are considered ‘not serious’about their career.”Dr Fitzsimmons says there are lessonsto be learnt. Since promoting the data tolarge companies around Australia, countlesssuccessful women have confessed they comefrom similar backgrounds. “You hear it overand over again from women in all sorts ofindustries in senior roles. They tend to be cutfrom the same cloth. I think the lesson is howdo we provide that cloth to everyone?”10 11UOQ 1189_275x235 [P] 48pp Magazine.indd 10-1126/04/12 6:04 PM


CUSTOMERRAGECustomer rage is onthe increase, fuelled inpart by the prevalenceof social media.And if organisationsdon’t want to be on thereceiving end, they’dbetter start workingwith their customers.It seems simple enough: if customersare important to your organisation – workwith them. A company that is receptive to itscustomers’ needs, including their complaints,is rewarded with loyalty. But complaints areoften mishandled, and this can lead to powerfulfeelings of customer rage – to the detriment ofthe business involved.Last year, a woman looking to buy a bridesmaiddress visited Melbourne fashion retailerGasp. When she hesitated over a particulardress, the assistant yelled at her that she hadwasted half an hour of his time. She complained,but the store refused to acknowledgeany fault. In fact, their email response was, atworst, insulting, at best, inflammatory.The story went viral, with people aroundthe world criticising, and locals boycotting,the store. Shots of Gasp’s Chapel Street outletwith no customers were broadcast on televisionnews networks. Eventually the companyapologised, but it took three months anddelivered irreparable damage to the brand.All organisations need processes to dealeffectively with customer complaints. Unmanaged,customers’ negative emotions build up.Annoyance and frustration become anger andresentment; next step – customer rage. Thecustomer is lost to the company – and thebrand damage is done.A study lead by UQ Business School andconducted across Australia, the US, Thailandand China, highlights the causes of customerrage and suggests the different ways organisationscan manage dissatisfied customers.The good news is that customers don’ttypically go into rage at their first frustration.Disgruntled customers usually give the firm anopportunity to fix the problem. But each timean attempt to solve a problem fails, negativeemotions becomestronger, ultimatelyresulting in rage.Janet McColl-Kennedy is Professor ofMarketing at UQ Business School and projectleader. “Before getting to this point, theorganisation has been given on average fiveopportunities by the customer to redeemitself,” McColl-Kennedy says.She cites one case where a woman made11 calls to the call centre of an Australian insurancecompany and two in-store visits over fiveweeks to get a legitimate refund of $500. Ateach encounter the customer felt the employeesseemed “not to care”, and showed noempathy or willingness to solve her problem.She went from surprise to concern, thenannoyance, to frustration and, ultimately,extreme anger, which she expressed byswearing and slamming down the phone.Eventually the insurance company returnedthe money, but the customer was unhappyand shared what had happened with as manypeople as possible.This customer’s “sense of helplessness,desperation, no one would listen to me” arefeelings echoed by many of the disgruntledconsumers interviewed for the UQ BusinessSchool study. “I felt cheated”, “I felt manipulated”,“He was trying to cheat me”, are thekinds of frustrations that build up in customerswhen they feel they aren’t being heard.It’s not that customers don’t expect thingsto go wrong. Products break and systemsfail. It’s just that when there are problems,customers look for companies to show concernand work with them to fix the problem.Professor JanetMcColl-KennedyJanet is internationallyrecognised for her workin customer service, includingservice recovery – how to rectifymatters when things go wrong –and the growing phenomenon of‘customer rage’.Cultural differencesThe research into customer rage fromUQ Business School is ongoing and the latestfindings highlight the differences in the waydifferent cultures express their rage.“Customers from Western societies tendto express their rage more openly comparedto customers from Eastern societies; butdon’t be fooled, they may well be plottingtheir revenge,” says McColl-Kennedy. “Ourresearch shows that Eastern customers tend tohold in their negative feelings until they cannothold them any longer. If they explode, it islikely to be to a much greater extent than theirWestern counterparts. And customers can takerevenge on companies years later.” McColl-Kennedy explains that revenge can take manyforms: destroying company goods, facilities orproperty, injuring front line staff and worse.”TELECOSLast financial year there were morethan 197,000 new complaintsfrom telco customers lodged withthe Telecommunications IndustryOmbudsman – a 17 per cent increaseon the year before.About 60 per cent of customers whohad filed a complaint spent threeor more hours unsuccessfully tryingto solve their issue first. One in fivespent more than nine hours trying toresolve it. This fits with UQ BusinessSchool’s findings that consumersmake, on average, five attempts tosolve their problems before theyescalate to rage.12 13UOQ 1189_275x235 [P] 48pp Magazine.indd 12-1326/04/12 6:04 PM


Nip it in the budMcColl-Kennedy says that if mild negativeemotions are not corrected they buildto boiling point and extreme emotions andrage behaviours emerge. This makeslife difficult for all parties. If front-lineemployees are not adequately trainedto deal with customer rage, the situationis more likely to escalate to damagingbehaviours towards the organisation’semployees, property and the brand.“Through Facebook, Twitter andother communications, people find outabout how others are suffering, andcome together,” Lisa Montgomery,chief executive of non-bank lender ResiMortgage Corporation, says. “This selforganisingbrings people together toget some restitution for a service that hasgone wrong. Vodafail is a great example.”The website Vodafail – with twitterfeed and Facebook page – was setup in 2010 by Adam Brimo, an unhappyVodafone customer, and has attracted hugepublicity. The site allows Vodafone customersand employees to share their experiences andfrustrations with the telco provider, and theworld, and continues to attract posts.“This type of social organising will happenManagingcustomer complaintsAnticipate potential flashpointsEncourage – even reward –information about complaintsRecruit ‘service-minded’ staffTrain staff to deal withangry customersProtect your employeesGive front-line staff the powerto make discretionary decisionsFind out what went wrong –and learn from itRebuild customer relationshipsmore in the future,” Montgomery says. “Assomeone recently advised business: socialmedia will be your sword or your shield.”McColl-Kennedy suggests four strategiesto help organisations avoid rage: take preemptiveaction; prevent customers from failing;recruit the right people for the front-line; andtrain employees to anticipate and cope withunhappy and angry customers.“Often people who are good at customerRESI HOME LOANSservice are promoted off the front-line” saysMcColl Kennedy, “so they are lost from theareas where they do the most good. Morefocus needs to be on training staff todeal with unhappy customers. Thecost is minimal. The returns can behuge.”St George Bank is one companythat appears to be taking the rightapproach: they have long stated toemployees that complaints are anopportunity to salvage a relationship.This culture has meant staff don’ttake complaints personally and areuninhibited in reporting or dealingwith them in a rational rather thanemotive manner.“While most organisations havecomplaint handling processes in place,there remain serious implementationissues at the customer-employee interface,”McColl-Kennedy says. “Firms need tobe proactive. Never allow a customer to leavewith their problem unresolved. Exiting, spreadingthe word or, worse still, taking revenge,even far into the future when the companyhas forgotten about it but the customer hasn’t.The consequences are sure to be disastrous.”Chief Executive Officer of non-bank lender Resi MortgageCorporation, Lisa Montgomery, says most of the complaints herorganisation receives are a result of “crossed wires”.“The first thing we do is give that customer time to tell us everything. We find that in most casesthat resolves the issue.”Montgomery says one of the main reasons customers get into a rage is because they feel theyaren’t being heard. “It’s often not because someone has done something wrong,” she says.“And we also ensure we learn something from the experience and make changes within theorganisation to ensure it doesn’t happen again. It doesn’t matter how good your product is, ifthe experience is bad, your customer won’t stay.”THE MBARANKED INTHE TOP 1%WORLDWIDEThe EconomistThe UQ Business School MBA program hasbeen recognised by The Economist as one ofthe world’s best, rewarding graduates with theinvaluable expertise of lecturers activelyinvolved with leading businesses.MBA graduate Elyse Henderson, RegionalBusiness Executive with NAB Business, hasaccelerated her career and enjoyed rapidpromotion with one of Australia’s largest financialservices organisations.UQ Business School offers three MBA studyoptions that provide flexibility and convenience,with the added benefit of an outstanding facility inthe heart of the Brisbane CBD.To find out more contact UQ Business School on07 3346 8100 or email mba@business.uq.edu.auMBA PROGRAMbusiness.uq.edu.au14 15UOQ 1189_275x235 [P] 48pp Magazine.indd 14-1526/04/12 6:04 PM


Diversify andspread your riskSmall businesses often lack the capacityto diversify activities. But there is more thatthey can do than just check their insuranceis paid up and cross their fingers. Businessgroups are working together to increaseknowledge and spread risks, and to lobbygovernments to protect their interests.Small businesses need to know how toaccess government support in the event ofa business interruption. The Victorian andFederal Government provided a series ofgrants and loans, and a professional businessadvice and counseling service in the wake ofthe 2009 bushfires and 2010 floods.Large corporations can also play animportant role in helping small producers.Starbucks sources the majority of its coffeefrom tens of thousands of small coffee growers,typically with land-holdings of less than30 acres. Through its Small Farmers SustainabilityInitiative, Starbucks has reached over56,000 small-scale farmers, providing loansand assistance to cooperatives, helping thembuild resilience through managing risk, sharingknowledge and improving environmentalstewardship.InsureDr Linnenluecke recommends all businesses takesteps to build long-term resilienceThe insurance – and reinsurance – industrysits on the front-line of the climate–businessbattle. After all, they foot the bill when theircustomers suffer losses.Insurance has been the way that most businesses– particularly those with long-lived andexposed infrastructure and fixed geographiclocations (for example, energy, agricultureand tourism) – have typically mitigated theirfinancial exposure to extreme weather events.The sector is moving to influencebusinesses to introduce climate friendlyactivities, the plan being to reduce theextent of potential climate change. Insurancecompanies also lower their own exposure ifUnderstand where you do business: are you, your suppliers or yourcustomers in a climate hotspot?Diversify: what you do, who supplies you and where you’re based.One extreme event needn’t wipe out all your operations.If you can, move to a safer spot for your business.Build partnerships to share knowledge and risk with other organisations.Understand government and institutional support and resources.Understand your ‘slack resources’ – off-site back-up facilities or financialreserves which you can call on in response to extreme events.Audit your insurance cover: don’t leave any nasty surprises in shortfalluntil it is too late.they can encourage businesses to developlong-term resilience. Mark Way, Senior VicePresident, Head Sustainability Americas,at global reinsurer Swiss Re believes “It isessential for society to reduce greenhouse gasemissions and adapt to the impacts of climatechange by building climate risk considerationsinto the decision making process.”Dr Linnenluecke argues that, while theyhave put considerable resources into investigatingclimate impacts, there is still anopportunity for insurance companies to helptheir clients be better prepared to cope withdamage and loss of business in the wake ofextreme weather damage.A resident’s response to Cyclone Yasi Drift restaurant during the 2011 Brisbane floodemergingexportersThe reality of tougher trading conditions and thehigh Australian dollar means that SMEs will needsmart and well-targeted strategies to make a dentin overseas markets. How can a small businessdetermine a successful export strategy?Pfeiffer’s Winery sits on a high embankmentabove a sweeping bend in the Sunday Creeknear Wahgunyah, in Victoria’s Rutherglen winedistrict. It’s where Chris and Robyn Pfeiffer haveraised their children and grown their wines foralmost 30 years.It’s from this idyllic rural base that thePfeiffers launched a robust export business.More than half of Pfeiffer wines sell overseas,into the UK, Canada, China, Singapore andMalaysia.“With around one winery for every 10,000Australians, export was on our agenda earlyon,” says owner–manager Chris Pfieffer. “If wehad any hope of achieving the economies ofscale we needed to make affordable wines, wehad to find markets outside of Australia.”18 19UOQ 1189_275x235 [P] 48pp Magazine.indd 18-1926/04/12 6:04 PM


ConfrontingopportunitiesConfronting opportunities is aboutovercoming uncertainty in, or regardingprospective export markets. Dr Peter Lambsays business owners who view their exportstrategy as confronting opportunities need tofeel confident and prepared to make theseforays into markets overseas.“They spend a lot of time researching thedifferent international markets to give themconfidence,” he says. “It’s about understandingall the background information that youintrinsically know about your own market.”International agents are key. Finding theright agent with a good business fit is crucialto this strategy.“Once you have found your agent, find outas much as you can about them, verify theirclient list and establish their track record ofpursuing market opportunities promptly.”It was also about vulnerability. “If you onlyhave one channel to market, you’re exposed.Increase your sales channels and you spreadyour risks.”For Pfeiffer Wines export has been a 30-yearlearning curve, with triumphs and misstepsmarking the way. “What’s the key thing we’velearnt?” ponders Chris Pfeiffer. “Every marketis different, and every company is unique. First,get in there and learn how the market works.How much is it going to cost you? And howmuch is it worth to you?”How does an owner–managed businesspitch their product to an international market?How can you map out opportunities and deviseways to crack them, while keeping your handfirmly on the helm of your local business?According to Peter Lamb, of La TrobeBusiness School, Jörgen Sandberg and PeterLiesch, of UQ Business School, authors of aCompetingon priceThis strategy is clear: being unknown inthe market need not be a barrier if you can beprice competitive.An exporter who sees internationalisationas competing on price assesses the price competitivenessof markets they are interested in,and uses price to compete and attract agentinterest because they are relatively unknown ininternational markets.PortrayingdistinctivenessAdopting product distinctiveness meansoffering an appealing product package thatagents believe they can ‘sell’ to customers.“Value is portrayed through the product’sperceived distinctiveness and uniqueness,”Liesch says. “Distinctiveness for winegrowersrelates to styles and regionality. For this strategy,growers need to find agents who sharetheir passion for their wine varieties and ensurethe agent educates the market to reinforce thisdistinctiveness. There are wines and there arewines!”first-in-its-kind study of how small owner–managedbusinesses practice internationalisation,the key to a successful strategy is not about thetarget market, or the product. It’s the individualwho drives the process.They studied the export activities of agroup of owner–managed Australian wineriesand believe they have produced new insightsinto how successful SMEs approach exporting.It is the differences in owner–managers’understandings of what internationalisationmeans to them that explain how theyapproach export markets and organise theirinternationalisation activities.Their study indentified four “understandings”of how winegrowers understoodinternationalisation: confronting opportunities;competing on price; portraying distinctiveness;or storytelling.ProfessorPeter LieschAs Professor ofInternationalBusiness, Peter’s research hascovered everything from theearly internationalisation offirms – the so-called ‘born globalphenomenon’ – to export andoverseas subsidiaries.Professor JorgenSandbergJorgen is a leadingacademic inorganisational competenceand organisational learning, inparticular managing learning. Hisresearch has investigated how wecan define and develop competencein professions, including medicine,law and engineering.StorytellingStorytelling creates memorable experiencesto engage prospective buyers. Theresearch makes it clear that the wine, the philosophyof the wine maker and how the wineis ‘made’ can become a story to attract agentsand their customers. This moves beyond theuniqueness of the wine to the grower’s passionfor it, and this passion becomes embodied inthe product with storytelling.During the lifecycle of his business, ChrisPfeiffer has experimented with each of theseapproaches. “Our first export market was theUK. This was clearly about confronting opportunitiesin the demand for quality Australianwine. In China, wine is commoditised – oftensold under a different label, perhaps not evenas Australian, so price competitiveness iskey.” In other markets, storytelling has provedeffective – and Pfeiffer has approached thesemarkets with a compelling tale of heritagevineyards, aged oak vats, of “human follies,tragedy and traditional wine making”.When it comes to storytelling, social mediahas been a boom. “Twitter and Facebook allowNEED EXPORT ADVICE?AUSTRADEThe federal government’s trade andinvestment development agency, witha network of offices in more than 50countries. The majority of Austrade’sclients are SMEs.Executive director, AustralianOperations, Tim Beresford, saysAustralian exporters are findingconditions challenging, especially withthe strong Australian dollar.“Companies that have made acommitment to export and are exportready are having to be more innovative,”he says. “It’s more difficult to win onprice so you’re looking for insightinto the market and where you cangenuinely add value. That’s whereAustrade can help.”us to talk directly to customers, wine writersand brand champions in markets acrossthe world. If we tweet a review, it’s picked up,spread and shared. Social media has broughtthe world closer – at least for our Englishspeaking markets.”The experience of wine growerstranslates readily to small business ownersin other industries. Antonette Golikidis oforganic babycare range Little Innoscents,recognises two of the study’s approaches tointernationalisation: confronting opportunitiesTHE AUSTRALIANINSTITUTE OF EXPORTEach state has its own department.In Queensland this is the Trade andInvestment Queensland Network,which has published Strengthening theQueensland Economy Through GlobalMarkets: 2011-2016, which outlinesfuture export opportunities.The report states that the increase inthe Asian middle class augurs well forQueensland firms in the education,design, fashion, niche manufacturing,processed foods and tourism markets.These will become the focus of theQueensland Government’s exportdevelopment interventions.and portraying distinctiveness.Golikidis says if she hadn’t begun exportingto Singapore and Malaysia last year, she wouldnot have survived, and she has learnt a numberof lessons in the process. Not least being togo in person to meet with the distributors – aconfronting opportunities approach.“You need to screen distributors. While theycan report on what they can do for you, gothere and make sure they are not exaggerating.You should also follow up referrals to backup what you heard about them,” Golikidis says.Visits also build rapport and show commitment.According to Golikidis, the philosophybehind Little Innoscents is about taking itsstory to the overseas community and increasingconsumer awareness of natural and organicbaby skincare and the difference it can make tothose suffering from sensitive skin issues. Thisis a classic “storytelling” approach to export.This research into internationalisationshows a one-size-fits-all approach does notwork. A creative mind, and a boost fromsocial media, allows the resource-constrainedowner manager to meet the challenges of newmarkets – with confronting opportunity, price,distinctiveness and storytelling.20 21UOQ 1189_275x235 [P] 48pp Magazine.indd 20-2126/04/12 6:04 PM


SOCIAL MEDIA?SO WHAT?Social media is transforming business. It is building newkinds of communities and shaping key conversations.What are the trends? Who’s doing it well? And how canyou build your own online profile?Building a blogInternationally recognised innovationblogger and UQ Business School academicDr Tim Kastelle has built a dynamic onlineexchange through his blog and twitter feedover the past four years. Tim reaches almost4000 people on a daily basis with thoughts andlinks to discussion on innovation.Tim’s tips for building your social mediaprofile:1. You don’t have to use every social mediatool available. Pick the one that suits yourpurpose. Blogs, communicating with a generalaudience; LinkedIn, connecting witha professional community; Twitter, regularinteractions on a particular topic.2. Figure out who you want to communicatewith. Write as though you’re in conversationwith your ideal audience.3. Think about what you want: profile raising,idea testing, customer communication,professional networking or finding researchsubjects, for example.4. Participate regularly. What ‘regular’ meansvaries. Blog between once and a few times aweek; LinkedIn works with daily interactions;Tweet a few times a day (the reward is that it’sthe best tool for getting attention).5. Respect the ‘social’ in social media – buildrelationships around topics that interestyou. Be generous, pointing people to otherinteresting work in your area. Paradoxically,it’s one of the best ways to draw attention toyour own work.Queensland Police Media launched their social media experiment in May, 2010.After six months of tweeted press releases and public information bulletins, @QPSmediahad a following of around 8,000. When Cyclone Tasha hit Central Queensland onDecember 25, all that changed. Accurate, trusted information exchange became critical.@QPSmedia was there to fill the need. Followers doubled within two weeks.But this was merely a dummy run.When floods hit Toowoomba and the Lockyer Valley, moving on to Ipswich and Brisbane,@QPSmedia found itself the authoritative point of contact for the community.With news emerging from all quarters, the media, the emergency services and strandedQueenslanders turned to @UQSmedia and Facebook, to find out what was going on,and to post what they knew. Communications were immediate, squashing rumour,and correcting misreporting. QPS tweets were broadcast on national TV news tickers,and read out by radio announcers moments after being posted online.For the first time, the emergency services had a direct, two-way conversation with thepublic – and everyone was listening in, and chipping in.In the 24 hour period following the floods the number of ‘likes’ on the QPS Facebookpage increased from around 17,000 to 100,000. In the same 24 hour period it generated39 million post impressions – 450 million views per second. Social media had earned itsstripes for disaster management.Police Media advises businesseson social mediaDo it nowTrust your teamGet a social media expert on the teamIntegrate social media asstandard practiceReceive information and involveyour online communityThe point with socialmedia and business isthat it’s out there. Andyour brand is out there allacross social media platforms,whether you like itor not. That can be scary,but it’s also an incredibleopportunity. The questionis, what is your businessgoing to do about it?QUEENSLAND POLICE MEDIACHANGES DISASTER MANAGEMENTDr Tim Kastelle90% ofconsumersbelieve socialnetworking saves themtime shopping. 40% usethe web for competitiveshopping.(IBM 2012 Consumer Study)1151% penetrationmillion Facebookusers in Australia.of total population.64.46% of internet users.$400million spenton groupbuying and growing72% each quarter.(Sydney Morning Herald)50% fastergrowth inonline auctionsthan global average.10.7million videousers, 60% ofthe population. 941.4million videos viewed.89 videos each.ConvergenceWhere real world and social media meet.Take the Gold Coast theme parks. Whatif every Dreamworld visitor updated theirFacebook status and sent an automatic tweeteach time they swiped their pass to go on aride? High visibility, low cost, engaged impactmarketing, adaptable for a huge variety of realworld experiences, is next on the social mediamarketer’s agenda.It’s where you areYour age, your likes, where you live andhow you spend your money are old newsto marketers. They want to know where youare. Now. Location-based social media, likeFourSquare – or simply the GPS facility on yoursmartphone – is tailoring advertising to whereyou are at any point. It is the next rich seam inthe social media data gold mine.What areyou worth?Your social capital is your ability to influenceothers with what you think and what you buy.A number of businesses measure online socialcapital by capturing your online interactionsand activities. The idea is to offer incentivesto encourage you to use your social capital fortheir ends. Of course, some Twitter users slipthrough the system. @BigBen tweets ‘boings’to mark the passing hours, has 176 000 followersand the standout: a social capital rating of69 (Klout). But will Big Ben influence which hotelyou choose next time you’re in New York City?Count me out!Advertisers and search engines build comprehensiveprofiles of online behaviour whichthey sell, largely without asking permission.More and more, consumers are asking howthey can opt out. Companies like disconnect.me, launched by a former Google staffer, offertools that allow users to turn all that tracking off.Peace and privacy at last?GONE VIRALBelgium cable tv channel, TNT, iscelebrating a recent viral success.22 million views of their 1 minute video‘press to add drama’ within a week of itshitting YouTube. That’s three times theTV channel’s target market, the Dutchspeaking population of Belgium.The video spoofs the reality tv prankshow format. A button, on a pedestal ina quiet Belgian square is labelled ‘pressto add drama’. When some curiouspasser-by does, a raft of activity explodesout of the surrounding buildings –horsemen, emergency rescues, streetbrawls, romance. The drama is irresistible,the shock and surprise of passers-bydelicious.Online video viewing in Australiais among the highest in the world,according to ComScore’s 2011 report onAustralian internet activity. 10.7 millionAustralians watch online video eachmonth – averaging 10 hours of videoper person.And it’s growing. The Online AdvertisingExpenditure Report (OAER) compiledby PricewaterhouseCoopers (PwC),shows online video advertising increasing53 per cent year on year in Australia, withfurther growth expected as broadbandreaches 95 per cent householdpenetration by 2015.22 23UOQ 1189_275x235 [P] 48pp Magazine.indd 22-2326/04/12 6:04 PM


executive paySalaries for corporate bosses have skyrocketed.The question is, are shareholders getting value fortheir outlay? Now that shareholders have the powerto remove boards that pay executives too muchmoney, understanding the link between pay and goodcorporate performance is crucial, says UQ BusinessSchool Associate Professor, Dr Julie Walker.The increasingly contentious issue of executivepay continues amidst further evidence thattop Aussie bosses are still ratcheting up salaryand bonuses. To the bystander at least, there islittle evidence of any link to performance.That executive pay is excessive is hardlynews. There has long been a gap betweenwhat corporate boards and shareholders feel isa reasonable reward for top management.No longer acquiescing to bad companyexecutive pay practices, shareholders are finallyfighting back – their disapproval expressed byvotes against management on pay. They arecombing their top executives’ pay packagesfor dodgy or badly written bonus plans andscrutinising them to see whether so-calledpay-for-performance plans, in fact, reward poorperformance.By emphasising short-term profit in bonusarrangements, institutional fund managershave sometimes been seen as part of the problem,since they have encouraged executives tofocus on profit margins at the expense of longtermgrowth and investment.What is surprising, then, is that despite thehowls of protest from investors about escalatingsalaries, and greater regulator and investorscrutiny, return on investment for executive payis not measuring up to any other use of corporatecapital.Obviously, companies need to pay theirtop people well.But managers must be paid in proportionto the value they add. This can only beassessed by taking into account the capitalthey employ to create value and the risk thatcapital is exposed to.Ultimately, in this debate, the question ischanged from, ‘are shareholders getting goodvalue from the executives?’ to ‘have compensationschemes had the perverse result ofharming shareholders’ interests?’Return on investmentfor executive pay is notmeasuring up to any otheruse of corporate capital.Dr Julie Walker, Associate Professor inAccounting at UQ Business School, says shareholdersare right to check remuneration reportssince pay still isn’t matching performance.Dr Walker has analysed various componentsof 240 ASX-listed companies between2001–2009, a period that straddled regulatorychange in Australia. She wanted to see howfar real pay moved with improved companyperformance.For her, the relationship between executivepay and company performance is still veryweak: a 10 per cent increase in shareholdervalue correlates to only about a 1.11% rise inexecutive pay.While this level of pay-to-performance isconsistent with the US and UK, it is far fromokay.“Since executive pay is usually justified onthe basis that managers need relatively highlevels of incentive-based remuneration sothat they will take necessary risks and boostshareholder wealth, it seems strange to findsuch low levels of pay-to-performance inevidence,” she says.“We make a fuss about performance-basedpay and yet when we measure it, the performancecomponent is a really small part of totalshareholder return and hardly powerful as anincentive. If we say the absolute salaries aretoo big, then packages contain a big whack offixed pay.”After analysing pay packages for both abull market as well as in the 2008 downturn,Dr Walker concluded that tougher regulationshave had a positive affect on the executivepay process.The trouble is, the positive impact shouldhave been more dramatic.Regulators have been slow to act.It wasn’t until the Corporation Law ReformAct in 1998 that companies were forced todisclose exactly how their executives werepaid or incentivised. But even then, the poorlydrafted rules weren’t policed.Add into the mix the numerous instances ofegregiously high salaries being paid out on thebasis of fictional accounts.Things improved in 2004, says Dr Walker,following a very prescriptive international24 25UOQ 1189_275x235 [P] 48pp Magazine.indd 24-2526/04/12 6:04 PM


accounting standard which demanded corporatebosses be more upfront about disclosingsalaries and bonuses.From where she sits, regulators could doa whole lot more – especially when it comesto disclosing how payouts are determined.“For instance, the calculations on how cashbonuses are tied to performance measures arestill too vague.”Cash bonuses are often payable at the discretionof the board.“Incentives are supposed change behavior– that’s the point. We need to provide betterincentives and tie more of executive pay to thevalue of the corporation,” she believes.That view fits with Dean Paatsch, directorof proxy firm Ownership Matters Pty Ltd,who rails against the one-size-fits-all mentalitywhen it comes to pay, preferring companies tothoughtfully tailor executive incentives to eachbusiness. “Also, they should remove the effectof general market movements – you don’t wantto reward someone for being in a rising marketwhen commodity prices are booming.”According to Paatsch, executives arecurrently on a mission to de-risk their pay packagesby eschewing share incentive schemesand clamoring for cash.Share incentive schemes which were soattractive in a bull market – because they kepton paying out as share prices continued toclimb - are clearly way less desirable in a downturnor in times of uncertainty.Says Paatsch: “We are seeing a dramaticrise in both the executive cash pay base andcash bonuses.”He warns that if boards continue to givein to the executive demand for more cash –without it being tied more to performance –then executive productivity will deterioratejust when low labour productivity is comingunder fire.Worse, the sudden and significant cashoutlay is starting to hit the bottom line for manymid-cap companies. “It’s not unusual for salariesbeing paid to key management personnelto be between five per cent to 10 per cent ofcorporate profit.”Transurban chief Chris Lynch’s pay wasseven per cent of all employee expenses.Associate ProfessorJulie WalkerJulie lectures inaccounting and hasa special interest in policy andcorporate governance reforms. Herrecent publications have includedpapers on performance-based payand the effect of CLERP 9.Clearly, any sea-change in compensationstructures has to come from shareholders.We’re seeing far more shareholder attentionbeing paid to executive pay policy, partlybecause of the federal government’s controversialtwo strikes rule introduced last year.This empowers disgruntled shareholders toremove the board if 25 per cent of them decideafter two years that corporate bosses’ salariesare too high. This can change the outcome onpay tomorrow.Attracting and keeping talented managersis always hard, and in a tight labour marketthe challenge becomes enormous. Companiesare forced to pay more, putting pressure onmargins, which in turn leads boards to demandhigher performance, prompting executives todemand even more money.To John Harte, Australian Institute of CompanyDirectors member and chief executiveof Integrity Governance Shareholders, salarydisclosure levels (and the cost to the company)are about right.He thinks recent regulator concern overcompany communication stems from uncertainearnings outlook post global financial crisis aswell as in high chief executive exit payoutswhen their stewardship of the company hasbeen unsuccessful.He worries that the new two strikes rulecould present a range of unintended consequences.He says many of the top ASX 100 willfind themselves falling foul of this rule if a significantnumber of proxy votes aren’t counted.In the US, where shareholders have a ‘sayon pay’, the process would have little affect,given the strong culture of the chief executive,who is also chairman of the board. Data analysedby USA TODAY showed chief executivessalaries rose two per cent in 2011, following awhopping 27 per cent increase the year before.Shareholders must involve themselves inthe process of renewing boards that are clearlynot doing the job properly and prevent rewardsfor mediocrity or failure. “Disclosure of pay andincentive schemes is giving shareholders thetransparency they need to make their case,”says Dr Walker. “Tracking the link between payand actual company performance is a powerfultool to create accountable boards and executiveteams incentivised to generate the returnsshareholders require.”Incentives aresupposed tochange behaviour– that’s the point.EXECUTIVEEDUCATIONRANKED INTHE WORLD’STOP 50Financial TimesUQ Business School offers one of the best ranges of executive leadershipcourses in the world. And it’s available in the heart of Brisbane’s CBDat an innovative, well appointed, high-rise facility. Discover whyyou should undertake executive education at UQ Business School.Call +61 (7) 3346 7111, email execed@business.uq.edu.au or visitbusiness.uq.edu.au/execedEXECUTIVE EDUCATIONbusiness.uq.edu.au26 27UOQ 1189_275x235 [P] 48pp Magazine.indd 26-2726/04/12 6:04 PM


WHATDOLEADERSare the qualities that leadersneed to be effective? Is it who they are– or how they behave? We tap into theresearch and front-line experience ofUQ Business School experts to answerDO?Whatthe question: What do leaders do?Successful business leaders need twothings: a business to drive, and followers – colleagues,employees and customers – whobelieve in them enough to accept direction,and to join them on their journey.But what do leaders do? What is the elusivecombination of character traits and behavioursthat makes some people worth following? Arethere innate qualities or learned behaviours?Leaders create trustIn November 2006, regulatory investigationsof German engineering giant Siemensrevealed that in “a system of organised irresponsibilitythat was implicitly condoned” sumsof around 420 million euros (AU$530 million)were kept in off-book accounts to pay bribesto win contracts. Corruption came from thetop. Senior executives authorised payments bysigning post-it notes, easily removed to hidetheir involvement.Siemens’ brand was blackened, the integrityof its leadership questioned.But, says Dr Nicole Gillespie, Senior Lecturerin Management at UQ Business School, thecompany’s determination to put the situationstraight shows they understood the power oftrust as a pillar of successful business leadership.Siemens hired over 500 full-time complianceofficers and a former Interpol official to heada new investigation unit. Then they went towork. An amnesty, introduced by the newCEO, brought 40 whistleblowers into theopen, revealing the full extent of the problem,reaching deep into senior management.Strict new anti-corruption and compliancesystems were established, and by 2008,more than half of Siemen’s global workforce ofAre great leaders born or made?Researchers at the UQ Business Schoolhave studied all aspects of the elixir of leadership,working with students as they shape theircareers, and with leaders already at the helm ofbusinesses, seeking to strengthen their skills asmanagers and leaders.In this article five of our experts answer thequestion: What do leaders do?400,000 had received anti-corruption training.The company was beginning to put thedamage behind them.Re-establishing stakeholder trust was thekey challenge facing new CEO, Peter Löscher.Tough decisions had to be made, includingover 900 internal disciplinary actions (includingdismissals), revising company strategiesto avoid competing in countries known forcorrupt practises, and restructuring to simplifyreporting systems and enhance accountability.Understanding how to build and repairtrust is a key leadership competency. Afterall, without trust, how can a leader influencefollowers and engender commitment?Gillespie has identified the characteristicspeople look for when judging the trustworthinessof leaders: competence – having theknowledge, skills and experience to do thejob; benevolence – people want to feel theirleaders have their best interests at heart; andintegrity – the adherence to a set of clear principles,such as honesty and fairness.“If you consistently portray these threecharacteristics as a leader, you will be trustedby all but the most cynical,” she says. “Getthem wrong and your reputation will suffer.”Gillespie interviewed more than 80 researchand development leaders and their teammembers. She believes every interaction offersthe opportunity to reinforce or undermine trustin the leadership relationship, and suggests sixways leaders can build trust with their team:involve team members in all decisionsand give them freedom to make theirown decisions (empowering);co-ordinate tasks and negotiateexpectations and resources withexternal stakeholders (co-ordinating);encourage individual strengths, helpteam members to meet their goalsand to consider problems in new ways(coaching);develop common values and goals inthe team;role model competence and integrity;show benevolence through opennessand being available when needed.You can nurture trust, Gillespie points out,but you cannot demand or control it. After all,“trustworthiness is in the eye of the beholder.”28 29UOQ 1189_275x235 [P] 48pp Magazine.indd 28-2926/04/12 6:05 PM


Leaders facilitate strategyThe essence of strategy is a journey ratherthan a once a year conversation, agree JohnSteen, Senior Lecturer in Strategy, and KevinHendry, a UQ Business School Industry Fellow.A company’s strategic direction should be anongoing discussion, not an annual set-andforgetexercise.According to Hendry, the leader’s role is tofacilitate this strategic conversation. “Settingthe tone and guiding employees along thestrategy path is the leader’s role. Good leadersneed to be always asking: ‘does the strategyneed to change?’ ”“Many organisations have one strategyplanning weekend each year,” he says. “That’scrazy – what if something changes? The notionof formulaic strategy planning puts you ina strait jacket. What use is a plan that is 100pages long that no one reads?”Hendry adds that leaders should be havingboth strategic and operational conversations.“An operational conversation is asking thingslike ‘can we make a machine go faster?’or ‘can we run three shifts instead of two?’Leaders drive changeAll organisations undergo periods ofchange. The changes may be fine-tuning, but,in some cases, changes are major, stressful,even urgent. It is the leader’s job to plan anddrive these changes. “This involves explainingwhy changes are necessary,” says UQ BusinessSchool’s Professor of Management, VictorCallan. Callan divides his time betweenindustry, where he advises leaders how to bemore successful in delivering on both thesesmall, and sometimes very large, changes.“The leader needs to be totally responsiblefor creating and maintaining the momentumfor change, and success hinges on having leadersat all levels of the business who supportthe changes. When a business needs to betransformed, it is important to create a senseof urgency. The most effective approach is toThe strategic conversation asks ‘are we doingthe right thing?’ or ‘are we providing the rightdimensions of value?’ It’s easy to get caughtup in being busy and it can be difficult totake half a day out and address the strategicquestions.”John Steen adds that skilled leadersare aware that the stages of the strategyprocess need to be supported by differentconversations. “Sense-making conversationsare vital in getting a shared understanding ofthe business challenges, but these are verydifferent from a ‘making choices’ or ‘making ithappen’ conversation”.“Business leaders tend to have a preferencefor a particular phase of the strategy process,”he adds. “Some prefer open dialogue andengagement with staff while others are morecomfortable with making choices and determiningbudget and accountability. Leadingstrategy means adjusting your leadership stylethrough the strategy process and getting outof your comfort zone. This is what makes strategicleadership so challenging.”have a clear vision and an easily communicatedplan, then to proceed, step-by-step, gettingsmall wins on the board early. Leaders do notlead from 50,000 feet away, but from within thecompany. When leaders aren’t visible duringchange, employees start to speculate.”To drive change, Callan says leaders needself-confidence and a conviction that they aretaking the business down the right path. “Theyalso need to be effective, authentic communicators,”he says. “Leaders who are not greatcommunicators must stay authentic to theirown style and use team leaders and supervisorsas key supporters and communicators. Ifyou are clear about the purpose and the goalsof the change you are driving and stick to yourknitting, you will communicate with clarity andpurpose.”Professor NealAshkanasyA former engineer whooversaw the buildingof the Wivenhoe Dam, Neal is nowProfessor of Management and isrecognised worldwide for his researchinto the field of organisationalbehavior.Professor Victor CallanA management expertwith an internationalreputation in businessresearch, Victor has completedprojects for federal and stategovernments, as well as many ofAustralia’s best known businesses.Dr Nicole GillespieA Senior Lecturer inManagement, Nicoleresearches the way inwhich organisations can build trustwith stakeholders and how they canrepair it following damage to theirreputation.Dr Neil PaulsenNeil spent over 20 yearsas a senior managerand consultant inpublic, private and communityorganisations. Now a Senior Lecturerin management, his interests coverleadership and organisational change.Dr John SteenAn experiencedconsultant, John is SeniorLecturer in Strategywith key expertise in innovationand strategic management. His riskmanagement skills have helpedvarious blue chip clients to developbusiness strategies.Leaders manageemotionsWhen it comes to doing business and,most importantly, when leading a business,emotions can get you into the top job, andmake you successful once you are there.Professor Neil Ashkanasay and hisresearch team at UQ Business Schoolhave focused on the emotional interactionbetween leaders and those around them. Hehas developed a five-level model of emotionalinteractions covering the full rangefrom one-on-one to organisation-wide reach,and concludes that leaders need to have thejudgment necessary to know what emotionsand moods to display, and to be skilled atdisplaying them.On a day-to-day basis, a leader’s abilityto manage and model appropriate emotionscan set the mood of a business. Workingdays are filled with frustrations. By setting theright mood, leaders can help deal with these,transforming frustration into optimistic outlookabout taking on challenges. Ultimately, howemployees feel about their work affects howthey deal with customers and how successfullythey perform in their jobs.If a leader’s job is to motivate teamsand convince them to implement thecompany vision, then well-judged, emotionally-engagedspeeches have most impact.Indeed, when it comes to bringing peopleon board, Ashkanasay believes that emotionalengagement can be more importantthan content.Emotional Intelligence – a term firstcoined in the early 1990s – has become apredictor of job performance, and it’s hasbeen shown that it may be the right combinationof cognitive skills and emotional skillsthat differentiate great business leaders.The leader’s contribution is incoordinating and connecting ideasand resources to enable the teamto work effectively together todeliver desired outcomes.Dr Neil PaulsenLeaders build teams“An effective team is one where membersare willing to contribute their expertise todeliver outcomes for which they are mutuallyaccountable,” says Dr Neil Paulsen, Senior Lecturerin Management at UQ Business School.“When that happens, you’re hitting the sweetspot.”Strong leaders build an environment inwhich effective teams can flourish, creating acontext in which high performance is possibleand achievable.“It isn’t about having all the answers,”explains Dr Paulsen, “the leader’s contributionis in coordinating and connecting ideas andresources to enable the team to work effectivelytogether to deliver desired outcomes.”Leadership style influences a strong team identityand effective cooperation between teammembers. Paulsen’s research has shown thatthis combination leads to increased innovationin scientific research groups.“Leaders who focus on those processesthat make groups effective, and then developa wide repertoire of skills and interventionsthat improve performance and put them intopractice.”He adds that leaders should not confinetheir team-building skills to the group forwhich they are responsible. Rather, leadersneed to look laterally at how they relate acrossgroup boundaries, both inside and outside theorganisation.“To handle the demands and complexitiesof the modern organisation, team leadersneed to spend less time in direct contact withtheir teams and more time managing thecontext in which the teams operate. Effectiveleaders strategically manage at and acrossteam boundaries to forge partnerships withother groups and organisations,” he says. “Toachieve this, a leader needs to develop organisationalacuity and become politically astute.”30 31UOQ 1189_275x235 [P] 48pp Magazine.indd 30-3126/04/12 6:05 PM


UQ BUSINESS SCHOOLStudents help polish planfor shoe shine businessMBA students have helped to launcha social business which gives marginalisedyoung men the opportunity to run their ownshoeshine operation.Buffed was set up by the Wise Foundationand Bank of Queensland, and is Australia’sfirst social franchise business. The studentshelped with market research, business plandevelopment and gaining corporate funding.The project was part of the school’s SocialEconomic and Engagement Program (SEEP).SEEP Director, Neil Paulsen, said: “SEEP isa voluntary option for UQ Business SchoolMBA students. It allows them to work withnon-profit organisations and gain some trulyunique experiences.”CELEBRITIES SHARE THEIREXPERIENCE AT YALARI CAMPCelebrities, including film director andscreenwriter Khoa Do and entertainer ChristineAnu, were among an impressive turnout out atthe second Yalari Horizons Leadership Camp,hosted by UQ Business School this year.The camp is an opportunity for Indigenousstudents to learn from business leaders andcelebrities who have overcome obstacles tobecome high achievers in their field.Former paralympic swimmer KarniLiddell, youth support worker Luke Goodwin,businesswoman Melissa Fletcher-Tooveyand Michael Combs, founder of the CareerTrackers Indigenous Internship Program wereamong the impressive line up of achievers whoshared their experiences.The camp is run in conjunction with Yalari,a not-for-profit organisation that sponsorsIndigenous students, and organised by MBAstudents as part of the business school’s SocialEconomic Engagement Program.Does it payto be green?The carbon tax, the cost of raw materials, lobbyingfrom environmentalists: the pressure on businessto be environmentally responsible is intense. Butcan sustainable development – the combinationof economic growth and ecological balance – bea business reality? UQ Business School’s ProfessorPeter Clarkson asks under what circumstancesbusiness can turn green practice into profit?Without business on board, sustainabledevelopment is likely to remain the catchphrase of election campaigns and a footnotein policy papers. After all, compared to mostgovernments, businesses have the flexibility toreact, the global reach to have impact, and theeconomic clout to matter.Take Walmart. If Walmart were a countryit would rank 25th in the world by GDP.Operating under 55 different names andwith two million employees over 15 countries,it reaches into the economies and the lives ofmillions of consumers. When a business onthis scale decides on a course of action, theimplications reverberate across economies.Professor on ‘jury’ toassess research qualityA UQ Business School professor has been appointed to a panel ofexperts responsible for assessing the quality of academic research inAustralia.Professor Victor Callan will be a member of the Australian ResearchCouncil’s Research Evaluation Committee, helping to rate highereducation institutions as part of the 2012 Excellence in Research forAustralia (ERA) initiative. He will sit on ERA’s Economics and CommerceCommittee.Professor Callan, who is taking on this role for the second time, hasan international reputation for research, and has completed projects forfederal and state governments, as well as leading businesses.Student expertise boostsrecycling businessThe Endeavour Foundation is one of Australia’s largest non-governmentdisability service providers, managing recycling facilities forcomputers and televisions on behalf of local authorities. It’s a businessthat provides supported employment and generates income to fundother disability services.UQ Business School MBA students have been working withEndeavour to find opportunities to expand its electronic waste recyclingbusiness.11 students have been on the project. John Steen, Senior Lecturer,said: “It has opened up some great opportunities for new businesslines, particularly in extracting the more valuable components of electronicwaste.”32 33UOQ 1189_275x235 [P] 48pp Magazine.indd 32-3326/04/12 6:05 PM


Take US Steel maker, Nucor Corporation.Nucor has met its greenhouse gas emissionreduction targets six years ahead of schedule.The US Government has yet to sign the Kyotoprotocol.It’s how business decides to behave thatis likely to determine whether the globaleconomy finds an environmentally sustainableoperating model. And it seems that business istaking the responsibility seriously.As Jennifer Westacott, Chief Executive ofthe Business Council of Australia put it:“The competition for resources simplymeans that we must use resources more efficiently.However, the first critical introductorypoint is that the sustainability agenda andthe economic growth agenda should not bein competition with each other. If we are tohave a sustainable future we must have strongeconomic growth. In turn, if we are to have astrong economy in the long term we must havesustainable and resource efficient growth.”The research team set out to examine inwhat conditions sound environmental practisecreated value for business. Could businesstranslate the message of ‘do more with less’ toimprove the bottom line?Their findings identified three waysenhanced environmental performance cancreate competitive advantage and addvalue, but, emphasises Professor Clarkson,the circumstances have to be right.EfficiencyWhen waste is pumped into the environmentit’s called pollution. When it comes tobalancing the books, waste is a cost that cutsinto company profits. With the cost of raw materialssoaring and pollution charges becomingstandard around the world, improving wastefulproduction processes can translate directlyand rapidly into cost savings.Raw materials in the steel-making processare now, according to Bluescope Steel, 70%of production costs. Using those raw materialsefficiently can mean the difference between aviable and a non-viable business.ReputationA company’s environmental reputation –and the cost of losing it – is ever more visibleon the balance sheet.The cost of the oil spill in the Gulf of Mexicoto BP’s brand has been estimated at $1 billionUS. After the accident, BP shares hit a 14-yearlow, and analysts questioned the company’songoing status as partner of choice for governmentslooking for mineral exploration andexploitation partners. Two years on, BP haveannounced a $500 million spend to rebuildits brand in the US and finally lay to rest thememory of the world’s worst accidental oil spill.ProfessorPeter ClarksonPeter is Professorof Accounting. Hisspecialist areas include thedisclosure of information inannual reports and the way inwhich financial and non-financialinformation affects the priceof equities.INVESTOREXPECTATIONSInstitutional investors are payingincreasing attention to socialenvironmental reporting. WolfgangEngshuber, Chair of United NationsPrinciples for Responsible Investment(UN PRI), predicts that one ofthe major investment trends in thedecade ahead will be the integrationof environment, social andgovernance (ESG) into investmentanalysis, decision-making andstewardship. In the last five years,PRI has grown to 870 globalsignatories with over US$25 trillionin assets under management. If thistrend continues, then rather than‘Does It Pay To Be Green?’ maybecome, ‘Can you afford not to be?’Keeping up with regulationsAs a sector’s environmental performanceimproves, standards rise, and often, so do environmentalregulations. According to ProfessorClarkson, there is evidence that companies canachieve competitive advantage by anticipatingchanges in the law and by adapting their environmentalperformance early.This is what Sony Ericsson did whenthey decided to eliminate the use ofberyllium, and other toxic chemicals, fromtheir manufacturing processes. Anticipatingfuture recycling advantages and legislationmaking producers responsible for theirproducts once they’d come to the end oftheir useful lives, Sony Ericsson’s vision paidoff with a host of environmental accolades,which has established them as market leadersin eco-friendly phones.Professor Clarkson adds that companieswho lead when it comes to environmentalGREEN STAR OR GREENWASH?Alcoa positions itself as an environmentally conscious aluminium producer.It has won a number of awards, has been included on the Dow Jones Sustainability Index10 years running and been recognised by the Carbon Disclosure Project (CDP) for reducingemissions and mitigating the risks of climate change.In 2010 Alcoa appointed its first Chief Sustainability Officer tasked with seemlessly integratingsustainability concepts into business processes. Its Sustainability Scorecard aligns sustainabilitytargets with business goals right across its business. Alcoa’s aim is ‘to be climate neutral by2030’ and declares it has cut carbon emissions by 36% from 1990 levels.But aluminium production is a high polluting, carbon intensive business.Alcoa finds itself regularly under attack for its performance.Activists in Iceland claim the smallest smelter there emits moregreenhouse gases than all of Iceland’s homes and businesses combined,while contributing little to GDP. Alcoa has also been widelycriticised for supporting the efforts of an industry trade groupthat fights mandatory cuts in greenhouse gases.So, how can we tell if a firm is genuinely engaged ingreen behaviour that can lead to investment gains, orif it is all greenwash? Professor Clarkson suggests tolook closely at the company reports. A truly committedorganisation publishes hard, verifiable facts. Greenwashconsists of soft, unverifiable information. We should readbusiness scorecards closely.performance not only gain competitiveadvantage over rivals playing ‘catch up’, butthey have the opportunity to influence futurelegislation in their sector.Despite the apparent simplicity of this3-step approach, Professor Clarkson warnsthat “evidence suggests that not all firms canpursue proactive green strategies successfully,and that firms wishing to pursue greeninvestment strategies must carefully plan forsuch investments.”The research – covering firms in four highpollutingindustries over a 13-year period(paper and pulp, oil and gas, chemicals, metalsand mining) – finds a key factor in the successfulimplementation of environmental policies is theexistence of a good resource base and a strongmanagement team. Firms with these in placeare most likely to benefit economically fromimproving their environmental performance.The question that was asked was, whichcomes first, improved financial performance orimproved environmental performance?They found that firms experiencing asignificant improvement in relative environmentalperformance over time had earlierexperienced significant increases in return onassets and operating cash flows.It indentified a virtuous circle in whichit can ‘pay to be green’: improved financialperformance leading to improved environmentalperformance which creates furthercompetitive advantage.With a good resource base and strongmanagement, not only can it pay to be green,but green investment may even turbo chargedifferentiation, widening the gap betweensuccessful firms and their competitors.If saving the planet needs a business case,could this be it?34 35UOQ 1189_275x235 [P] 48pp Magazine.indd 34-3526/04/12 6:05 PM


esearch toRICHESTurning a discovery orinvention into a profitablebusiness requires skills thataren’t taught in researchlabs. UQ Business Schoolis showing the way withits popular and practicalpost graduate courses inresearch commercialisation,says Associate ProfessorDamian Hine.Venture capitalists have a term for the pathfrom lab to marketplace: the commercialisationchasm, says Anne-Marie Birkill, co-managerof the $40 million venture capital fundOneVentures.It’s a chasm that UQ Business School isdetermined to bridge. In collaboration withUniQuest, one of Australia’s leading researchcommercialisation companies, the schooldelivers advice and expertise to inventors andresearchers looking to take their bright ideasto the market.With 28 years of experience with technologystart ups, UniQuest offers a rich resource ofexperience and expertise. There could be nobetter advertisement for its expertise than thelaunch of the world’s first cervical cancer vaccine(Gardasil), as just one example. UniQuestis benchmarked among the top ten per cent oftechnology transfer companies worldwide.Students studying commercialisation at UQBusiness School are working on a vast array oftechnologies from anti-crack aircraft paint tomicroalgae based biofuels, from music therapyprograms to reducing arsenic contamination incopper mines. Developing an original inventionis an impressive feat; but if the goal iscommercialisation, it’s only the first step on acomplex and perhaps risky journey. In the caseof pharmaceuticals, the process can take upto ten years, and half a billion dollars in investmentfunds. Even an agile smartphone appmay take a year to develop and a few hundredthousand dollars to get it on its way. Not thatanyone counts the cost when there’s success!“Our course is about understanding thepotential commercial and non-commercialways to get research out of the universityto where it can make an impact,” explainsAssociate Professor Damian Hine, who hasdirected the program since 2007.“Biotechnicians, engineers, students fromlife sciences, often in the latter stages of theirPhDs, learn about doing deals, pitching toventure capitalists, even how to recognise whattechnology and intellectual property mightmake it in the marketplace. They get hands-onexperience working with inventors, startupsand managers to help them develop theirstrategies.”“We take a pathways approach,” explainsHine, “outlining the steps towards commercialisation,and giving every student reallife experience of each step – and access toexperts along the way.“Students get insight into a broad range ofpractical skills,” he explains. A simple exampleis communication. Often university researchersfind it difficult to talk in lay terms about theirspecialist area. They are too technical to makesense to people outside the lab. “Being ableto simplify your story to cater to different audiencesis important,” says Hine, “and not justin the elevator pitch, but in every meeting andpresentation along the journey.“The way you talk to a person in financeis different to the way you talk to a person inyour own technology field. You have to pitchproperly,” agrees OneVentures’ Anne-MarieBirkill, who guest lectures on the program.“Courses like this give people the language tobe able to communicate to different audiences.”There are many enthusiastic and satisfiedstudents. William Ha is part way through hiscourse. A dentist, Ha is finishing his M.Phil indental biometrics. In his Easter break last year,Ha created an iphone app to help dentistscalculate prescription drug dosages. Withthe help of a software engineer the app wasbuilt within a week and on the market withina month. While it has had a good receptionin Australia, insights from the course are helpingHa understand how to better assess theefficacy of his product, and how to improve hisapproach to market.Do you have thenext Instagram oranti-cancer drug?How do you know if your researchor invention has commercial value?Damian Hine suggests you start byconsidering these questions.1. Is your research a public or aprivate good?2. Is it exclusive to you and does ithave potential commercial value?3. Should you protect yourintellectual property? How?Patent, trademark, copyright,registered design, plantbreeder’s rights?4. What steps do you need to taketo add value to your research orprepare it for market?5. Who should you collaboratewith? What skills don’t you have,that you will need?6. What do you need to get yourtechnology noticed by investors,funding bodies or even charitablefoundations?7. What are the pathways tocommercialisation you shouldconsider: new venture start up, analliance, develop the technologyin house, a joint venture, licenseto another producer, makeit available for free, or evenabandon it.36 37UOQ 1189_275x235 [P] 48pp Magazine.indd 36-3726/04/12 6:05 PM


Associate ProfessorDamian HineAn expert oninnovation strategy,Damian also carries out researchinto entrepreneurship andbuilding intellectual assets. Hehas a particular interest in thebiotechnology and life sciences sector.“The app didn’t go down well in the USbecause they use different drug formulations.So it got low ratings. I’ve upgraded it tomatch US prescribing patterns, but the originalratings continue to hinder uptake.”“With what I know now, I should havefigured that the US is the biggest market andtailored it to the US and had a bigger release.I could have released the app at a cheaperprice then raised it.”So far, Ha’s app has made him and hisfriend $2500 each, with a steady income of$200 a month. “We’re not about to quit ourday jobs,” he notes.Students get sound feedback from industryexperts. Venture capitalist Anne-Marie Birkillprovides students with insights into the mind –and the wallets if they’re lucky – of the venturecapital community.She is a realist: “We have a real shortage ofavailability of venture capital funds in this country.It’s not good anywhere, and in Australia it’spretty dire,” she explains. “And the commercialisationchasm between the research anddevelopment effort and eventual success isabout money. The money to take these ideasforward is very scarce.Government schemes like the InnovationInvestment Fund (IIF) help stimulate investmentin venture capital, but it took a big hitfrom the GFC.“In a world where super funds and otherinstitutional investors are constrained in howmuch they can invest in this asset class atthe moment, because their overall fund hasdepleted, we need continued governmentsupport to ensure this industry recovers.”More than 200 higher degree studentshave completed the graduate certificate sinceit began five years ago. But it’s not just aboutPhd research and Masters programs. UQBusiness School runs a series of successful shortprograms attracting inventors and researchersfrom around the world. A particularly successfulrelationship has been formed with a number ofLatin American institutions.David Chang was sent to UQ BusinessSchool by Ecuador’s top university, ESPOL(Escuela Superior Politecnica del Litoral), tostudy research commercialisation. Since hisreturn home, he has developed a technologycommercialisation company at ESPOL,Inventio, modeled on UniQuest; formed a newinnovators’ community, IDEA; and acceleratedhis start-up production company, KMaretaCreative Studio.One of Chang’s top lessons from the UQBusiness School program was that “innovationis an invention that creates value.”William Ha’s take-aways focus on the practical.“I know other researchers who have createdsomething innovative, but they felt the steps tocommercialise were too arduous and complexso they didn’t bother. I have learnt how to buildconnections with industry and negotiate withthose connections so that someone else cancommercialise the research while you can stillmake money in your salaried job.”“It’s one thing to have a great idea, it’sanother turning it into a business. Researchstudents start with ‘why?’ or ‘how?’ The coursetaught me to ask: ‘who cares?’ It puts a spinon research that makes it relevant. Without thatspin your research could go to waste.”What do venturecapitalists look for?Venture Capitalist and UQ BusinessSchool graduate Anne-Marie Birkillsays prospective entrepreneursmust offer:technology that meets a largeand growing market need, withintellectual property that is uniqueand can be protected.a founder or CEO with anunderstanding of how to interactwith investors and the market, andwhat it will take to make the brightidea into a going concern;a realistic business model.Development costs must allowprofit, create value and drive thebusiness forward.She suggests would-be entrepreneursshould consult widely, seek as muchadvice as possible and look beyondthe technology to how to monetiseit and build a solid business aroundit. Finally, she says, it is importantto practise the pitch. “Your missionis to persuade people to joinyou. Persistent and persuasivecommunication is essential. Alwaysget your story right.”OPTIONALEXTRASUQ Business Schoolresearchers have turnedconventional thinking onmergers and acquisitions(M&A) on its head byrevealing that biddingcompanies have muchto gain from suchtransactions and do not,in fact, promote wealthdestruction.38 39UOQ 1189_275x235 [P] 48pp Magazine.indd 38-3926/04/12 6:05 PM


The market is not crazy andit’s not destroying value.Until now it has been generally acceptedthat target companies experience most of thevalue gains in M&A transactions with little orno gains to the share price of bidding firms.However Professor Tom Smith and his team atthe University of Queensland Business Schoolhave shown that bidding companies can alsoexperience significant value gains at the timeof an M&A announcement.“The biggest contribution [by the research],is that it shows the market is not crazy and it’snot destroying value by these bidders makingtakeover offers,” Professor Smith said.The UQ Business School research wasconducted in conjunction with VanderbiltUniversity’s Professor Robert Whaley, renownedfinancial markets researcher and designer ofthe Chicago Board Options Exchange (CBOE)Volatility Index (VIX).A fresh perspective on M&A transactionswas required as academic research hadbecome overtly negative towards biddingcompanies, implying that they were paying toomuch to acquire targets, with some going as faras describing many firms’ acquisition motivesas irrational, according to Professor Smith.“[Researchers] started coming up withstories that maybe CEOs were doing it becauseof empire building or feathering their ownnests at the expense of shareholders,” he said.“That is a little unsatisfactory. [Companies],on average, wouldn’t be doing that becausesomeone might eventually take them over.”The research found that controlling partiesin M&A transactions, as well as the targets, doactually experience value gains, realigningresearch in the area with conventionaleconomic theories of profit maximisation andrationality.Previous research on the impact of M&Atransactions on the market value of target andbidder companies was based on movementsin share prices. However relying on share pricesalone as sources of value does not reveal allthe available information about the companiesinvolved.Using share price methodology, all that isknown for certain at the time of an announcementare the value of the offer and the prices of thebidder’s and target’s underlying shares. Themarket’s assessment of the companies’ valuesif the transaction fails, and the probability ofsuccess, must be estimated.By looking at the prices of the exchangetradedcall options on these shares, ProfessorSmith and his team have been able toextrapolate this additional information aboutthe value gains to a company from a mergeror acquisition.A call option is the right to buy an underlyingshare at an agreed price; a put option is theright to sell the stock. Because options seriesare non-linear functions of their underlyingstock price, each options price reveals newinformation about the companies involved inthe transaction.Observing call option prices of the targetand bidder at the time of an M&A announcementreveals the market’s view on the gainsto the bidder; the value of news about thebidder relating to the transaction; the gains tothe target; value of news about the target; andProfessor Tom SmithTom, who is theFrank Finn Professorof Finance, isacknowledged as the leadingfinance academic in Australiaand New Zealand. His specialistareas include asset pricing, marketstructure and derivatives.the probability that the takeover will succeed.From a sample of 167 uncontested offersbetween April 1996 and December 2008, theUQ Business School researchers found that86.4 per cent of M&A synergy gains went totarget companies, with 13.6 per cent of gainsgoing to the bidder. While the bidder resultmay seem quite low, it is significant whencompared with the result using share pricemethodology, which is close to zero.For all the complex calculations that wentinto the UQ Business School research, themethod of application is relatively simple and‘low-tech’.“We provide an Excel spreadsheet,” ProfessorSmith says. “When there’s a takeoverannouncement you enter the share prices andoptions prices to come up with the probabilityof the deal going through, how much gainthere’ll be, and how much news there’ll be.”A limitation of the research, and a challengefor the UQ Business School team,was that both parties to an M&A transactionmust have exchange-traded options listed onthem, with sufficient liquidity, for adequatemeasurements of value gains and the valueof news.“The biggest issue we had in trying tosell the research was that not all companieshave options on them,” Professor Smith said.“Exchanges only list options on companies theycan make money on; those that are pretty bigand pretty liquid.Professor Smith says it is not viable to applythe research to put options as they are onlylightly traded at the time of an announcement(unlike call options on a target which increaseby over 1500 per cent on average) as votingrights on the underlying shares increase thevalue of options.“Every share is precious in that situation,”he says. “If you can’t get the share and shortsell the share, it’s not really a feasible trade.”Nevertheless, the research has been wellreceived within academic circles according toProfessor Smith.“People seem to like it. It’s a nice methodologyand something you can easily do. I don’tthink people really liked where the literaturewas.”Professor Smith has been ranked the numberone finance academic in Australia and NewZealand by both the Journal of Financial Literatureand the Pacific Basin Finance Journal.40 41UOQ 1189_275x235 [P] 48pp Magazine.indd 40-4126/04/12 6:05 PM


While much of the debate on climatechange concentrates on the negative impactsof adaptation on economies, communitiesand the environment, and the role that governmentsshould play in the process, recentresearch emerging from the UQ BusinessSchool shows that companies large and smallare finding innovative and unique responses tothe challenges and broader issues of sustainabilityand climate change.These studies are finding that managerscan obtain significant rewards for an organisation– through improved value, increasedinnovation and engagement of staff as a resultof developing a small wins approach to sustainabilitychange.sustainabilityrevolutionCompanies large and small are finding innovativeresponses to the challenges of sustainabilityand climate change. The key may well be to aim forsmall wins first and watch how big change follows.A series of studies and organisational implementationprojects undertaken by ProfessorAndrew Griffiths of UQ Business School andDr Nardia Haigh of the University of MassachusettsBoston, found that proactive companiesengaged with addressing sustainability issueshave built their change programs on developingand integrating patterns of ‘small wins’.Colleen Geyer is the Director of Missionat UnitingCare Queensland. With over 15,000staff in more than 400 geographic locationsacross the State, UnitingCare Queensland isone of Australia’s largest non-profit health andcommunity service providers. Change in organisationson this scale, must be managed withcare, but when they are successfully achieved,the impact can be significant. “When we beganto think organisationally about decreasing ourcarbon footprint and becoming more efficient,it seemed like a huge task, particularly whenwe wanted to bring everyone with us. So westarted with some small, discrete projects thatcould be achieved quickly. This meant we hadthe credibility for a more strategic integrationof sustainable business.”The small wins approach has its beginningsin redefining seemingly intractable socialproblems into achievable steps so they aremanageable. A small project is, after all, easierto sell to the business. It is simpler to define,communicate and measure. It also requiresless risk and fewer people to be involved.In implementation projects, in organisationsin diverse sectors such as engineering andconstruction firm Abigroup and patient caresuppliers Blue Care, Griffiths and Haigh foundthat small wins became an uncontroversial wayof engaging longer-term sustainability-ledtransformations.“Our data resists assertions that one smallwin may be unimportant,” explains AndrewGriffiths. “A series of small wins reveals apattern that may attract others and deter opponents.A single small win can demonstrate thatit is necessary to search for linking issues andto link small wins together, otherwise they willremain fragile, and vulnerable to becomingsmall flops. This can lead to a significant overallloss.” Andrew Griffiths believes that oncefound, linking issues allow innovation projectteams to tackle more difficult practises with agreater degree of cooperation from organisationalmembers.What linking issues are will vary betweenorganisations. In a meat processing facility, thelinking issue was addressing concerns overoccupational health and safety injuries, whileProfessorAndrew GriffithsThe Dean is anexpert on corporatesustainability, governance systemsand ways organisations canmitigate the risk from disastersand disruptions.in another, driver safety and awareness was alinking issue that resulted in a reduction in fuelconsumption and more effective driving, whichcombined to contribute to a lowering of theorganisation’s carbon footprint.“Specifically, when it comes to managingclimate change in organisations and reducinggreenhouse gas emissions, our study found thatsmall teams working firstly on energy efficiencyprojects, developed skills and capabilities thatcould be transferred to larger projects suchas fleet management, facilities design and thedevelopment of carbon accounting systems.Wins in these areas were then transferred toissues of supply chain management and theninto broader strategic concerns.”Griffiths and Haigh found that companieswere developing and integrating patternsof ‘small wins’ as a way to redefine seeminglyintractable problems, to become manageable.“Companies that look for ways to link issuesand successful initiatives are able to find innovativesolutions with more cooperation acrossthe organisation.“Companies found the small wins strategyenabled them to build the skills and capabilitiesof employees whilst addressing theirpersonal concerns about sustainability issues.“We believe that we are witnessing theemergence of a quiet revolution in how companiesapproach the issue of sustainability,”says Professor Griffiths. “It is apparent thatbusinesses, globally, that have developedproactive strategies on climate change andbroader sustainability issues are reapingsignificant benefits through the creation ofinnovative products and services, reducingtheir risk portfolios and enhancing the capabilitiesand resilience of their employees.”The key steps that we are seeingin this revolution are:It is driven by inspired leadership,with senior managers capitalising onemployees’ desire to actIt is occurring across industry sectorsand firm sizeIt starts with focused educationand awareness of the core issuesfor senior management teams andthen spreads through whole oforganisation education programsRisk is not enough, nor the onlydriver. It is necessary to collectreliable data on emissions andthen use it to inform carbonmanagement strategies, which canthen be used to inform broaderprograms of cultural changeIt is built on small winsIdentification of sustainabilityportfolios and the innovationimpacts on your businessThe issue of carbon managementis a Trojan horse for creating anintegrated strategic approachto sustainability which addressescorporate social responsibility,environmental management andvalue-based innovation.42 43UOQ 1189_275x235 [P] 48pp Magazine.indd 42-4326/04/12 6:05 PM


How do companies innovate? This question hasbecome something of a holy grail in businessesacross the globe. Part of the answer is simple: it liesin who is talking to whom inside your company, sayinnovation experts Drs John Steen and Tim Kastellefrom UQ Business School.The popular science writer Steven BerlinJohnson gave a TED talk in 2010 in which headdressed the age-old topic “Where do goodideas come from?” In the lecture, he discussedhow English coffee houses in the 1650splayed a role in the birth of the Enlightenment,look who’stalkinga period of great social reform and intellectualbreakthrough.Fuelled by caffeine, people from differentbackgrounds would get together and shareideas. Johnson claims that an astonishingnumber of innovations in this period have acoffee house in their story. Despite the populartale that Sir Isaac Newton developed theUniversal Law of Gravitation when an apple fellon his head, Johnson argues that the cliché ofthe lone thinker doesn’t hold sway.“More often than not they [ideas] arecobbled together from whatever parts happento be around,” he says. “We take ideas fromother people, from people we’ve learned from,people we run into in the coffee shop, andwe stitch them together into new forms andwe create something new – that’s really whereinnovation happens.”Just as the coffee houses of London providedthe impetus for great innovation, 400years later, networks are just as relevant tomajor Australian companies, according toresearch done by Drs John Steen and TimKastelle at UQ Business School.According to their work, old worldbusinesses don’t need to hire teenagehipsters from Palo Alto or turn themselvesinto Apple or Google to innovate. They cando it themselves. But how? By recognisingwho the communicators or “brokers” are intheir companies, and building the right kindsof communication networks between thedifferent “clusters”, ideas can flow through acompany, sparking new thinking.By examining a plethora of networksamongst project engineers, entrepreneursin Taiwan, academics and others, Steen andKastelle have found a strong link betweenthe performance of a business and how wellconnectedthe people inside the businessare. “While networks aren’t the whole story ofinnovation, there is good evidence that theyare part of the story,” says Steen.Steen, a former medical scientist with adoctorate in biochemistry, explains: “Thinkabout any workplace you’ve been in – especiallya workplace with a few hundred people – youdon’t know all of them. You can’t. You wouldn’tget your job done.”Using an online questionnaire, a networkmap is created by asking staff a range of questionslike who do you talk to on a regular basis?Who are your friends? Who do you go to foradvice? Who do you invite to BBQs? “Whenwe talk about networks we mean: who do youwork with, who do you talk with, where do youget expertise from. It’s about how you connectup an organisation – it’s a living thing, like abrain,” says Steen.Dr Tim KastelleA lecturer ininnovationmanagement, Tim haspublished numerous articles andpapers on strategies to encourageinnovation. He is also the coauthorof a popular blog: theInnovation Leadership Network.Blind to the realityCuriously, Steen and Kastelle’s networkmapping has exposed the fact that companiesoften don’t know where the conversationsare happening in their business – and who isinvolved. Steen says, “time and time again”he’s shown senior managers a map of thehuman networks in their organisation andthey’ve been “shocked”. “They often had noidea that one group was totally disconnectedfrom another side of the business.”“We had this beautiful moment that wasalso quite tragic,” he says. “We were mappingthe networks of a global business, mainly oftechnical staff. After poring over the data, theexecutive asked, ‘Who is this guy over here?44 45UOQ 1189_275x235 [P] 48pp Magazine.indd 44-4526/04/12 6:05 PM


He’s really well-connected, he’s obviouslypulling every one together, making connections.What happened to him?’”It turned out they had fired him.“They didn’t realise what he was doing: theyjust thought he wasn’t being very productive.He wasn’t completing his work on time. Butthe reason this was happening was becausehe was fulfilling the role of bringing peopletogether. He was actually doing an importantjob as broker between the disparate networks.”John Steen says network mapping alsoshows groups becoming isolated. After apublic inquiry into the Enron Corporation, theUS energy company that went spectacularlybust in 2001, emails were released that madeit clear how the inner circle had cut themselvesoff from the rest of the company. “They weren’tdisclosing how bad things were,” says Steen.“It was really obvious there was an isolatedclique in the middle of the business. If youfollow the communication pattern, you can seethat something was wrong.”Networks are not just crucial to largecorporations – they are also relevant to thecreative industries. An article published in Slatemagazine in March this year cited researchoriginally published in 2005 by social scientistsBrian Uzzi and Jarrett Spiro into 474 Broadwaymusicals produced between 1945 and 1989.By examining collaborations and relationshipsbetween producers, choreographers andothers, it was discovered that, for the bestsuccess, the artists “shouldn’t have toomuch experience working together, but theyshouldn’t be total strangers”, said the report.Dr John SteenAn experiencedconsultant, Johnis Senior Lecturerin Strategy, with key expertisein innovation and strategicmanagement. His riskmanagement skills have helpedvarious blue chip clients todevelop business strategies.MAPPING KNOWLEDGEAT ERNST & YOUNGIan Fisher, Lead Partner Oceania Government Sector, Advisory at Ernst & Young, says thatas the company has transformed from a geographically-based organsiation to a truly globalentity, connections, networks and knowledge mapping have led the business to someinteresting insights. “Our vision is a connected organisation able to deliver information andideas at a moment’s notice internally and for the benefit our clients,” he says.To this end, Ernst & Young recognise two dimensions to their networks: the informal,based on individuals, direct contact and, to an extent, personality type; and the formaldimension that technology platforms and systems provide. “The formal dimension givesthe network structure. The personal touch is also very powerful,” he explains.Fisher stresses the importance of creating a culture that values and rewards sharingknowledge. “We value what we measure,” he says. “Companies need to measureinformation sharing and the innovation that it generates. A culture of reward andcelebration, and a willingness to share the spotlight, motivates people to contributetheir insights. They’ll feel it’s in their interest.”Fisher believes Ernst & Young’s closely networked relationship with UQ Business School isa working example of innovation between separate but highly connected organisations.“Working with UQ Business School is a powerful opportunity for us both to spark ideasacross our shared networks and generate powerful, industry-shifting innovations. It’s anexciting partnership,” he says.What next?Steen says that apart from companies notknowing who talks to whom, they also don’thave the structure for innovation to take placein the first place. “If you are a client-basedorganisation, you need to consider: do youhave the right networks into the client? Whois playing the broker role between the clientand your organisation?” He says companieslike IBM often deliberately embed staff intoclients so they can understand the problemsand design solutions.For more radical innovations, deliberateconnections to different fields in the outsideworld need to be made. And for those seekingsystematic, incremental improvements, it iscrucial to have a community of practice wherelike-minded people are sharing ideas.“Decide on your strategy and work outhow innovation fits into that. From there, youcan design a network that supports the kindof innovation you need to achieve,” he says,adding that recognising brokers is crucial.Research by Sam MacAulay, a UQ BusinessSchool PhD student who interviewed engineersat a large Australian resources company,showed that brokers were often gregariousand naturally inquisitive characters, as well asbroadly considered trustworthy.“You cannot assume the environment forexchanging ideas is benign. When you asksomeone a question, you are also telling themwhat you don’t know,” he explains. “You haveto have a high degree of trust that they arenot going to laugh at you for not knowingthe answer. When with people, trust becomesvery important.”Cherish your networks, keep on thelook-out for your brokers – you don’t want tobe the manager that fires the one person thatcould hold the key to innovation.UQ BUSINESS SCHOOLHousehold collectionbrings home the pointStudents on a social entrepreneurship course at UQ BusinessSchool faced a novel challenge – to come up with household goods fora new scheme for homeless people.The class of 50 undergraduates were given two weeks to collect, orraise, money for household items for the Brisbane Common Groundinitiative, a 146-unit development under construction. They donatedgoods worth up to $3,000 to Micah Projects, the organisation behindthe scheme.Senior Lecturer Lance Newey said: “Seeing what can be achievedin a short space of time gives students the confidence to move on tobigger things.”UK HONOURFOR SOCIALSCIENCE EXPERTThe London-based Academyof Social Sciences has namedProfessor Neal Ashkanasy, Professorof Management at UQBusiness School, a member. Thehonorary title of Academician isconferred on those consideredto be ‘outstanding social scientistsof our time’.An expert in organisationalbehaviour, Professor Ashkanasywas partly responsible for the‘affective revolution’, an acknowledgementthat human behaviourcannot be properly understoodwithout taking account of motives,moods and emotions.Tim is one of world’stop bloggersLeading website InnovationExcellence has named UQBusiness School’s Tim Kastellefifth in a global blogging leaguetable.Dr Kastelle, who lectures inInnovation Management at UQBusiness School, was the onlyfull-time academic in the top40. He and fellow lecturer JohnSteen share their insights at theInnovation Leadership Networkblog – http://innovationleadershipnetwork.org/blog/.Kastelle believes the successof the blog is in keeping it relevantand practical, translatingresearch into a way people cansee how to apply it.LECTURERS WINTOP AWARDSTwo UQ Business School lecturers have won top awards fortheir work.Professor Janet McColl-Kennedy, who is internationally renownedfor her research into customer service, was made a Fellow of the Australianand New Zealand Marketing Academy (ANZMAC) and also wonthe Distinguished Researcher award.Professor McColl-Kennedy’s specialist areas include service recovery– how organisations can rectify matters when things go wrong – and‘customer rage’, what happens when customers become infuriated as aresult of poor service.Meanwhile, Dr April Wright was named Management Educator ofthe Year by the Australian and New Zealand Academy of Management(ANZAM) in recognition of her pioneering teaching methods.Dr Wright believes in integrating learning, assessment and feedbackto actively engage students. She uses a team-based approach,where teams of students are required to read a case study, reach aconsensus then defend their team’s opinions against others. She alsobelieves in hands-on experience and, following the Queensland floods,led students on field trips to assist recovery efforts.Award-winningacademics join UQBSTwo award-winning academicshave joined UQ BusinessSchool. Professor Tom Smith(left), who will hold the FrankFinn Chair in Finance, has beenranked as the number onefinance academic in Australiaand New Zealand by both the Journal of Financial Literature and thePacific Basin Finance Journal. He was previously at the AustralianNational University.Professor Andrew Burton-Jones is joining as Professor in BusinessInformation Systems. He comes from the University of British Columbiain Vancouver. Professor Burton-Jones, who has won various awards,researches ways to help analysts design better information systems andhelp people to use them more effectively.46 47UOQ 1189_275x235 [P] 48pp Magazine.indd 46-4726/04/12 6:05 PM


10YEARSIN FRONT2002–2012UQ Business School is proud to celebrate a decade of leadingthe way in business education. Recognised as one of theworld’s best, we are renowned for our esteemed academicstaff, innovative programs and strong links with Australian andinternational industry. We are also at the fore in break-throughresearch, with work consistently citied in the world’s top tierjournals. More reasons why UQ Business School will continuechallenging the future of business for many years to come.business.uq.edu.auUOQ 1189_275x235 [P] 48pp Magazine.indd 4826/04/12 6:05 PM

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