In my role as CEO of Business SA, the Chamber of Commerce and Industry for South Australia, and my former roles as Lord Mayor of Adelaide, University lecturer, GM of Rundle Mall and as a national retailer, I have always taken a keen interest in how State and Federal Governments craft their annual budgets to support those who take risks and make things happen in the economy. I am of course referring to entrepreneurs.
Over the years, I have seen some budgets hit the spot and others miss woefully.
With the vitally important 2021/22 State Budget for South Australia handed down on Tuesday 22 June, and with the end of the financial year now upon us, I reflect on what a different position the business community was in only twelve months ago.
Although many businesses were gradually returning to trade in June 2020, most were still riddled with uncertainty and hoping that last year’s State Budget would support them through the turbulence. Treasurer Lucas delivered the goods and as the peak body for business in South Australia, Business SA was grateful for it.
COVID-19 wreaked havoc across the business community in 2020
The bounce back following the first lockdown in 2020 was pleasantly unexpected and other than the disruption caused by a subsequent lockdown in November, business confidence has continued to build. As we learned from the results of the March 2021 Quarter of the Business SA William Buck Survey of Business Expectations, business conditions have again risen now to their highest level since just prior to the Global Financial Crisis, and business confidence was not far behind. Fingers crossed that this continues.
In valued partnership with William Buck, Business SA has published the Survey of Business Expectations every quarter for almost 40 years
Although the majority of businesses are doing better than expected, the survey also revealed that 21 per cent of businesses expect for their revenues to be below 70 per cent of pre COVID levels by the end of this quarter. That’s of real concern and why the recent State Budget needed to back all businesses, with a focus on initiatives that both grow our economy and support small businesses that are still experiencing hardship.
The unfortunate reality is that this pandemic is far from over. Although on a local level, South Australia is thankfully performing well, the risk of COVID outbreaks is still front of mind for many small business owners, as demonstrated by lockdowns in Victoria earlier this month and current localised lockdowns in Sydney and several other places.
In April this year, I handed our pre-budget submission to Treasurer Rob Lucas. It included a suite of 13 recommendations from Business SA. These recommendations are far more than hours upon hours of work from my expert team, let me tell you. Instead, these are genuine pleas from our members, the coal face of the business community across South Australia.
Small to medium sized enterprises are the backbone of the South Australian economy
We asked for the State Budget to address a funding mechanism to support South Australian SMEs through future periods of severe restrictions and why it MUST support the events, arts and live performance sectors who are still heavily impacted by restrictions.
We asked that temporary payroll tax waivers be extended for businesses most acutely impacted by ongoing restrictions including closed international borders, and that Adelaide’s CBD should have a bright spotlight shone upon it through a cold and dark winter, with hospitality, retail and accommodation sectors struggling to perform without international tourists and students. These things, along with a continuation of the incentives for employers taking on an apprentice and/or trainee, were mostly included in the 2021/22 State Budget. On behalf of the business community, we appreciate that.
We also hope for stronger measures in the future that enable the growth of industry, build local manufacturing capability, support jobs growth, fast track important infrastructure plans with more local procurement and capitalise on our state’s global renewable energy and circular economy leadership.
Business SA State Budget Luncheon on Friday 2 July 2021
Providing there are no monumental disruptions, Business SA will host Treasurer Rob Lucas at Adelaide Oval on Friday 2 July for our State Budget Luncheon with the Treasurer presenting a detailed business briefing on the 2021/22 State Budget. This event includes a response by Shadow Treasurer Stephen Mullighan and a budget analysis by an expert business panel. Limited tickets are available at www.business-sa.com or contact my team on (08) 8300 0000 today.
As they say in show business … “The show must go on!”
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Today, I write to you in my role as CEO of Business SA, the peak body for the business community in South Australia. When 2020 started, never did I imagine that I would be standing on a ladder in Adelaide’s CBD addressing a 150-strong crowd of business owners at breaking point.
In all the twists and turns of 2020, for myself and my team, this was THE defining moment.
It exposed the pure heartache and despair that business owners have endured in the wake of COVID-19.
This show of solidarity from the hospitality sector was raw and emotional. People were open and honest about their fears for the future and in many ways, this was the moment where Business SA, the Chamber of Commerce and Industry for South Australia, truly found its PURPOSE.
In terms of Business SA’s role to support business owners, not only in the hospitality sector but right across South Australia, this moment doubled our resolve to support those who take a risk.
It is the risk takers who will ultimately drive our economy forward from this pandemic. Not business associations, not Governments. Entrepreneurs are our largest employer. They are also creators and seekers of opportunity. It is our role to support them through the good times and bad.
This year saw pivoting, resilience and mental health become words that we have become all too familiar with.
However, these words are much more than cliches. They have helped businesses to survive … and, we say to you all, a very big WELL DONE.
As the State’s independent and local Chamber of Commerce and Industry, Business SA has played its role in supporting 17 different industry sectors in 2020.
When the Summer bushfires devastated South Australia, Business SA personally contacted and offered support to more than 100 businesses impacted by the fires.
We then “pivoted” ourselves, delivering more than 40 virtual events and webinars throughout the year while our Business Advice Hotline answered 12,800 calls from business owners.
We brought together 50 industry associations to discuss their concerns and ideas to assist economic recovery from COVID-19 and later launched a 9 Point Plan to Skyrocket SA.
We held South Australia’s biggest Mentally Healthy Business Breakfast, which was livestreamed across 10 regions and attended by almost 200 business owners and more than 3,200 people online.
Business SA also advocated consistently to Federal Government, State Government and even Local Governments to fight for more financial support for businesses.
But we know it has been you, the business owner, who has done the heavy lifting this year.
We have stood with you, but you have done the hard work and we thoroughly commend you for it.
We wish you and your family a Merry Christmas and success into 2021. We hope you have an opportunity to re-charge over the break and we encourage everyone to buy local this Christmas.
When you support local businesses, you are supporting local jobs. This is something we’ll need more of next year. Also, when you support others, your organisation’s PURPOSE all of a sudden has more clarity and becomes a lot more meaningful.
Thank you for reading my blog : The Martin Haese Report.
If you haven’t already joined my network, you can sign up for free. Please do not hesitate to recommend my blog to any of your friends, family or colleagues who share our common interests.
Welcome to the Martin Haese Report, the sixth in my series of musings on entrepreneurial leadership. With COVID-19 having wreaked havoc across industry sectors around the world and in turn disrupting how many do business, a growing number of people are asking whether it’s time to reconsider the business community’s relationship with the natural environment. I am one of those who believe that it is now timely to discuss how entrepreneurial and environmental leadership intersect.
COP21 Paris 2015
Before we commence, some context that qualifies me to share my thoughts on this topic. In my former role as Lord Mayor of Adelaide, I was invited to attend the United Nations COP21 in Paris in December 2015 where I spoke at several functions including the Sustainable Innovation Forum. It was at COP21 that I grasped the significance and strategic importance of South Australia’s renewable energy leadership and the high regard in which the State is held on the world stage.
It was also in Paris that I signed the Compact of Mayors, met with world leaders who are committed to environmental and economic leadership, and committed to educating myself about climate change adaptation, mitigation, the growth of low emissions industries and the circular economy.
In January 2019, South Australian State Minister David Speirs MP appointed me as Chair of the Premier’s Climate Change Council (PCCC) where I have since worked alongside a talented group of fellow Council members to advise and inform the State Government on climate change adaptation, mitigation and the importance of low emissions industries in South Australia.
In September this year, I (virtually) attended a number of sessions at Climate Week 2020 in New York City where I watched HRH Prince Charles’ inspirational address;
Has COVID displaced climate change?
While the global pandemic continues to dominate the headlines, there is a growing anxiety that some other pressing issues are being neglected, most notably climate change. This is a topic that was swept to the top of the national agenda when the drought culminated in last summer’s devastating bushfires, but was quickly set aside with the onset of COVID-19 only three months later.
But rather than despair, I suggest that the pandemic may in fact provide an opportunity to reassess, recalibrate and refocus on climate change issues, as COVID-19 has resulted in many people developing a greater awareness and appreciation for the natural environment.
For many, COVID-19 has forced a rethink about how we consume, where we consume, and who we consume from. This is resulting in a protracted shift towards people wanting to buy from and do business with organisations that either have an environmental sustainability policy (ESP), a goal for carbon neutrality, are actively involved in the circular economy, or have greater transparency about their waste cycle.
Consumer behaviour is changing
Consumer sentiment and behaviour is changing and if businesses don’t respond to the needs of their customers then they are often not in business for much longer. With more organisations putting measures in place that govern how and where they invest, there is a stronger emphasis being placed on whether organisations are making investments into climate aware and climate appropriate companies.
Insurable risk is another key consideration in business decision making, and assessing climate risk is already driving behavioural change within the business community. To illustrate the point, in January 2020, the Vice Chairman of BlackRock discussed their plan to avoid investments with high sustainability-related risk as climate concerns are driving a sweeping change in the way the firm invests and manages its $7 trillion in assets.
An opportunity rich environment
With rapid advances in technology, changing consumer behaviour and new demands being placed upon institutional investors, the low emissions sector is clearly the next big thing. If the steel, plastic, aluminium, cement, food and agriculture sectors were each to adopt circular and low carbon practices, not only would 9 billion tonnes of carbon be saved by 2050, a multi-trillion dollar carbontech sector would be unleashed.
In the following video, I share my thoughts on how climate change and technological innovation are catalysing the growth of low emissions industries and greater innovation within the circular economy.
However, while the economy is clearly important, I caution you against thinking that every climate related problem or opportunity must be considered in pure economic terms. After all, it has been that very thinking that has got into the predicament we currently find ourselves. Sometimes doing the right thing should be justification enough.
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A quick lesson about the importance of being agile.
The inter-relationships between creativity, innovation and entrepreneurship are already well documented. With organisations operating in such highly competitive environments, creative thinking has become a crucial way to differentiate in a crowded marketplace.
Whether that manifests itself as the next big idea or as an improvement to an existing process, it almost always starts with creative thinking.
It is well documented that in order for an organisation to embrace creative thinking, management must tolerate failure. The old adage of ‘fail small and succeed big’ has never been more true when it comes to the application of creative thinking within organisations.
Welcoming creative thinking within organisations also requires a degree of agility. A few short years ago, I was asked to keynote a musical gala at Adelaide Town Hall. Prior to going on stage, it was brought to my attention that there were slight issues with the schedule as the next artist was caught in traffic and running late. This is how I helped the emcee get everything back on track before I delivered the keynote speech!
Welcome to Part Two of a series of musings on entrepreneurship.
The talent within: The 'entrepreneurial employee'
Intrapreneurs, innovators and so much more …
Intrapreneurs are employees who search for opportunities and exploit them through innovation using the resources of the organisation they work for.
The term intrapreneur was first coined in the late 1970’s by an American author, inventor and entrepreneur, Gilford Pinchot III.
Pinchot defined the term as ‘employees and leaders of large firms who bring to the organisation the traits of entrepreneurs.’
The concept of intrapreneurs is older than many think and an often-cited example is Lockheed Martin during WW2 when Kelly Johnson was tasked with developing what became the XP-80 jet fighter for the US Army.
The Lockheed Martin XP 80 fighter jet
Johnson recruited a small team which later became known as Skunkworks.
Given the escalation of the war effort, increased manufacturing output and subsequent lack of space, Skunkworks quite literally worked from a rented circus tent.
However inconvenient, being located outside of the corporate bureaucracy meant that Johnson was also able to work outside of its rules, traditions and hierarchies.
Johnson developed 14 rules and practices for intrapreneurship at Skunkworks and you can read them here
Skunkworks designed and delivered the XP-80 in only 143 days - a full week before the delivery deadline.
Post War Intrapreneurs
During the post war years, many organisations actively encouraged intrapreneurial ecosystems and subsequent new products and innovations made companies such as 3M, Xerox, HP (Hewlett Packard) household names. However, other companies hosted significant internal R&D programs but could not make the leap of faith that their intrapreneurs asked of them.
‘Talent hits a target no-one else can hit.
Genius hits a target no-one else can see’.
Steve Jobs presented the Apple iPhone to the public on the 29th June 2007 proving Arthur Schopenhauer right and every high school math’s teacher who ever uttered the phrase, ‘you won’t always have a calculator withyou’ wrong.
Twelve years on from that first smart phone, we are rarely further than arm’s length away from having the entire sum of all recorded human knowledge at our fingertips.
The impact of the iPhone on businesses and society in general cannot be understated.
It not only changed the way we communicate but also the way we listen to music, how we meet partners, how we shop, socialise, keep fit, take notes and stay on time.
The list of products, and in some cases, industries made redundant by the iPhone and subsequent technologies and ideas enabled by it, is staggering.
Disruption on an epic scale
While the iPhone changed the way we take photos and what we do with them, it might surprise you to learn that it wasn’t Nikon, Canon or Sony that developed the first handheld digital camera, it was Kodak and they did it way back in 1975.
Kodak is often used as the worst example of how to create intrapreneurial ecosystems and it still stands today as a cautionary tale for any business.
It was Kodak who had been at the forefront of new technologies including dry plates to film and black and white to colour who ran a large R&D department and employed a 25-year-old engineer named Steve Sasson.
When Sasson developed the digital camera for Kodak it was a little different to what we think of today.
His camera weighed 3.6kg and took 23 seconds to store a black and white 0.01-megapixel photo onto a cassette tape.
The cassette tape held 30 images and to put that into perspective, think of how many selfies you have on your phone today.
The world's first digital camera
Most unfortunately for Sasson, Kodak’s executives were not as forward thinking as the young engineer. They saw, what seemed to them, an obvious threat to their 90% market share of film sales rather than a revolutionary new technology that could change society.
Kodak could not envisage a world without prints, photo frames and albums and certainly not one with Facebook, Instagram, WhatsApp, Snapchat and Tinder.
Kodak allowed Sasson to continue his work and retained the intellectual property, but they forbade him from going public with it.
The result was that Kodak filed for bankruptcy in 2012 while just two years later it was estimated that people took and uploaded 1.8 billion photographs per day or around 657 billion per year
In 2018, we collectively took an estimated 1 trillion photographs and only very few of them were taken using film and even fewer were printed.
Kodak got disrupted.
The late Twentieth Century
The eighties and early nineties were a bleak time for intrapreneurs.
A shift in corporate culture meant that many organisations became more risk averse and demanded a stricter adherence to top down management systems.
This was wonderfully parodied in the 1986 Michael Keaton movie ‘Gung Ho’ (released as Working Class Man in Australia). In the following scene, the new Japanese owners of a Pennsylvania car manufacturing plant insist that the local American workers perform morning calisthenics.
It’s curious to note that the top down, Japanese ‘salaryman’ culture that was the subject of ‘Working Class Man’ was, at the same time, laying the foundations for a multi-billion-dollar console gaming industry through companies like Nintendo and Sony.
However, at that time, these companies were the outliers and most CEO’s were turning their attention to increasing efficiencies, minimising risk and cutting costs.
Reducing input rather than increasing output is still sadly the established orthodoxy in some larger organisations.
No company, organisation or individual has ever become truly successful by reducing their capacity.
Enter the Millennials
Many Western leaders have been told, or are telling themselves, that we live in an ageing society. However, this statement ignores the impact that young people with higher disposable incomes have on the consumer economy.
Millennials are now the largest generation born in decades. They have seen advances in technology that have upended industries and broken oligopolies - just ask a Millennial when they last paid for music and they will almost certainly say a live concert.
Millennials also grew up during the global financial crisis and felt the effects of austerity measures introduced in its wake, leading many to question if there wasn’t a better way.
This is a generation that has known nothing but disruption, most accept it as normal, adapt and exploit it, so is it any surprise that they bring that same appetite for change to their workplace? And, is it any surprise that progressive organisations are recognising the value of their ideas?
I would argue that businesses that are embracing, encouraging and creating an intrapraneurial ecosystem for this new generation of employees and catering to a new generation of customers, are not the ones complaining about a downturn in sales.
That is not to say that all Millennials are intrapreneurs or that all intrapreneurs are Millennials. I certainly don’t think that other generations lack intrapreneurial spirit but Baby Boomers and Gen X’ers have lived and worked through the economic rationalism of past few decades and may be less inclined to put their heads above the parapet.
In my experience, intrapreneurs come in all shapes and sizes, they exist in every organisation and they can be enabled.
When you consider that the chief difference between an entrepreneur and an intrapreneur is their employment status it should be easy to spot an intrapreneur within your organisation. They should be the ones displaying those entrepreneurial traits I covered in ‘Who and what is an Entrepreneur' right?
I would argue that unless you create an intrapreneurial environment, most of your entrepreneurs will remain hidden and under-utilised - an incredibly useful resource left untapped. However, if you create the right environment, intrapreneurs will readily identify themselves.
10 things you can do to create an intrapreneurial culture.
1. Hire more intrapreneurs
Sounds simple doesn’t it?
Some creatives like to work in isolation (although they might credit a ‘Muse’) but creativity in business is more often a result of collaboration and inspiration and employing more intrapreneurs means more opportunities for both.
Have a look at your organisation’s last few job advertisements - do they start with a long list of duties and responsibilities followed by required formal qualifications?
If you want to attract cookie cutter candidates advertise a list of cookie cutter job descriptions, but if you want to attract intrapreneurs you will need to post more thoughtful job advertisements.
Try reversing the job description and matching the potential candidate’s strengths to the organisation’s needs. Eg;
‘the successful candidate will use the full Microsoft toolbox to engineer new solutions to old problems’
… sounds a lot more attractive to a potential intrapreneur than:
‘must be competent in Outlook, Word and Power Point, and proficient in Excel’
Remember that intrapreneurs are looking for a challenge, so appeal to their aspirations and intellect rather than their experience - try asking what they can do rather than what they have done:
‘we’re looking for someone who can take our customer service to the next level’
is better than:
‘must have 5 years’ experience in B2B sales'
2. Encourage employees to think of themselves as partners in the business
There are many reasons why intrapreneurs don’t become entrepreneurs and it is often personal financial circumstances. While it would be easy and uncharitable to define intrapreneurs as people with great ideas who don’t want to risk their own money, that definition ignores the experience, loyalty and entrepreneurial instinct that intrapreneurs bring to an organisation.
It could also be that while entrepreneurs are often driven by individualism, intrapreneurs are driven by collaboration.
If you want to develop an intrapreneurial culture, people need to feel as though they have a stake in the organisation and I think it goes without saying that this starts with trusting all employees, from the cleaner through to the Vice President. Nine times out of ten they will know how to innovate within their own area of expertise, but they must feel as though they are heard and trusted to make decisions as part of the solution.
The best way I have found to build trust is by being open and transparent with all employees by sharing relevant and important information.
I have seen company CEOs and senior executives try to hide the company’s financial position from their employees in a misguided attempt to calm fears about job losses. If you’ve ever been an employee, you will know why this is misguided.
Ask for feedback, but more importantly ask for recommendations. You would be surprised how rarely this happens, especially in large companies and rarely in organisations with a top down management culture.
Great ideas (and solutions to problems) often come from unlikely sources.
3. Enable people and encourage ownership
General George S Patton famously said;
“Never tell people how to do things. Tell them what to do and they will surprise you.”
Ownership of a project or role is one of the most important drivers of intrapreneurial behaviour. When you allow people to own their work, what you are really doing is giving permission for them to make that work the very best that they are capable of delivering.
Taking away the back stop, or reducing an employee’s reliance on it, means that the individual assumes responsibility for their successes and failures and both of these things are key to creating an intrapreneurial environment. In my experience, this is one of the hardest things for anyone to put into practice, but it is the main difference between being a leader and manager.
4. Provide opportunities for people to speak
This seems like an obvious thing to do, so it is surprising how few large organisations have a multi directional system of communication - even more surprising when you consider how many new ways of communicating there are. In the old days there might have been a suggestion box allowing at least bottom/up communication, but technology has made the suggestion box largely obsolete.
I will write further on the concept of a Social Enterprise Network (SEN) but for now, they are basically a social media styled intranet or a private Facebook page for all employees - allowing people to actively engage with other areas and levels of an organisation or within specific groups.
Of course, there are other ways to communicate, but make sure that if you have an ‘open door’ policy that your door is open. Quashing ideas and recommendations before they have been discussed and explored will lead to fewer ideas and recommendations.
5. Provide time, space and resources
In my last Blog post, I discussed entrepreneurs. If we look back at the definition of an entrepreneur, it’s someone who;
1. Creates and/or recognises opportunities
2. Assumes the responsibility for the risk involved in new ventures, and
3. Has the managerial skills to gather and deploy the required resources
It should be obvious, yet far too many managers of intrapreneurs stumble at this hurdle.
While entrepreneurs are able to gather and deploy the required resources, intrapreneurs are not as likely to have the authority to redirect resources such as staff and capital and likely to have less control of their own workload and time. This is an area where leaders can have an enormous impact in creating an intrapreneurial culture by simply making available the required tools.
6. Don’t try to design by committee
I spent many years in the fashion industry building a national retail chain. In the retail industry, there is a graph used to reveal the sales arc of products and it is often used by fashion buyers to determine product lifecycle and when to look for the next big thing.
The graph is called the ‘Rogers Adoption Curve’ or the ‘Diffusion Process’ and it was originally applied to agriculture and home economics. It has since been most commonly used to describe the adoption of new technology, but the principle can be applied to almost any new product or idea.
I present it here because intrapreneurs sit squarely in the 2.5% of the sample area designated 'innovators'
The Rogers Adoption Curve - Diffusion Process
If you submit a new innovation to a committee of ten people, the best that you can hope for is that two of them (innovators and early adopters) will get it straight away and see the potential, three will understand part of it and the other five will be completely baffled.
The danger of ‘design by committee’ is when the majority are able to veto the minority but an even worse situation occurs when the majority aren’t able to veto so they compromise instead.
This sees a new idea stripped of innovation until it resembles an old and easily recognisable idea, then it will be held up as progress and proof that the committee system works.
I think you can guess how this impacts an intrapreneurial culture.
7. Cross functionality
Silos are the scourge of modern organisations.
Department A and B sometimes collaborate with C (usually because they have to) while department X, Y and Z have only limited contact with other departments.
While working on a previous project, a colleague described a large company who wanted to improve the organisation’s digital footprint - particularly setting up an online store.
A committee was formed with representatives from each department.
The chair of the committee was the General Manager of Human Resources while the Project Manager was a relatively junior from Marketing with little or no authority (either personal or official) to work across departments.
The project quickly descended into chaos as each representative was afforded an equal say in all aspects of the project including areas they had no experience or knowledge of.
In the end, the organisation built a portal with an online store added as an after-thought, resulting in a giant opportunity missed.
My colleague maintains that it could have been worse - they could have handed the entire project to the IT department and ended up with a website that no-one could use.
That is not to say that silos cannot be broken down to enable collaboration because a great idea or innovation in one area might have disastrous effects in another, but by the same coin, other perspectives can also add significant improvements to the original.
In my experience, the best way to smash silos is not with a sledgehammer but with a smaller group that shares a common problem or goal who is afforded the authority to work across all departments and pay scales.
8. Mistakes, I’ve made a few.
I don’t entirely subscribe to the mantra of ‘fail fast and fail often’ because it implies that failure is part of the original goal.
Failure is, by definition, the opposite of success and everyone should want intrapreneurs to succeed - especially the intrapreneurs themselves.
Instead, a better word is ‘mistake’ … mistakes happen and we correct them.
9. Collaboration or competition?
An intrapreneur is likely to respond well to both.
Collaboration is required for teams to work individually or across departments to draw upon collective knowledge and experience, but competition is just as important.
Healthy competition ensures that benchmarks are not only reached but reset.
10. What’s in it for me?
Recognise and celebrate the wins along the way. I have yet to meet anyone who doesn’t respond to recognition of their contribution.
Recognition amongst peers, raises, bonuses, promotions and even a share in the profits are all examples of rewards but not the only ones and they may not be the most effective in all circumstances.
Rewards for intrapreneurs should not only reflect what they have achieved but also how they would like to be rewarded.
Think of it this way, they have spent the last few days/weeks/months pouring their energy into understanding the problem and delivering a successful outcome. They’ve sweated the big and the small stuff, knowing that their reputation and status are on the line. At the end of it a pay rise might be welcome, but it could also seem impersonal to someone who has invested more than was asked of them.
If you are asking people to go above and beyond, be prepared to go there too - find out what motivates them and if you still don’t know, ask.
What’s in it for you?
When organisations create an intrapreneurial environment, where people are given a genuine opportunity to think, create and transform, employees become more enthusiastic and engaged which in turn leads to productivity increases. It’s then easier to attract and retain valuable people and skill sets.
Yet, there is another compelling reason why it's important to embrace greater entrepreneurial thinking with your organisation - disruption.
I will cover disruption in my next Blog post but for now - disruption is the single biggest threat to every business.
For many years, the biggest threat to most businesses was competitors with cheaper prices - a relatively easy problem to counter, but over the last decade or so it has been competitors with better ideas.
Disrupting your own business (before someone does it for you) by attracting, retaining and enabling intrapreneurs might be your best option to survive and thrive.
Vision, strategy, communication, persistence and …
Having owned my own businesses, taught university students, held public office and led positive change for communities, I have appreciated and learnt from each experience. However, it was those years as an entrepreneur and business owner leading a large team of employees that reinforced in me the importance of vision, strategy, communication and persistence.
… an unwavering focus on the customer!
No matter what your industry or sector, customer centricity is vitally important. Customers are the very reason why we do what we do but nowhere are the lessons sharper or more immediately felt than the retail sector. It should therefore come as no surprise that I have taken a relentless, customer driven approach to everything I have done.
Change is the only constant
Technology is transforming the way that we work, communicate, live and recreate. Automation will even inevitably transform the way that we travel.
As Lord Mayor of Adelaide from 2014 - 2018, I delivered Ten Gigabit Adelaide; an ultra-fast fibre optic data network as a partnership between the City of Adelaide and TPG Telecom. I believe that digital infrastructure in a CBD environment has a transformative impact on underwriting the competitiveness of the city and the business community within it.
While disruption is frequently associated with new and innovative technology, this only tells part of the story. Technology is simply the enabler of new ideas and new ways of doing things, especially in business.
With change as the only constant and the pace of disruption accelerating as technology makes new things possible, many business leaders have identified the need to re-invent both themselves and their businesses. Most understand that if they don’t show leadership and disrupt their own business or industry, someone else will.
Embracing disruption is the only option for building sustainable enterprises (both financially and environmentally) and far too many businesses owners have already learned, at great cost, that standing still and trying to deny and defy change is no longer an effective strategy.
Having built multiple businesses, I know what it means to take a financial risk and I have great empathy, insight and support for those that do the same. The relationship between risk and reward strikes to the very core of being a business owner.
My future blog posts will focus on the three important themes of leadership, reinvention and sustainability.
Business SA is the peak body for employers and business owners and supports all industry sectors with a diverse offer of training solutions, mentoring, networking, export services, sponsorship opportunities and public and political advocacy. Business SA assists employers on a daily basis with navigating the complexities of employing staff and complying with their obligations.
As a former business owner, it was more often the things that I didn’t know that kept me up at night and as business becomes increasingly complex, it is Business SA’s core function to assist employers in growing their business and watching their back.
As the first Chamber of Commerce established in Australia, Business SA has an influential history, but it also has an exciting future with a leadership role to play for all South Australians because when businesses grow, there is more opportunity for everyone.
Premier’s Climate Change Council
Often, the reality of climate change is seen as an unsurmountable challenge or impost to be endured, however, this type of thinking ignores the opportunities and denies the potential of emerging industries. As Chair of the Premier’s Climate Change Council in South Australia, I will be looking at sustainable development from both an environmental and economic perspective.
South Australia is well placed to lead the world in providing solutions to address climate change and other sustainability related technologies. It is my personal challenge to identify and champion the innovative solutions created by South Australian entrepreneurs so that they can provide them locally, nationally and globally.
Thank you for subscribing to my Blog
Thank you for subscribing to my blog and stay tuned for my next post where I will be sharing with you some thoughts about the nature of entrepreneurs and whether being an entrepreneur is something innate or is a skill that can be learned.
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As a former national retailer, I like to pay attention to what’s happening in the retail sector. I also like to keep a close eye on this sector as it is a barometer for growing consumer confidence, or the opposite.
The news this week is that Woolworths will close thirty BigW stores effective immediately with two regionally based distribution centres marked for closure in the next two years. The business commentariat has flagged competition from online as a major contributing factor. Oddly enough, no-one seems to have noticed that BigW's competitors in the Discount Department Store (DDS) sector, Target and Kmart, are seemingly less affected. The truth is that BigW's problems started a little over a decade ago in South East Asia when Wesfarmers placed a call to Mr Guy Russo, the then retired President of McDonalds Greater China and former Managing Director and CEO of McDonalds Australia.
Someone at Wesfarmers had decided that Mr Russo might be able to salvage something from the emerging train wreck that was Kmart Australia. Mr Russo's appointment was to be the last roll of the dice for Kmart which had had something of a revolving door for senior managers with three Managing Directors occupying that position in 10 years. Mr Russo took some convincing, after all, what could a guy with 34 years of fast food experience have to offer a department store?
As it turns out, quite a lot.
I had the privilege of hearing Guy Russo speak at a conference just a few years after this spectacular turn around. A down to earth, unassuming man approached the podium and asked the audience to guess how much his outfit, a suit and tie, shirt and shoes, cost. He didn't tell us then, he instead saved that for later.
Mr Russo recounted the phone call he had received and his own trepidation about it but then pivoted to what we were there to hear, how he turned around a monolithic company like Kmart from the brink to setting the pace for other in the DDS sector to follow. How did he manage to make Kmart so 'cool' that numerous Facebook fan groups have popped up, boasting no less than a combined half a million followers; something unheard of for an Australian retail corporate.
In short, Guy Russo did nothing except listen for several months. He listened to the Buying and Marketing teams, he listened to the Retail Operations teams, he listened to the upper, middle and junior managers but perhaps most tellingly, he listened to the floor staff; even the 17 year olds that hand out garment tickets at the entrance to the fitting rooms.
Unsurprisingly, he discovered that after more than a decade of flagging sales, uncertain job security, heavy handed management, staffing cuts and other by-products of economic rationalism, the company had a culture problem. The people themselves had most of the solutions and they were more than happy to share them but collectively, Kmart didn't know how to win anymore and no-one even knew what the brand stood for.
The situation at Kmart was so dire that Wesfarmers, quite rightly, were not prepared to throw good money after bad and this presented yet another challenge for Mr Russo. He would have to change the company's culture on a shoestring budget.
Mr Russo called in his Senior Management team and work-shopped the feedback he had received over the previous months. The team looked at every business function and gradually a way forward emerged.
It was at about this time that Kmart launched a new TV marketing campaign. These weren't the adverts with people bouncing around to funky covers of 80's era one hit wonders; that would come later. These were simple ads that stated 'Expect Change.'
I remember discussing those ads with a colleague at the time; the genius of those two words as a slogan, their double meaning. The message that something was happening at Kmart and it was going to be affordable.
Meanwhile, the Kmart Senior Management team were reinventing the whole company and Mr Russo was proud of the fact that reinvention didn't automatically mean redundancies. He mentioned that some people left because they did not like the changes that were happening but no-one left Kmart during this period involuntarily. Mr. Russo was intent on refocussing as many of the existing personnel and putting their ideas into practice, building capacity and creating a winning team.
In an unusual move, much of the early focus fell on the buying department. Mr Russo tells the story of how, prior to his arrival, Kmart stocked somewhere between 20 and 30 different outdoor barbecues. Several brands with many options and this was whittled down to 3 barbecues - a good, better and best option.
During this time, some departments disappeared altogether which is why you can't buy plants and garden accessories at Kmart anymore. National brands were also in the crosshairs and Bonds was one of the first casualties. Why buy from an importer with no control over how their brand was discounted when Kmart had the resources to import their own product and sending buyers overseas with empty 'Open To Buys' led to further opportunities.
Mr Russo and the Senior Management team turned their attention to pricing and earned sage nods from the audience when he related that using pricing that ends in 0.95 or 0.99 cents is equivalent to lying to your customers; you both know that the item is the rounded up figure so why pretend?
Next it was the store's turn. New floorpans were introduced and the aisles were cleared of clutter. Does anyone remember the large cardboard bins full of $2 DVDs that obstructed every Kmart aisle? Those bins were bought and paid for by the suppliers but Kmart's profits from DVD sales were in steady decline. Those bins were removed for economic reasons as much as aesthetic ones.
All of this newly found space was filled with new stock. The buyers had been busy buying all those new product ranges that half a million Facebook Mums now love Kmart for.
Marketing then had its turn. Do you remember the last time you received a Kmart catalogue in the post? Me neither … and this proved his point before he made it. Mr Russo described the decision to drop catalogue advertising was like giving up cigarettes or hard drugs. For years, Kmart's poor performance was propped up and papered over by a regular cycle of catalogues. When catalogue advertising was dropped, Kmart entered a year long period of barely meeting last year's sales and many counselled starting them up again to arrest the situation. However, steady improvements in other areas of the business enabled them to justify and continue with the plan.
With all of these exciting changes happening elsewhere in the business, it must have been tempting to leave Retail Operations alone. However, Senior Management had a plan to change the company's culture and part of that involved giving staff members more control over the stores that they worked in. A new set of operating procedures were introduced where floor staff were empowered to make some decisions without the need to refer to their managers. I have personally experienced this when an item scanned at $10 instead of $5. The situation was immediately rectified without making me or the staff member feel uncomfortable; it's a nice way to shop.
The Cost of Change
None of the above changes were implemented without associated costs but they were cost effective (remember that shoestring budget?) and they changed the entire company culture at Kmart.
Target and BigW both noticed Kmart's resurgence on their sales performance and ultimately it's dominance of the DDS sector. In 2016, Mr Russo was promoted as CEO of the Wesfarmer's Department store division (Kmart and Target) and at the same time he was made Managing Director of Target. From that time, Target also started to change (for the better).
BigW tried to emulate their competitor's success but as events of the last few days show; it may have been too little too late.
And Mr Russo's outfit? Suit, shirt, tie and shoes came in at slightly under $100 from, you guessed it ... Kmart.
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