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#thinkUTS BUSINESS SCHOOL 2014
Redesigning business
Medicine for Medicare
The leadership dilemma
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#think is the official magazine for students, alumni, partners and friends of UTS Business School.
EditorLesley Parker 02 9514 3054
UTS Business SchoolDr Chau Chak Wing BuildingBuilding 8, 14-28 Ultimo RdUltimo NSW 2007www.business.uts.edu.au
#think is published by Mahlab Media.
Art DirectorSuzanne Cengia 02 9556 9126
Managing EditorMartin Wanless 02 9556 [email protected]
Managing DirectorBobbi Mahlab
369a Darling StBalmain NSW 204102 9556 [email protected]
PhotographyDamien Pleming 0402 096 [email protected]
Hair and make-up Sahra Bull 0410 458 [email protected]
Printing Webstar Printing
© All material copyright UTS Business School 2014. Apart from any fair dealings for the purposes of private study, research, criticism or review, as permitted under the Copyright Act 1968, no part may be reproduced by any process without written permission. Enquiries should be addressed to UTS. While all reasonable attempts have been made to ensure the factual accuracy of this publication, Mahlab Media and UTS accept no responsibility for any errors contained in this publication. The views expressed in this publication are not necessarily those of UTS.
UTS CRICOS PROVIDER CODE: 00099F
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3
4 WELCOME
6 HEAD & HEART Theongoingchallengeforfundraisers.
12 BACK TO EARTH Whydon’tmorecompaniestestforassetimpairment?
15 MORE THAN JUST A NUMBER Spreadsheetsthenandnow–25yearson.
16 MEDICINE FOR MEDICARE Healthspendingisnotincrisis,butitdoesneedcare.
20 HOW TO DESIGN A BUSINESS WhydosomebusinessesbetternavigateAustralia’s
high-costenvironmentthanothers?
24 COMPLETING THE CIRCLE Thecirculareconomyismorethanrecycling.
28 SENSE OF SELF Areleadersbornormade?
32 TIGER OR CUB? Gaugingtheimpactofforeignbuyersonhouseprices.
35 THE HERO MYTH The“heroentrepreneur”asamythicalcreature.
36 MAKING MARKETS Marketdesignaimstofindbetterwaystoachieve
thegoalsofgovernment,businessandsociety.
40 THE MONEY TRAIL Dobusinesseventsaddupfortheeconomy?
44 SCHOOL FOR SCANDAL Thedarksideofcelebrityendorsement.
49 THE INVISIBLE HAND Assigningadollarfigureshortchangesthevalue
ofvolunteering.
50 ABOUT UTS BUSINESS SCHOOL
CONTENTS
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4
WEL
COM
E
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5
It’s inevitable that the new home of UTS BusinessSchool,theDrChauChakWing
Building,willattractattentionforitsstriking
architecture.Designedbyinternationally-
renownedarchitectFrankGehry,itjoins
afamilyofbuildingsthatincludesthe
GuggenheimMuseuminBilbao,Spain.
Butrightfromthestartthefocusforus–
hereattheUniversityofTechnology,Sydney
(UTS)andwithintheBusinessSchool–
hasbeenwhatwillgooninsidethebuilding.
Asonhisotherprojects–including
educationalfacilitiessuchasthoseat
WeatherheadSchoolofManagement,MIT
andPrinceton–GehrydesignedtheDrChau
ChakWingBuildingfromtheinsideout.The
arrestingbrickworkandglasscurtainwalls
cameonlyafterhehadenvisagedaninterior
thatwouldfacilitateamore“integrative”
approachtobusinesseducation.
Wewantedabuildingthatwouldbring
transformationalchangetotheBusiness
School’sresearchandteaching.We
wantedspacesthatwouldencourage
greaterinterdisciplinarycollaboration
andcross-pollinationofideas,notonly
betweendisciplinesandresearchersbut
alsowithindustryandpractitioners.
Inthismagazine,you’llfindexamples
ofthethinkingthatisgoingonatUTS
BusinessSchoolasweenterthisnew
eraofbusinesseducation.Thesestories
providejustatasteoftheeducation,
researchandindustryengagementthat
hasoccurredoverthepastyearacrossour
coredisciplinesofaccounting,economics,
finance,managementandmarketing,and
withinourdiverseresearchcentres.
Theconsultingprojectinvolvingour
ExecutiveMBAstudentsandtheWestmead
MedicalResearchFoundationillustratesour
approachto“experiential”learning,which
occursnotjustatthepostgraduatelevel
butforourundergraduatestudentstoo.
Real-worldengagementwithbusinesses
andotherorganisationsdevelopsinour
studentstwokindsofskills:practicalones
thatpreparethemfortheworldofwork
andwhatwecallboundary-crossingskills
–skillsthatbuildontechnicalknowledge
toencompassbroadercapabilitiesin
communication,teamwork,problem-
solving,criticalandcreativethinking.
Thesearetheskillsemployersare
lookingforastheymeetnewchallenges
inafast-changing,globaleconomy.They
arealsotheskillsthatwillhelpsomeof
ourgraduatesshapetheirowndestinies
throughentrepreneurialstart-ups.
Ofcourse,theseprojectsalsohave
benefitsforthebusinessesandcommunity
groupsthatbecomeinvolved–allowingthem
totapintothefreshthinkingofourstudents
and,insomecases,gainingaccesstothesort
ofadvicetheycouldnototherwiseafford.
Ourresearch,too,isbasedinreality.We
produceknowledgewithimpact–impact
forindustryandalsosocialimpact,asyou’ll
seefromtheexamplesinside.Ourthinking
feedsintocommercialandpolicydecisions
beingmadebybusinesseslargeandsmall,
andbygovernmentatalllevels.Italso
supportstheworkofthegroupsincivil
societythathelpshapethosedecisions.
Wehopeyou’llenjoyreadingthis
magazineandthatamongitscontents
you’llfindthemesandissuesthat
provokenewthinkingabouttherole
ofbusinessinaglobalcontext.
Professor Roy Green
Dean, UTS Business School
WELCOME
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7
All charities face the continual challenge of maintainingandexpandingtheirfundraising,
withsomanycausescompetingforthe
financialsupportoftheAustraliancommunity.
Ericd’Indyistheexecutivedirectorofthe
WestmeadMedicalResearchFoundation,
whichraisesmoneyforWestmeadHospital
andforWestmeadMillenniumInstitutefor
MedicalResearch.Bothsitproudlywithin
westernSydneyandserviceadiverse
andrapidlyexpandingpopulation.
“Thefirstchallengeoffundraisingis
buildingtrustwiththecommunity,by
continuallydeliveringonyourpromise,”
saysd’Indy.“Peopleneedtoknowthat
youarebringinggenuinevaluetothe
causeyourepresent,andthattheimpact
oftheworkiseasilydemonstrable.Then
inchoosinganapproachtotakeyour
messagepublic,youcombineacompelling
articulationoftheneedanditsurgency,
whiletappingintotheemotiveconnection
thatpeoplehavewithyourcause.
“Ifyourbrandstandsforsomething
easilyunderstoodbythecommunity,and
hassomeequity,thenyouarealready
halfwaythere,”hesays.“Luckilyforus,
everyoneinwesternSydneyknows
Westmead,sothat’sagoodstart.”
Thecalibreofresearchbeingfunded
bythefoundationisdemonstratedbythe
recentlypublishedwork(Nature,2014)
ofDrJamesChongfromtheInstitute.
Incollaborationwithscientistsatthe
UniversityofWashington,DrChonghas
succeededinusingstemcellsinsufficient
quantitytorepairdamagedheartmuscle
afteraheartattackinaprimate.With
20,000Australiansdyingeachyearfrom
chronicheartfailure,thisisbeinglauded
asasignificantstepforwardandhas
receivedworldwideattention.»
Westmead Medical Research Foundation has a crucial role as a fundraiser. A group of EMBA students helped
ensure its strategy was a truly 21st century one.
#thinkSTRATEGY
Headheart
EMBA graduate Clare Ferguson and Eric d’Indy of the Westmead Medical Research Foundation
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8
DONOR PYRAMIDFord’Indy,thetraditionalapproachof
raisingmoneyforsuchworkthroughbig
charitygalaeventsdoesn’taddup.Such
eventsdon’tactuallygeneratesignificant
netincomeandcanleadto“donorfatigue”,
becausere-inventinggalaballsyearonyear
isresourceintensiveandexpensive.
Moreimportanttohimisbuildinga
“donorpyramid”,withabaseofdonorswho
giveseveraltimesayear,andacquiring
donorswhoarecommittedtogivingmonthly.
“We’verecentlyinvestedinaregular
givingprogram,commonlyreferredtoas
face-to-face(F2F),whichinvolvestrained
staffapproachingthepublicandasking
themtocommittobecomingaregulargiver,”
hesays.“InourfirstyearofF2Foperation,
thecampaignacquired1600newdonors.”
Theseregulargiversformthebaseof
thedonorpyramidandprovidecharities
withasustainablefundingmodel.Asmall
proportionofthisbasewillengageinmajor
giftsandbequests,activitiesthatcanbe
extremelybeneficialthoughnotasfrequent.
In2014,studentsfromtheUTSBusiness
SchoolExecutiveMBA(EMBA)program
becamepartofWestmead’sefforts,
undertakingaprojecttodevelopa21st
centuryfundraisingstrategy.
EMBAcandidatesaremid-stagecareer
executivesreadytomakethemovefroma
tacticaltoastrategicrole.AtUTSBusiness
Schooltheyareassignedwhatprogram
directorJimHutchincalls“real,meaty
businessproblems”tofix.
Studentsworkinteams,engagingin
intensive,liveconsultingprojectswithclients
suchasWestmead.Eachteamissupervised
byaprojectexecutivewhoiseithera
BusinessSchoolacademicwithindustry
experience,oraseniorbusinessexecutive.
PaulThambarofUTSBusinessSchool,
whohasacademicandindustryexperience
instrategyandaccounting,wastheproject
executivefortheWestmeadproject.
“Theroleofprojectexecutiveisakey
differentiatorinourprogram,becausethey
helpstudentstoapplypriorlearningand
toobtainprofessional,consulting-grade
outcomesforclients,”hesays.
TheEMBAprogramalsohasanAdvisory
CouncilmadeupofC-suiteexecutiveswho
volunteertheirtimetoreviewthework
donebythestudentsbeforeitgoestothe
client.OneoftheBigFouraccountingfirms,
PricewaterhouseCoopers,providessenior
stafftoserveonthisAdvisoryCouncil.
CHARITY DOLLARClareFergusonwaspartoftheEMBA
groupthatworkedwithWestmead.
“WelookedatwhattheFoundationand
othermedicalcharitiesweredoingand
undertookresearchintothenot-for-profit
environmentinAustralia,andcompetition
forthecharitydollar,”saysFerguson,who
isnowanEMBAgraduate.“Wethenlooked
atthetargetmarketofwesternSydney,
whichisverymulticultural,withmanyfirst-
generationimmigrants.
“WiththesupportofUTS,weinterviewed
people,didourownresearch,analysedthe
informationandturneditintoconclusions,
recommendations,andstrategies.”
Afterthreemonths’work,thestudents
presenteda70-pagereporttothe
FoundationBoardforconsideration.
Akeyrecommendationwasthe
integrationofmultiplebrands–Westmead
Hospital,WestmeadChildren’sHospitaland
theMedicalResearchInstitute–intoone
campus-wideWestmeadbrand,toavoid
duplicationand“donorcannibalism”.»
THE TRADITIONAL APPROACH OF RAISING MONEY FOR SUCH WORK THROUGH BIG CHARITY GALA EVENTS DOESN’T ADD UP
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9
#thinkSTRATEGY
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10
Executivedirectord’Indysaysit’sa
recommendationthat’sbeingdiscussed.
“Weseethelong-termbenefits,andthisis
astrategythatseveralorganisationshave
contemplatedforlonger-termstrengthening
oftheWestmeadbrand,”hesays.“Weneed
togetagreementfrommultiplestakeholders
[todothis],anditisstillinnegotiation.”
Anotherrecommendationwastolook
atthepossibilitiesfordigitalcampaigning,
somethingtheFoundationalreadyhadin
developmentwithitsnew“ShareSome
Love”program.Forasmalldonation,
participantscansendadigital“heart”and
apersonalmessagetoalovedone,viathe
sharesomelove.org.aucampaignpage–
perhapstotheparentsofanewbaby,or
tosomeoneundergoingtreatmentinthe
hospital,oreventoshowtheirgratitudetoa
doctororanurseforthecaretheyoraloved
onereceived.Themessageisdisplayedona
massivemonitorinthemainentrancetothe
hospital,whichalsofeaturesanine-metre-
longwallpromotingthecampaign.
Thestudentssuggestedalsocreating
anappforvisitorstothehospital,totiein
withthisstrategy.Suchanappwouldsupply
usefulinformationaswellastheopportunity
toquicklydonate.
Theyalsosuggestedexploring
non-fundraisingrevenuestreamsfrom
thesmall-to-mediumenterprisesector.
TheFoundationiscurrentlyresearching
andbuildingabusinesscasetolauncha
corporatehealthchecksprogramthattaps
intotheresourcesofWestmeadHospital.
“TheEMBAstudentswerevery
professional,veryengaged,andputinalotof
hoursinrapidlydevelopingtheirknowledge
ofthenot-for-profitsector–whichwas
foreigntoallofthem,”d’Indysays.“They
werewellsupportedbyUTSandcameup
withwell-tested,fullfinancialanalysisand
well-researchedideas.”
Fergusonsays:“Itwasagreatfeelingto
knowthattheworkIwasdoingwashelping
thisorganisationcontinuetheamazingwork
thatitdoes.”
IT WAS A GREAT FEELING TO KNOW THAT THE WORK I WAS DOING WAS HELPING THIS ORGANISATION CONTINUE THE AMAZING WORK THAT IT DOES
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11
REALITY DRIVENFergusoncametotheEMBAprogramafter
workinginoperationsrolesfor15years
acrossindustriesasdiverseascargo
shipping,taxconsultancyandnowlegal
services.Shehadfoundnothavingan
undergraduatedegreewasholdingher
back.“Iwantedtogetabroaderbusiness
understandingoftheindustriesIwasin,
andtomovemyselfuptheladder,”shesays.
ShewasattractedtotheEMBAcourse
mainlybecauseofitscohortmodel,with
studentsbeingformedintogroupswith
whomtheycompletetheentirecourse.
“DespitebeingfromSydney,Iworked
overseasformostofmy20s,sothecourse
alsoallowedmetodevelopanetworkof
localbusinesscontacts,”Fergusonsays.
Foranothermemberofthegroup,Parambir
Sandhu,theprogramwasasteppingstone
fromHRintoacareerinconsultingwith
PricewaterhouseCoopers(PwC).
LynetteNixon,director,DealsInnovation,
PwCAustralia,says:“BecauseParambiris
abletocombinethecontentshehaslearned
viatheEMBAwiththepracticalexperience
ofworkingontheclientprojectsduringthe
course,shebeginsherconsultingcareer
astepupfromothergraduatesinterms
ofstrategicknowledge,knowingtheright
questionstoaskandtheoverallquality
ofherthinking.Itisalwaysgroundedin
outcomesfortheclientversusthe‘theory’
ofhowsomethingisdone–theseareterrific
attributesforconsultantstohave.”
AssociateProfessorHutchinsaysthe
valueofreal-worldengagementswithclients
likeWestmeadisimmense.
“Whatwe’retryingtoachievewiththis
programisverydifferentfromaconventional
MBA,”hesays.“Thefocusisonpractical,
experientially-basedlearning–whatwecall
reality-drivenrigour.”
Ratherthanporingovercasestudies
fromtextbooks,theEMBAcandidateswork
with“live”subjects.“Fromourperspective,
casestudiesaretobusinessschools
whatcadaversaretomedicalschools,”
AssocProfHutchinsays.“Theyprovide
forwonderfullearning,butthelearning
isincompletebecauseyouknowthe
outcomebeforeyoustart–andyoudon’t
getanylivefeedback.”
#thinkSTRATEGY
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12 Professor Peter Wells and Dr David Bond
Back
Q
anta
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assi
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ame
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nally
revi
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of it
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anes
. But
rese
arch
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say
it is
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the
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Aus
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com
pany
with
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ew a
sset
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uatio
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rth
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13
#thinkACCOUNTING
When Qantas reported a $2.8 billion net lossforthepastfinancialyear,impairment
charges–whichbringtoaccountfalls
inthevalueofbusinessassets–wereby
farthebiggestcontributor.
Theairlinerecordedanimpairment
chargeof$2.56billiononitsinternational
operations,alongwith$387millionin
impairmentsonotherbusinessassets.
Thenewspromptedmediareportsof
a“horrorloss”butcameasnosurprisetoa
groupofresearcherswhohadbeenworking
onaprojectevaluatingtheassetimpairment
decisionsofAustraliancompanies.
“Theseimpairmentsshouldnothave
beenasurprise,”saysProfessorPeter
Wells,headoftheAccountinggroup
atUTSBusinessSchool.Qantas’book
valueofequityhadexceededitsmarket
capitalisationbythisamountforyears–
anindicatorthatimpairmenttestingwas
necessary,ProfWellssays.Italsohada
recordofpoorprofitability.
“So,whatwasunexpectedwasnotthe
magnitudeoftheimpairmentsbutthatit
tooksomanyyearsfortheimpairments
toberecognised.”
ENDEMICAccountingstandardAASB136identifies
arangeoffactorsthatcouldindicate
impairmentandprovideapromptfora
businesstoreviewitsvaluations.Italso
setsouttheproceduresbusinessesmust
followtoensureassetsaren’tbookedat
morethantheir“recoverableamount”.»
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14
Therecoverableamountisthevaluethat
arisesfromtheuseoftheasset(knownas
valueinuse)ortheamountthatcouldbe
recoveredbysellingtheasset(fairvalue).
Iftherecoverableamountfallsbelowthe
bookvalueoftheassetintheaccounts,the
businessmustrecordanimpairmentloss.
UTSBusinessSchoolresearchers
havegonethroughhundredsoffinancial
statements,from2000to2012,toexamine
impairmentdecisions.Amongotherthings,
theywantedtocomparedecisionsbefore
andaftertheimplementationofthecurrent
accountingstandardonassetimpairment,
AASB136,inthemiddleofthatperiod.
Theresearchers,ProfWells,DrDavid
BondandDrBrettGovendir,wantedto
betterunderstandhowcompanieswere
implementingthestandard,especiallyas
biggapsbetweenbookvalueandmarket
capitalisationwereapparentforanumber
ofhigh-profilecompanies–something
thecurrent,moreprescriptivestandard
identifiedasanindicatorofimpairment.
Itquicklybecameclearthissortof
gapbetweenmarketandbookvaluewas
“endemic”,saysDrBond.“Thismarket-
to-bookmeasuresuggestscompanies
shouldatleastbetestingforimpairment,
ifnotrecordingimpairmentlosses.”But
thiswasn’toccurring,oritwasdelayed.
“Whenthere’sagaplikethis,in
essencethemarketissayingtheassets
ofthebusinessareworthalotlessthan
thedirectorsaresaying,”DrBondsays.
“Someonehastobewrong.”
InthecaseofQantas,DrBondsays
thatforthepastthreeyears–upuntil
themostrecentearningsannouncement
–Qantas’marketcapitalisationwasless
thanhalfitsbookvalue.“Itwasanindicator
ofimpairment,butupuntiltheearnings
announcementinAugusttherehadn’tbeen
amaterialassetimpairment.”Norwasthere
anycommentaryfromQantasoverthis
periodtoexplainanydecisionnottoimpair
assets,hesays.
Thecircumstancesunderwhich
companiesshouldberequiredtopublicly
addressadecisionnottorecordan
impairmentmaybeaquestionforregulators
toconsider,DrBondandProfWellssay.
BOOK TO MARKETTheimpairmentannouncementbyQantas
lastAugustlargelyclosedthegapbetween
itsmarketandbookvalue.
FairfaxMediawasanotherprominent
exampleofacompanywiththissortofgap,
DrBondsays.Itreportedabookvaluein
excessofmarketvalueforanumberofyears
beforefinallymakingassetimpairmentsof
$2.87billioninitsearningsreportfor2011-12.
Altogether,theUTSBusinessSchool
researchershaveanalysed1853financial
reportsfromcompanieswherebookvalue
exceededmarketvalue.Onlyaquarter
ofthecompaniesintheresearchsample
recognisedanassetimpairment.When
impairmentsoccurred,theyweregenerally
relativelysmall.
Onapositivenote,therewasagreater
recognitionofassetimpairmentafterthe
introductionofAASB136,butthesizeofthe
impairmentsremainedgenerallyquitesmall,
theresearchersfound.
DrBondsaystheresearchaddresses
severalquestions:Arefirmscomplying
withthenewstandard?Istheresufficient
disclosureaboutdecisionsnottoimpair
assets?Whenimpairmentsoccur,dothey
gofarenough,especiallywithregardto
intangibleassets?“Thesequestionsareof
concerntostandardsetters,financialmarket
regulatorsandusersoffinancialstatements,
includinginvestors.”
#thinkACCOUNTING
THE MARKET IS SAYING THE ASSETS OF THE BUSINESS ARE WORTH A LOT LESS THAN THE DIRECTORS ARE SAYING. SOMEONE HAS TO BE WRONG
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15
#thinkACCOUNTING
More
Twenty-five years ago, not many Australianshadamobileletalone
anemailaddress,laptopswerefor
peoplewithstrongarms,andfor
mostaccountantsspreadsheetswere
actuallythat:largesheetsofpaper,
notavitalpieceofsoftware.
TheBachelorofAccounting
programattheUniversityof
Technology,Sydney,ismarking
its25thanniversary,havingbeen
establishedaquarterofacentury
agoasauniquepartnershipbetween
UTSandtheaccountingindustry.
Thisprestigiousprogramattracts
500-plusapplicationsayearfor
about35placesandhasgraduate
employmentofabout95percent.
Today,asin1990,everystudent
selectedreceivesafullscholarship
andallcompleteinternshipswith
“bluechip”industrysponsors.
Amongthem,LendLease,Coca-Cola
AmatilandWestpachaveallbeen
involvedsincethestart;National
AustraliaBank/MLC,Allianzand
PricewaterhouseCoopershavebeen
onboardformorethan20years.
“Wewerealwayslookingfor
specialpeople,”recallsArieSietsma,
foundationcoursedirectorwhenthe
firststudentsfiledintotheroomall
thoseyearsagoin1990.
Whilemanystudentscome
withhighATARscores,theprogram
hasalwayslookedbeyondthisto
otherqualities.
Inparticular,theprogram
looksforstudentswithleadership
potential.Sietsmarecallsone
studentfromanunderprivileged
backgroundwhohadmadeahuge
impactathishighschool–rebuilding
theschool’sspiritbyleading
socialactivitiesandprojectsto
improvetheschoolenvironment.
Ifleadershippotentialwas
whattheprogramwaslookingfor,
itcertainlyfoundit,withalumni
includingbusinessleadersofthe
calibreofKateGoodman(managing
director,KimberlyClarkVietnam)
andCourtenaySmith(group
financialcontroller,LendLease).
CURIOSITY“Mydegreemademecurious
abouttheworld,asallgood
educationshould,andalsotaught
mehowtothink–ratherthan
whattothink,”saysAdrianCoppini,
whowasinthatfirstintake
andisnowgeneralmanagerof
StrategyandBusinessServices,
WealthManagementAdvice,at
CommonwealthBankofAustralia.
AkeyattractionforCoppiniwas
beingabletocompletethecoursein
threeyears,includingprofessional
experience.HeinternedwithLend
LeaseandIBM,bothconsequently
providingpart-timeworkthathe
undertookintandemwithhisstudies.
REAL WORK“Thecoursesponsorswerereally
goodatgivingstudentsrealwork,
morelikegraduatejobsthan
internships,”herecalls.Thissort
ofworkexperiencemeantCoppini
wasabletocompletehisCPAby
age21–atthetimetheyoungest
evertodoso.
Coppini’sfirstjobongraduation
waswithAMP,oneoftheoriginal
sponsors.There,heacquireda
mentorinBruceNation–“always
sopassionateaboutaccounting”.
“Ifyoucangettheright
opportunitystraightoutofuniversity,
itsetsyouontherighttrajectory.”
Ultimately,Coppinibelievesthe
programprovidesstudentswitha
veryrealisticexpectationoftheworld
ofwork,atthesametimeproviding
employerswithgraduateswhoare
quitedriven.“It’sallaboutputting
peopleintherightenvironment
wheretheycanflourish.”
A ground-breaking accounting degree has been turning out leaders for 25 years.
than just anumber
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16
THE COST OF LIVING IS STAYING RELATIVELY LOW. IT’S THE COST OF DYING THAT’S SO EXPENSIVE
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17
#thinkPOLICY
Medicine
Professor Jane Hall
Medicare
We are repeatedly told that Medicare as we knowitisunsustainable.Treasurymodelling
showshealthcareeatingupmoreandmore
ofournationalwealthincomingdecades.
Australiacurrentlyspendsaboutnineper
centofitsgrossdomesticproduct(GDP)on
health.TheCommonwealthGovernment’s
shareaccountsforaboutfourpercentof
GDP,andthisfigureissettoalmostdouble
tomorethansevenpercentofGDPby2050.
“Treasurerslookatthosenumbersand
theydon’tlikeit,”saysUTSBusinessSchool
ProfessorofHealthEconomicsJaneHall.
“Theythinkhealthcareisgoingtoeatthe
Commonwealthbudget.”
Nowonderthere’spublicconcern
aboutwhetherwe’llbeabletocounton
Medicaretodeliverinthefuturewhatwe
gettoday.Butresearchandanalysisby
ProfHallandcolleaguesattheCentrefor
HealthEconomicsResearchandEvaluation
(CHERE)attheUniversityofTechnology,
Sydney,suggestssomeofthemoredire
prognosesforoursystemofhealthfunding
maybetoopessimistic.Theresearchalso
pointstoconsideredstepswecantaketo
ensureMedicareremainssustainable.
MIDDLE OF THE ROADSo,what’sbehindtheprojectedincrease
inhealthspending?Demographicsispart
oftheanswer–thoughonlypart,saysProf
Hall.In1970,onein12Australianswasaged
over65;by2050oneinfourAustraliansis
expectedtofallintothisgroup.
“Deathreallyhasgoneoutoffashionthis
century,”ProfHallsays.“Inthepast60years
thedeathratehasfallentoaboutathird
ofwhatitwasjustagenerationago.That’s
remarkable,andit’ssomethingweshould
becelebratingnotbemoaning,”shesays.»
Is the Medicare system as it exists today sustainable in the long term? Professor Jane Hall says health spending is not in
crisis but it does need care.
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18
Nevertheless,anothercompelling
statisticisthefactthata75-year-oldman
todayusesdoubletheMedicare-funded
serviceshisfatherwouldhaveused,ifhe
survivedto75,twodecadesago.
“Thequestionpeopleareaskingis,can
thecountryaffordtherisingcostofhealth
careforthisageingpopulation?”ProfHall
says.IstheMedicaresystem,asitexists
today,sustainableinthelongterm?
Inseekingtoanswerthisquestion,Prof
HallfirstpointstohowAustraliacompares
withotherdevelopednationsinspendingon
health.Therealityisourhealthspendingis
modestbyinternationalstandards,shesays,
andevenifAustraliaachievesonlymoderate
economicgrowthwewillhavemorethan
enoughfundstomeettheprojectedincrease.
“Infact,Australiaisverymiddleofthe
roadwhenitcomestospending,”shesays.
“We’renotseeingablowoutofhealth-care
costs;we’reactuallydoingquitewellin
internationalterms.Comparedwithother
countries,theimpositiononourbudget
doesn’tlookunmanageable.”
Butwillthatremainthecaseifhealth-
carespendingcontinuestogrowsoquickly?
ProfHallsaysit’simportanttoconsider
thatwhilehealthspendingwillgrow,so
tooshouldournationalwealth.Thesums
improveifwefactorinatleastamodest
increaseinGDP.
“Ifweassumethatweexperience
economicgrowthatavery,verymodest
rate–atthelowestratethatwe’veseen
inthepast40years–in40years’timewe
willhavealotofextrawealthtospend,”she
says.“Evenifhealth-carespendingdoubles
asforecast–growingatamuchfasterrate
thanoureconomicwealth–itwillstillbea
relativelysmallproportionoftheincreased
nationalwealthwe’relikelytohave.
“WhenIlookatthenumberslikethat,
Ican’tseethesustainabilityproblem,”
ProfHallsays.
END OF LIFEEvenso,lookingforsavingsandgreater
efficienciesinthehealthsystemis
worthwhilewhensomuchofournational
productionisatstake.Thisisnotacrisis
thatneedsemergencymeasures,however,
ProfHallsays.Rather,itrequirescareful
andconsideredstrategies.
ProfHallpoints,forexample,to
researchonhealthspendingattheendof
life.Thisresearchcomparesthehealth-
carecostsofover-65“survivors”,wholive
fromoneyeartothenext,andtheover-65s
whodieinthatsameyear.
“Whatweseeisthecostofliving
stayingrelativelylow,”shesays.“It’s
thecostofdyingthat’ssoexpensive.”
Why?“Well,ifwelookatwherewe
die,whatweseeisthatthemajorityof
Australiansdieinhospital,”ProfHallsays.
DatafromastudyinwhichCHEREhas
beeninvolved,lookingathealth-carecostsin
thesixmonthsbeforedeath,showsthere’s
notmuchchangeinspendingonmedicines
andout-of-hospitalhealthservicesinthat
period,andthatemergencydepartment
visitsrisejustalittleattheend.
“Itisin-patienthospitalcarewhereso
muchmoneyisbeingspentinthefinalsix
months,”ProfHallsays.
That’sdespiteresearchindicatingthat
mostofusdon’twantmajorinterventions
asthisstage.“AsurveyofAmerican
physiciansaskingthemtoimaginethey’re
inaterminalstageofillnessfoundthatthe
onlythingtheywouldreallywantwaspain
relief,”ProfHallsays.
“Alltheothermore,shallwesay,
‘heroic’interventions–CPR,ventilation,
surgery,andsoon–mostpeopledon’t
wantthem.Butthat’swheresomuch
moneyisgoing,”shesays.
Finally,whataboutquestionsbeingraised
aroundthedegreetowhichweare“entitled”
togovernment-fundedhealthcare?
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19
#thinkPOLICY
A 75-YEAR-OLD MAN TODAY USES DOUBLE THE MEDICARE-FUNDED SERVICES HIS 75-YEAR-OLD FATHER WOULD HAVE USED TWO DECADES AGO
SHARE THE RISKProfHallsayshealth-carefinancingrequires
someformof“insurance”.“Theriskofillness
isveryuncertain.Wedon’tknowwhichof
uswillgetsickandwhichofuswillgetsick
withreallyexpensivediseases,”shesays.
“Thereforeweneedsomeformofrisk
‘pooling’–weneedtosharetherisk.”
Butweknowthatifweleavehealth
financingtothestandardinsurancemarket,
someindividualswillbeexcludedfrom
coverbecausetheyaredeemedtoohigha
risk.“Wealsoknow–andcandemonstrate
theoreticallyverysatisfactorily–thatthose
peoplewhoarelowrisks,intermsoftheir
chanceofillness,willbuylesscoverthan
thelevelthatwouldoptimisetheirwelfare.”
Governmentfinancingofhealthcare
isalsoaformofinsurance,ProfHallsays.
“Andit’sperfectlylogicalandrationalto
wantgovernmenttoprovidethat–notas
anentitlement,butasinsurancepaidfor
byourtaxes.”
Ifdeathandtaxesareinevitable,ProfHall
says,thenthemessageisthatweneedto
reclaimdeathandhowwedie,andweneed
toreclaimourtaxesandwhattheyarefor.
“Weneedtoknowexactlywhatwe
wanttohappentousinthelastpartofour
lives,andifwebelievethemosteffective
andfairestwaytoprovidehealthcareis
throughgovernment-providedinsurance
thenthatisnotanentitlement,itisthe
government’sjob.”
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#thinkINNOVATION
Professor Sam Bucolo
It’s a stark statistic: over the past 50 years themanufacturingsectorhasshrunkfrom
nearlyathirdofAustralia’seconomytojust
10percent.It’snowonderthedecisionby
thebigcarmakerstoceaseoperationsin
thiscountrybetweennowand2017has
becomeengravedonthepublicmindas
“thedeathofmanufacturing”.
There’snodenyingthechallenges
Australianmanufacturers,bigand
small,face.Yetit’salsotruethatsome
manufacturershavemanagedtoprosper
despitehurdlessuchasrelativelyhigh
labourcostsandthestubbornlystrong
Australiandollar.
Whydothosebusinessessucceed
insuchanenvironmentwhenothers
fail?Whydosomebetternavigatethe
challengesthanothers?That’sthe
questionProfessorSamBucoloofthe
UniversityofTechnology,Sydney,andDr
PeterKingofAustralia’snationalscience
agency,theCSIRO,soughttoanswerin
researchforthefederalgovernment.
Whattheyfoundwereanumber
ofattributesthatthesesuccessful
manufacturershadincommon,centering
onwhathasbeendubbeda“design-led”
approachtoinnovation.
“InAustralia,weareverygoodat
technology-driveninnovationandwe’re
verygoodatefficiency-driveninnovation,”
saysBucolo,ProfessorofDesign
InnovationatUTSandco-founderwith
ProfessorKeesDorstofitsnewDesign
InnovationResearchCentre(DI:rc).
Butinahigh-costenvironmentthere’s
littlepointintryingtocompeteonprice.
“Inthisenvironment,it’snon-technological
innovation–aroundcustomerexperience,
forexample–that’sjustasimportant,ifnot
moreimportant,”ProfBucolosays.
InthereportDesigningforManufacturing
Competitiveness,ProfBucoloandDrKing,
managerofDesignIntegrationinCSIRO’s
FutureManufacturingFlagship,lookat
14high-performing,globallycompetitive
manufacturingfirmsthatusedesign
principlesinareasasdiverseasmining
equipmentandmicrophones.
TheseincludeRØDE,whoseaward-
winningmicrophonesareusedinmore
than100countries;Codan,whichsupplies
sophisticatedcommunicationsequipment
andmetaldetectors;andSuperior,whose
flotationdevicesareusedinmarineand
miningoperations.
Whattheresearchersfoundwasthat
thesebusinesseshadfivethingsincommon.
First,theywereclearabouttheirpurpose.
ProfBucologivestheexampleofabusiness
that“killed”181projectssoitcouldredirect
itseffortsintojustfour.Ittookclarity–and
leadership–toshutthoseprojectsdown.»
Why do some businesses succeed in a challenging environment when others fail? A different way of thinking may be the answer.
NON-TECHNOLOGICAL INNOVATION IS JUST AS IMPORTANT, IF NOT MORE IMPORTANT
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22
Second,thesuccessfulbusinesseshad
“become”theirmarket.They’dimmersed
themselvesintheworldoftheircustomers,
andtheircustomers’customers.“Everyone
ofthemgotoutoftheofficeandoutoftheir
labs,”ProfBucolosays–notjustthesales
teambutalsotheC-suite.“Itwasabout
activelysharingtheirideasandprovoking
thecustomer,”hesays.
Inaddition,theywerethe“disruptor”,
ratherthanbeingdisruptedbyothers.“All
ofthemwouldactivelydisruptthemselves,
bysaying,‘Ifwe’renotthinkingaboutthis
maybeourcompetitorsare’.Theylookedat
alternativefutures.”
Theyfocusedontheverticalintegration
oftheirbusinessmodels–breakingtheir
businessmodelsapartandputtingthem
togetheragaininnewways.
Finally,they“owned”thechange
experience,investingtime,peopleand
financialresources.“Thishastohavesenior
leadersupportandworkitswaythroughthe
organisation,”ProfBucolosays.“Youcan’t
outsourcethis.”
Allfiveoftheseprinciplesneedtobe
presentforsuccess,notjustoneortwo,Prof
Bucolosaysoftheframeworkthatcame
togetherintheDesigningforManufacturing
Competitivenessreport.
DESIGN AS A VERBUnderpinningthisframeworkisthe
applicationofpracticesborrowed
fromthedesignworld.
ProfBucoloisaformerindustrial
designerwhobecamefrustratedthathe
was“designingsolutionsforthewrong
problems”.Forbusiness,designshouldnot
beanounbutaverb,hesays.“It’saprocess,
andquitearigorousprocess.”
Sohowdoyouthinklikeadesigner?
“Designthinkers”startwithempathy,Prof
Bucolosays.“It’sapeople-firstapproach.”
Designthinkingisalsointegrative;designers
trytodrawasmanythreadstogetheras
possible,hesays.
Designersarealsoveryoptimistic.
“Theyalwaysassumethere’sonemore
answerandtheykeepbuilding.Theyuse
experimentsandtheyconstantlylearn–
thatlearningcultureiscritical,”hesays.
Anddesignersareverycollaborative.
Withtraditionalbusinessthinking,“asa
leaderyouarerewardedforgettingtothe
answerfirst.Yourationaliseyourthought
process,takeoutallthevariablesandtryto
gettotheonerightanswer.Designthinkers
dosomethingverydifferent.”
Theyconstantlyreframeproblems,he
says,drawingoutthecontradictionsand
constraints,andtheyrecognisetherewill
bemultipleanswers.
THEY ALWAYS ASSUME THERE’S ONE MORE ANSWER AND THEY KEEP BUILDING
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23
#thinkINNOVATION
GLOBAL LEADER NigelSpork,managingdirectorofCentor,a
companyfoundedmorethan60yearsago
byhisgrandfather,hasbeenthroughthis
design-ledinnovationprocess.Asaresult,
Centorhasjourneyedfromfinancialdistress
in1997tobecomeagloballeaderinwindow
anddoorsystems.
Itwasthebusinessthatthreeyears
agocancelled181projectstofree
23full-timestaffto,inSpork’swords,
“designanewfuture”.Theresultwasnot
justanewdoorbutanewcategoryof
door–theIntegratedDoorthatincludes
featuressuchasinsectscreensaspart
ofthedesignratherthanhavingthem
separateandvisibleevenwhennotin
use.Theprojecthasproduced16patent
applicationsandrecognitionincludinga
UKGrandDesignsaward.
Today,SporkisaDesignLedInnovation
“champion”sharinghisexperiences
throughtheDesignThinkingforExport&
CompetitivenessHub,whichisaninitiative
ofMETA(ManufacturingExcellence
TaskforceAustralia)thatisbeingfacilitated
byDI:rcatUTS.
AnotherMETADesignLedInnovation
ChampionisNickWhite,chiefexecutive
ofGourmetGarden,whorealisedabout
fiveyearsagothecompanyneededto
dosomethingdifferenttogetbeyondthe
15percentmarketpenetrationithad
achievedwithitsherbproducts,knownfor
theirtubepackaging.
Thedesign-ledinnovationprocessthat
followedresultedinaworld-firsttechnology:
lightlydriedherbsandspiceswhichrefresh
totheirnaturalstatewhenusedincooking.
Theirinnovativepackagingwona“bestin
category”awardintheAustralianGood
DesignAwards.
Thereisevidencethatbusinesseslike
these,thattakethetimetorethink,do
endupachievinggreatergrowth,Prof
Bucolosays.“We’veseenthatintheUS,
theUKandNewZealandandnowwe’re
seeingithere.”
Driving change
Tapped on the shoulder, 10 of BMW’s best engineers were pulled out of its huge research and development campus in Munich and closeted away in an innovation “war room” carved out of a dirty car assembly shop.
It was 2007 and BMW had just announced a new strategic plan to address challenges such as rising materials prices, the depletion of fossil fuel reserves, stricter regulation, growing environmental awareness and limits on mobility in densely populated areas.
The team of 10 was tasked with “reshaping the future” and nothing was off limits, says Volker Richter, BMW vice-president for Customer-Focused Quality Management and today an international member of UTS Business School’s Advisory Board.
The German manufacturer had decided its strategic objective was to be “the leading provider of premium products and premium services for individual mobility”. In other words, it didn’t just sell cars, it sold mobility; it didn’t just sell products, it sold services.
“This was a revolution,” Richter says, and it opened up lots of possibilities. “All of a sudden the car itself was no longer the only solution.”
Given the freedom to imagine a new future, the hand-picked team focused in on the electric car, lightweight carbon fibre-reinforced plastic (CFRP) as a material and, longer term, fuel-cell technology.
The public result of their work was the new BMW i3 and BMW i8. On the factory floor, it was a new production process. The traditional linear movement from press shop to body shop to paint shop to assembly was replaced with the simultaneous production of two assemblies to be joined at the end – halving production time.
The third part of the equation was services, with BMW innovating around leasing and add-ons such as parking apps.
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24
Inbuilt obsolescence is obsolete – welcome to the new industrial model known as the circular economy.
The circular economy is an idea that has beengainingtractioninbusiness,political
andenvironmentalcircles.Itwasthesubject
ofareportreleasedattheinfluentialWorld
EconomicForumin2014andithasearned
itsownchapterinChina’sfive-yearplan.
Prominentbusinessessuchas
electronicsgiantPhilipsandconsumer
productsmultinationalUnileverareamong
thosebuildingitsprinciplesintotheir
operations,tacklingnaturalresourcelimits
withnewwaysofdoingbusiness.
InAustralia,it’saconceptthatunderpins
thethree-yearWealthfromWasteresearch
collaborationtargetingthe$2billionayear
losttotheAustralianeconomyfromfailure
torecyclewastemetals.
Butthecirculareconomyisn’tjust
aboutrecycling,saysUTSBusinessSchool’s
ProfessorofSustainableEnterprise,
SuzanneBenn.Thisnewmodelofindustrial
productionrequiresanewwayofthinking,
fromdesign,throughproduction,andin
useandreuse.
Currently,thedominantmodeofmaking
andusingthingsinoureconomyinvolves
diggingupresourcestomakeproductsand
buildinfrastructure,thenlaterdiscarding
thosematerialsaslandfillorrecyclingthem,
saysAssociateProfessorDamienGiurcoof
theInstituteofSustainableFuturesatthe
UniversityofTechnology,Sydney.“Thisisa
‘take,makeandmostlydispose’economy.”
Manypeoplemightbesurprised–and
concerned–toknowthat,globally,only
about20percentofthevalueofmaterials
usedintheconsumergoodssectoris
recoveredwhile80percentgoestowaste.
InAustralia,abouthalfofourwasteis
recycledbutthevolumeofwastegoing
intolandfillcontinuestorisebecauseour
economicoutputisgrowingatthesame
time.Sorecyclingisn’ttheansweronitsown,
ProfBennsays.“Oftenwearethrowingaway
valuableresourcesinthislinearmodel.”»
CIRCLE
Professor Suzanne Benn
Completingth
e
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THIS NEW MODEL OF INDUSTRIAL PRODUCTION REQUIRES A NEW WAY OF THINKING, FROM DESIGN, THROUGH PRODUCTION, AND IN USE AND REUSE
#thinkSUSTAINABILITY
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26
Thingscanonlygetworseasthreebillion
newmiddle-classconsumersenterthe
globalmarketinthenext15years,shesays.
CRADLE TO CRADLEThisiswherethecirculareconomycomes
in,buildingonideassuchas“cradleto
cradledesign”toaddresstheseunnecessary
resourcelosses.
“Morerecyclingispartofit,butthe
circulareconomygoesmuchfurther,”
ProfBennsays.“It’samodelofindustrial
productionthatinvolvesdesigning
productssotheylastlonger,sotheycan
berepairedandupgraded,sotheycanbe
reusedorresold,andsotheirmaterials
canbeusedinremanufacture.”Carpet
companiessuchasDesso,forexample,
havecreatedsystemstotakebackcarpet
fromitscustomerssothecompanycan
reuse,sellorrecycletheyarn.
“It’samore‘restorative’process,
wherecomponentsandmaterialscan
bereusedmanytimes,”ProfBennsays.
Inacirculareconomy,thereuseand
remanufacturingofproductsbecomes
standardpractice,sothatcompaniesstart
to“closetheloop”ontheiroperations,
ProfBennsays.
“It’sanexcitingapproachbecauseit
encouragesnewbusinessmodelsand
opensupopportunitiesforconvergence
withrevolutionarydigitalpracticeslike3D
printing,”saysAssocProfGiurco,whois
leadingtheUTScomponentoftheWealth
fromWasteproject.
Butitdoesrequireashiftinmindset
onthepartofbusinessesaccustomedto
generatingongoingrevenueviaplanned
orinbuiltobsolescence.
Oneexampleofthesortofswitch
thatmightbeinvolvedisforbusinesses
tostartsellingservicesinsteadof
products–forexample,selling“hours
behindthewheel”ratherthanselling
cars,whichiswhathappenswithcar-
shareschemessuchasGoGet,Hertz
24/7andGreenShareCar.
Thissortofchangeisstartingtohappen,
butthereportlaunchedbytheWEFandthe
EllenMcArthurFoundationatDavoswas
abouthowtoscaleupthecirculareconomy
model.TowardsaCircularEconomyspelled
outabusinesscasewherethecircular
economymodelwouldleadtoatleast
$1trillioninsavingsimmediately,and
potentiallymuchmoreinyearsahead,ina
worldeconomythat’s$72trillioninsize.
ThealliedProjectMainstream,which
involvespartnerssuchasPhilips,Unilever,
techcompanyCiscoandcarmakerRenault,
isdesignedtopromotecollaborationin
pursuitofthecirculareconomy,particularly
acrossthemassiveglobalsupplynetworks
ofkeyindustrysectors.
MAINTAIN PROFITSTheforecastsavingswouldflowfromwaste
reductionandlowercapitalrequirementsfor
businesses,ProfBennsays.
RemanufacturingandrecyclinginEurope,
forexample,employsmorethanonemillion
people.Renault,forone,hasfoundthatwhile
remanufacturingismorelabourintensive,
profitsaremaintainedbecauseofreduced
wasteandlowercapitalexpenses.
Otherpotentialbenefitsincludegreater
innovation,jobcreationandlessvolatilityin
thepricesofbusinessinputs.
“Anumberoffactorswillhelpdrive
progresstowardsacirculareconomy,”
Bennsays.“Businesseswillincreasingly
bemotivatedtodomorewithlessas
water,energyandresourcesbecomemore
expensiveincomingdecades.”
Companieshavealreadyexperienced
massivepricerisesforoil,energy,metals
andfoodsofarthiscentury.
“Inwhatisachallengingtimefor
manysectorsoftheAustralianeconomy,
unlockingthepotentialofthecircular
economywillensureAustraliancompanies
retaintheircompetitiveadvantage,”Prof
Bennsays.“Thecirculareconomyoffersthe
potentialofjobcreationandinnovationand
apathwaytoaresilienteconomicgrowth.”
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27
#thinkSUSTAINABILITY
Wealth From Waste
Wealth From Waste is a three-year research program that aims to identify viable options for reusing, remanufacturing and recycling metals from existing products in Australia.
Teams drawn from various universities and disciplines will undertake four distinct but interconnected research programs that draw academics from a range of disciplines to develop a better understanding of possible pathways for change. An international reference panel of 12 industry, government and research organisations has been established to help guide the direction of the work and provide expert review.
The Wealth from Waste Cluster will run from 2013-2016 and will seek input from industry, research, government, community and other stakeholders at different times over this period.
The cluster partnership is funded by the Commonwealth Scientific and Industry Research Organisation (CSIRO) Flagship Collaboration Fund, with significant investments by partner universities, including the University of Technology, Sydney (UTS), Monash University, the University of Queensland, Swinburne University of Technology, and Yale University in the United States.
The CIRCULAR ECONOMY model would lead to at least
$1 TRILLION IN SAVINGS IMMEDIATELY, and potentially much more IN YEARS AHEAD
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SELF
#thinkLEADERSHIP
Professor Emmanuel Josserand
There’s a long-held view that great leaders areborn,notmade–thatsomepeoplecome
intothisworldwithcertainpersonalitytraits
whichwillmakethemleadersinthefuture.
“Thatdoesn’tleavemuchroom
forimprovement,”saysProfessorof
ManagementandOrganisationStudies
EmmanuelJosserand.“Fortunately,
thereareothertheories.”
Ontheothersideofthetablearethose
whosubscribetothebehaviouraltheory
ofleadership.Leadershipisregardedas
somethingyoucanlearn,somethingyou
candevelop.
Thenthere’sthe“contingent”approachto
leadership,whichrecognisesthere’snotjust
onetypeofleaderoroneformofleadership,
saysProfJosserand,DirectoroftheCentre
forManagementandOrganisationStudies
(CMOS)atUTSBusinessSchool.
“Ittellsusthatsomebehavioursare
moreusefulinsomecontextsthanothers,
andthatyouhavetobeabletoadapt
yourbehaviourstospecificcontexts,”Prof
Josserandsays.“Thereisnotonlyonetype
ofleaderandonesetofcompetencies.There
aredifferentleadersindifferentsettings.”
Thesethreebroadtheoriesconverge
in“self-leadership”,anapproachthat
acknowledgesinherentstrengthsand
personalitytraits,butonlyasastartingpoint
fromwhichtodevelopleadershipbehaviours
adaptedtospecificcontexts.
“So,thestartingpointinself-leadership
istoknowone’sstrengthsandtodevelopa
leadershipstylethatwillworkinyourcontext.”
BORN LEADERSUnderthetraditional,deterministicviewof
leadership,somepeoplearebornleaders
whowillrisetohigherroles;peoplewill
naturallyfollowthem.Thisinvolvesa
“universal”imageofleadership,whereall
leadersarethesame,ProfJosserandsays.
TheimageisofaMartinLutherKingfigure
–someoneborntoriseabovethecrowd.
“Buttherearenotthatmanypeoplewhocan
achievethatlevelofleadership,andinmost
organisationsit’snotnecessarilywhatyou
areaimingfor,”hesays.“Youmightwantabit
ofthatinyourCEO,buttherearemanyother
characteristicsyoumightwanttodevelop.»
Is leadership inherent or learned? The concept of ‘self-leadership’ makes that question redundant.
SenseOF
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“Themoreweprogressourthinking
aboutleadership,themoreweunderstand
that,actually,oneofthekeycapabilitiesofa
leaderistobeabletochangeyourbehaviour
dependingonthesituation,onthecontext,
onthepeopleyou’retalkingto.
“Andso,progressively,leadership
theorieshavecometoincludeaspects
suchassituationalleadership,leadership
that’smoresupportive,leadershipthat’s
moredistributed.
“It’saboutleadershipasmentoring,
coaching,”hesays.“Wewantleaderswho
havethecapacitytodevelopothersas
leaders,ratherthantojustbefollowedby
others.Becauseattheendofthedaythat’s
whatyouwantifyouwantyourorganisation
tobesustainableandresilient.”
It’struethatsomeofusmightbemore
naturallygiftedatleadership,butitisstill
possibletodeveloptherightleadership
behavioursinspecificcontexts,Prof
Josserandsays,whichisamoreoptimistic
messagethanbeingtoldleadershipisa
birthrightonlyforsome.
“Allofuscanimproveourleadership
capabilitiesbyreflectingonwhoweare,who
weareinspecificcontexts,andthebestway
touseourassetstodevelopothersandto
achievemorepositiveoutcomes,”hesays.
OUTSIDE THE BOXThatmeansself-leadershipisnotasetof
genericskillstobelearned.It’snotabout
thefive,orsevenor10“goldenrulesof
leadership”.Norisitsomethingthatcanbe
taughtusingtraditionalclassroommethods
orpickedupatatwo-dayconference.
“Leadershipisstillapproachedinterms
of‘training’andIdon’tthinktrainingis
theanswer,”ProfJosserandsays.“Thisis
aboutself-reflectionandreflexivity–the
capacitytoquestionassumptionsabout
others,assumptionsaboutthesituation,
assumptionsaboutwhoweare.
“Ifyouwantto‘thinkoutsidethebox’,
ifyouwanttocomeupwithnewsolutions
thatwillbemorethanawin-lose,zero-sum
THERE IS NOT ONLY ONE TYPE OF LEADER AND ONE SET OF COMPETENCIES. THERE ARE DIFFERENT LEADERS IN DIFFERENT SETTINGS
The dark side
Business bestseller lists are heavy with tales of inspirational leadership, but a group of academics is gleaning lessons for management from the “dark side” by studying the methods of Pol Pot, the dictator responsible for Cambodia’s killing fields.
As commander of the Khmer Rouge, Pol Pot orchestrated the genocide of an estimated 1.7 million people, killing one in five in the then Kampuchea in five years, in pursuit of his “utopian vision” of a classless, peasant society.
Totalitarian regimes are not only social and political movements but also “organisational projects”, says the Executive Director of the Centre for Management and Organisation Studies at UTS Business School, Professor Stewart Clegg.
“The processes that produced [the killing fields] can and should be analysed,” says Prof Clegg, who is internationally recognised for his work on power. “Scholars in the field of organisational studies have an ethical responsibility to analyse not just the best in organisations but also the worst,” so we can avoid the excesses that organisations are capable of.
Prof Clegg and his fellow researchers have isolated 20 principles that underpin totalitarian organisations. For instance, leaders within such organisations demand conformity, maintain their distance, are selective in their “mercies” and favour certain people with perks and benefits. They also ensure a ceaseless round of activity leaves little room for reflection.
“These 20 principles or rules for constructing totalitarian institutions are phenomena that you might find present in everyday, normal organisations,” says Prof Clegg. “It just needs a little accentuation of some of these aspects to begin to produce ethically very dubious organisations.”
Prof Clegg says that, rather than having staff “singing from the same sheet”, very strong corporate cultures are to be avoided. “I don’t think they’re a very good idea. I think it’s from dissonance, from resistance, from polyphony that you get creativity and innovation.”
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31
#thinkLEADERSHIP
gamebutwhichwillactuallyaddvalueforall
parties,youneedtobecreative,youneedto
respectothers.Thereforeonekeyaspectis
toknowyourselfbetter.”
Inthesmall-groupself-leadership
programsatCMOS,participantsgothrough
afour-stagereflectionprocessovera
numberofmonths.
Isthissortofleadershipdevelopment
justfortheC-suite?ProfJosserandsaysif
wearetoclosetheworkplaceleadership
gapinAustraliaidentifiedinasuccession
ofreports,startingwithKarpinin1995,
itneedstostartmuchearlier.
“Ifwelookatwhatwearetryingto
achieveinorganisationstoday,Idon’tthink
wecanaffordtopaythetypesofsalarieswe
payforwellqualifiedandexperiencedpeople
tojustexecuteorders,”hesays.“Assoon
asyoustarttoallowpeopletomaketheir
owndecisionsaroundwhattheyaredoing,
assoonasyouaskthemtobecreativeand
developnewideas,youneedtodevelopin
themthistypeofself-reflection.”
Self-leadershipisparticularlyimportant
inenvironmentswherepeoplemusthavethe
highestethicalstandards,hesays.“We’ve
donesomeworkinthefinanceindustry;
ifyouthinkabouttheexampleofpeople
workingintradingrooms,therearethings
thatself-leadershipcoulddothatprocedures
willneverachieve.”
Measuring leadership
The Centre for Management and Organisation Studies at UTS Business School is leading a project to develop a new leadership “standard” for Australian managers.
The 18-month-long project is looking at the individual and organisational factors that drive leadership performance and will involve a survey of Australian managers and business leaders.
The findings of this research will form the basis of an Australian Leadership Capability Standard. This standard will provide a benchmark for businesses and inform the development of self-assessment and leadership auditing tools. The project will feed into the work of the federally funded Centre for Workplace Leadership, based at the University of Melbourne.
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TIGERor cub?
The conventional wisdom is that Chinese buyers are driving up Sydney house prices. But measuring the impact of foreign
buyers is more complex than you might think.
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33
#thinkFINANCE
Dr Lorenzo Casavecchia and Dr Adrian Lee
Australians love discussing house prices. Inthepastyear,though,thefocusofpublic
conversationturnedfromcapitalgains
toconcernthatforeignpurchaserswere
“pricingout”locals.Withanecdotalevidence
quicklybecomingconventionalwisdom,
tworesearchersdecidedtoinvestigate.
“Mediaattentionwasfocusingon
ChinesebuyingofAustralianrealestate,”
saysDrAdrianLee,aPostdoctoralResearch
FellowatUTSBusinessSchool.“Wewanted
totestwhethertherewasanytruthinthe
beliefthattheaverageChinesebuyerwas
willingtopaymorethanothers.”
WhatheandfellowresearcherDrLorenzo
Casavecchiafoundinapreliminarystudy
surprisedeventhem:analysisofarandom
sampleof74,000salesfoundthatindividual
Chinesebuyers–historically,atleast–paid
lessthantheaveragepurchaser.
Now,theresearchersareintheprocess
ofreplicatingthisinitialstudyacrossapool
of600,000transactions,andextendingit
tomorerecentsales,withtheresultsofthis
broaderinvestigationdueinearly2015.
Theresearcherswillinvestigatewhether
increasedactivitybyChinesebuyersasa
groupincreaseshouseprices,especiallyin
lightofmorerecentpolicychangesinChina.
“Inturn,thatwillallowustoconsiderwhat,
ifany,impacttherewouldbefromapolicy
shockinChina–suchasacredittightening
–onahousingmarketsuchasSydney,”Dr
Casavecchiasays.
DISCOUNT EFFECTIntheirpreliminarystudy,DrCasavecchia
andDrLeeuseddataonSydneyhomesales
frompropertyinformationserviceAPM
Pricefinderthatincludesnotonlythesale
price,transactiondateandsuburb,but
alsocharacteristicssuchasthenumber
ofbedrooms,andthebuyer’sname.
Whattheyfoundinthisfirststudywas
that,onaverage,between2000and2011,
Chinesebuyerspaidtwopercentlessthan
otherbuyers.Thatwasadiscountofnearly
$14,000ontheaveragepriceof$676,300
forthepropertiesinthesample.
Thiswasevenaftermakingallowances
forcharacteristicssuchashousingquality.
Thediscounteffectheldtrue–though
varyinginsize–whentheyranthenumbers
yearbyyear,peakingatafivepercent
discountin2006.Thediscountsurfaced
regardlessofwhetheralocationhadahigh
orlowpercentageofChinesebuyers,alarge
orsmallChinesecommunity,andregardless
ofwhetherasuburbwasprestigiousornot.
Andthiswasoveraperiodwhenthere
wasasignificantincreaseintheproportion
ofsalestoChinesebuyers.Inthestudy
sample,Chinesebuyersaccountedfor6.5
percentoftheyear2000salesbutdouble
thatby2010.
“Theimplicationofourfindingswasthat
Chinesebuyers,onaverage,donotoverpay
forhousing,ascommentarysuggests,”Dr
Casavecchiasays.Thiswillbetestedfurther,
however,intheextendedstudy.
Theresearchersadmittobeingsurprised
bytheoutcomeoftheinitialstudy,inlightof
thewidelyheldviewtothecontrary,butsay
thediscountwasstatisticallysignificantand
robustwhentested.
Italsomesheswiththeviewofthe
ReserveBankofAustralia,expressed
ataparliamentaryinquiryintoforeign
investmentinrealestate,thatrisingprices
inthe$5trillionresidentialpropertymarket
mainlyreflectincreaseddemandfrom
Australianresidentsandcitizens,partly
becauseoflowinterestrates.»
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DATA GAPSDrLeeandDrCasavecchiaalsopresented
theirresearchtotheinquiryin2014,sharing
withtheRBAtheviewthattherearegapsin
ourknowledgeofwhetherbuyersareforeign.
Fortheirstudy,theresearchershadto
relyonthesurnamesthatappearedinthe
APMdatatotrytoidentifyChinesebuyers.
TheysearchedforChinesesurnames,then
filteredthatlistbyremovingthoseChinese
surnamesthatwerealsocommonKorean
andVietnamesesurnames.
“Whenweappearedbeforetheinquirywe
wereaskedwhywewerepresentingresearch
thatlookedspecificallyatChinesebuyers,
astheinquirywasn’tfocusingoninvestors
fromanyparticularcountry,”DrLeesays.
“Onereasonwasthelackofdataonwhether
abuyerisaforeigner.
“Infact,theBureauofStatisticsandthe
ReserveBanktoldtheinquiryitisdifficultto
knowexactlyhowmuchforeignbuyingthere
is.TheForeignInvestmentReviewBoardtold
theinquiryitcollectsapprovalsbutdoesn’t
knowwhetherallapprovalsgoontobecome
actualpurchases.”
Theresearchersacknowledgethat
relyingonsurnamesmeanstheirinitialstudy
willhavecapturedsomelocalChinese-
Australians.“Wedon’tknowtheproportion,”
DrCasavecchiasays.“ButiflocalChinese
areaveryhighproportion,thenforeign
Chinesebuyersaretoosmallaproportion
tobeofconcern.Iftheyareaverylow
proportion,thenitjustconfirmsthatforeign
Chinesebuyersarenotaggressivebuyers,
onaverage,historically.”
DrLeesaysit’sclearfromtheirwork
sofarthatbetterqualityhousingdatais
needed.“Withoutsuchdataitisdifficult
tomakeinformedpolicy.”
WITHOUT SUCH DATA IT IS DIFFICULT TO MAKE INFORMED POLICY
#thinkFINANCE
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35
Much of the hype surrounding entrepreneurshiptodayfocuses
on“heroentrepreneurs”–the
stereotypicalimageofVirgin
founderRichardBransonand
hisextroverted,risk-taking
personality.Butthispicture
doesn’taccuratelyreflectday-
to-daylifeasanentrepreneur,
accordingtoresearchinto
Australianstart-ups.
AstudybyDrDanielleLogue
ofUTSBusinessSchoolbusts
themyththatentrepreneurs
succeedbecauseofinherent
personalitytraits–becausethey
arebornthatway.
Sure,theymaybedetermined
andpassionate,buttheyalso
followprocessesandpatterns
ofdevelopingandtestingideas,
buildingsupportnetworksand
developingcertaincommunication
andbusinessskills,shesays.
Forseveralmonths,DrLogue
observedandinterviewed
individualentrepreneursat
leadingincubatorAustralian
TechnologyParkInnovations
(ATPInnovations),whichcounts
UTSBusinessSchoolamongits
shareholders.Shetracedthe
journeysof20start-upfirms.
WhatDrLoguefoundwasthat
mostentrepreneursdidn’tfitthe
stereotypeofbeingyoungrisktakers.
PROBLEM SOLVERS“Whatwastheirtypicalcareer
journey?Manyoftheyounger
cohortemergedfromuniversity,
mainlyfromtechnicalfacultieslike
scienceandengineering,tofurther
developtheirowntechnologies,”
DrLoguesays.“Butmostofthe
entrepreneursinthestudycreated
start-upslaterintheircareers,
afterseeingaproblemintheir
industryandidentifyingasolution
butbeingunabletoimplementit
withinanorganisation.”
Thenotionthatbeingan
entrepreneurisahigh-risk/
high-rewardactivitywasnot
prominent,shesays.“Leaving
full-timeemploymentfora
start-upisrisky,butmanydoso
havingbeensuccessfulintheir
careersandwiththesecurityof
astrongprofessionalnetwork
andafallbackposition.”
Whiletheseentrepreneurswere
morecomfortablewithuncertainty
thansomepeoplemightbe,they
werenotnecessarilywhatothers
mightconsiderrisktakers.
Ratherthanbeing“born”
entrepreneurs,thestudy’s
subjectstalkedabouttheneed
todevelopspecificskillsin
marketingandnetworking,suchas
learninghowtoarticulateavalue
proposition,howtounderstand
theneedsofthemarket,howto
pitchandsellanidea,andhow
topersuadeinvestorsofthe
meritsofanidea,DrLoguesays.
ECOSYSTEMDrLogue’sresearchalsolooked
athowentrepreneursmeasure
andcommunicatesuccess(to
eachotherandtoinvestors),
theartandscienceofvaluing
start-ups,andthestructureof
entrepreneurialnetworks.
Suchinsightsintothe
entrepreneurialecosystemare
neededasgovernmentsconsider
waystosupportinnovationin
Australia,DrLoguesays.
“Abetterunderstandingof
therealitiesofentrepreneurial
lifeinAustraliawillleadtobetter
informedindustrypolicy,and
perhapsincreasedsupport
foranecosystemthatisakey
driveroffuturegrowthand
developmentforAustralia.”
#thinkENTREPRENEURSHIP
Insights into the real life of entrepreneurs are needed so they get the support they need.
TheHEROmyth
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36
Making
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37
Markets don’t always work as intended. Whilederegulationofthephoneindustry,
forexample,hasbroughtgreatbenefitsfor
consumers,theglobalfinancialcrisisshows
whatcanhappenwhenmarketsgowrong.
Somemarketsjustdefytheusuallogic
–thepopularityofopen-sourcesoftware,
forexample,seemscountertostandard
economictheoriesabouttheroleof
incentivesandpropertyrights.
Thisiswheretherelativelynewfieldof
“marketdesign”comesin.“Marketdesign
studieswhatmakesinstitutionsworkand
howtofixthemwhentheydon’t,”says
ProfessorJacobGoeree,Directorofthenew
CentreforPolicyandMarketDesignatUTS
BusinessSchool.Besidesstudyingexisting
institutions,marketdesignalsoprovidesthe
toolstocreatenewones,hesays.
“It’slikethedifferencebetweenstudying
biologyasanabstract,academictopicand
atsomepointwantingtodosomething
goodwithit,perhapsbybecomingamedical
doctor,”ProfGoereesays.“Amarketdesigner
issometimesthecreatorofamarketand
sometimesthedoctorofamarket.”
Marketdesigncanbefoundin
settingsasdiverseasGoogleads,eBay
recommendationsystems,crowdsourcing
platforms,kidneyexchangeprograms,
fishingrights,theprivatisationofpublic
assets,schemestoreducegreenhouse
gasemissions,andvoting.Marketdesign
drawsoninsightsfromgametheory,
experimentaleconomics,computer
scienceandoperationsresearch.“It’s
aninterdisciplinaryfieldwheregreat
synergiesarerealisedwhenresearchers
withdifferentbackgroundscome
together,”ProfGoereeexplains.
ENGINEERING APPROACHInmarketdesignthereareno“one-size-fits-
all”solutionssinceoftenthedevilisinthe
detail,ProfGoereesays.“Justasthedesign
ofanewairplanerequiresknowledgeof
manyengineeringdetailsbesidesBernoulli’s
basicprinciple,designingnewinstitutions
requiresmorethantheoreticalinsights
alone,”hesays.
Andjustasanewlydesignedplane
wouldn’tbeputtocommercialusewithout
extensivewind-tunneltesting,proposalsto
improveeconomicandsocialinstitutionsare
scrutinisedinlaboratoryexperimentsbefore
beingimplemented.This“engineering”
approachtomarketdesignensuresthat
newlycreatedinstitutionsworkwellin
practice,notjustintheory.
“Ineconomics,wehavepowerful
theoreticalmodelsabouthowpeopleshould
bidinauctions,forinstance,”ProfGoeree
says.“Butthenthere’stherealworld–how
peopleactuallydobid.Anybodywhohasbid
foranapartmenttheyloveknowstheymay
nothaveexactlyfollowedthetheoretical
model.Yougetexcited,youreallywanttowin
thisthing.Youtellyourself,‘Ishouldstop’–
butyoudon’t.”»
#thinkECONOMICS
There are no ‘one size fits all’ solutions in market design, a relatively new
branch of economics aimed at finding better ways to achieve the goals of government, business and society.
Professor Jacob Goeree
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38
Soanewbreedofeconomicscientistsis
movingtheirpracticeclosertothepractices
foundinthenaturalsciencesbyconducting
“experimentaleconomics”.
“Inexperimentaleconomics,wetake
peopleintoalaboratoryandimplement
onthecomputerscreenthesituationwe’re
interestedin.Iworkalotonauctions,for
instance.Soanexperimentmightinvolve
havingpeoplemakeon-screenbidsunder
differentauctionconditions.Thiswaywe
cancomparedifferentauctiontypesina
verycontrolledway.”
Thisispreciselywhathedidwhile
atCaltech(theCaliforniaInstituteof
TechnologyinLosAngeles)intheUnited
States,whereheworkedwiththeFederal
CommunicationsCommissionondesigning
the2008auctionofthe700MHzspectrum.
Theauctionofthisspectrum–airwaves
abandonedasUStelevisionmovedfrom
analogtodigital–wasdescribedatthe
timeasbeingthemostsignificantairwave
auctioninUShistory.
THE WHOLE PIEProfGoereedesignedabiddingmechanism
foroneparticularpartoftheauction,using
a“hierarchy”oflicencepackages.Potential
buyerscouldbidforindividualpiecesofthe
spectrumonofferorthecompletepackage
oflicencesasawhole.
TheprinciplebehindtheHierarchical
PackageBiddingsystemhecameupwith
isrelativelysimple:Somebuyerswillbid
moreifit’sthe“pie”asawholethatthey’re
beingoffered;they’llpaylessifforcedtobid
onindividual“slices”inthehopeofending
upwiththewholepiebutwiththeriskof
perhapsfallingshort.
ProfGoereetestedhisideasforthis
hierarchicalauctionsysteminthesortof
behaviourallabincludedintheDrChau
ChakWingBuilding,thenew,FrankGehry-
designedhomeofUTSBusinessSchool.
Caltechstudentswerebroughtintoa
computerlab,placedinfrontofscreens
andaskedtoplacebidsundervarious
parameters.Theyearnedreal,butmodest
sumsiftheyhadthewinningbid.
Intherealworld,inAuction73oftheFCC
sale,companieswerepermittedtobidfor
anyof12individuallicencesorforapackage
dealthatwouldgivethemcoast-to-coast
spectrumcoverage–somethingofgreat
valuetobigtelcoslikeVerizon.Thispartof
theauctionendedupgeneratingaquarter
ofthetotal$US19billionraised.
Thefishingindustryisanotherplace
wheremarketdesignisbeingused
aroundtheworld,toaddresstheproblem
ofoverfishing.Theissuehereishowto
designgovernmentbuybackschemesthat
removetheleastefficientboats–rather
thanthebestfishingbusinesses–from
theindustry,andatnottoohighacost
tothegovernment,ProfGoereesays.
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39
“Thisindustryisspecialbecauseit
includespeopleforwhomfishingismore
ofalifestylethanabusiness,aswell
aspeoplewhofishefficientlyandwith
profit.Sohowdowedesignschemes
whereallofthesepeopleknowtheywill
bebetteroff,whethertheystayorgo?”
Emissionstradingschemesareanother
areaofmarketdesign.IntheUS,Prof
Goereewasinvolvedinsettingupa“cap
andtrade”marketforgreenhousegas
emissionpermitsforagroupofnorth-east
statesthatweren’twillingtowaitfora
nationalprogramoncarbon.
TheRegionalGreenhouseGasInitiative
capsandreducesCO2emissionsfromthe
powersector.Thefundsthestatesraised
fromtheinitialauctionofpermits–where
ProfGoereeadvised–wereinvestedin
energyefficiency,renewableenergyand
otherconsumerbenefitprograms.
KIDNEY EXCHANGEButmarketdesignisn’talwaysabout
marketsthatinvolvemoney.ProfGoeree
givestheexampleofakidneyexchange
programdesignedbyAlRoth,jointwinner
withLloydShapleyofthe2012NobelPrize
forEconomicsforhisworkonmarket
design.(ProfGoereesucceededRoth
aspresidentoftheEconomicScience
Association,theinternationalsocietyfor
experimentaleconomists.)
“Rothwasalreadyatheorist,abigname
inwhat’scalledmatchingtheory,”Prof
Goereesays.“Butheturnedtothepractical
problemofkidneys–theproblemofpeople
havingtowait,ondialysis,foradonorkidney
foralongtime.”
Heknewthatwhilefamilymembers
wouldbehappytodonateakidneytoa
lovedone,theirkidneymightnotmatch.
Meanwhile,thesamesituationmightarise
inanotherfamily,andathird,andsoon.
Maybethedonorkidneyinthethirdfamily
mightbeaperfectmatchforthepatientin
thefirst,butwhyshouldthatfamily’sdonor
givetheirkidneytoastranger?
Rothcameupwithasystemwhere
incompatibledonorscouldbeswappedwith
compatibleones,insingleormultiplepairs
ofdonorsandrecipients.
Australiahaditsfirstsuch“pairedkidney
exchange”in2014,withachainof12donors
andrecipientsundergoingsurgeryonthe
oneday.Sixkidneyswenttosixstrangers,
buteachofthedonorsknewtheirlovedone
wouldgetakidneyaspartofthecycle.
IntheUS,kidneytransplantshavesoared
asaresultofthisinnovation.
InSwitzerland,whereheestablished
theEngineeringSocialandEconomic
Institutions(ESEI)marketdesigncentreat
theUniversityofZurich,ProfGoereeand
histeamadvisedtheDutchandAustralian
governmentsonthedesignoftheir
spectrumauctionstoo.FortheUSTreasury,
hedevelopedareverseauctiontobuy
troubledassetsatthetimeofthesubprime
mortgagecrisisthatprecededtheglobal
financialcrisis.
InAustralia,heenvisagesprojectsthat
addressmajor,unresolveddesignproblems
suchashowgovernmentprocurement
processescouldbeusedtostimulate
innovation;howtoaddressthefactthat
somevoterscaremoreaboutaparticular
outcomethanothers;andhowtheelectricity
marketcouldbebetterdesignedinaneraof
“smart”meters.
“Practicaladviceforpolicymakers
andforbusinessisanaturaland
importantactivityforanymarketdesign
group,”ProfGoereesays.“Afterall,this
iswhereourtheoreticalandlaboratory
studiesareputintopractice.”
A MARKET DESIGNER IS SOMETIMES THE CREATOR OF A MARKET AND SOMETIMES THE DOCTOR OF A MARKET
#thinkECONOMICS
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41
#thinkMANAGEMENT
Rubbery figures don’t do anyone in the tourism
industry any favours. Now we have a way of knowing the true value of business
events to host destinations.
Dr Carmel Foley and Dr Deborah Edwards
moneyThe
trail
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42
The sorts of dollar figures bandied about in
connectionwithmajoreventscansometimes
beeyebrowraising.Thatmuch?Really?
Frequently,thesenumbersarebasedon
modelsthatincludecertainassumptions
–forinstance,thatforevery$1avisitor
spendsatavenueoreventthey’llspend,
say,afurther$3elsewhereintheeconomy.
Differentmodelswithdiffering
assumptionsmeanthatitisn’talways
possibletomakedirectandfaircomparisons
betweenevents,citiesandevencountries
whenitcomestotourism,yetaccurate
informationissomethingthat’svitalwhen
governmentsmakespendingdecisions.
“Expenditurestudiesarenotoriousfor
inflatingtheeconomicimpactofevents
onhostdestinations,”saysDrDeborah
Edwards,aSeniorResearchFellowwith
UTSBusinessSchool.
Now,DrEdwardsandcolleague
DrCarmelFoleyhavecomeupwithanew
measureofthevalueofbusinesseventsto
hostcities–onetheysaydoesn’t“inflate”
resultsbyusinggenerousdefinitionsof
eventspending.
DevelopedinpartnershipwithBusiness
EventsSydney(BESydney),thisnew
“inscope”expendituremethodology
isbelievedtobethefirsttoaccurately
measurethevalueof“newmoney”
generatedbybusinessevents.Itfocuses
onwhat’sknownasthefirst-round
expenditureeffectofabusinessevent.
Usingthismethod,spendingcountsonly
ifitisdirectlylinkedtotheevent.
“Theinscopeexpenditurecalculations
weuseareconservative,andwedon’tuse
economicmultipliers,”DrEdwardssays.
Thismeansspendingsuchasairfaresand
conferenceregistrationfeesareexcluded,
asisspendingbydelegateswhowere
comingtothedestinationanyway.
“Iftheindustrytakesonthismethodology
asthestandarditwillallowfairandtrue
comparisons,”saysDrFoley,aResearch
AssociateoftheAustralianCentreforEvent
ManagementatUTSBusinessSchool.
Inparticular,itwillallowuseful
comparisonstobemadebygovernments
andfundingagencieswhenmaking
decisionsaboutfinancialsupport.
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43
#thinkMANAGEMENT
Already,theresearchbyDrEdwardsand
DrFoleyhasfedintothebusinesscasefor
anewconventioncentreatDarlingHarbour
inSydney.
Applyingthemethodologytorecent
businesseventsinNSW,theUTSresearchers
foundthatinternationaldelegatesspend
anaverageof$694adayduringanevent,
andinterstatedelegates$493.
Asforlocaldelegates,themeasure
focusesonwhattheresearchersdub
“retained”localdelegates:thoselocals
whowouldhaveattendedtheeventeven
ifitwereheldoutsideNSW–asopposed
tothosewhoattendedjustbecauseit
happenedtobeathome.Thesedelegates
spend$319onaverage.
OTHER LEGACIESTheexpenditurestudybuildsonworld-
leadingresearchbyBusinessEvents
SydneyandUTSBusinessSchoolinto
thebenefitsandlegaciesofbusiness
events–notjustindollarterms,but
alsoingeneratingnewknowledgeand
partnerships,andsharingideasand
technologies,amongotherthings.
“Businesseventsshowcasethe
capacitiesofacity,theyenhance
reputations,interculturalbondsare
formedandnetworksarefostered,”Dr
Edwardssaysofthelonger-termbenefits.
Theresearchersarenowworkingon
morefullyquantifyingthevalueof
theseeconomicandsociallegacies.
“It’simportantthatgovernmentsand
communitiesunderstandthebenefitsthat
conferencesbringtotheirdestinations,so
theygettherightsupport,”DrFoleysays.
“Governmentsareinterestedin
thebottomline,andthebottomlineis
important,”DrEdwardsadds.“Butit’snot
justaboutshort-termdollargains.It’salso
abouttheselesstangiblebenefits–the‘long
tail’benefitsofbusinesseventsthatcanlead
tosustainedeconomicdevelopment.”
INTERNATIONAL DELEGATES SPEND AN AVERAGE OF $694 A DAY DURING AN EVENT, AND INTERSTATE DELEGATES $493
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44
SCANDALSchool for
Brands like to attach themselves to celebrities. But they need to know how to react to avoid becoming
collateral damage when the local footballer, or international film star, ends up in hot water.
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#thinkMARKETING
Associate Professor François Carrillat
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THERE IS A FEAR REACTION TO ANY FURTHER COMMENT – WHETHER DISTANCING OR SUPPORTIVE
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#thinkMARKETING
INVESTORS RESPOND MORE NEGATIVELY TO THE REACTIONS THAN TO THE ANNOUNCEMENT OF THE SCANDAL ITSELF
THERE IS A FEAR REACTION TO ANY FURTHER COMMENT – WHETHER DISTANCING OR SUPPORTIVE
The roll call of celebrities who’ve found themselvesinthenewsforallthewrong
reasonsisalongone:TigerWoods,Lance
Armstrong,OscarPistorius,RolfHarris…
It’sprobablynotrealistictoexpect
everyonetobeaGeorgeClooney–theactor
andhumanitarianwhosecachethasmade
coffeepodsahouseholditem–butthescale
ofrecentscandalscan’thavefailedtoshock.
Inthepastfiveyearsalone,golferTiger
Woods,cyclistLanceArmstrong,“Blade
Runner”OscarPistoriusandAustralian-born
entertainerRolfHarrishavebeenembroiled
inallegationsaroundinfidelity,doping,
manslaughterandindecentassault.
Sucheventsraisethequestionofwhata
businessshoulddowhenthepositiveglow
fromcelebrity–whetherlocalfootballer
orinternationalfilmstar–turnsnegative.
Howshouldcompaniesendorsedby
celebritiesreact?Shouldthecompanyissue
astatementofsupport?Shoulditbreakoff
therelationship?Shoulditsaynothingitall?
REPUTATION RISKCelebrityendorsementisamarketing
strategythatcanbringmanybenefits
tobrands.Butwhenthereputationofa
celebrityishurt,brandreputationcanbe
atriskaswell,saysAssociateProfessor
FrançoisCarrillat.
Thatcouldhurtthebottomlineifthe
loweredopinionofabusinessresultsin
consumersforgoingitsgoodsorservices.
Forlistedcompaniesandtheirinvestors,it
canmeanlossofvalueonthesharemarket
asinvestorsreacttothescandaltoo.
Howabusinessshouldrespondwill
dependtosomeextentonwhetherthe
celebrityhasdeniedtheallegations,whether
thepublicbelievesthosedenials,andhow
closelythebrandandthecelebrityare
connected,saysAssocProfCarrillat.
“Whenthere’sstrongevidencethat
thecelebrityisinthewrong,it’sgenerally
inthebrand’sbestinteresttoatleast
acknowledgetheallegations,”hesays.The
decisionbecomesalittlemorecomplicated,
however,forapubliclylistedcompany.
“Scandalsafflictingcelebritieshavebeen
showntolowerthesharepricesoffirms
associatedwiththem,”saysAssocProf
Carrillat,whohasbeenconductingresearch
inthisarea,investigatingthetrajectoryof
scandalsforpubliclylistedcompaniesinthe
UnitedStates–birthplaceofthecelebrity.
TheseincludeincidentssuchasJanet
Jackson’s“wardrobemalfunction”atthe
SuperBowlin2004andactorCharlie
Sheen’sarrestin2009forassaultinghis
wife.AffectedsponsorsrangefromAmerican
ExpresstoNikeandMcDonald’s.
Theresearchlookedathowfirms
responded:whetherthatwaswith“silence”
(whenabusinesschoosestosaynothing),
“disavowal”(ifanendorsementiscancelled,
forinstance)or“support”(wherethefirm
standsbythecelebrityinsomeway).
Inturn,theresearchersrecorded
whetherthecelebrityreactedwithsilence,
madeanapologyorissuedadenial.»
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48
RIPPLE EFFECT“Whatwelookedatwastherippleeffect
onsharepricesofthereactionbyafirmor
celebrity,notjusttheinitialimpactwhen
scandalstrikes,”AssocProfCarrillatsays.
Otherstudieshadsuggestedthat
scandalscaused“abnormal”fallsin
sharepricesonthedaytheinitialnews
broke.WhatAssocProfCarrillatandhis
collaboratorslookedatwaswhathappened
onthedaythecelebrity,orbusiness,
reactedtothescandal.Theyfoundthat
sharepricesexperiencedabnormalfalls
evengreaterthanthoseupontheinitial
newsofthescandal.
“Thissuggestsinvestorsrespondmore
negativelytothecompanyorcelebrity
reactionsthantotheannouncementofthe
scandalitself,”hesays.
What’smore,theimpactworsensthe
morecloselythebrandandthecelebrity
areconnectedinconsumers’minds–for
instance,whenasportsstarhasendorsed
asportsbrandratherthanahousehold
cleaningproduct.
“Sucha‘match-up’,whentheendorser
andthebrandfitwell,canbeverypotentin
marketing,butthisresearchsuggestssuch
anassociationcanbackfireinthecaseofa
scandal,”AssocProfCarrillatsays.
Perhapsthemostsignificantresultwas
that–contrarytoconventionalwisdom–
silencewasgolden.Disavowthecelebrity
orspeakupinsupport,eitherreactionwas
morenegativeforabusiness’sshareprice
thanjustsayingnothing.
“Anymore‘buzz’followingtheinitial
breakoutofthenegativeeventcauses
themarkettoreactinanegativeway,”
AssocProfCarrillatsays.“Thereisafear
reactiontoanyfurthercomment–whether
distancingorsupportive.”
Therefore,simplyweatheringthe
storminsilencemayprovethewisest
strategy,hesays–forpubliclylisted
companies,anyway.
Sep 1988ATHLETE
Ben Johnson disqualified for steroid
use after breaking 100m world record
Jan 1989SINGER
Madonna’s Like a Prayer video
condemned by Pope
Jul 1991BOXER
Mike Tyson arrested for rape
Aug 1993STAR
Michael Jackson accused of child abuse
Apr 1996ACTOR
Robert Downey Jr arrested for drug
possession
Jun 1997BOXER
Mike Tyson disqualified for biting
a piece out of his opponent’s ear
Feb 2004SINGER
Janet Jackson’s breast exposed
during Super Bowl performance
Nov 2009GOLFER
Tiger Woods admits to serial
infidelity
Dec 2009ACTOR
Charlie Sheen locked up for
assaulting wife
Jan 2013CYCLIST
Lance Armstrong admits to doping
Feb 2013BLADE RUNNER Oscar Pistorius
charged over death of girlfriend
Aug 2013ENTERTAINER
Rolf Harris charged
with indecent assault
Falling stars
#thinkMARKETING
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49
#thinkSOCIAL IMPACT
The economic and social value of community-basedorganisations
andvolunteeringinAustraliaisbeing
underestimated,accordingtoa
groupofUTSresearcherswhohave
comeupwithanewtooltobetter
appreciatesocialimpact.
Servicesarebeingmeasured
onlybytheirshort-term,dollar
replacementvalue,theresearchers
say,ratherthanfactoringinthelonger-
termandmultilayeredcontributions
oforganisationslikeSurfLifeSaving
Australia(SLSA).TheCosmopolitan
CivilSocieties(CCS)ResearchCentre
attheUniversityofTechnology,
Sydney,hasbeenworkingonasocial
impacttoolwiththehelpofSLSA.
Justover6millionAustraliansspend
timevolunteering,accordingtothe
BureauofStatistics.“Everyday
volunteersdevelopandimplement
solutionstoaddressvitalsocial
issuessuchashomelessness,safety
onthebeach,emergencyservices
andcarefortheelderlyandlessable,”
UTSBusinessSchoolresearcher
DrMelissaEdwardssays.
Governmentsandprivate
donorsrightlywanttoensurepublic
andphilanthropicfundsareused
efficientlyintheseoftenhighly
sophisticatedprograms,DrEdwards
notes.Thiscaninvolvetryingto
putadollarfigureontheimpact
ofaprogram–itsoutputsand
perhapsmonetisingthisasarate
ofreturnoninvestment.
Butthissortofmeasurement
doesn’ttakeintoaccounttheother
importantandmeaningfulimpacts
suchorganisationshave,asthey
create,buildandmaintainflourishing
civilsocieties.
HUMAN CAPITAL“Impactsarefeltfarbeyondthemere
deliveryofprogramsandreverberate
intothewidercommunity,”she
says.“Bytryingtomonetisethe
ratherqualitative,long-termand
multilayeredoutcomes,thetrue
valueofvolunteeringactivitiesand
ofthecoordinatingorganisationsis
largelyunderestimated.”
“Peoplewhoareactivecitizens,
throughvolunteering,support
andcreatecivilsociety,”shesays.
“Theyaretheinvisiblehandsof
socialprosperity.”
Thenew“ripplemodel”uses
statisticalindicatorstomakevisible
allthecontributionsorganisations
likeSLSAmake–ripplingoutfrom
theindividualandclubtowider
networksofpeopleandorganisations
andsocietyitself.TheProductivity
Commissionhasinthepastcited
SLSAasanexemplarforitsreporting,
forexamplebyvaluingthedirect
replacementcostofitsbeachpatrol
activities.ButaUTSsurveyofits
volunteers–fromdirectorstotoe-
in-the-sandmembers–uncovered
amuchbroaderanddeeperimpact.
VanessaBrownoftheSLSA
saystheripplemodelhashelped
theorganisationbetterunderstand
itswidersocialcontributionand
developmoreeffectivewaystoput
avalueonit.
“Wecouldputavalueon
thehoursvolunteered,thelives
saved,onthegearandequipment.
However,thesocialimpactisnotas
quantifiableandoursurflifesavers
doalotmore,”shesays.
“Thestudyhelpedustodefinea
wayinwhichwewillbeabletosee
thebenefitsmembersexperience
frombeingpartoftheirlocalsurfclub
…thedevelopmentofthishuman
capitalhaseffectsthatrippledout
intowidersociety.”
Asaresult,theSLSAisbetter
abletodemonstratehowitis
achievingitsmissionof“savinglives,
developinggreatAustraliansand
buildingbettercommunities”.
One in three Australians volunteer and that’s worth measuring properly.
The
hand
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50
INTEGRATED, FLEXIBLE COURSEWORKIntegrative and practical
approach–preparingstudents
foraworldthatdemandsmore
thanspecialistexpertiseina
particulardiscipline.
Reality-based rigour–ouraward-
winningacademicsbringamixof
industryexperienceandacademic
leadershipintotheclassroom,while
capstonesubjectsandinternships
allowstudentstodevelopsolutions
torealbusinessproblemsin
consultationwithindustrypartners.
OUR ACADEMIC PROGRAMSUndergraduate programs
• BachelorofBusiness
• BachelorofManagement
• BachelorofAccounting
• BachelorofBusiness
Administration
(Indigenousprogram)
• Combineddegreeswith
InternationalStudies,Creative
IntelligenceandInnovation,Law,
IT,Engineering,Science,Medical
ScienceandBiotechnology
Postgraduate programs
• GraduateCertificates,Graduate
DiplomasandMasterDegrees
• MBA
• ExecutiveMBA
• ProfessionalAccounting
• AccountingInformationSystems
• AccountingandFinance
• Finance
• QuantitativeFinance
• Marketing
• Management
• HumanResourceManagement
• StrategicSupplyChain
Management
• Not-For-ProfitandSocial
EnterpriseManagement
• ArtsManagement
• EventManagement
• SportManagement
• TourismManagement
INNOVATIVE LEARNING SPACES• Upto24/7accesstostate-of-the-art
teachingfacilities,labsandlearning
resourcesthroughoutthecampus
• UTSBusinessSchool’s
contemporaryandcollaborative
approachtoeducationhasbeen
embodiedinthedesignofitsnew
home,theDrChauChakWing
Building,designedbyinternationally
renownedarchitectFrankGehry.
The Dr Chau Chak Wing Building
ThenewhomeforUTSBusiness
Schoolfeatures:
• a240-seatpublicauditorium
• a120-seatcollaborative
theatrethatfacilitatesmultiple
formsofengagementincluding
presentations,collaborative
groupworkandtechnology-
enabledactivities
• 11seminar rooms,includinga
specialtradingroomseminar
room,featuringinteractivewhite
boardsandLCDsandflexible
learningspaces
• Twouniquehigh-techoval
classroomsthatenable
moreinteractiveengagement
betweenstudents
• ExecutiveEducationfloorfeaturing
customisable learning spaces
• General access computer areas
andstudentloungesthatfacilitate
individualandgroupstudy,
reflectionandrelaxation
• Over200officesand230
workstationsforacademic
andsupportstaff
a different school of thought
UTS WORLD RANKINGS
21st QS 2014 University Rankings, Top 50 under 50
47th
Top 100 under 50 universities, Times Higher Education World University rankings 2014
UTS BUSINESS SCHOOL RANKINGS
TOP 75
For employer reputation, QS World University Rankings 2014 – Social Sciences and Management
TOP 100
For Accounting and Finance, QS World University Subject Rankings 2014
TOP 150
For Economics and Econometrics, QS World University Subject Rankings 2014
TOP 200
Shanghai Jiao Tong Academic Ranking of World Universities in Economics/Business 2014
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51
ABOUT UTS
CONNECTING WITH ALUMNI AND INDUSTRY• Solve your complex business
problemswithourstudents
throughalivecasestudy
consultancywithinour
ExecutiveMBAorthecapstone
unitsinourundergraduateand
postgraduateprograms
• Develop your staff capacity
throughshortcourses,customised
learningsolutionsorwhole
postgraduatedegrees
• Tap into our academics’
expertiseviaaccessUTS,the
whollyownedconsultingarm
ofUTStoprovideindependent,
relevantandreal-world
knowledgewithimpact
• Discover,trialandrecruit the
best emerging talentin
yourfieldandtacklespecific
challengesfromanew
perspectivewitheitherone
talentedindividualorawhole
teamofdiverselyskilled
undergraduate interns
• Joinouradjunctprofessors
andshare your knowledge
withleadingstudentsthrough
guestlectures
• Enable the leaders of the future
tohavetheeducationexperience
theydeservethroughour
scholarshipsprogram
• Supporttheinitiatives
ofUTSandtheBusiness
Schoolbymakinga
philanthropic gifttofund
scholarships,teachingand
learning,andresearch.
Toliaisewithspecificstaffabout
thefollowingareaspleasevisit
www.business.uts.edu.auor
• AlumniRelations
• CareersandInternships
• DevelopmentandDonorRelations
• ExecutiveEducation
• ExternalEngagement
• InternationalRelations
• Marketing,Mediaand
Communications
EXECUTIVE EDUCATIONAGILE, ADAPTIVE, APPLIEDCreativity and Innovation–focused
onexecutionaswellasideas–
matchingtherightideawiththeright
businessmodelandtherightculture.
Short courses–includingLean
SixSigma,FinancialAcumen,
BigData/DataAnalytics.
Intrapreneurship and
Entrepreneurship–embracinga
leanstartupmethodologywhatever
yourorganisation.
Leadership and Management–
workingwithleadersacrossall
sectorstofosteragility,build
capabilities,createalegacyand
leadthroughtransformative
businessmodels.
Resilience and Positive practices–
individualandorganisational
resilienceandpositiveorganisational
scholarshiptoincreasewellbeing,
productivityandstaffretention.
EXCELLENCE IN RESEARCH
Knowledge with impact
Our research is not just about cutting edge research but its practical application to solving real problems faced by business and the wider community.
Top 5 Australian business schools
Excellence in Research for Australia 2012, with Australia’s strongest rankings for Applied Economics and Econometrics, and producing research at or above world standard in Accounting, Banking, Finance, Management and Marketing.
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