25 BRILLIANT YEARS

TECH STOCKSExposing the myths of valuation

MARKET DEFENCEA classic study by John Roberts

AUSTRALIAN GRADUATE SCHOOL OF MANAGEMENT MAGAZINE ISSUE: 2 ★ 2002

Newfocus

AUSTRALIAN GRADUATE SCHOOL OF MANAGEMENT MAGAZINE ISSUE: 2 ★ 2002

Rob Ferguson joins the AGSM

The opening of the AGSM’s new

premises in the Sydney CBD,

described in words and pictures on page 13, was an extremely important event for the

School. After years of consideration and planning, we have space in the business district to

call our own.The tangible benefits include being more convenient for MBA (Executive)

students and for participants in executive programs. It is also a clear signal that we are

serious about continuing to build our connections with the business community.

At the opening ceremony, AGSM board chairman David Hoare pointed out that the premises

have “symbolism as well as substance”.The design features of the space, including the

fittings, furniture and colours, were deliberately chosen to symbolise the AGSM’s blend

of academic learning and pragmatic delivery.The School’s readiness to take measured risk

in order to grow is also symbolic – it indicates our willingness to practise what we teach.

Perhaps the strongest symbolism is the AGSM’s acceptance of the new environment of

Australian higher education.

Dr Brendan Nelson, federal minister for Education, Science and Training, also spoke at the

opening ceremony. He emphasised Australia’s need for a higher education system with

institutions that are value adding, high quality, innovative, cost-effective and publicly

accountable. As an organisation that each year earns more than 90 per cent of its revenue

from fees, the AGSM has long understood the need to maintain these principles, and to

manage the occasional tensions between them.

The School can be justifiably proud of its self-reliance and its leadership. At the same time,

we must acknowledge that the environment is not going to get any easier. Continued

success will require continued effort, continued focus and a willingness to continue to take

measured risk.We will succeed, and our success will bring improved results for our clients,

our community and ourselves.

If you have not yet visited our new premises, I encourage you to do so. Stop by any

weekday between 9am and 9pm to see a substantial investment in services and facilities that

is symbolic of the School’s ability to move forward.

DEAN’S MESSAGE

Professor Michael Vitale

Dean and director

Australian Graduate School of Management

Our behaviour wears down path synapses in the brain, so change is stressful.— Rob Ferguson. See full story page 10.

AGSM Magazine is a publication for supporters of the AustralianGraduate School of Management, a School of both the University of New South Wales and the University of Sydney.

Publisher: professor Michael Vitale,AGSM dean

Editor: Debra Maynard

Design: Mayfly Graphics

Copy editor: Richard Podmore

Bush telegraphcorrespondent: Don Taylor

SEND Magazine contributions to: magazine@agsm.edu.au

Circulation enquiriesTel: (02) 9931 9240

AGSM contact points:

Media and communicationsTel: (02) 9931 9240

Alumni servicesTel: (02) 9931 9499/9284

Executive programsTel: (02) 9931 9333

MBA programsTel: (02) 9931 9412

Main switchboardTel: (02) 9931 9200

Web site: www.agsm.edu.au

Published for the AGSM by Debra Maynard & Associates Pty Ltd, 93 Bream StreetCoogee NSW 2034 Australia, Tel: (02) 9665 7182,Fax: (02) 9665 7186.

ISSN 1441-5437

Cover photo: Rob Ferguson, by Frank Lindner.

Copyright © AGSM 2002. All rights reserved. Thispublication may not, in whole or in part, be lent,copied, photocopied, reproduced, translated orreduced to any electronic medium or machinereadable form without the express writtenpermission of the publishers. While the publishershave taken all reasonable precautions and makeall reasonable efforts to ensure the accuracy of the material contained, articles express the personal opinion of the author and not necessarily that of the publishers or the AGSM.

ISSUE: 2 ★ 2002

www.agsm.edu.au

ContentsPAGE 16

Defending your territory: PAGE 20

NEWS2 Branching out

The alumni association has established new branchesin capital cities across Australia and in Hong Kong,Singapore and London.

3 World’s best The AGSM is classed among the world’s top 35 executive education providers.

4 Getting connected Budding entrepreneurs go to battle.

FEATURES10 Mind over machismo

Rob Ferguson talks about leadership,managing change and his role as AGSM executive-in-residence.

13 Looking good Sydney CBD campus and business centre delivers state-of-the-art facilities.

17 Not-for-profit strategiesWhat does it take to achieve sustainable competitive advantage in the disability services sector?

18 Team worksAlumni and students collaborate in a new team coaching initiative.

22 Competition: the Franklins caseDoing battle in the Australian supermarket sector.

SPECIAL14 The business of education

In the 1980s the AGSM steered its own course in theface of rising competition and growth constraints.

RESEARCH7 Back to basics for tech stocks

A new study dispels valuation myths.

DEPARTMENTS2 Upfront

25 Books26 Publications & papers 27 Faculty news28 Bush telegraph31 Alumni at large32 Corporate partners

▲

CBD Campus: PAGE 13

PH

OT

OG

RA

PH

: J

OH

N G

OL

LIN

GS

20 Defending the beachheadA classic case study in market defence strategy.

T he AGSM has launchedalumni associationbranches in five Australian

cities and in Hong Kong,Singapore and London as partof a long-term strategy tobroaden and invigorate thealumni association. In March,cocktail parties in Adelaide,Brisbane, Canberra, Melbourneand Perth launched eachbranch. Operating guidelinesand steering committees are inplace and each branch has beenallocated seed capital.Thesteering committees areresponsible for managing eachbranch and creating opportuni-ties for networking and profes-sional development.

Networking is already provingstronger as branch steeringcommittees work with theiralumni membership to organisehigh-profile speaker events.

The branch infrastructurewill make it easier tointroduce Life LongLearning programssuch as the Australia-wide alumni teamcoaching initiative onthe MBA (Executive)program (see story,pages 18–19).

Another importantinitiative is alumninetwork alliances withother business school commu-nities in Australia and overseas.Alliance discussions have begunwith Stanford Graduate Schoolof Business, which has alreadyagreed to welcome AGSMalumni at Stanford GSB alumnievents around the world.Alliance discussions are alsounder way with HarvardBusiness School.

“It is important that we

change the alumni associationculture from being names andaddresses on a database to afully-fledged and activecommunity.We want toencourage more interactionamong alumni and betweenalumni and the School at local,national and global levels,” saysCorene Strauss, associatedirector of alumni.

The branches aim toincrease the opportu-nities for alumni tomeet up in their homelocations to swapbusiness, social andcareer developmentknowledge. “We arecertainly off to a greatstart; we are alreadyexperiencing muchgreater success incontacting alumni, andit was great to see the

branch launches so wellsupported,” says Strauss.

One of the first newbranches making a success of networking is Singapore.Thanks to the enthusiasm of Samantha Mark (MBA Exec ’00), it held its first eventon 5 April 2002 – a jointdinner with MelbourneBusiness School’s alumni towelcome Australia’s new

deputy high commissioner inSingapore, Michael Wood.

“Having an alumni branch is especially important whenpeople have moved to othercountries and are faced with adifferent working culture andenvironment. It adds value beingable to share experiences andapproaches with others whohave an AGSM education andsimilar cultural background,”says Mark.

“The branch is a natural fornetworking; at our firstfunction we had alumni whohave just graduated, others whoare in start-up businesses, andquite a few alumni who hadleft Australia more than 10years ago who hadn’t heardfrom the alumni communityfor some time and were quiteexcited about this renewedcontact,” says Mark.

One of the advantages ofestablishing branches aroundAustralia is the ready-madenetwork for people whorelocate. Neill Wiffin (GMQ’99), who recently moved fromSydney to Melbourne withBaycorp Advantage, says: “I’mreally pleased to see this devel-opment; every opportunity todevelop a new network is agood one.”

upfrontNEWS UPDATE KEEPING YOU IN TOUCH WITH WHAT’S GOING ON AT THE AGSM

Having analumni branchis especially

important whenpeople have

moved to othercountries.

— Samantha Mark

ON THE WEBThis month we launchAGSM Magazine online tofurther enhance communi-cation. This first stepcreates a digital format ofmagazine stories andarticles. Go to:www.agsm.edu.au andclick on the AGSMMagazine link, or godirectly to:www.agsm.edu.au/magazine. We’d like toextend the site with linksto management informa-tion and other usefulpractitioner tools. Tell uswhat you think and whatyou want on the site by e-mailing:magazine@agsm.edu.au.

Also new this issue is ourfirst Letters column.Thank you to alumni whotook the time to write — itis great to have an oppor-tunity to publish yourviews. Keep the letterscoming by e-mailing:magazine@agsm.edu.au.

COMPETITION WINNERThe winner of last issue’sSnapshot Competition wasJanis Lander (formeradmissions administratorin the MBA programoffice). Thank you toeveryone who took part.The correct answer was: 1. Di Yerbury 2. BobVermeesch 3. PeterWilenski 4. David Midgley5. Bob Marks 6. MalcolmFisher 7. Philip Yetton 8. Lex Donaldson 9. JohnConybeare 10. Ray Ball 11. Howard Thomas 12. Chris Adam. For anupdate on these past andpresent faculty members,go to:www.agsm.edu.au/snapshot.

2 | AGSM I S S U E 2 • 2 0 0 2

JOINING FORCES (from right): CoreneStrauss, AGSM associate director of alumni,

met with Stanford GSB director of alumniLynne Reynolds and associate director

Laura Wilson in Stanford, California.

BRANCHING OUT

CORRECTION The first issue of theAustralian Journal ofManagement waspublished in 1976, not 1977as written in Issue: 1, 2002.

The AGSM is the only businessschool in Australia and Asia-

Pacific to be classed among theworld’s top 35 executive educationproviders in the latest ranking ofglobal business schools by theFinancial Times (UK).

The School’s capability indesigning customised programs forcompany executives – ranked 32ndin the world – raised its overallperformance to 33 out of 35 businessschool providers of executiveeducation. For non-degree openenrolment programs, the AGSMmaintained its 40th place from 2001.

New developments ■ The AGSM is rolling out severalnew initiatives in its open enrolmentexecutive education program in thesecond half of this year to meet theongoing needs of managers.■ A new Time Saver Series of

HEALTHY MARKETINGLast year I established a new foundation to raiseawareness of, and funds for, research into pre-eclampsia (high blood pressure in pregnancy) as a result of a marketing principles assignmentundertaken in my MBA (Executive).

Pre-eclampsia is a common killer of mothers andbabies in Australia.Women with pre-eclampsia cansuffer a stroke and liver and kidney damage if thedelivery of the baby is not timely, and the diseasevery often leads to premature birth of the baby.

The marketing assignment allowed me to examinethe possible funding streams, and to analyse andcompare their strengths, weaknesses and opportunitycosts. As a result, the foundation PEARLS (Pre-eclampsia Research Laboratories) is now up andrunning. It has the support of a major law firm, theWeb site is working (www. preeclampsia.org.au),and donations are gratefully received.

I would like to thank the AGSM’s marketinginstructor Lawrence Jackson for his guidance and support.

ANNEMARIE HENNESSY, PhD,Camperdown NSW

PEOPLE SKILLSIt was gratifying to read your article, “Bestemployers 40% ahead” in Issue 1, 2002, whichstated that: “The top 20 companies were found toexcel in leadership, employment offer, employeerecognition and accelerating employee develop-ment”.These, I feel, are the very basics that you needto offer as an employer in order to attract, retain andmotivate quality employees.

At Learned Friends, I have long advocated that ifwe treat our people well by providing recognitionand the opportunity for them to develop their skills,we will be rewarded by our employees attaininghigher levels of performance and this has definitelyproved to be the case. By managing our people withpassion and respect, allowing them to develop andgrow within their roles and within the company as a whole, and by rewarding and recognising themwhen they succeed, we greatly benefit from theirincreased efforts.

I look forward to reading more about this vitaltopic in future issues of AGSM Magazine.

RHONDA LIVINGSTON, managing director,Learned Friends, Sydney NSW

Letters

Letters are welcome. Please keep them short and include yourfull address and phone number for verification. E-mail: magazine@agsm.edu.au. Mail: The Editor, AGSM Magazine, Australian Graduate School of Management, UNSW, SYDNEY NSW 2052. Fax: (02) 9931 9539.

HISTORIC DINNER (above): Telstra chiefexecutive Dr Ziggy Zwitkowski, professorMichael Vitale, dean, and AGSM boardchairman David Hoare at the AGSM’s annualdinner in April. The dinner paid tribute to theAGSM’s 25th anniversary with speeches fromformer deans — professor Philip Brown (viavideo), professor Jeremy Davis and JohnFairfax Holdings chief executive Fred Hilmer.

MILESTONE (left): Dr Brendan Nelson,federal minister for Education, Science andTraining, officially opened the AGSM’s $3.1million Sydney CBD campus at No. 1 O’ConnellStreet on 1 May. “The new campus is a superbexample of enhancing the relationshipbetween higher education and business,” hesaid. (See story page 13.)

www.agsm.edu.au AGSM | 3

In world’s top 35 executive education programs,conducted early mornings, eveningsand weekends, starts in August.Programs confirmed include:ThePerformance Driven Company,Management of Technology, Financefor Executives, Building andMaintaining Corporate Reputation,and Achieving Client Loyalty inService Firms.■ A suite of 12 executive programsstarts in Hong Kong from July tomid-December.■ A total of 18 executive programshave been moved to the School’sCBD campus, some of which havebeen modified from residential toevening study formats to suit thevenue.■ Eight new programs are on offerfrom September to November.

For details on any of the above initiatives, call client services on (02) 9931 9333, or e-mail:enquiries@agsm.edu.au.

4 | AGSM I S S U E 2 • 2 0 0 2

Getting connectedThe richest student-run entrepreneurship

competition in Australia, AGSM’sConnector Business Planning Competition,is up and running for 2002. Once again,$35,000 in prize money is up for grabs forthe two best business plans.

The competition is open to anyone witha great idea or invention and/or excellentbusiness planning skills.Teams are requiredto include one student from the AGSM,UNSW or University of Sydney.

The organisers especially want to attractentries this year from researchers andinventors in fields as diverse as bioscience,engineering, computer science, fine artsand media and communications.

Last year’s winners successfullycombined unique research and ideas incomputer science and medical diagnostictechnology with business managementknow-how to clinch the judges’winning votes.

The 2002 competition will be officiallylaunched by major sponsor, DeutscheBank, on 1 August at The Scientia, UNSW.Throughout the competition, teams willbe supported by entrepreneurial skillsworkshops and mentors, and Connectorwill continue to run its monthly network-ing forums featuring external speakers.

Alumni are invited to become involvedin the competition as team mentors or asparticipants in student teams.Teammentoring is an initiative which isproving to be an important aspect of a successful competition.The BusinessPlanning Competition registrationdeadline is 5 August. For more information, go to:www.connector.agsm.edu.au.

Sheather, Wood win first research award

BRILLIANTCAREERS

Professors RobertWood (left) andSimon Sheather

receive the AGSM’s first

annual researchaward.

Michael Chaney, managing directorof Wesfarmers, delivered the first

of the AGSM’s 25th AnniversaryDistinguished Speaker Series lectures inMay. Using Wesfarmers as a case study,

and drawing on his 19 years with thecompany, he used the forum to“debunk a few management myths”.

He said misconceptions about whatit takes for a company to succeedincluded the views that: “companiesneed a grand vision; companies need toset growth targets; forecasting is auseful tool in decision-making; businessmanagement is a complex task;management allocates scarce capital tothose projects ranking highest by rate ofreturn; companies don’t add value bymaking unrelated acquisitions;conglomerates are not a desirable form

of corporate entity; and managersalways act rationally” – among others.

His views piqued the interest of theAustralian Financial Review, which ran ahalf-page article on his lecture.

Of the AGSM and the MBA degree,Chaney said: “I feel honoured to beinvited to address you in celebration ofthe 25th anniversary of this distin-guished institution, which I have alwaysconsidered Australia’s pre-eminentgraduate school of management.”

Chaney’s lecture will be availableonline from 30 July.To view, go to:www.agsm.edu.au/chaney.

In the newsMichael Chaney with

daughter Kate, who isstudying an MBA at the

AGSM, and wife Rose.

Professors Simon Sheather andRobert Wood share the first annual

AGSM research award.Their namesappear on a perpetual plaque, and theyshare a $3000 prize.The School’sresearch committee gives the award onthe basis of the quality and impact of afaculty member’s research career.

Professor Robert Wood pioneeredthe study of motivational processes oncomplex tasks in the field of organisa-tional behaviour. His experimentalresearch has contributed to an under-standing of how motivational andpersonality factors influence cognitiveeffort, information search and problem-solving strategies.

His work in social cognitive theoryhas contributed significantly to ourunderstanding of the psychologicalprocess through which situational andpersonality factors influence managerialproblem-solving. Other researchers havecited his work more than 1000 times.

Professor Simon Sheather has madefundamental contributions to statisticalmethodology in the fields of non-parametric and robust statistics. Hiswork has been cited more than 1000

times, and his methods have beenadopted by many researchers.

With M.C. Jones he developed the‘Sheather-Jones Bandwidth SelectionAlgorithm for Non-parametric DensityEstimation’. It is included in manystatistical software packages and, inparticular, as the Sheather-Jones Plug-In,(SJPI) in the world’s leading statisticalsoftware package, SAS/STAT.

This year also marks Sheather’sappointment by the federal minister ofEducation, Science and Technology tothe Australian Research Council’s ExpertAdvisory Committee on Mathematics,Information and CommunicationSciences.

“The AGSM places a high value onresearch excellence,” says professorEddie Anderson, research director. “It isfitting that we have a research awardthat acknowledges sustained excellencein research by our faculty.”

Professor Michael Vitale, dean, notesthat the prize is the same as the School’s teaching award. He says this is“… symbolic of the equal importancethat the AGSM attaches to its activities inteaching and in research.”

www.agsm.edu.au AGSM | 5

Working smarter Faculty and staff have revamped the MBA

(Executive) program to make it even more accessible and relevant to participants.

The new calendar will have three full sessions of 12weeks, with no summer session. Participants starting inFebruary 2003 can complete the first part of the programby May 2004 – just 16 months. Previously this requiredtwo years.

This change feeds into another improvement. Starting in2003 the executive year (EY) will have two intakes instead ofonly one. In the past, many participants finished the first partof the program mid-year then had to wait six months beforestarting their EY.The new calendar eliminates this delay.

By taking two courses every session, a disciplined,organised and energetic participant can complete theentire program in two-and-a-half years. Under thecurrent calendar, it would take a minimum of three years.

Greater flexibility in the program also comes from anexpanded choice of subjects. Participants can select froma number of new half courses designed to give them theoption to study more of their fields of interest.

The AGSM pioneered the part-time MBA (Executive)degree for Australians in 1989. Since then the programhas grown to 2010 participants nationwide. In November2001 the Financial Times (UK) ranked the AGSM program number one in Australia and Asia and 13th worldwide.

Key changes to the program for 2003Three full sessionsTwo intakes for executive year (EY)No summer sessionNo mid-session breaks New half-coursesNew analysis and statistics course

More scholarshipsThe AGSM is offering four Silver

Anniversary Scholarships, worth $25,000each, to mark the School’s 25th birthday.Open to local and international students,the scholarships aim to attract students fromsocial groups that have been traditionallyunder-represented.

A scholarship marketing campaign isunder way, specifically targeting prospectivestudents from the not-for-profit sector,women, people from disadvantaged back-grounds and those seeking re-entry to theworkforce.These new scholarships bring thetotal value of AGSM and corporate scholar-ships on offer this year to a record $700,000.

Application criteria for all scholarshipsare available on completion of enrolment inthe AGSM full-time MBA program.Theclosing date is 30 September 2002.

Tell a friend or colleague! Details are onthe AGSM’s Web site: www.agsm.edu.au.

CELEBRATING At a special event on 7 March to mark the AGSM’s 25th anniversary arefoundation alumni: (back row, from left) Chris McCulloch, Edward Magen, Adrian Dignam,Murray Player, John McMahon, James Beecher and Peter Schweinsberg; (middle row,from left) Ross Hutcherson, Graham Higham, Ian Stanwell, George Ivanov and DavidNathan; and (front row, from left) Janetta Matchett and Paul Greenwood.

In brief AGSM board appointments Businesswomen Ann Sherry ofWestpac Bank and consultant PattyAkopiantz have joined the AGSMboard. Sherry is group executiveresponsible for people performanceat Westpac Bank and chief executiveof the Bank of Melbourne. AtWestpac, Sherry has worked onchange management practices andleading-edge management develop-ment, as well as policy issuesincluding paid maternity leave andwork/family initiatives.

Akopiantz runs her own consult-ing business and is a director on theboard of Coles Myer. She wasformerly a senior consultant withMcKinsey & Co, and has more than15 years’ retail and marketing experience in both senioroperational and strategicroles in Australia and theUS. She holds an MBAfrom the Harvard Business School.

Top bankerAGSM board and advisorycouncil member, ANZchief executive JohnMcFarlane, was named the

best financial services executive in2002 at the Australian Banking andFinance Awards in May.

Hong Kong graduationOn 16 June, 65 AGSM students wereconferred with MBA, Master ofManagement and MBA (Executive)degrees at a ceremony at the GrandHyatt hotel. Guest speaker was HongKong business leader, Dr Victor Fung,group chairman of the Li and Funggroup of companies. Attending thegraduation were professor MichaelVitale, dean, and from the Universityof New South Wales – chancellor Dr John Yu, then vice-chancellorprofessor John Niland, and registrar and deputy principal Crystal Condous.

(Below, from left): graduates Ray Yip, LettyWong, Christina Hong, Elaine Chan, Willie Ng,Johnny Yuen, Ophelia Wong and William Kwok.

6 | AGSM I S S U E 2 • 2 0 0 1

Academic excellenceThe Simon Domberger Memorial

Prize was presented to SarahMagarey (MBA 2) by BrendaDomberger at a celebration of studentachievement at the AGSM in May.Theprize, for the best performance in theeconomics elective, IndustrialOrganisation, was among five prizesthat paid tribute to high academicachievement.

Professor Simon Domberger wasone of Australia’s leading economistsand a world-renowned scholar inthe field of outsourcing. He was afounding faculty member of theUniversity of Sydney’s GraduateSchool of Business and a deputy

director before it merged with theAGSM. He taught at the AGSM whileon a six-month sabbatical and isremembered as an inspiring teacher.

The other prize-winners were:Chong Poh (the Australian Instituteof Company Directors Prize for thebest performance by a student inYear 1 of the MBA); Joe Lai (theAustralian Finance Conference Prizefor the best performance in financein the MBA program, and theMalcolm Fisher Memorial Prize forthe best performance in theeconomics gateways); and IoleD’Angelo and Eric Germes (FarthingWest Prize for best performance inthe gateway course, OperationsManagement). ✪

MEMORIAL PRIZE(from left): Sarah Magarey is congratulated by Brenda Domberger.

For your diary18 July Singapore alumni might

like to catch the MBAprogram information evening inSingapore at the Shangri-La Hotel,Gardenia Room, 7pm.

29–30 July Learn how toleverage knowledge,

encourage innovation and facilitatechange in Building OrganisationalCapability, a two-day non-residentialexecutive program (Sydney).

26– 27 August PerformanceDiagnostic for Biotechnology

Organisations, a two-day programthat will help you avoid pitfalls andcapitalise on opportunities.August – December New TimeSaver Series (see page 3).

4– 6 September Audit andworkshop your leadership style

in The Advanced Leader Program.

19– 20 September CorporateCitizenship and the Triple

Bottom Line, a new two-day

Alliance breeds leadershipCorporate education has a new alliance – a

trans-Atlantic meeting of minds on the latestmanagement ideas, theory and techniques for thebenefit of senior Australian executives.

The AGSM’s latest executive leadership forum,Driving Corporate Growth, which broughttogether cutting edge contemporary managementthinking from the AGSM, Stanford GraduateSchool of Business and Melbourne BusinessSchool, reminded Tom Pearson, a director ofTelstra, “that I am still capable of learning and,more importantly, that I need time to learn”.

Another forum participant, Greg Adcock, aTelstra general manager, says the week-longresidential program “added a new perspective tothe way I view growth strategies and planning, andthe ‘time out’ has reminded me how much I enjoylearning and how much I have neglected it”.

It was the first time the AGSM has run aprogram for senior executives in an alliance withother business schools. According to professorMichael Vitale, dean, who gave an evening lectureon new economy business models, “participantfeedback on the forum was some of the best I’ve seen”.

One of the highlights of the week was a guestpresentation by Harvard Business School professorChristopher Bartlett. His 1998 book, Managing AcrossBorders:The Transnational Solution, was named by theFinancial Times (UK) as one of the 50 most influential business books of the 20th century.

Other presenters included Melbourne BusinessSchool dean Paul Rizzo, senior AGSM professorsJeremy Davis, Roger Collins, John Roberts andThomas Powell, and Stanford professors GeorgeFoster and Bruce McKern.

It was also the first time the AGSM sponsorednot-for-profit places on a senior executivecorporate program – which gave executives fromthe Benevolent Society and AFS International an opportunity to workshop business strategywith senior executives from Fosters,Westpac and Telstra.

executive program (Sydney); alsoconducted in Melbourne 17–18October.

24September Kim Beazley,former leader of the Australian

Labor Party, will give a lecture at theAGSM as part of the annual alumniLeadership Series.

14–15 October Managing Peoplefor Performance, taught by

professor Dennis Turner, is offered inMelbourne for the first time.

31October – 1 November Newexecutive program, Corporate

Entrepreneurship, is led by professorJulian Birkinshaw of LondonBusiness School.

For details on any of the above executive programs, call client services on (02) 9931 9333, or e-mail: enquiries@agsm.edu.au. For information about the Kim Beazleylecture, contact: alumni@agsm.edu.au(alumni will receive a formal invitationcloser to the event).

GRADUATION Sally Woodcelebrated conferment of her PhD (in statistics) with husband, AGSM professor Robert Wood, and children Jack and Daisy. A total of 273 students attended the graduation ceremonies. It was the third graduation ceremony of the AGSM as a managementschool of both the University of New South Wales andUniversity of Sydney.

www.agsm.edu.au AGSM | 7

Back to basics for tech stocksA new study commissioned by the Australian Stock Exchange reveals that company fundamentals have more influence than place of listing on tech stock valuations. Alan Valvasori* reports.

Aconcern frequently expressedby executives of Australianhigh-tech companies is thattheir home-based stockexchange systematically

undervalues their stocks when comparedwith major capital markets like the NASDAQin the US.

However, new research conducted by ajoint AGSM and Stanford Graduate School ofBusiness academic team strongly conteststhe belief that the US capital market valueshigh-tech companies higher than does thelocal market does.

“Our research has challenged thatpopular view,” says Baljit Sidhu, associateprofessor at the AGSM.

Working with Stanford’s professors GeorgeFoster and Ron Kasznik, Sidhu gathered sixyears worth of data from more than 2000high-tech companies in the US, the UK, Israeland Australia.The data revealed that the factorsthat most explained valuation differencesacross countries were profitability, leverage,company size and revenue growth rates.

The study was commissioned by theAustralian Stock Exchange (ASX) becausethere was a lack of empirical evidence aboutrelative valuations of listed companies acrossmarkets internationally, says Robert Bladier,national manager of strategic businessdevelopment at the ASX.

“Many market participants, includinglisted companies seeking to raise capitalIL

LU

ST

RA

TIO

N:

GR

EG

OR

Y B

AL

DW

IN

8 | AGSM I S S U E 2 • 2 0 0 2

RESEARCH

and some investors and intermediaries, oftenclaimed that the relative valuation for anequivalent firm was much higher in foreignmarkets,” says Bladier.

In asking the decisive question ofwhether it was ‘country’ or ‘company’variables that most affected the comparativevalue of tech stocks, the research team’sfindings came down firmly on the side ofcompany variables.

The report finds that a shifting of stocktrading location from Australia to an overseasmarket such as the NASDAQ, in and of itself,is unlikely to be a major factor in providinga more favourable market multiple to anAustralia-based stock.

A DIFFICULT SECTOR TO VALUERegionally or globally, tech stocks generallyinvolve more uncertainty when comparedwith mature industries. High growthvaluation calculations often involve highlysubjective projections of the company’sfuture performance.

Three related factors make it difficult tovalue high-tech stocks. First, many are newand have losses or very small profits for thefirst few years. Second, these companies aregrowing rapidly.Third, by their very nature,high-tech stocks are highly volatile and theirfate is uncertain.

SIZE MATTERSStudy team member professor Foster, anAustralian expatriate who has consultedwidely with firms in the Silicon Valley, saysthe Australian high-tech sector faces somesizeable challenges (see Key Capital MarketStatistics table).

“Australian high-tech firms are generallydisadvantaged because they are small players

The data revealed that thefactors that most explainedvaluation differences acrosscountries were profitability,leverage, company size and

revenue growth rates.

PROFITABILITY PROBLEMS The front-end investment nature of key high-tech areas (such as software), coupledwith the extreme pressure for rapid growth (in part from venture capitalists), createssizeable profitability challenges for many early-stage high-tech companies. Selectedcompanies in non-high-tech sectors are less likely to be loss-making enterprises.

Selected percentages of high-tech and non-high-tech companies with negative netincome in the 1990—2000 period range as follows:

■ High-tech sector

1994 1997 2000

Australia 62.3% 76.5% 68.1%US 39.5% 51.1% 62.8%

■ Non-high-tech sector

Australia 37.9% 40.9% 40.3%US 32.1% 35.7% 41.0%

in a market that offers a premium for beinga large-scale player,” says Foster.

“The absolute value of the Australianhigh-tech market is comparatively small,and its importance in its local capital marketis relatively low versus the US market.

“The Australian market is highly concen-trated and dominated by a few companieswhich account for most of the ASX’s high-techmarket capitalisation, unlike the US marketwhere the largest firm accounts for no more

than 8 per cent of the sector’s total value.“The Australian high-tech sector has

more loss-making companies than the othercountries examined in the study, and theirrevenue growth is less consistent.

“Australian companies with strongrevenue growth in one year have less steadygrowth in subsequent years, compared totheir counterparts in the US and the UK.

“The smaller size of Australian companiescan be a double-edged sword. It can be an

AGSM associate professor Baljit Sidhu.

www.agsm.edu.au AGSM | 9

advantage in early years because smallcompanies are more likely to produce highgrowth rates. But small companies based ina small economy face greater challenges inscaling up sufficiently to compete in globalmarkets,” says Foster.

GOING GLOBALSo, what does a company need to do toachieve a critical mass to become a successfulglobal player?

The research report includes case studieson five companies with successful growthstrategies: eBay and Siebel from the US;Checkpoint from Israel; and Computershareand ResMed from Australia.

The market correction of March 2000sparked a general decline in all marketsstudied. However, several key factorsemerged from analysing these fivecompanies, which the researchers suggestcan offer guidance for a global expansionprogram (see Lessons Learnt table).

First, having a highly-focused productor service strategy was a common thread.The message here is for companies to stickto what they do best and not be distracted bytoo eagerly expanding into a broad range ofproducts.

Second, successful companies engagethird parties through meaningful alliancesand joint ventures to gain distributionchannels in multiple markets as well asmuch-needed credibility for their product.

Third, early revenue from seriouscustomers is needed to validate the product.Profitable customers need to be won earlyon – not only for the health of thecompany’s balance sheet, but also for itsposition and profile in the marketplace.

Fourth, companies aspiring to globalexpansion need to be flexible. Differentcountries may require different strategiesand modes of entry and transition, so it isimportant to be sensitive to idiosyncraticmarket conditions and adapt accordingly.

Finally, executives in the company need to be stubbornly focused on achieving aglobal footprint.They need the vision, drive,entrepreneurial skills and courage toconfront the inevitable challenges of globaltechnology competition.

The ASX’s Bladier believes the AGSM-Stanford research has wider application toany knowledge-based industry, such asbiotechnology. He says the research findingswere well received by the broad investmentcommunity.

DON’T BLAME THE MARKET“The general reaction [to the research] bythe broad community of government,regulators, business, investors and brokershas been one of praise, both for the initiativein undertaking this research and also forthe depth of analysis that many see as[being] directly beneficial to … theirbusinesses,” says Bladier.

“Specifically, the ‘company versuscountry’ factors alerted some, or at leastreminded them, of the importance of thebasics of business, and was seen, I think, assomewhat refreshing.

“The research provides valuable insightsfor companies seeking to compete globally.[Companies should] focus on the businessand have a clear and viable strategy forexpansion and growth.

“I think the research highlights that thereis no easy fix to industry development. It isnot as simple as changing tax or spendingmore government money, although thereport does give guidance to government forpolicy direction.

“Companies need to want to be global,and need to have a good strategy to achievethis. But foremost they have to have a soundbusiness and be good at what they do.Understanding this is critically important,”says Bladier. ✪

Baljit Sidhu is an associate professor at theAGSM specialising in corporate financialreporting and financial statement analysis.George Foster is the Wattis professor ofmanagement at Stanford Graduate School ofBusiness, and Ron Kasznik is associateprofessor of accounting at Stanford GSB.For further information about the reportcontact Baljit Sidhu at: bbaalljjiittss@@aaggssmm..eedduu..aauu.

* Alan Valvasori is the AGSM’s manager,media and public relations.

KEY CAPITAL MARKET STATISTICS THAT RAISE CONCERNS ABOUTTHE AUSTRALIAN IT SECTOR

■ Scale of total Australian capital market is less than 2%

■ Relative importance of IT sector

1998 1999 2000

Australia 10.7% 16.3% 10.2%

US 34.8% 47.8% 40.9%

■ Dominance of new players

Top 2 in Australia = 55—70% of high-tech sector capitalisation

Top 2 in US = approx. 12% of high-tech sector capitalisation

■ High proportion of firms with losses

1998 1999 2000

Australia 73.6% 62.2% 68.1%

US 58.7% 58.6% 62.8%

LESSONSLEARNT■ Earn a premium

with a focusedproduct/servicestrategy

■ Engage third partiesto expand distribution

■ Maintain flexibility/beopportunistic

■ Seek revenue fromcustomers to validateproduct

■ Focus on achieving aglobal footprint

■ Think global, act local

■ Anticipate surprises

10 | AGSM I S S U E 2 • 2 0 0 2

COVER STORY

PH

OT

OG

RA

PH

Y:

FR

AN

K L

IND

NE

R

Mind over machismoRob Ferguson, former CEO of Bankers Trust Australia, shifts focus with a newrole as the AGSM’s executive-in-residence. He talks to Helene Zampetakis.*

He wouldn’t str ike you assomeone who has done battlefor 15 years at the front lines ofAustralia’s deregulated financial

sector. Rob Ferguson has an unassumingstyle and a careful thoughtfulness thatsuggests a philosopher, someone who hasweighed up the bigger questions of life andsearched for meaning.

He talks about balance, self-knowledgeand the folly of machismo. He smiles wrylywhen he describes how the business elite arekept ignorant by subordinates who tell theirbosses only what they want the bosses to know.

Those meeting Ferguson for the firsttime may interpret this as new-foundwisdom and humility gained since he quitas chief executive of Bankers Trust Australiain 1999.

But then, Ferguson himself is the firstto say that he never did conform to thestereotype of business commander.

“For a long time as CEO I wasn’tcomfortable with it. I was shy, I wasn’t agood communicator. I worked well asnumber two and when I was uncomfortable,I made mistakes, I did things for the wrongreasons.”

Despite that, Ferguson became eminentlysuccessful as CEO of Bankers Trust. Whathe did to bridge the chasm between histemperament and his circumstances was totransform himself into a leader. He re-invented himself to meet the requirementsof the new position.

Without losing his natural reserve, hedeveloped a public persona. He learnt howto talk to the media and to trust his owninstincts. At the same time, he learnt toaccept his own limitations.

“I realised that I didn’t have to be agenius – that, in fact, being a genius issometimes a disadvantage.

“Being effective is about knowing whatyou have to offer and offsetting yourweaknesses. If you can do that, you canmanage change.”

Clearly, this strategy worked. By 1990,Ferguson had transformed Bankers Trustfrom an unimpressive investment bank intoAustralia’s top financial institution.Transformation at the top led to transfor-mation along each layer of the organisa-tion, with Ferguson running the shop leanand mean during the extravagant 1980sand shifting his strategy in the 1990s toreflect a need for more hierarchy andstructure.

That was then. Now, Ferguson’sinvolvement in business is somewhat moreat arm’s length. He is director of the newBankers Trust entity, Principle FinancialGroup, non-executive chairman of Vodafone,on the board of Westfield and chairman ofan unlisted optical fibre cabling companycalled Nextgen Networks. He is alsoinvesting in the fishing industry and has astake in the Magic Millions bloodstockauction company.

These positions are all well and goodbut Ferguson enjoyed the thrill of rising

and falling on his own decisions and is notcontent with roles where his advice maybe routinely turfed out.

He also misses the passion he felt incommand of a leading company. For a longtime Ferguson has been looking forsomething to arouse that passion again.

In March he accepted the role ofexecutive-in-residence at the AGSM,becoming the third person to hold thisposition after former ANZ chief executiveDon Mercer and former Fujitsu managingdirector, Neville Roach, who fulfilled therole for two years.

THE ROLE This year the AGSM has developed a positiondescription for the role that outlines anumber of goals with documented activitiesand timelines to ensure that expectationsare clear.

Ferguson’s physical presence will be moreprominent than either Roach or Mercer. Hewill have an office at the AGSM where he’llspend two days a week. During the year hewill deliver a series of lectures for students,alumni and the public as part of the 25thAnniversary Distinguished Speaker Series atthe School.

A major aspect of the role is to expandthe knowledge of the faculty and students ofwhat is going on in business in the region.He’ll participate in AGSM functions and puttogether a white paper on a managementtopic.

Professor Michael Vitale, dean, says

ROB FERGUSON is making anothertransition, this timefrom the cut and thrust of business to the world of ideas.

Ferguson was a perfect choice forthe executive-in-residenceposition: “There was a terrific fitbetween what he wanted andwhat we wanted; Rob has got tothe stage of his career where he isreflecting on his professional lifeand looking to give back to thecommunity.

“When you have anopportunity to have an associationwith a person of Rob’s calibre,you grab it,” says Vitale.

Vitale notes that Ferguson hasan excellent reputation and anextensive network, “and networksare always an advantage” for theAGSM.

But the relationship isreciprocal. Ferguson is makinganother transition, this time from the cutand thrust of business to the world of ideas.

“I have all this information in me but itneeds to be teased out,” says Ferguson. Hesees the AGSM as a conceptual hothouseand hopes to bounce ideas off people tofeed a book he has in mind.

Interestingly, the book itself will centre onissues of change. Ferguson is fascinated bythe dramatic transition produced by theopening of the Australian economy to theworld market, and he will consider theeffect of deregulation on the “hollowingout of Australia” and the creation of thebranch office economy.

Mainly, however, he’d like to rebut thetheory that this development has madeAustralia the loser. In doing that, he hopes tofuel the fervour he felt as a CEO when he’dvisit New York to investigate and report onindustry and how competitors conductedbusiness.

“I have a bit of the journalist in me andI have the capacity to get passionate aboutthat – almost obsessive,” he says.

MANAGING CHANGEAfter leaving Bankers Trust, Ferguson wentthrough a second painful process ofredefining himself. Earlier this year he talkedopenly about the panic attacks he suffered ayear after resigning as CEO when years ofdelayed stress caught up with him and hewas suddenly stripped of his purpose in life.

He acknowledges that transition is achallenge people have faced for decades and

will continue to confront. “It’slike the dot com thing but it’salso something that has beengoing on since deregulationstarted in the 1970s,” he says.

“With the dot com boom,people were catapulted fromnothing to hero status overnight,then flung back to nothing, andthat’s traumatic. But it’s probablymore traumatic for people whohave had those roles for a longperiod.

“When change happens thereare winners and losers and thelosers are those who are inindustries or towns that becomeredundant.

“So the whole restructuringprocess that globalisation causes is

one of the reasons why there is such abacklash to globalisation, such as from S11and even One Nation.

“People who find change happening intheir field or see that an industry is goingnowhere and are lucky enough to see thatit’s happening can prepare to jump ship,but for others that luxury doesn’t exist.

“I think it’s a matter of understandingwhether your industry is globallycompetitive and where you’re working issustainable in the long term.”

Ferguson says there are a lot of industriesin Australia that are in great shape – he citesthe wine and fishing industries – but hesays a lot of the deeply entrenched uncom-petitive industries that were kept alive bygovernment grants or tariffs or regulationhave died off.

Nevertheless, change will continue toaffect most people’s professional lives, hesays. For many it will come as an urge tochange course mid-career. For others it isbecause they’ve hit a brick wall as theirindustry contracts. For those who’ve investedyears of their professional lives in a particularfield, change that demands a complete redef-inition of career is particularly difficult.

Yet, says Ferguson, fear of change canlead to failure. Ferguson says he has a gutfeeling that many of his peers have beenbrought down by an inability to change.

“We work on the basis that we live in anorderly world. Our behaviour wears downpath synapses in the brain like paths in thebush, so change is stressful.

“But at the same time, it’s inevitable and it’sgood. It brings innovation and fresh energy.”

He says dealing with change is a matterof time and adopting a positive attitude.He has learnt not to take things for grantedand to be flexible.

“You have to learn that change isconstant, but that doesn’t mean tearingdown existing institutions because manyare there for good reasons.”

He advises balancing an inner focus onthe organisation with outward-lookingattention to customers, the marketplace andcompetitors, much like a ship’s captainkeeping the binoculars trained on thehorizon to see what’s ahead.

“One of the downfalls of a lot ofexecutives is to take their eye off the horizonand that can happen easily when there areinternal business problems. Many getknocked off course.”

Ferguson experienced this himself in thelast three to four years at the top whenBankers Trust’s parent company in New Yorkwent through a succession of changes inmanagement, so hastening its demise.

“I could see it coming and became veryinternally focused and now I can see howour competitors caught up with us.”

Cultivating balance in life and striving tosee the bigger picture in business, he says, isessential to being a good businessperson.

So, too, is having a philosophy ofhumility, knowing your strengths andweaknesses and being comfortable withthem. Ferguson says this is the greatestlesson he learnt in management, and it tookhim a long time to learn it.

He notes that contemporary industry isrife with corporate takeovers driven bytestosterone-induced men, many of whichgo wrong because they’re fuelled byaggression.

Ferguson says people need to recognisewhen their behaviour is being driven bytestosterone.

“If an industry is booming, it’s usuallythe boom that is making you look good.People need to be more cerebral andthoughtful and aware of where they fit in theworld.

“What we need is more mind and lessmachismo.” ✪

* Helene Zampetakis is a freelance writer.

If an industry is booming,

it’s usually theboom that’smaking you look good.

12 | AGSM I S S U E 2 • 2 0 0 2

www.agsm.edu.au AGSM | 13

The two-level campus located at No.1 O’Connell Street in the heart ofSydney’s downtown businessdistrict was officially opened by

Dr Brendan Nelson, federal minister forEducation, Science and Training, on 1 May.

At the official opening, Nelson praised thenew campus saying it was a superb exampleof enhancing the relationship between highereducation and business: “It demonstratesthe AGSM’s commitment to engaging activelywith the business community,” he said.

In addition to tiered and flat-floorteaching rooms, the 1755 square metrecampus features a business centre that is attracting conference, meeting andseminar activities.The campus also featuresnine syndicate rooms, 12 ‘touchdown’

computers, lounge and quiet study areas, acafe and dining area.

With the effective use of space, layout,materials and colours, Bligh Voller Nieldarchitects have broken away from theconventional to create a distinctly profes-sional and corporate-looking environment.

Caroline Diesner, Bligh Voller Nieldpractice director, says the design teamapproached the AGSM project holistically –aiming to build a space that was an effectivelearning environment while creating a bold,contemporary design of appeal to bothstudents and the business community.

Creating a “good space” for aneducational setting recognises that teachingand learning occurs outside the designatedareas like theatres and syndicate rooms.

Looking good“Part of the success we achieved with theCBD campus is due to acknowledging thatteaching continues in informal situationssuch as casual discussions over coffee, inbreakout spaces, and in impromptuencounters in corridors,” Diesner says.

There were several challenges, according toDiesner, in designing and creating the campus,including building tiered theatres within aflat-floor structure that imposed ceilingheights, and making the design work for bigincreases in the numbers of people arrivingwithout creating congestion.

“We believe our design also encouragesstudent interaction through the open areasadjacent to the formal teaching spaces via acentral ‘street’ that connects key spaces; thisprovides a public space that contributes to asense of community for students andclients,” says Diesner.

First-year MBA (Executive) studentTiffany Watson, a marketing executive atIBM, says the central location of the newCBD campus is easily accessible from heroffice in St Leonards.

“The campus is very professional. It’snice having an exclusive place that I canidentify with, and the facilities are verygood,” says Watson. ✪

by Alan Valvasori

The AGSM’s new $3.1 million Sydney CBD campus is the latest of the School’s national teaching campuses and its fifth in Sydney.

The campus occupies levels6 and 7 of No. 1 O’ConnellStreet. It includes:

■ Two tiered lecture theatreswith a seating capacity of42 and 44 people in each,plus extra capacity forbanquette eating.

■ Four flat-floor theatreswith a seating capacity of 30 people in each. Modularmovable tables and parti-

tioning promote flexibleconfiguration.

■ Nine syndicate rooms withup to eight-person capacity,each with data and computeroutlets.

■ Five single-occupancyvisitor rooms.

■ Access to 12 flat-screencomputers in a seated’touchdown’ area, including

access to Internet and e-mail.

■ Four lounge areas withseating for 42 people.

■ Cafe with seating for 40people.

■ 24-seat landscapedoutdoor terrace.

■ Work area for nine staff,office for one, and six-personmeeting room.

CBD feature

PH

OT

OG

RA

PH

: J

OH

N G

OL

LIN

GS

‘Without the deregulation of salaries,the AGSM would have withered in

the face of US competition.’

The business of education

Academic leaders at the AGSMhave been singing thevirtues of deregulation – foruniversities as well asbusiness – for almost 25years. By serendipity or

design, this philosophy has positioned theSchool for its pre-eminence today.

As recently as 40 years ago ‘commercial’education was unknown. The MBA waspioneered in this country at the universitiesof New South Wales and Melbourne in 1963,the year that saw Adelaide introduce a mastersof business administration. But the early MBAprograms were part-time and mostly tackedonto the economics and commerce facultiesof the larger universities.

By the early 1990s, 20 universities hadMBA programs that enrolled about 5000students. By 1996, numbers had more thandoubled and 41 universities and privateorganisations operated MBA courses. At acost per head of up to $50,000, managementeducation then added $50 million a year touniversity revenues.

The AGSM was not always a $49 millionbusiness. For the first five to seven years itsparent, UNSW, had an annual federal blockgrant of $2–$3 million earmarked for theSchool. More importantly, it set the precedentand foundation for its later independence.

David Midgley, former foundation chair ofmarketing at the AGSM and now professor ofmarketing at the Paris-based INSEAD businessschool, recalls the AGSM was influenced bythe major crosscurrents of the 1980s andyet was able to steer its own course throughthe Hawke Government reforms.

“The events that had real impact on theAGSM were the overall trend to reduce

During the market deregulation of the 1980s the AGSM steered its own course ofreform in the face of rising competition and growth constraints. Guy Healy* takes alook at what it took to find a winning balance between scholarship and commerce.

much more like a business. This has hadmixed consequences – on the one hand it made the AGSM more a master of its own destiny, on the other it madescholarship harder.

“Nevertheless, we had no problem withpitching academic standards. The originalrecommendations to establish the School,and the origins of most of the faculty,mandated world-class standards. Hence wewere rigorous in student selection and madethem work very hard.

“Having established a reputation forquality we then began to attract people whodid not want to go to the US, but did notwant to accept second-best at other Australianschools. Eventually this reputation spread tothe region as well,” he says.

The strategy for academic prowess – forboth faculty and students – paid off. Between1984 and 1988, academics at the Schoolwon nine international awards inmanagement education and secured somehefty corporate sponsorship of professorialchairs.

During the mid-1980s, universities onlyraised about 12 per cent of their annualbudgets from industry and fees.2 MBA places– and thus faculty numbers – were stillallocated by the federal government. It was aconstraint on growth that became increasinglyobvious and against which the AGSM chafed.

Davis realised that central funding fromCanberra meant an effective cap of just 100students annually, which meant there couldnever be more than 25 faculty, and in turnmeant there could never be more than threeor four academics per discipline. So the ideafor the EMBA was born.

All the core ideas had been experimentedwith in an Executive Development Year courseand this became the foundation of the

government funding, the deregulation offaculty salaries and the creation of theMelbourne Business School,” Midgley tellsAGSM Magazine from INSEAD.

“In the 1980s the AGSM had world-classfaculty but was operating in the relativelyundeveloped Australian market and wasprimarily oriented to the US as the majorsource of business ideas,” he says.

The first crop of 33 MBAs and two Mastersof Public Administration – comprising 31men and four women – had graduated in1979, followed by the School’s first PhD twoyears later.

Midgley pays tribute to the School’s deanfrom 1979 to 1989, professor Jeremy Davis,for his seminal role in lobbying UNSW forthe freedom to pay top faculty salariescomparable to those on offer in the bestschools outside Australia.

“The deregulation of salaries was inevitableand necessary to allow the top schools toattract good faculty. The early deans: PhilipBrown hired only world-class faculty andstamped quality on the School from yearone; and Jeremy Davis fought and won manykey battles in university committees and withministers, especially over salary issues.

“Without the deregulation of salaries, theAGSM would have withered in the face of UScompetition. Later deans had an easier jobbecause of the efforts of Brown and Davis,” hesays.

But salary deregulation was only part ofthe story. In the wake of the 1982–83recession, Commonwealth grants per highereducation student declined by some 15 percent in the decade after 1983, according tothe Australian Vice-Chancellors’ Committee.1

Recalls Midgley: “The reduction infunding forced the School to expand itsrevenue-making programs and to become

SPECIAL

(Left): Professor David Midgley in 1988.

www.agsm.edu.au AGSM | 15

16 | AGSM I S S U E 2 • 2 0 0 2

modern MBA (Executive) program.So when the then third-term Hawke

Government – through the offices of thereformist education minister John Dawkins –scrapped regulations prohibiting institutionscharging fees for certain postgraduate awards,the AGSM was able to ride the wave.

“The AGSM offered a two-year full-timedegree, which most other schools did not,and we had extensive executive educationprograms, which many also did not,” saysMidgley. “Hence, the explosion of MBAprograms and the various attempts to latermerge or consolidate these had remarkablylittle impact on us,” he says.

Midgley also traces the ideaof merging with theUniversity of Sydney’s GSB tothe Dawkins era of the late1980s, even though themerger did not come to passuntil 1999.

That initial band of 35AGSM graduates in the late1970s has grown over theSchool’s 25-year history toalmost 6000 graduates. Anadditional 1000 seniormanagers have participated inpremium corporate andexecutive programs andthousands more have attended the manyopen enrolment executive programs. Thetotal student body today comprises 2010students in the MBA (Executive) program,and another 285 students studying full-timeMBA program.

The School’s culture of fosteringachievement among its students was alreadybeing laid down for future cohorts.

Among them was Peakhour Internationalchief executive David Harrington (MBA’88), who says even by the late 1980s theSchool had already built a reputation as thecountry’s leading business school.

“It was known as a place you went to gearup for future management. It had outstandingspikes of capability in areas I was interested in,especially management consulting and generalmanagement,” he says.

Similarly, Dr Ingrid van Beek (MBA ’87),director of the Kirketon Road Centre inSydney’s Kings Cross, recalls the early AGSM“encouraged you to be a tall poppy; there wasa really diverse and vital student community,and a robust exchange of ideas which

encouraged you to think outside the square”.Midgley – who was also research director

for the Industry Taskforce on Managementand Leadership Skills (1992–1995),otherwise known as the Karpin report –would be glad to hear it.

He believes the AGSM can be justifiablyproud of its achievements. In the early daysthere were few companies and managers that“saw the light”.While the sponsors of the firstnamed chairs in the School – AMP, FreehillHollingdale & Page and FAI Insurance – wereobvious exceptions, most Australianbusinesses did not “get it”, he says.

“When the School waslaunched, Australian manage-ment and managementeducation was rather primitive.There was little tolerance fortheory or for the notion ofmanagement development.Thishas changed and indeed theSchool has played a veryimportant role in exposingAustralian managers andpotential managers to bestpractice and theory fromaround the globe,” he says.

Today the local market ismuch more sophisticated, butalso the AGSM has become more

regionally focused and more self-confident inits own intellectual property, he says.

“While the US is still very influential,there is an increasing recognition that USacademics and schools have no monopolyon wisdom.”

Midgley believes the Karpin report itselfhas left a “curious” legacy: “A lot of what theKarpin report said was accurate, but wasresisted by schools and universities – who arevery good at resisting industry-drivenchange,” he says.

While largely ignored by academia, manymajor Australian businesses used the Karpinreport to benchmark what they were doing inmanagement development, he says.

“The tragedy of Karpin was that as thereport was delivered, the Labor Governmentthat commissioned it was in its death throes.Thus, little was picked up andimplemented,” he says.

By the end of the 1980s, Fred Hilmer,now chief executive of John FairfaxHoldings, took over the reins of the Schoolas dean (1989–98). He believed the School

needed to be better embedded in thebusiness community.

In one of the many ebbs and flows of theongoing “academic purity” versus “vigorouslinks with business” debate, Hilmer reinvig-orated the School’s advisory council, raisedmoney and increased executive education tomake the School more relevant to business.

The business school industry is stillundergoing profound change, especially fromthe local to global. Midgley argues that thecreation of Melbourne Business School was anational mistake with severe consequences forAustralia and for both Sydney and Melbourne.

“Australia’s two world-ranking schoolshave done outstandingly well with theirlimited resources and earned goodreputations in Asia,” says Midgley.

However, the creation of a second nationalschool effectively split the domestic marketand resources (state and corporate) into twocity-based schools – neither of which havesubsequently reached the mass to competeglobally.

“Today, the major multinationals areincreasingly setting the agenda for businessschools, given that most top schools derivesignificant revenues from executiveeducation,” he says.

“In the ’70s and ’80s this was via publicprograms whose content the schools largelydetermined. More recently we have seen therise of company-specific programs wherethe client firms themselves determine thecontent.Also, corporate donors have becomemuch more demanding in setting goals andtopics for large donations.”

Midgley cites the example of the alliancebetween INSEAD and Wharton, which cameabout because neither believed it had thefaculty and resources to maintain leadershipin a changing global marketplace.

“I think charting a course for the AGSMover the next 10 years will require great skilland some luck. It may also require the sort offaculty enthusiasm and commitment that Iwas fortunate to be part of in the early years,”says Midgley. ✪

* Guy Healy is a freelance education andenvironment writer.

FOOTNOTES1 Geoffrey Maslen and Luke Slattery, Why Our

Universities are Failing: Crisis in the CleverCountry, Wilkinson, Melbourne, 1994.

2 ibid.

‘Manybusinesses used the Karpin

report tobenchmark what they

were doing inmanagementdevelopment.’

www.agsm.edu.au AGSM | 17

We were interested in doingsomething of value andDisability Services Australia[DSA] was ideal because it

couldn’t afford to pay market rates forconsultants and we could see it wouldbenefit from help with its strategic plan,”says AGSM management project teammember, Keith Kibble. “It was also bigenough – it’s a $12 million a year business– to have issues for us to solve.”

Sydney-based DSA provides employmentfor about 1000 people with disabilities in itsown factories and through placements inclients’ workplaces. It also provides a rangeof vocational training and life skills supportto adults with disabilities.

Competitive advantage for DSA’s businessservices means being able to continue tooperate and maintain commercially viablebusinesses in order to provide supportedemployment for people with a disability.DSA’s business services include fivepackaging factories, contract packaging andassembly work with host employers likeQantas Flight Catering and Pierlite, andcleaning services.

Although DSA had already received ahigh rating for its business services fromKPMG in a report to the National IndustryAssociation for Disability Services, itrecognised it needed an alternative view ofits commercial viability because it competesfor business in an open market against able-bodied workers.

The original focus of the AGSMmanagement project was to look at howDSA could position itself as a business in achanging business environment. “However,we found we needed to drill the focus downto more pressing short-term issues such asclient retention, how to expand the clientand revenue base and how DSA could betteridentify and market its commercial capabil-ities,” says Kibble.

The project analysis and action plan aimsto give DSA the information and tools withwhich to find sustainable competitiveadvantage – which the team says will require

further improvements in finance, customerrelations, business process, organisationallearning and staff performance.

“The project was fantastic,” says DSAchief executive Tony Lund. “The team’sanalysis of the business was particularlygood – they gave us an outsider’s view of thecommercial viability of our business servicesoperations and highlighted our vulnerabil-ity – that we only had four or five customersthat made up the bulk of our businessservices revenue,” he says.

“We were right in the middle of ourstrategic planning during the [AGSMmanagement] project, and it confirmed someof our own findings but also encouragedus to make other changes,” says Lund.

“We have already made some changesto our management structure, specificallyputting the right people in the rightpositions and turning generalist roles intospecialist ones” says Lund.

The AGSM team examined the criticalfacets of the DSA business and based itsanalysis and recommendations around fourstrategic ‘pillars’: finance, customers, peopleand processes. It built action plans and tookDSA’s dual commercial/support servicescharter into account in providing a variantof the ‘balanced scorecard’ to measure actionplan implementation.

Half of DSA’s revenue comes fromgovernment funding and the other half isearned by its business services operations –

its factories and contract work.“This year DSA and other community

services organisations face reforms that willmove funding from block grants to a case-based system; that means they will have tolook much more closely at what they arespending and why, and accurately cost andtrack service provision to ensure equitablefunding,” says AGSM academic supervisor onthe project, Dr Robin Stonecash.

“It has been a good opportunity for ourstudents to apply concepts in an organisationwhich has objectives other than profitmaximisation and shareholder value,”she says.

“The great value of the managementproject to DSA has been its access to a groupof people who understand all the businessprocesses and can help it to improve itsbusiness capability,” says Stonecash.

DSA’s short-term action plans include:looking at implementing an inventorytracking system in its factories to bettersatisfy clients; improving financial systemsfor analysing business performance;enhancing client relationship building;selling the added value of communityservice; and improving general housekeep-ing systems such as inventory managementand reporting.

With strategic plan in hand, DSA is nowbudgeting for an increase in businessservices sales of 15 per cent for the2001–2002 financial year. ✪

The MBA (Executive) management project teammembers contributed broad managementexperience. They were Pramil Agrawal (foodservice engineering), John Butler (finance andbanking) Guy Gavagna (medical practitioner),Leanne Russell (banking) and Keith Kibble (salesand marketing).

Dr Robin Stonecash is a senior lecturer ineconomics at the AGSM. She has produced workon the impact of competition policy on ageingand disability care; she also wrote a businesscase for restructuring foster care payments,which has been implemented, and is completinga survey on the impact of the GST oncommunity services in New South Wales.

by Debra Maynard

Not-for-profit strategiesWhat does it take to achieve sustainable competitive advantage in the disability services sector? Five MBA (Executive) students sought answers and action plans in a recent management project.

“

FEATURE

ILL

US

TR

AT

ION

: G

RE

GO

RY

BA

LD

WIN

18 | AGSM I S S U E 2 • 2 0 0 2

Mention coaching and mostmanagers think of eitherpoor performers receivingspecial help or one-to-oneexecutive coaching for

high performers.In the burgeoning field of executive

coaching, the focus is usually on improvingindividual capabilities in areas such asleadership. But at the AGSM there’s anotherkind of coaching getting a workout –focusing on teams – thanks to leading-edgeresearch on what drives team effectiveness.

The research – by PhD candidateCatherine Collins and supported by associateprofessor Sharon Parker – is generatingfindings on teamwork design that is givingstudy teams and their coaches advancedresources for raising their effec-tiveness.

The first team coachingprogram, rolled out at thebeginning of the year, signed up24 volunteer alumni in six citiesaround the country to use theresearch and its evaluation tools tocoach MBA (Executive) studyteams throughout their finalexecutive year (EY).The programhas since been expanded to the full-timeMBA program, involving an additional 21alumni coaches.

Coaches and students use a team effec-tiveness survey to record team members’perspectives of their team’s behaviour.Information from the survey is thenaggregated into a team feedback report byCollins.

“Coaching traditionally falls down in theevaluation and diagnostic phase of theprocess – teams don’t often get to see andevaluate their strengths and weaknesses in anobjective way,” says Collins.

“The point is to take team evaluation toan advanced level: the feedback report allowsteam members to reflect on team design,roles, processes and outcomes – somethingwe call ‘reflexivity’; they are also betterequipped to question the assumptions ofteam discussion and how the team isfunctioning by having data at theirfingertips,” she says.

The advantage of providing regularfeedback and coaching to teams is that ithelps bring issues out into the open wherethey can be dealt with constructively, saysassociate professor Parker.

Coach Peter Hickey (MBA Exec ’01)highlighted this issue at a recent progressmeeting for coaches: “The feedback reportbrought underlying problematic issues to the

surface in an objective manner,so that the team and I were ableto pinpoint and explore the issuesmore fully.

“We were able to do thisanonymously, which reduces anyfinger pointing that can be sodestructive in teamwork,” he says.

In the past, study teams havereceived feedback on their coursework but not on how well they

function. AGSM study teams now havequantitative feedback and benchmarks withwhich to assess how well they are working,to set and evaluate teamwork goals, and toimprove team effectiveness over time.

Another volunteer coach, Chris Foote(MBA Exec ’01), says: “I wish I had thisprogram available in my EY”.

“The team feedback tool initially providesthe coach and team with a forum to discussand align team expectations; subsequentsurveys help teams check alignment andattitudinal changes, and to identify activitiesto increase team performance in the latter

part of the EY,” Foote says.Teams often get caught up in the tasks

they are doing and neglect to consider howthey are performing those tasks. This isespecially true of study teams when theassignments are piling up and the pressureis on.

This vulnerability highlights theimportance of setting goals at the outset, saysChris Digby (MBA Exec ’01), whovolunteered as an EY team coach: “toincrease my experience in dealing with andrunning teams, but also to give somethingback and keep in contact with the AGSM”.

“In one of the teams I was assigned, theteam split in two because the team membersfound they had misaligned goals andobjectives, mainly in relation to work attitudesand work-life commitments,” he says.

“As a team coach, the learning experiencefor me is trying to identify those thingsearly on. More generally, you need torecognise that some issues require a directiveapproach, others need a facilitative style andsome require a bit of both,” says Digby.

Team learning is a strong feature of theAGSM’s MBA programs. Professor RogerCollins, who leads the EY team formationprocess, says: “Organisations are increas-ingly using teams to solve complexproblems, and to collaborate and integrateacross departmental ‘silos’, businesses and countries”.

A new research-based team coaching initiative is bringing students and alumni together todiscover what really drives team effectiveness.Debra Maynard reports.

Team works

Teamleadership,membershipand coachingare crucial

skills.

FEATURE

www.agsm.edu.au AGSM | 19

“Team involvement can also result inhigher commitment to critical decisionsfrom members,” he says.

“Team leadership, membership andcoaching are crucial skills that all mangersneed. For these reasons, and becauselearning can often be richer if undertaken inteams, the AGSM is focusing on theapplication and development of teams asan integral part of its program design anddelivery.

“What we are doing with the coachingprogram ensures that we walk the talk aboutteamwork in our MBA programs,” professorCollins says.

The team coaching initiative is part of theAGSM’s Life Long Learning program, whichseeks and supports opportunities for alumnito share and update their managementknowledge and to become more active inthe AGSM community.

“I think one of the great things about thisinitiative with the full-time MBA program isthat it gives students an opportunity tonetwork with alumni and to learn abouthow teams operate in real business environ-ments,” says Dr Anne Lytle, AGSM seniorlecturer in organisational behaviour anddirector of Life Long Learning.

For alumni, the program providestraining in how to coach teams based on thelatest materials from experienced faculty,which can also be used in coaches’ own

organisations. It is also an opportunity foralumni to try out their skills and networkwith past and new colleagues.

WANT TO KNOW MORE ABOUT THERESEARCH?Further data analyses on the AGSM studyteam results will provide an in-depth pictureabout study teams and, more generally,workplace teams. Preliminary findings willbe presented by Catherine Collins andassociate professor Sharon Parker at the2002 Academy of Management Conferencein Denver, Colorado, 9–14 August, in a papercalled, ‘Predicting team effectiveness:importance of collective outcome efficacyand collective process efficacy.’ ✪

Any companies interested in participating inthe AGSM’s ongoing team effectivenessresearch can contact: associate professorSharon Parker at sharonp@agsm.edu.au.Alumni interested in participating in theAGSM’s coaching program can contactalumni services, Tel: (02) 9931 9499/9284.

FOOTNOTE1 M.A. Campion, G.J. Medsker, et al. ‘Relations

between work group characteristics and effec-tiveness: implications for designing effectivework groups’ in Personnel Psychology, 46 (4),pp. 823–850, 1993; and M.A. Campion, E.M.Papper, et al. ‘Relations between work teamcharacteristics and effectiveness: a replicationand extension’ in Personnel Psychology, 49(2), pp. 429–452, 1996.

What drives team effectiveness?The AGSM study teamresearch highlights two keyareas that are crucial to teameffectiveness:

■ Goal alignment is critical. Goalsare aligned when team membersare aiming for, and committed to,obtaining similar assessmentmarks. Goal alignment includesreaching agreement on how workis scheduled. Team members needto be upfront and honest aboutwhat they can contribute and beat least a little flexible on teamcontribution.

■ Balance between taskorientation and creating a supportive environment. If a team wants to be effective it needs to do more than focussingle-mindedly on the task; itneeds to attend to the way teammembers work together. Theresearch suggests that gettingthis balance right affects not onlyteam member satisfaction, butalso team performance.

Issues such as workload sharingand a clear definition of rolesneed to be decided in a participa-tive manner so that teammembers have buy-in on teamoutcomes. However, beingfocused on the team’s tasks cancreate a competitive environment,which can lead to adverse interac-tions between team members.Thus, it is important provide anenvironment of mutual respect,which includes: keeping interac-tions positive by not criticisingindividual differences or theexperience of team members (lowaffective conflict); and providingsupport (citizenship behaviours),such as helping other teammembers when they run intoproblems and resolving conflictthat may emerge (conflictmanagement).

This finding replicates studiesconducted in organisationalcontexts such as the recent workby Campion and colleagues,1

where there is evidence that team design and processes affect bottom line performanceindicators such as productivity in a broad range of jobs.

20 | AGSM I S S U E 2 • 2 0 0 2

Much less has been writtenabout market defencestrategy than about marketattack. This is a seriousweakness in strategy and

marketing. In this article, we focus on oneaspect of defensive strategy: defendingagainst a new market entrant.

We specifically focus on, in marketingwarfare terms, “defending the beachhead”:short-term strategy to (a) minimise the newcompetitor’s market share gain during thefirst few months after launch; while (b)enabling the incumbent to avoid expendingmore resources or sacrificing more profit(for example, through price-cutting) thannecessary.

A successful defence of the beachheadwill provide the platform for a longer-termstrategy to keep the new entrant contained,regain lost market share, or even force thenew entrant to withdraw from the market.

The defender has four generic strategicoptions (see Figure 1). First, it must decidewhether to emphasise its own strong pointsor to counterattack at the entrant’s weakspots.Then it must determine whether to tryto reduce the final amount of territory(market share) that the new entrant gains orto focus on slowing the rate at which thatterritory is won.

How should it decide which combinationof these strategies to adopt? The answer is tounderstand where the leverage points (areasof greatest effectiveness) lie, based oncustomer research and analysis of theincumbent’s and new entrant’s relativestrengths and weaknesses.

We argue that a formal approach – whichexplicitly models the key issue, customerbehaviour, will generally outperform rawmanagement judgment. If the new entrantcan be regarded as the enemy, then theconsumer’s mind is the battleground. Weillustrate our approach with a particularcase,Telstra’s reaction to the entry of Optus,into the Australian telecommunicationsresidential long-distance market.

Optus was launching into the Australianmarket in 1995.The incumbent (our client)was Telstra, the state-owned telecommuni-cations monopoly. The particular battle-

ground was the valuableheavy calling segment of theresidential long-distancemarket.The aim was to giveTelstra two things: a forecastof Optus’s market sharegains over the first sixmonths, and diagnosticinformation about the likelyimpact of alternativedefensive strategies by Telstrain limiting that share.

MODEL OF CONSUMERADOPTIONIn strategy modelling, animportant issue is how muchto simplify. We recommenda middle-range model thatincludes the main possiblestages and routes of consumeradoption, but in simplifiedform. In marketing this iscalled a ‘macro flow’ model.1

Based on focus groups,we developed the macroflow model in Figure 2.Themodel aims to estimate howmany people will flow alongeach path and the rate at

which they will do so.

APPLYING THE MODELUsing market research, respondents weretaken through a learning process wherethey were first told about the new entrantand then gradually given more informationabout it, using simulated advertisementsand other material. This enabled us toestimate consumer beliefs about Optus at thedifferent stages of knowledge that wouldoccur as the market evolved.

The model calibrated on this informationgave forecasts of the rate at which Optus

Reprinted by permission of Business StrategyReview. An excerpt from ‘Defending theBeachhead: Telstra versus Optus’ by John H.Roberts, Charles J. Nelson and Pamela D.Morrison. Copyright © 2001 London BusinessSchool. All rights reserved.

Defending the beachheadJohn Roberts* won the Best Paper Award at the American MarketingAssociation’s Advanced Research Techniques Forum in the US last month for what has become a classic case study in market defence strategy. This edited excerpt outlines his model for defensive strategy against a new market entrant.

RESEARCH

ILL

US

TR

AT

ION

: N

IGE

L B

UC

HA

NA

N

would gain market share. These provedremarkably accurate: the model forecastOptus market share at 4.8 per cent threemonths after launch (actual was 4.0 percent); and after six months, forecast andactual market share were both 8.8 per cent.

We estimated that Optus wouldeventually gain a 20 per cent market sharegiven Optus’s predicted market entry strategyand the best defence that the model wasable to suggest to Telstra to overcome it. ByJune 2000, further government deregulationhad encouraged additional entry, takingshare from both Telstra and Optus. Therelative split between Telstra’s share and thatof Optus was 82.1:17.9, reasonably close tothe 80:20 forecast.

MARKETING DIAGNOSISAt least as important as these forecasts was thediagnostic information provided by the modelto help Telstra plan its defensive strategy.

Focus groups indicated 14 attributes thatwere important in judging Telstra. Thesewere reduced to three underlyingdimensions using principal componentsfactor analysis: “How strong is my relation-ship with Telstra?”,“What do I believe ofits service delivery?” and “Do I see it as bigand impersonal?”. In contrast, attitudes toOptus and the idea of competition weremeasured on nine separate attributes. Thesewere distilled down to: “Is there adownside?”, “Am I restless with my existingsupplier?”, “Do I have a high level of inertiato change?” and “Do I care aboutcompetition?”.

The first three factors provide the meansby which the incumbent can adopt positiveactions in the strategy matrix in Figure 1 toimprove its long-term equilibrium appeal.The second four factors enable it tounderstand how it can use negative strategiesto exploit and expose the entrant’sweaknesses. These negative strategies arenot without some risk, however. With theadvent of MCI and Sprint into the UStelecommunications market, AT&T triednegative advertising suggesting that newentrants would not be able to match itstechnological sophistication. Thesecampaigns backfired badly.

Having analysed the structure ofconsumer beliefs about Telstra andcompetition, we then looked at how thesewould affect consumer flow through thedecision process in Figure 2, based on thetwo adversaries’ positions on these criteria.

Consideration of the new entrant could

war since its margins would alsobe eroded.)

CONCLUSION The forecasts, which came out ofthis prelaunch model, came towithin 1 per cent of the actualmarket share for the first six monthsof the new entrant’s operation. Bytackling the problem of dynamicdefence against a new entrant, wewere able to pick up the differentcriteria that consumers use toevaluate both the incumbent andthe new entrant. That way Telstracould compete on grounds thatfavoured it.

We were able to identify the realdanger of a price war because of theextra margin loss, larger base towhich that loss would be applied,and bigger response effect. Wefound out the sustainability of adefence strategy post-trial, basedon the very high expectations of anew entrant.

Finally, we discovered thatTelstra’s service level had a dual role.First, we found that perceivedservice levels affected how Telstrawas perceived as a company. Second,and less obviously, we found thatperceptions of Optus could be

changed dramatically by changingperceptions of Telstra. Any improvements inservice perceptions carried with them thisdouble bonus.

By understanding the battleground – thatis, the consumer – the incumbent canembark upon successful marketing warfareagainst any attacking force. Without suchan understanding it is impossible for theincumbent to focus its defensive forces toareas where they will be most effective. Asthe Telstra versus Optus case illustrates,formally modelling the consumer adoptionprocess can yield unexpected insights andenable management to develop a moremeasured and precise defensive strategy. ✪

* John Roberts is professor of marketing atthe AGSM. To read the complete article aspublished in Business Strategy Review, clickon to the AGSM’s Web site at:www.agsm.edu.au/marketdefence.

FOOTNOTE1 G.L. Urban and J.R. Hauser, Design and

Marketing of New Products (2nd edition),Prentice, Englewood Cliffs, NJ, 2003 (seechapter 17).

www.agsm.edu.au AGSM | 21

FIGURE 2

Consumer adoption model

be reduced if Telstra improved servicedelivery and developed a closer relation-ship with its customers. Consideration couldalso be contained if it was able tocommunicate that there was indeed adownside to switching carriers (particular-ly since Optus was not going to provide afull service offering), or if it could reducethe level of restlessness of consumers.

Pricing was critical in both trial andrepeat. The most interesting point aboutpricing was that the price sensitivity for theincumbent was lower than the pricesensitivity for the new entrant. Given thatcompetition was likely to lead to lowerprices, this was bad news for Telstra.A pricedecrease by Optus would be more valuedthan a price decrease by Telstra. If Telstragot into a price war it would be hit by adouble whammy: first, its margins would beeroded and, second, even if it was able tomaintain price parity or a similar pricedifferential relative to the new entrant, itwould gain a lower share as price decreased.(Of course, it does not follow that it is in theinterests of the new entrant to start a price

FIGURE 1

The defender’s strategic options

Harness Own Expose Entrant’sStrengths Weaknesses

Ultimate New Positive NegativeProduct Appeal Strategies Strategies

Rate at which Inertial RetardingNew Product Strategies Strategies gains Share

PrelauchTelstra

ConsideringOptus

OptusTrial

OptusRepeat-Buy

TelstraLoyalist

Switcher

OptusLoyalist

22 | AGSM I S S U E 2 • 2 0 0 2

Shayne Gary: What led to Franklins’1 shift inmarket position, from being the leadingdiscount grocery retailer in the mid-1980sto its recent managed sell down? Jill Connell: In the early to mid-1980sFranklins had a distinctive position in themarket as the discount supermarket. Theexpansion in store numbers also contributedto strong sales growth.The positioning waseffective because price was paramount inmany people’s purchasing decisions. Backthen, Franklins’ competitors weren’t reallyoffering fresh food to the standard mostpeople wanted, so shoppers were used togoing to the supermarket for their drygroceries and going to the greengrocer,butcher and baker for fresh foods.

The Franklins model relied on butchers,bakers, greengrocers nearby, so that it wasn’ta disadvantage for Franklins to focus on drygroceries. That changed when Woolworthsupgraded its stores and fresh food offer inthe late 1980s. Coles also upgraded its offer.SG: It seems, in retrospect, that Woolworths,and to some extent Coles by followingWoolworths’ lead, drove that change withinthe industry, so they shaped theirenvironment with their repositioning.JC: Yes, their changes tapped into the desireof many shoppers for convenience – partic-ularly given the changing demographicsover the years, with more women working,and time becoming a much more importantfactor in decisions for many households.The changes in supermarket offers alsoinfluenced future shoppers’ expectations.At the same time, Woolworths and Coles

Dr Shayne Gary and JillConnell* discuss whatdrove Franklins and itsowner, Dairy FarmInternational of HongKong, to exit the market in a $US300 millionmanaged sale.

focused on their processes and restructuredtheir businesses to be more cost-effective.Rather than just cost cutting, they gained realefficiencies in terms of supply chain andother business processes.

They started shaping a financial model tonarrow the price gap on the items relative toFranklins whilst remaining profitable.Theywere also improving their shopper offers.Whilst there was still a substantialproportion of people who continued towant the Franklins offer, there was also anincreasing number of shoppers who wantedto try something different.SG: Now, this dynamic was happening, soWoolworths and Coles were squeezingFranklins both by expanding the productoffering and also by improving their owncost structures. Somewhere along the wayFranklins lost its cost advantage – itspositioning was fine as long as there was a cost advantage. How did the companylose that? JC: There is a legitimate position if youreally have a cost advantage and Franklins didin the 1970s and 1980s. For example,shoppers would pack things in boxesthemselves, there were no night fillers, and

the overheads within the central operationwere minimal. What ended up happeningwas that doing things the way they had beendone in the past, whilst many thought wasthe ‘cheapest’ way, was, in fact, no longer themost cost-effective way.

This is one of the key learnings thatcomes out of the Franklins experience:businesses need to keep on seeking morecost-effective ways to deliver a competitivecost advantage, and this is fundamental tosurvival if the business appeal to customersis based on lower prices. If businesses don’t,their competitors will find an edge, andjust cutting a few cents out of shopperspacking their own boxes, for example, is notgoing to result in a more efficient supplychain.SG: So, in some ways, Franklins stood stillwhile its rivals were making aggressivemoves to bring their cost structures undercontrol.JC: Franklins did recognise the need tochange, and in fact undertook a variety ofsignificant initiatives which attempted toimprove the offer to shoppers and reducecost. Achieving change was particularlytough given that many of Franklins’

Competition:the Franklinscase

PH

OT

OG

RA

PH

Y:

FR

AN

K L

IND

NE

R

www.agsm.edu.au AGSM | 23

employees took a lot of pride in its successas a discount grocery retailer and werereluctant to let go of what had worked in thepast. There were many debates on howFranklins should move forward andretain/regain the cost advantage whilemeeting shoppers’ changing expectations.

Many still argue that to have done thingsthe old way was the right way to go. But itreally wouldn’t have stood up because Aldiis using modern approaches and processesand seems destined to usurp Franklins’ low-cost position. I think this would havehappened even if Franklins had stuck to theold ways.SG: My impression when I read reportsfrom industry journals about Franklinslosing its cost advantage was that there wasjust a lack of investment in systems, inprocesses, in technology that would havebrought down the cost structure through thevalue chain. Now, is that a fair statement? JC: It is a statement widely voiced but, no,the reality is that after Dairy Farm boughtFranklins there was a substantial amountspent on IT and various process improve-ments and store refurbishment; the issuewas that the spend didn’t necessarily deliver

the results that were needed.SG: So there were implementation issues.JC: Yes, and some design issues as well.However, there was certainly a recognitionthat the business did need to improve itssystems and a lot of effort was invested toachieve improvement.SG: So, Woolworths and Coles wereexpanding the size of their stores, goinginto higher margin fresh food and ready-made meals.And the decision that Franklinstook at that point was to expand the size ofits stores and to start carrying some of thefresh foods.What drove that decision?JC:There was recognition that the consumerwas changing and that to be one of themainstream players in the market Franklinsneeded to cater for the needs and the desiresof the shoppers.SG: Was it clear at this time what level of investment would be necessary toimplement this repositioning?JC: Yes, it was reasonably clear what wouldbe required, and certainly there wassubstantial investment in the business. Thequestion from that is: ‘Why didn’t it work?’There were a number of factors in terms ofongoing competitive issues as well as a

FEATURE

portfolio issue for Dairy Farm, which hassome enormous strengths and fantasticgrowth opportunities in Asia.The opportu-nities in Asia’s growing markets are partic-ularly attractive when compared to themature Australian supermarket industry,where usage is close to saturation in corecategories; in world terms it is relativelylow growth, and is highly competitive.SG: After expanding into the larger storesand stocking fresh foods, there wereeffectively three chains within Franklins –the No Frills, Franklins Fresh and FranklinsBig Fresh. In retrospect, do you think thedecision to open Franklins Fresh and BigFresh was a management mistake, or doyou think there was a long-term strategythere that could have been successful?JC: I’m an optimist and would like to saythat inevitably there was a way of making itwork. I think the Franklins Fresh model wasa good one. It did recognise what shopperswanted.The stores were pleasant to shop inand it should have been a viable strategy,provided a supermarket can improve costefficiencies so that price discounts can beoffered profitably.SG: Was it a matter of timing? If Franklins hadmoved three or four years earlier to expandand cover the fresh food products, could ithave been more successful than it was? JC: Everyone has opinions on this, and Idon’t think one opinion is necessarily rightand another wrong. Franklins did recogniseit needed to change and endeavoured to doso. I think it’s easy to say it should havestarted changing earlier; whether that wouldhave ended up being successful or not alldepends on whether the positioning isdistinctive, and is popular enough withshoppers and financially viable. I think therewas a very good chance of that happening.SG: How did Franklins and Dairy Farmcome to the conclusion to exit? JC: The competition was increasinglyaggressive, the financial performance haddeteriorated and there were better oppor-tunities for Dairy Farm in Asia. So, DairyFarm considered several exit options.

SELL-DOWN STRATEGYJC:The options included: selling the businessin its entirety; selling part of it; scaling itback and just continuing to run a small partof the business; or closing. But from a DairyFarm shareholder point of view it wasdecided that the best decision in share-holders’ interests was to divest Franklins.

Sell-down at a glance Franklins’ $US300 million sell-downwas one of the largest and mostcomplex undertaken in Australia.

The ACCC required more than 50per cent of Franklins’ 288 stores to besold to independents or non-majoroperators, and Franklins and Metcashformed the Joint IndependentDivestment Alliance to facilitate thesale to independents (there were 1163expressions of interest and 508 bidsfrom 115 parties for 153 of the stores).

There are now two new largesupermarket retailers operating onthe eastern seaboard: Foodland andPick’n Pay.

The sell-down achievedemployment continuity for more than90 per cent of Franklins’ 25,000employees.

Independents purchased 146stores, Woolworths took 72, ColesMyer bought 35, and a small numberof stores were closed.

The South African based Pick’n Paygroup bought the Franklins and NoFrills brands, so the Franklins namecontinues to be a retail icon.

COMPETITION STRATEGY

Former Franklins planning director Jill Connelland the AGSM’s Dr Shayne Gary.

24 | AGSM I S S U E 2 • 2 0 0 2

Dairy Farm firstlooked at selling Frank-lins to an offshore partybut was not able tofinalise such a sale. It’snow on the publicrecord that Wool-worths was interestedin buying the wholebusiness, and there is no doubt that that would have beenthe best outcome for everyone in thebusiness. Everyonewould have retainedjobs, at least at thatpoint in time, and it would have been themost painless way to manage it – it wouldhave been quicker for the shareholders andthings would have happened more smoothly.However, for understandable reasons, thatwas not going to be approved by theAustralian Competition and ConsumerCommission and, therefore, there were anumber of negotiations that resulted in 67stores being approved for sale toWoolworths.That was absolutely critical forthe total deal to move ahead and to fund therest of the sale.

Some stores were sold to the Coles Myergroup, and a large number of stores weresold to independent retailers. Importantly,two large parcels of stores were sold toFoodland and the South African Pick’n Paygroup, which enabled two new experienced,large operators to enter the eastern seaboardmarket. Pick’n Pay also bought the Franklinstrading name.SG: Now, in thinking back, what were thekey differences between Woolworths’successful turnaround in the mid-1980sand early 1990s and Franklins’ opportunitiesfor a successful turnaround before the sell-down? JC: I can only speculate, but I think thecompetitive environment now is

enormously tougher than it wasin the 1980s. By the mid-1990s,Coles and Woolworths alreadyhad efficiencies of scale withindry grocery and fresh produce;they had already attractedshoppers. It would have takentime for Franklins to gain similarimprovements, and althoughFranklins’ turnover was approxi-mately $4 billion, it was a muchsmaller business than either Coles

or Woolworths – so there were inevitablysome scale disadvantages. In addition, Coles’and Woolworths’ businesses werecontinuing to improve, and Franklinsneeded to be more competitive on price ata time when Aldi was looking to enter themarket. Clearly, the competitive environmenthas changed enough to make it substantiallymore difficult now.SG: To come back to Aldi entering themarket, you mentioned earlier that one ofthe factors that impressed upon Dairy Farmand Franklins in the market becoming morecompetitive was that Aldi was entering themarket. In your opinion, do you think Aldican succeed in discount dry goods and whycouldn’t Franklins take that position? JC: I think Franklins did have a similarposition many years ago, and could haveintroduced fresh produce in a similar way toAldi, therefore catering for changingshopper needs whilst retaining the discountprice positioning. To be profitable doingthis requires a highly competitive coststructure. Franklins needed to modernisevarious processes and systems to improve cost-effectiveness. Interestingly, whilst beinga new entrant has its own challenges, it alsobrings some advantages in that the infra-structure can be shaped to suit the currentand future needs, whilst Franklins faced achallenging task in reshaping a large,complex infrastructure and asset base tocater for the changed marketplace.

The financial structure you set depends onyour return on assets, and Franklins hadalready built up considerable assets, so therewas a process of looking for a smarter way ofmanaging those.And that’s a dilemma that anyongoing business has – that sometimes itcan be, from this perspective, easier to startup, which goes against most of themanagement theory that we hear. But if you’reheavily asset and/or infrastructure-based itcan restrain some of the options that youhave or the speed at which you can move.SG: So, by coming in without these existing

assets you think Aldi could put together abetter business model.JC: One that is different, although there’s adouble-edged sword to not having anestablished infrastructure because I suspectthat Aldi has been finding it difficult to findsites, but my assumption from what I’veseen is that its model is reasonably effective.I also think Aldi has recognised that in orderto be competitive at the hard-discount endof the grocery market, where there is asignificant price differential offered to theshopper, it really needs to ensure it has thecost efficiencies.Aldi has also found a way ofdelivering a very tight fresh food offer.SG: Now, in thinking retrospectively, whatare the lessons to be learnt?JC: First, really understanding the shoppersand anticipating how they are going to thinkin the future. It sounds so basic, but is areminder to focus on the changing expec-tations of our customers. Second, beingvery clear on the positioning of the businessand carrying that right through everyactivity. If you are trying to achievecompetitive advantage through a priceposition supported by cost-efficiency thenyou have to be relentless in achieving cost-effectiveness.This doesn’t mean not buyingan extra pencil, for example; it means doingthings smarter so that through the end-to-value chain you’re delivering the product toyour customer at a lower overall cost thanyour competitors.

Sometimes using relatively sophisticatedtechnology can help to achieve substantialcost improvements in the end-to-endprocess. In retail, given the cost of inventory,speeding up the flow of product through thesupply chain can help drive down overallcost. Getting the advantage through cost-effectiveness supports a marketingpositioning of lower price. ✪

* Dr Shayne Gary is a senior lecturer ingeneral management at the AGSM. Hepreviously taught at London Business School,where he was a research fellow in decisionsciences. Jill Connell (MBA Exec ’00) wasstrategic planning director at Franklinsduring the managed sell-down. She joinedFranklins in December 1998 to lead the non-food business unit. At press time, she hadjust been appointed managing director of theJenny Craig group.

FOOTNOTE1 The name Franklins in this article refers to

Franklins Limited, which has now exited theAustralian market. None of this article relatesto the currently-operating Franklins.

Importantly,two largeparcels of

stores weresold to

Foodland andthe South

African Pick’nPay group.

www.agsm.edu.au AGSM | 25

THE BOUNDARYLESS ORGANIZATION: BREAKINGTHE CHAINS OF ORGANIZATIONALSTRUCTURERon Ashkenas, Dave Ulrich, ToddJick and Steve Kerr, Hardback,$53.06 (Jossey-Bass, 2002)

In 1995, The Boundaryless Organizationshowed companies how to sweepaway the artificial obstacles – suchas hierarchy, turf and geography –that get in the way of outstandingbusiness performance. Now, in thiscompletely revised edition, themanagement experts who helpedGeneral Electric create a “bound-aryless” culture explain what ittakes to do so in the economy ofthe 21st century.

DOGS AND DEMONS: THEFALL OF MODERN JAPANAlex Kerr, Softback, $22.46(Penguin Books, 2001)

A tough observation and analysis bya long-time Japan watcher, this bookasks: “How did one of the world’sgreatest and most ancient civilisa-tions reach the state of economic,cultural and environmental declinethat defines it today?” Kerr grew upin Japan and now lives in Kyoto andBangkok. He was educated at Yale,Oxford and Keio universities. Hislast book, Lost Japan, which wasoriginally written in Japanese, was

books 15% OFF BOOKS FOR ALUMNI, STAFF AND FACULTY.Enjoy a selection of new releases compiled by AGSM Magazine and UNSWBookshop. Limited stock is available at these prices. Buy three or more books and receive 20 per cent off.

THE WEALTH OFKNOWLEDGEThomas A. Stewart, Hardback,$53.96 (Nicholas Brealey, 2002)

The author of Intellectual Capitallooks at how the correctmanagement of knowledge is thekey to innovation, growth andwealth.With intellectual assetmanagement on the corporateagenda more than ever before,this could be one of the mostuseful management books thisyear.The author has been namedas one of the world’s 50 mostinfluential management thinkersby the Financial Times (UK). CONTINUED NEXT PAGE

THE DOT.BOMB SURVIVAL GUIDE Sean Carton, Hardback, $58.95(McGraw Hill, 2002)

SURVIVING AND THRIVINGIN THE DOT COM IMPLOSION

Reviewed by professor Michael Vitale, deanHalf of the Internet companiesthat had initial offerings inAmerica in 1999 and 2000 havebeen delisted or trade at underUS$1 per share, according to TheEconomist. This new book attemptsto explain why so many dot comsperformed so badly. Importantly,the book points out that the dotcom boom was only the firstwave of a profound change thatwill continue to impact allbusinesses for years to come.TheNew Economy is by no meansover – it’s just, as the author says,“out of beta”.

One of the more surprisinglessons of The dot.bomb survival guideis how many different ways thenew companies found to fail.Some, like Pets.com, lacked aviable revenue model – it wasnever going to come close togenerating enough income tosurvive. Others, like boo.com,never got its technology to work.Still others, like Webvan, burnedthrough its resources beforeenough customers signed on,so neither the model nor thetechnology was ever truly tested.And so on – the dot bombs seemnot only to have made everymistake in the book, but to havewritten some entirely newchapters as well. Fortunately forfans of morbid case histories,

perfect storm – a rare, self-reinforcing combination of newtechnology, naive entrepreneurs,cashed-up venture capitalists,aggressive investment banks and,of course, an eager group ofindividual investors.

The first wave of electroniccommerce prepared the way for a second wave that will consist ofall the things that can be done bybusinesses that are now operatingwith a new paradigm. In the firstwave, unsophisticated investorsassumed that every new businesswould operate in the new wayimmediately.They failed in theirinvestments, and businessesdependent on a steady flow ofnew capital failed as well.Thesecond wave will be very differentindeed, driven by solid businessmodels, functional technology,and customer focus.The NewEconomy beyond it’s beta test will be a less exciting, but morebeneficial, experience for all.

some of those chapters ended upin this book.

Carton aims to illustrate goodpractice as well as bad, and hisbook does include a fewexamples of success among themany examples of failure.Theauthor also draws some overallconclusions, such as: “If [your]product’s benefits don’t outweighthe cost of the commitmentnecessary for your customers touse that product, it won’t takeoff”.The startling simplicity andobviousness of the lessons raisesan important question – howcould so many people ignorecommon sense and lose so muchmoney so quickly? Carton laysmuch of the blame on thefinancial community.

Between 1990 and 1999 theamount of venture capitalinvested annually in the US rosealmost 20-fold.Venture capitalists,terrified of missing out on thenext Netscape or Yahoo!, raced tofund companies before someoneelse did. Given the eagerness ofthe stock market for IPOs,VCshoped to earn big returns in ashort time.The entire merry-go-round was built on the greaterfool theory – the idea that therewould always be someone willingto buy your stock.The ridecouldn’t last forever.

The recent $US100 millionsettlement by Credit Suisse FirstBoston with the US Securities andExchange Commission revealedhow wildly profitable the dot.comIPOs were for CSFB (and,presumably, for other investmentbanks as well). CSFB’s commissionon shares in a hot IPO was asmuch as 50 times higher than itscommission on ordinary shares.Through higher commissions andother schemes, CSFB kept as muchas two-thirds of the stag profitsearned from opening-day rises inthe prices of Internet shares. Fromthis perspective, the dot comboom looks something like the

26 | AGSM I S S U E 2 • 2 0 0 2

publications &papersPUBLISHED WORK AND RESEARCH PRESENTATIONS

BOOK CHAPTERS

Julie Cogin (adjunct faculty),‘Understanding humanbehaviour and group dynamics’,in Leading through Practice: Challenges,Strategies and Progress, MacLennanand Petty, Sydney, May 2002.Joseph W. McKean and professorSimon Sheather, ‘Statistics,nonparametric’, in Encyclopedia ofPhysical Sciences and Technology (3rded.), vol. 15, pp. 891–914, 2002.Associate professor SharonParker, ‘Designing jobs thatenhance employee well-beingand effectiveness’, in P.B.Warr(ed.), Psychology at Work (5thedition), Penguin, 2002; andwith N.Turner, ‘Work design andindividual job performance:research findings and an agendafor future inquiry’, in S. Sonnentag (ed.), PsychologicalManagement of Individual Performance:A Handbook in the Psychology ofManagement in Organizations, pp.69–94, John Wiley & Sons,Chichester, UK, 2002.

JOURNAL PUBLICATIONS

Professor Eddie Anderson and A.B. Philpott, ‘Optimal offer con-struction in electricity markets’,Mathematics of Operations Research, vol.

27, pp. 82–100, 2002.Michael J. Houston and Dr GianaEckhardt, ‘Culture’s conse-quences on consumer behaviourtoward food in Asia’, Asian Journalof Marketing, special millenniumissue, 8 (2), pp. 33–54, 2001;and (with Michael J. Houston),‘Cultural paradoxes reflected inbrands: McDonald’s in Shanghai,China’, Journal of InternationalMarketing, special issue on globalbranding, 10 (2), pp. 68–82,2002.Professor Robert Marks, ‘Directand derived policies: illicit druguse and greenhouse gasemissions in Australia’, Journal ofComparative Policy Analysis: Research and Practice, 4 (1), pp. 51–74,March 2002.PhD candidate Doan Hoang CauThai and R.J. Kaye (UNSW),‘Evolutionary optimisationmethod for multistoragehydrothermal scheduling’ in IEEProceedings – Generation,Transmissionand Distribution, vol. 149, issue 2,pp. 152–156, March 2002.

MONOGRAPHS

PhD candidate Kathleen Walsh,co-authored with David Allen(Edith Cowan University), Gary

MacDonald (Curtin University)and David Walsh (Barclays GlobalInvestors), ‘Using regressiontechniques to estimate futureshedge ratios, some results fromalternative approaches applied toAustralian 10-year treasury bondfutures’, in J.A. Batten and T.A.Fetherson (eds), Financial Risk andFinancial Risk Management, RIBFseries, Elsevier Science, vol. 16,pp. 189–214, April 2002.

CONFERENCE PRESENTATIONS

Dr Markus Groth, ‘Customercitizenship behaviour on theInternet: scale development andvalidation’ and (with J.B. Fallon,S.W. Gilliland and J. Ferreter),‘The development of theApplicant Reactions Scales(ARS)’, presented at the 17thannual meeting of the Society forIndustrial and OrganizationalPsychology,Toronto, Canada,April 2002.Dr Giana Eckhardt and MichaelJ. Houston, ‘Cultural psychologyand its significance to consumerresearch’, Association forConsumer Research Asia-PacificConference, Beijing, China,May 2002.

Professor Robert Marks,David Midgley and Lee Cooper,‘Endogenizing the actions of artificial brand managers’,presented at the first LakeArrowhead Conference onComputational Social Science and Social Complexity: Agent-Based Modeling in the SocialSciences, (invited), UCLA,9–12 May 2000.PhD candidate Anthony Vlasicand professor Philip Yetton,‘Delivering successful projects:the evolution of practice at LendLease (Australia)’, presented atthe 16th International ProjectManagement Association World Congress, Berlin,4–6 June 2002.

CONFERENCEPROCEEDINGS

PhD candidate Catriona Wallace,‘Computer technology providingleadership and its effects onteams and subordinates in callcenters’, in conferenceproceedings for ‘Call Centres And Beyond’, Kings College,London, 6 November 2001. ✪

CONTINUED FROM PREVIOUS PAGE

HOW TO ORDER:

Phone: (02) 9385 6622,Fax: (02) 9385 6633, e-mail:info@bookshop.unsw.edu.auWeb:www.bookshop.unsw.edu.au(a secure site by VeriSign,from where you can search,order and query the UNSWBookshop’s range).

Delivery in Australia is $8.80 for the first book, $3 for each additional book.Overseas delivery is $20 for the first book, $5 for every additional book. All orders are despatchedwithin 48 hours.

the first by a foreigner to win theShincho Gakugei Literary Prize fornon-fiction.

Drawing from decades of analysiswithin world-class organisations,Daniel Goleman (author of theinternational bestseller EmotionalIntelligence), Boyatzis and McKeeargue that a leader’s emotionsmust resonate energy andenthusiasm if an organisation isto thrive. Goleman is a psycholo-gist who has been a visitingfaculty member at HarvardUniversity and whose writing hasreceived two Pulitzer Prizenominations. Richard Boyatzis isprofessor of organisationalbehaviour at the WeatherheadSchool of Management at CaseWestern Reserve University. AnneMcKee serves on the faculty ofthe University of PennsylvaniaGraduate School of Education andhas taught on the WhartonSchool’s MBA program.

BREAKING OUT OF THE BOX: THE BIOGRAPHY OFEDWARD DE BONOPiers Dudgeon, Softback, $20.66 (Headline Book Publishing, 2001)

This biography of the man who created the concept of lateral thinking underlines the continuing criticalimportance of de Bono’sthinking, and is packed withdescriptions of his ideas. ✪

THE NEW LEADERS: TRANSFORMING THE ART OF LEADERSHIP INTO THESCIENCE OF RESULTSDaniel Goleman, Richard Boyatzisand Annie McKee, Softback,$26.96 (Little, Brown, 2002)

This book explores the conse-quences of emotional intelligencefor leaders and organisations.

Outstanding researchProfessor Robert Kohn has beenelected a fellow of the US-basedInstitute of MathematicalStatistics in recognition of hisoutstanding research instatistical methodology. Kohnhas made fundamental contribu-tions in the fields of time seriesanalysis, non-parametricregression and Bayesiancomputation. His work hasimportant applications in thefields of marketing and finance.

Going globalProfessor John Roberts has beenappointed an academic trusteeof the US-based MarketingScience Institute (MSI) and a member of the board ofacademic advisers of the US-based online MarketingResearch Network (MKTG).

At the MSI, his appointmentas academic trustee recogniseshis international stature in thefield of marketing. MSI hasabout 70 business sponsors,many of which are globalhousehold names. More than100 marketing academicsworldwide are engaged inresearch projects for MSI’ssponsor organisations and itsworking paper series includesmore than 500 titles.

His appointment with MKTGis an advisory role for an organi-sation that provides Internetaccess to the latest workingpapers, journal articles andannouncements to professionalsin the marketing community.

Ranked in top five A study of the finance researchproductivity of 97 universitiesin Asia-Pacific has ranked TomSmith, AGSM professor offinance and accounting, in thetop five of university financeauthors.The study, published inthe Pacific-Basin Finance Journal,examined 17 leading financejournals in the decade of the 1990s to rank research productivity.

“The AGSM has anoutstanding faculty in theaccounting and financedisciplines and any of us wouldhave made the top rankings ifthe data hadn’t been limited tothe 1990s,” Smith says.

In addition, if the study’s datahad concentrated on the elitefinance journals, Smith mayhave been ranked the top authorin Asia-Pacific.

The study, Research productivity ofthe finance profession in the Asia-Pacificregion, proposed that “researchproductivity ranking providesinformation on the researchquality of a finance program”,and that “the top Asia-Pacificfinance programs arecomparable with major state andprivate universities in the US”.

Economics leadershipProfessor Robert Marks wasinvited to attend the first LakeArrowhead Conference onAgent-Based Modeling in theSocial Sciences, held at the UCLAconference centre in the SanGabriel Mountains east of LosAngeles in early May, where par-ticipants paid tribute to him asone of two pioneers in the useof agent-based simulationmodelling in economics (theother was John Miller fromCarnegie Mellon University).

Competition policy andlegal practiceTogether with Paul Martin(lecturer in law and innovationat the AGSM) and Dr MiriamVerbeck, an AGSM MBA andPhD graduate, professor RobertMarks was commissioned bythe Law Council of New SouthWales to undertake workseeking evidence of the impacton New South Wales andVictorian solicitors’ practices ofchanges in the regulation of theprofession, partly as aconsequence of nationalcompetition policy. Using datafrom ABS surveys over the past15 years and from the Law

Society itself, they found clearevidence of the reduction inimportance of conveyancing, aswell as evidence of the tendencyof small practices, especially inmetropolitan suburbs and incountry towns, to disappearthrough retirement or amalgamation.

The study included surveys toforecast directions in legalservice demand and supply inAustralia in the next few years.The study has been published bythe Law Society under the title,‘National Competition Policy: Adiscussion paper’, March 2002.

New marketing facultyJulien Cayla joins the AGSM inJuly as a lecturer in marketing.Julien earned an MBA at theIndiana University ofPennsylvania and a Bachelor ofArts (Marketing) at the InstitutCommercial de Nancy in France,and he is currently completinghis PhD at the University ofColorado in the US. He has wonnumerous scholarships for hisstudies in the US and haspresented his research work atseveral conferences in the USand Europe. Cayla’s thesis is anethnographic study of theadvertising agency’s role inmediating the cultural learningand adaptation of multinationalcorporations, with an emphasison multinational corporations in India.

In September, the AGSM willwelcome distinguishedprofessor MuraliChandrashekaran to its facultyas a professor of marketing.Chandrashekaran is a highlyaccomplished scholar from theUniversity of Cincinnati wherehe has been, among other roles,the Ronald J. Dornoff Fellow ofTeaching Excellence andResearch Fellow of the Collegeof Business Administration.Chandrashekaran holds a PhD inmarketing from Arizona StateUniversity and a BTech inelectrical engineering from theIndian Institute of Technology(Madras). His recent researchwork has brought togetheradvanced statistical techniquesand marketing data onconsumer behaviour. His workhas provided improvedefficiency in sampling methodsfor market research.

Kristin Rotte will also jointhe AGSM’s marketing faculty inSeptember, as a lecturer. She hasa BSBA in marketing from XavierUniversity in the US, and iscompleting her PhD at theUniversity of Cincinnati. Beforeundertaking doctoral studies sheworked as a marketing managerin the US for FidelityInvestments. Kristin’s researchhas focused on the migration of customers across serviceplatforms or channels. ✪

www.agsm.edu.au AGSM | 27

facultynewsBEST IN CLASS John Lyon,professor of finance andaccounting, has won the AlumniTeaching Award for 2002. Thisalumni initiative was established to encourage and reward anoutstanding level of teaching. Eachyear one faculty member receivesthe $3000 award, resulting from avote by students in the full-timeand part-time programs. Eligiblefaculty must teach both MBA andMBA (Executive) courses.

Professor John Lyon acceptsthe 2002 teaching award.

28 | AGSM I S S U E 2 • 2 0 0 2

MBA

2001Recent graduate Praveen Goyalwas snatched up by AustralianCampus Network, where he hastaken on the challenge oflaunching the La Trobe Universitybusiness degrees and diplomas inSydney and Brisbane. Contact:pg@auscampus.net.The La Trobeprograms are licensed toAustralian Campus Network,which was founded by AlysonMoore (MBA ’89) following thegrowth of the Australian Collegeof English which she hasmanaged for 10 years. Alysonnow lives in the Hunter Valleywith her husband and threedaughters; she commutes weeklyto Sydney to operate the twobusinesses. Contact:agtm@ace.edu.au.

Greg Harradine has joinedNoel Arnold and Associates asstate manager. Contact:greg.harradine@noel-arnold.com.au,Tel:(02) 9889 1800.

Christa Thoma reports she isworking as a consultant at HPOManagement Consultants inZurich, Switzerland. Contact:ct@hpo.ch,Tel:(+41 1) 787 6000.

2000Markus Alleman reports: “We arestill residing in Chicago and I gotmarried to my long-term loveMaria Rodriguez in June 2001.Last September we became proudparents of twins, Nico Yanni andSelena Ines, who are well andgrowing quickly. Visit our familyWeb site:www.theallemanns.com. I havebeen promoted to director ofproduct engineering for Dremel

Rotary Tools (subsidiary of BoschPower Tools).” Contact:markus_allemann@sbpt.com.

Deba Das is now happilymarried to Heena; the ceremonytook place at Bhubaneswar inIndia last December. Contact:debasish.das@cummins.com.

Jong-Duk Choi has beenappointed president of Sims ValleyCo and is now living in Kangnamku in Seoul,South Korea. Contact:jdchoi@simsvalley.com,Tel:(+82 2) 3413 5934.

David Gati has moved toBrisbane, where he has beenappointed managing director ofSystem77 Qld. Contact:david@qld.77systems.com.au,Tel: (07) 3367 3773.

Dave Mackinnon has joinedAlcon Laboratories Australia astechnical services manager.Contact: dave.mackinnon@alconlabs.com.

William Wang reports fromShanghai, China that he has beenappointed managing director ofe-Tao Systems.Tel:(+86 21) 5481 0339.

1999James Albis formed New York-based management consultingfirm Everest Worldwide Inc. inApril 2000. Everest Worldwideprovides analysis, advice and “momentum” forcompanies. Everest targets mid-cap clients, which are often toosmall for major consulting firms.It provides Australian companiesstrategic advice for US marketentry and also advises UScompanies seeking expansioninto Australia.The company hopesto create greater synergiesbetween the US and Australia.Contact: jpalbis@hotmail.com.

After graduating in 1999,Michael Jacobsen worked indirect marketing for two yearsbefore moving back toAdelaide in February last year,where he started work for AllExclusive Homes in residentialsales. In February this year,Michael moved to LongridgeSarah Housing Group in theresidential division as a salesconsultant. Michael and his wifeJennifer were married in Sydneyin August 1999. “We now live inthe beachside suburb of Grangein Adelaide and would love to getin contact with any alumni inAdelaide and any of my class,wherever they are!”

1998Hans Norved says he has alwayshad a passion for small businessand has now started his own –providing business coachingservices. “Owning a business issupposed to give you a betterlifestyle, but far too many peoplego into business and instead ofthem running the business, thebusiness ends up running theirlives,” says Hans. “Add to that thefact that the failure rate ofbusinesses is 80 per cent in thefirst few years of operation andowning a business does notsound like too much fun.”Hans wants to change that for his clients: “I will not only besharing my business knowledgebut the proven system of ActionInternational – an Australianoriginated and now worldwidebusiness coaching network.There is a high demand forbusiness coaching and I aim to have a team of five coaches by mid 2003.

Jens Uhlig has been promotedto principal consultant at

PricewaterhouseCoopers inFrankfurt, Germany. Contact:jens.uhlig@de.pwcglobal.com,Tel: (+49 69) 5976 8200.

1997Derek Woodhouse is nowworking as director,WirelessBusiness Solutions International.Contact: derek.woodhouse@wbsintl.com,Tel: (08) 9315 2266.

Mark Dodson has moved toWestpac Banking Corporation as a consultant. Contact:markdodson@westpac.com.au,Tel: (02) 9216 0315.

1996Ian Mead has taken up a newposition as manager, financialstrategy with Sydney AirportsCorporation. Ian’s wife Colette ismanaging the MedicallySupervised Injecting Centre atKings Cross under the director-ship of another AGSM alumni,Ingrid van Beek (MBA ’87).

Raquelle Zuzarte has movedfrom the role of senior productmanager to a new salesmanagement position at Janssen-Cilag, the pharmaceutical arm ofJohnson & Johnson. Raquelle isengaged to Suso Balanza and thepair will wed in Valencia, Spain,in November. Inspired by Spain,Raquelle recently completed a short-film project with IanLittler (MBA ’97) about therunning of the bulls in Pamplonaand bringing this tradition toSydney – the title of this film issimply “Pure Bull”.

Simon Allen reports from SanFrancisco that he is now vice-president at SkyePharma.Tel: (+1 212) 753 5780.

Pramod Vijayasankar has beenpromoted to assistant director at

bushtelegraphTHE AGSM ALUMNI BULLETIN BOARD

NEW FORMATWe have simplified the Bush Telegraph format, listing your news under program and year, starting with the degreeprograms, MBA and MBA (Executive), followed by the graduate diplomas, management certificates, PhD programand shorter premium certificates. Bush Telegraph is no longer split into AGSM, UNSW and USyd groups becausestudents and graduates, past and present, are all part of the amalgamated, enriched AGSM community (it is nowmore than three years since the AGSM merged with the University of Sydney’s Graduate School of Business).

www.agsm.edu.au AGSM | 29

ANZ Investment Bank inSingapore. Contact:pvijaya@anz.com,Tel: (+65) 6539 6113.

1995John Rotenstein and his wifeJackie “had a bouncing (anddribbling!) baby boy, Elliot, on27 November 2001”. Photostypical of John’s humour can befound at www.balgara.com/ej.John is now working at NRMAInsurance, where he occasionallysees Russell Hoore (MBA ’95)“realigning the NRMA’s strategicdirections”.

Soon Teik Oon has taken a six-month break to travel in China. Atpress time he was in Changzhou,Jiangsu province. If you’d likesome survival tips on travelling inChina, contact Soon Teik at:jost@relay2.jaring.my.

1994Winston Chen has left LogicaConsulting (which he joinedafter Accenture), and is in theprocess of starting his owncompany. In the meantimeWinston is doing contract workon strategy-type assignments; oneof his current clients is IMA, thepersonal insurance arm ofNRMA.Winston is married toWai Yee Chen, an investmentadviser with Challenger First-Pacific (previously CS FirstBoston), and they have had ababy girl, Olivia.

Peter Hugh is pleased toannounce the arrival of his firstchild, Gerry Andrew Hugh, bornon 14 March 2002. Mother andbaby (and father) are doing well!

1993Katharine Seymour is delightedto announce the arrival ofdaughter, Claudia Jane Leonard,on 15 February 2002. She took a very short maternity leave,returning to Schroders in mid-April.

Jarrod Smith has left Westpacand is now with Homeloans as

finance director. Contact:jarrod. smith@homeloans.com.au,Tel: (02) 9223 2122.

1992Kieran Duck has left the BostonConsulting Group to start hisown consulting practice.Springboard management group“focuses on breaking downorganisational molasses to deliverleaps in performance”. Kieran has also sold up in Balmain andmoved out to Cabarita to give the twins a bit more space to run around.

1991Paul Couvret reports he hasmoved to Raytheon Australia assegment activation manager.Contact: pcouvret@raytheon.com.au,Tel: 0409 771 115.

In Singapore, Singtat Lim isworking for JM Sassoon & Co as asenior manager. Contact:(+65) 6538 0290.

Lee De Vryer married MelissaSmith on 13 April in Melbourne.Lee is vice-president, strategy andbusiness development for BHPSteel and Melissa runs herfamily’s golf business.They metsix years ago when they bothworked at Boston ConsultingGroup. Craig Mahony (alsoMBA ’91) was best man.

1990Peter Wallace and his wife Kathieare pleased to announce the birthof Joseph Charles. Joseph is theirthird child, joining Hugh (three)and Lewis (two). Peter is anexecutive director of theAustralasian Media andCommunications Fund.

Michael Lindsay has joinedRFC Corporate Finance in Sydney,working with alumni RobAdamson (MBA ’89) and GeoffHiller (MBA ’94). He wasrecently awarded the New SouthWales Dux Prize of the CorporateGovernance Course by theChartered Secretaries of Australia.

Nalin Wickramasinghe hasjoined Integral Energy as salesmanager, energy consultingservices. Contact:wickran@integral.com.au,Tel: (02) 9853 6944.

1989Charles Ulm has been promotedto director of marketing atAirservices Australia. Contact:charles.ulm@airservices.gov.au.

1988Mark Lockie has been appointeddirector of sport and physicalrecreation at the University ofMelbourne. In his previousposition as manager, sportservices with the AustralianOlympic Committee, Mark wasresponsible for the AOC’s fundingprograms to the Olympic sports,and assisted with its preparationprograms. He was appointedassistant director of administra-tion of the 2000 AustralianOlympic Team, and his careerhighlight was the opportunity tomarch with the Australian teamin the Sydney Olympics’ openingceremony. At the University ofMelbourne he is responsible forthe management of sport andrecreation facilities andprograms, and assists in thedevelopment of the university’s50 affiliated sports clubs.

Steve Talbot is metro Sydney’sfirst Community Bank boss atGalston (see story, page 31).Contact: steve.talbot@bendigobank.com.au.

1987Noel Corkery has been electednational president of theAustralian Institute of LandscapeArchitects (AILA) for a two-yearterm. AILA is the professionalorganisation of landscapearchitects throughout Australiawith more than 1000 members.It is committed to maintainingthe professional standard oflandscape architects throughinitiatives such as a registration

program, accreditation ofuniversity landscapearchitecture programs,continuing professionaldevelopment, publications,national design awards andconferences.

Noel represents AILA on theboard of the Australian Councilof Building Design Professionals,which includes the professionalorganisations of architects,engineers, planners and quantitysurveyors, as well as AILA. He is aprincipal and registered landscapearchitect in the North Sydneyoffice of URS, which is an inter-national environmental planningand engineering consultancy.

Morrison Carter was recentlypromoted to president and CEOof Beckett Gas, Inc.The companyis a combustion engineering andmanufacturing business thatserves manufacturers ofresidential and commercial gascombustion and heating systemsacross the US, Canada, Australiaand New Zealand. Beckett Gas hasplans to double its size over thenext five years and is always opento new opportunities in its targetmarkets.The company is privatelyheld with 230 employees and islocated 25 minutes fromCleveland, Ohio. Morrison’s wifeKirsten runs her own interiordesign business.They live withtheir five children in semi-ruralAvon, Ohio. Morrison is alwaysglad to offer classmates passingthrough with accommodationand a night on the town.Contact: mcarter@beckettcorp.com.

1986In Jakarta, Indonesia, FransWiantono is now a director ofPricewaterhouseCoopers FAS.Contact: frans.wiantono@id.pwcglobal.com,Tel: (+62 21) 521 2901.

1984Scott Lee took to the IndianOcean and Timor Sea in the 2002

30 | AGSM I S S U E 2 • 2 0 0 2

Bankwest Freo to Darwin Splashseries of races in June.The Splashraises money for charities inPerth and Darwin throughUnited Way.Watch this space foran update on the event results.

1981Frances Cowell has recently had abook published: Practical QuantitativeInvestment Management with Derivatives(Palgrave: London). Frances livesin Paris and since 1998 hasworked for Vestek-Quantec, asubsidiary of Thomson Financial.Frances previously worked withthe quantitative investments teamat Natwest InvestmentManagement in Sydney. Her bookwill be released in the US later inthe year.

1979Ingrid Jackson is now consultingwith the Commonwealth Bank inthe corporate reputation area andis also involved in reviewing thebank structure in line with ElliotJacques’ Stratified Systems Theory.

MBA (EXECUTIVE)

2000Craig Boyle has been accepted asa legatee to Sydney Legacy. Craigsays: “Legacy provides care fordependants of deceased AustralianWar Veterans and servicepersonnel killed on hazardousservice or in training accidents; inmy youth I was a recipient ofassistance from Legacy and seethis as an opportunity to givesomething back to the organisa-tion.” Legatees are volunteers andprovide assistance to dependantsof war veterans and are instru-mental in fundraising efforts forthe annual Legacy badge day in September.

Geoff Willett has moved toComOps as general manager,professional services. Contact:gwillett@comops.com.au,Tel: (02) 9923 8000.

Peter Hildebrandt has beenpromoted from senior accountsmanager at Robert Bosch(Australia) to director, RobertBosch Corporation. Contact:peter.hildebrandt@us.bosch.com,Tel: (+1 248) 848 6885.

1999Jennilyn Noack has taken up theposition of general manager,human resources at theZoological Parks Board of NewSouth Wales.

Trevor Cook is TelstraCorporation’s general manager,finance. Contact:trevor.cook@team.telstra.com,Tel: (03) 9634 6199.

Mark Dowd has left RockmansStores to work for ForestknollTechnologies as director ofbusiness development. Contact:markdowd@forestknoll.com.

1998Frank Choy and wife Janelle areproud and happy parents of babydaughter Elysse who arrived on9 February 2002. Life after babymakes academic study seemalmost a breeze considering onedoesn’t normally get out of bedin the middle of the night to doMBA assignments.

Anna Borzi is the newregional head, financial services,for HSBC Securities (Asia) inHong Kong. Anna was aprominent banker in Australia formany years, serving as a CEO,senior executive and non-executive director in some of thecountry’s largest financial institu-tions. She founded the AustralianSecuritisation Forum in 1989.

Steven Di Pietro is working inScottsdale in the US withMacquarie Bank, where he is theUS business developmentmanager. Contact: steven.di.pietro@macquarie.com.au,Tel: (+1 480) 650 7128.

Simon Green is now CRMstrategist with DDB Rapp CollinsAustralia.Tel: (02) 9923 0226.

Jon Short has moved fromfinance manager at MinterEllison Lawyers to executivemanager at Moray & AgnewLawyers. Contact:jshort@moray.com.au,Tel: (02) 9234 4636.

Lex Trotman is now businessdevelopment manager for ThalesTraining & Simulation. Contact:lex@thales-tts.com.au,Tel: (02) 9562 2718.

1997David Chen has a new baby girl,Rachel, born on 18 February 2002.

In Hong Kong, Tung Tsanghas moved to Hong Kong andShanghai Banking Corp as anassistant project manger. Contact:lautungtsang@hsbc.com.hk,Tel: (+852) 2822 1643.

1996Golda Munro has finally movedback to South Australia, whichshe has been threatening to dosince finishing her MBA(Executive) in 1996. She iscurrently employed as the ITproject manager for the Office ofDirector of Public Prosecutionsin South Australia, where theteam is developing an IntegratedJustice System. Golda says she isenjoying the change in lifestyleand the fun of learning aboutcriminal justice. “It’s a changefrom the hustle of Sydney andthe perils of workers compensa-tion,” says Golda.

1994Geoff Walker reports he hasbeen working in London forthree years and is now withGlazoSmithKline at its corporateheadquarters in Brentford (nearChiswick). He is responsible forglobal logistics in the consumerhealthcare division. Contact:geoff.b.walker@gsk.com.

GDM

1999James Ilett and Eliza Budniak(MBA Exec ’99) are pleased toannounce the arrival of their firstchild, Sebastian, born January2002. “When he is ready topursue postgraduate businessstudies in about 2032, mum anddad will hold the AGSM to theirpromise of a family discount!

1997Gary Keen has left Smorgon ARCand is now chief financial officerat Bounty Limited. Contact:garyk@bountylimited.com.

GCM/GMQ

1999 James Liang is working as areamanager at Philips’ central Chinaregional office, having beengranted a working visa from thelocal government. James says he

is willing to make every effort tosupport AGSM alumni who areplanning to work, visit or investin China. Contact:james.l.liang@philips.com,Tel: (+ 86 27) 8571 2420.

Paul Thomson has moved toWestern Australia as amanagement consultant forNetpaver.Tel: (08) 9342 1291.

1994Simon Andrews reports that heis now deputy director of patrolboat and hydrographic capability,Defence Personnel Executives,Royal Australian Navy.

1993Bruce Bailey now works forClinical Waste Australia as generalmanager. Contact: bbailey@clinicalwasteaustralia.com.au,Tel: (02) 9748 4552.

GDBA

1997Ike Yun reports from Seoul,South Korea that he is nowworking as a manager for Tiger Pools Internet Inc.Tel:(+82 2) 3469 0858.

SMDP/DPM

2000Brent Williams is now workingas executive officer for theBushfires Council of theNorthern Territory. Contact:brent.williams@nt.gov.au,Tel: (08) 8922 0832.

1996Neil Butler is no longer chiefexecutive of Meat and LivestockAustralia, having left to work forConsolidated Meat Group asgeneral manger, sales andmarketing. Contact:neil.butler@cmgbeef.com. ✪

Sincere apologies to PPrraavveeeennGGooyyaall and RRiicchhaarrdd JJaacckkssoonn((MMBBAA ’’0000)), whose news wemixed up in Issue 1, 2002. It is Richard who marriedWendy on 6 December lastyear at Yallingup.

www.agsm.edu.au AGSM | 31

Embracing educationBrian Salter (MBA Exec ’98) takes the

reins as CEO of the Securities Institute ofAustralia. Brian says his new post is theachievement of an ambition that took holdwhile he was a student: “When I did mydegree I developed a hankering for some sortof continued involvement in businesseducation,” he says.

The SIA provides education, fosters ethicaland effective markets and advocates highlevels of professional conduct in thesecurities and financial services industry.

After a successful career in banking andfinancial services, Brian believes the MBA(Exec) perfectly suits his new job. “It’s greatto bring a background of practical experienceto an education role,” he says.

Community bankingWhen Steve Talbot (MBA ’88)

became metro Sydney’s firstCommunity Bank manager, he put hismoney where his job is. Steve joinedlocal residents and businesses whoinvested more than $800,000 inGalston Financial Services, which ownsand operates the franchise.

Bendigo Bank is the franchisor andpioneer of Community Bank. Othershave tried franchising to individuals,but the Bendigo model is based oncommunity ownership.

“The idea was initially aimed atcountry towns that had lost all theirbanking services,” says Community

Bank head Russell Jenkins. “Amazingly,the second community to approach uswas a suburban Melbourne site, notunlike Galston.”

Having spent 22 years with Westpac,Steve says the big banks’ increasingfocus on sharemarket valuation hascreated a niche for community banks.“The biggies encourage people not tocome in and do business,” he says.“They want you to bank on the Net,use teller machines or bank over the phones.”

The Galston branch opened on 24March and at the end of May had $12million in loans and deposits. Steveplans for the branch to ultimately attract$90 million in loans and deposits. ✪

THE AGSM ALUMNI BULLETIN BOARD

alumniat largeMBA CLASS OF1994 REUNIONChristmas cheer broughtcolleagues together fromaround Australia. Frontrow (from left) are: TimPeppard, Phil Stockwell,Con Prassopoulos, JohnBegin, Paul San Miguel,Steve Stuart, FrankCassells, Sue Strudwick,Norm Chapman, DirekUtharntharm and DavidMarquard. Back row (fromleft) are: Sven Banton, CrisBesser, Naveen Aurora,Victoria Geddes, TeriMrena and JohnBarrington.

Tribute to 25 yearsFoundation class member Richard Fethers

(MBA ’78) couldn’t make the AGSM’s 25thanniversary dinner because he was busy restruc-turing AOL Time Warner’s supply chain. He says itcan feel strange to read about his work in thebusiness press: “… several of the projects I’veworked on hit the Wall Street Journal the next day”.He is now awaiting his next assignment as anexternal consultant with AOL.

“My warmest regards to those of Year 1 of theAGSM. It was a great honour to have gonethrough those first two years,” he says. “I wouldlove to catch up with all of my class.”

Richard and his wife and daughter live in LakeOswego, a suburb of Portland, Oregon.They arecurrently contemplating a return to Australia.

SINGAPORE STYLE SSaammaanntthhaa MMaarrkk ((MMBBAA EExxeecc ’’0000 )) andMMaanniikkaavvaaddiivvaallee KKuummaarraann ((MMBBAA EExxeecc’’0011)) celebrate the establishment ofthe Singapore alumni branch at ajoint dinner with Melbourne BusinessSchool alumni in the Lion City.

BUILDING A NICHE: Steve Talbot P

HO

TO

GR

AP

H:

FIO

NA

MO

RR

IS,

HIL

LS

NE

WS

32 | AGSM I S S U E 2 • 2 0 0 2

CORPORATE PARTNERS

TECHNOLOGY UNDER SCRUTINYPatrick Crooks* takes a look at the question mark being placed over the value of technology.

ILL

US

TR

AT

ION

: R

OC

CO

FA

ZZ

AR

I

PATRICK CROOKS

Turning vision into a reality requires astrong execution focus. It is too easy to getlulled into a sense of achievement bysimply initiating a project to implement adesired result.This is the equivalent oftaking a drug in the hope that it will cureheart disease which, of course, it will not.It needs a lifestyle change that requires achange in diet, lots of exercise andprobably a change in work patterns.Toooften we sit back, take the miracle drug oftechnology, and consequently don’t doour part in helping it succeed.

ACTION WITHOUT VISION IS A NIGHTMARE A recent survey1 showed that 76 per centof technology-related projects are initiatedbecause of competitive pressure. Not allactions taken by our competitors arenecessarily right for us. If technology isimplemented for technology’s sake, twothings happen. First, the desired outcomesare narrowly and inappropriately definedin terms of technology rather than thebusiness strategy – because the focus is onthe tool rather than the required solution.Second, there may have been a better wayof getting to the outcome, which we mayhave missed because we broke afundamental rule – “diagnose and thenprescribe”. Put in the context of ROI,this means that we are probably over-investing in something that will notmaximise returns.

Where businesses have a highdependence on technology, this could

prove fatal. In how many of the so-called‘dot bombs’ was technology delivery toblame as opposed to the underlyingbusiness strategy? Very few, I would think.

SUCCESS REQUIRES PARTNERSHIP A new delivery model is required betweentechnology and business. Old modelseither focus on consulting to business togive a theoretical solution that can neverbe practically implemented, or thesuppliers themselves focus too heavily onproduct or technology delivery and missthe main objective for the implementation.

Business and suppliers need to work asa team with a relentless focus onachieving the business strategy. Suppliersmust act as partners. New supplier modelswill require the sharing of materialfinancial risk and accountability onoutcome delivery. Suppliers need to moveaway from being rewarded for sellingtechnology, and work more closely withbusinesses to enable their strategy, usingtechnology as one of the components. Ofcourse, delivery rigour is a prerequisite.

Businesses need to select providers thatunderstand their business from top tobottom, and allow them the opportunityto develop pragmatic solutions that aretailor-made for the business constraints inwhich they operate. Managers need tounderstand the risks associated with anysolution, and work diligently and activelyto mitigate these at every step of the way.

If suppliers and executives takeaccountability for delivering an holisticand pragmatic solution to a well-thought-out business plan, there will hopefully beno blame to apportion. ✪

* Patrick Crooks is one of the foundingmembers of IT and business processspecialist, the IQ Business Group, and waspreviously responsible for IQ Australia.Patrick consults and lectures on the topic ofIT-enabled business strategy.

FOOTNOTE1 Charles Holms, ‘Identifying Productivity-

Driven IT Projects’, a ForresterTechstrategy™ report, March 2002.

A recent accusation that technologyhas single-handedly ruined theworld economy has sparked a lot of

discussion over the true value thattechnology delivers.This debate is certainlynot new. Sometimes referred to as the“productivity paradox”, it questions therelationship between national productivityand investment in technology.We caneither get bogged down in the difficultmeasurement issues within this relation-ship, or focus our attentions on that whichwe can influence – management oftechnology and expectations.

The end-point, in my belief, is thatgeneralisations about technology arelargely to blame for a perception thattechnology is not delivering on itspromise.There are some basic and specificprinciples that are being ignored in theexecutive management of technology-enabled businesses.Technology has beenmade the prime suspect when, at most, itshould stand accused of aiding andabetting project and corporate failure.

VISION WITHOUT ACTION IS A PIPEDREAM A good technology implementation willnot, necessarily, make your business planwork. It is interesting to note that mergersand acquisitions have about as poor atrack record as the successful implementa-tion of new technology, with more than70 per cent failing to achieve desiredresults. A lack of focus on how toimplement a vision, insufficient post-vision sponsorship and poor execution ofchange processes are not just evident intechnology-related projects.

It is difficult to communicate desiredoutcomes in a simple way without settingexpectations that are underpinned bycomplex assumptions. Managers shouldnot shy away from the realities of imple-mentation (human, strategic and techno-logical), particularly when these realitiesdon’t serve their cause.We need tounderstand them, communicate themproperly and manage them pragmatically.