Lift Your Game: Why Reviving Wage Growth Requires Supply-Side Measures Including Economic Liberalisation

The collapse to the supply-side of Australia’s economy has been caused by two decades of public policy recalcitrance, exemplified by Australia’s high corporate tax rate, rigid industrial relations system, and growing red tape burden. Australia’s economy is in its 28th year of consecutive economic growth, the longest run of unbroken growth on record. This impressive sounding statistic, however, means little to the average person, family, or business not feeling much better off than a decade ago. This is because most of the aggregate economic growth in Australia is driven by rapid population growth underpinned by mass migration.

In the decade since the Global Financial Crises (GFC) of 2008-09, approximately 60 per cent of Australia’s economic growth has been the result of population growth. Just 40 per cent has been driven by productivity growth or changes to the labour force participation rate. This is the inverse of the period between the Keating recession of the early 1990s and the GFC of 2008-09.

This fact is revealed by anaemic growth in output per capita, which divides the total amount of economic output across the population. Output per capita has declined throughout the previous three quarters for the first time in four decades. Output per capita is admittedly only a partial measure of living standards. It doesn’t control for the myriad of other factors which affect people’s day-to-day lives. Nonetheless, it is a superior measure of aggregate GDP as it at least accounts for the effect of population growth. Growing the economy by adding more people doesn’t make the average person better off.

The underlying weakness of the Australian economy has preoccupied members of the economic establishment, epitomised by the Reserve Bank of Australia (RBA) and its Governor Philip Lowe. The official cash rate was fixed at 1.5 per cent since August 2016, until on June 4 this year the RBA reduced the rate to 1.25 per cent, and then again in July to 1.0 per cent. The last time the cash rate was increased was in November of 2010, when the rate moved 25 basis points from 4.5 to 4.75 per cent where it remained until late 2011. Since then the cash rate has progressively decreased to its current record low.

The latest cut occurred despite widespread belief the next move would be up. Each month product and service comparison website Finder provides data on the proportion of selected experts who expect the next RBA move to be a rate rise. The experts include Alan Oster of NAB, Shane Oliver with AMP, Bill Evans of Westpac. As recently as December 2018, 78 per cent of these “experts” expected the next RBA move to be a rate rise. In September 2018 that figure was 88 per cent. At an event hosted by Bloomberg in Sydney in December 2018, assistant governor Christopher Kent said “We have said that it’s likely the next move is up”. Also in December of 2018, Governor Lowe said “the next-move-is-up scenarios were more likely than the next-move-is-down scenarios”.

The softening of the economy has baffled the economic elites. Going back to the early 2010s, the standard narrative was the tapering off to the mining-investment boom would require the economy to restructure away from mining-led growth to growth in other sectors. Interest rates would decrease, the exchange rate would depreciate, and real wages growth would slow to facilitate the transition of resources out of mining toward non-mining sectors. While the change to relative prices has taken place, the expected transition has been far slower. Interest rates have been declining since November 2011. The exchange rate has depreciated 30 per cent from its 2011 high. Growth to real wages has been stagnant for three years. Yet business investment is just 11.8 per cent of GDP, which is lower than during the Whitlam years.

Declining investment in the mining sector has not been offset by a corresponding increase to investment in non-mining sectors. Mining investment as a percentage of GDP has declined from nine per cent in 2013, to three per cent today, while non-mining business has barely increased from nine per cent to a fraction under 10 per cent. Low rates of business investment are a key cause of slow productivity growth, which in turn is holding down wages growth. According to a recent report by the Productivity Commission, labour productivity growth in 2017-18 was just 0.4 per cent, which is well below the long-run average of 2.2 per cent annual growth since the mid-1970s.

Sector-specific challenges in the mining industry and resources sector, declining business investment, and moribund productivity growth are the consequences of close to two decades without substantial economic reform. There are three key areas in which this falls: the corporate tax rate, a rigid industrial relations system, and red tape.

Corporate Tax

Australia currently has a two-tiered corporate tax system, with a different rate applying to “small” and “medium and large” businesses. Businesses with a turnover of $50 million or more are subject to a 27.5 per cent rate of tax on their profits, which will drop to 25 per cent by 2021-22. All other businesses are subject to a 30 per cent tax rate. There are a number of deficiencies with this system. The 30 per cent rate is one of the highest in the developed world. For example, the current rate in the US is 21 per cent, in Singapore is 17 per cent, and in the UK it is set to drop to 17 per cent from 2020. This disparity reduces Australia’s attractiveness as an investment destination.

Further, the two-tiered corporate tax system reduces the incentive for business expansion and growth. All “progressive” taxes, whether of personal income or business profits, discourage growth, expansion, and aspiration because a larger percentage of income is confiscated as more is earned. However, the current structure of the business tax system is especially pernicious as it is not based on marginal revenue or profits, like the income tax system. Under the income tax system, when an individual moves into a higher tax bracket it is only the portion of income which falls into that higher tax bracket which attracts a higher tax rate, rather than the totality of an individuals’ earned income. Hence, average personal tax rates are always lower than personal marginal tax rates. But the current business tax structure doesn’t operate this way. When a business crosses the $50 million annual revenue threshold, its entire profits become subject to a higher tax rate. The system is so perverse that a company with revenue of $49 million would have higher after-tax profits than a company with $50 million revenue, if both companies had the same pre-tax profit.

The government should reduce the current top-tier of the corporate tax rate from 30 to at least 20 per cent, in line with key competitor nations. If the government isn’t willing to reduce the top rate of 30 per cent, it should at least make the tax schedule marginal rather than a step increase. That is, the 30 per cent rate should only apply to the portion of profit above 30 per cent, as with income tax.

Industrial Relations

Australia’s industrial relations system is among the most inflexible in the developed word. Each year the World Economic Forum’s Global Competitiveness Report ranks the economic competitiveness of 140 nations using 98 indicators such as macroeconomic stability, infrastructure quality, and labour market efficiency. Rankings are derived from a combination of statistical analysis and survey data. The 2018 report shows Australia ranked 110th of our 140 nations for hiring and firing practices, and 105th in the word for flexibility in wage determination. This means it is difficult and costly for employers to recruit suitable staff and for employees to find work.

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This is reflected in labour market figures. While the headline unemployment rate of 5.2 per cent is relatively healthy, there are pockets of weakness. For example, some 750,000 Australians currently are in receipt of the disability support person, close to 350,000 Australians are in long-term unemployment, half of whom have been out of work and looking for work for more than a year, and some 400,000 young Australians are underemployed, meaning they are unable to work the number of hours they would prefer. Added to this, 265,000 young Australians are unemployed, giving a youth unemployment rate of 11.8 per cent. High minimum wages, penalty rates, and other add-on costs to employers are increasingly making employing young and low or unskilled Australians an unattractive prospect.

If the Morrison government is unwilling to engage with fundamental reform of the Fair Work Act, there are specific measures they could pursue to improve outcomes at the margins. These include making Individual Flexibility Agreements more widespread, replacing the better-off-overall test with a no disadvantage test, removing the “conveniently belongs” provisions from the Fair Work Act (which allows unions to monopolise workers within a given industry), reinstate an exemption from unfair dismissal laws for businesses up to 50 employees, and introduce variable minimum wage and penalty rates for states based on economic conditions.

Red tape

The final and most crucial pillar of economic reform is to reduce red tape. Surveys and analysis consistently show red tape and overregulation are two of the biggest impediments to business investment, job creation, and economic growth in Australia. The 22nd Annual Global CEO Survey released by Price Waterhouse Coopers in 2019 found overregulation was the equal biggest threat to the ease of doing business, alongside policy uncertainty. By contrast, climate change was the 13th biggest threat, behind factors such as exchange rate volatility and cyber threats.

Similarly, 48 per cent of business leaders said that regulation, in terms of its cumulative impact and constant change, was the most significant barrier facing Australian business success today, especially small and medium sized ones, according to a survey published by Westpac in 2018. This was far higher than the second highest response, which was “businesses taxes are too high” at 14 per cent. Notably, climate change did not rate a mention, although 2 per cent responded “other”.

The responses to the surveys are supported by quantitative analysis of the red tape burden. Research by the Institute of Public Affairs estimated the economic costs of red tape in Australia is at least in the order of $176 billion per annum , which is equivalent to 10 per cent of GDP. This is more than Australians pay in income tax, the GST, or business taxes. But this estimate captures more than just financial costs. It measures forgone human potential: all of the businesses which are never started, the jobs never created, and the pay rises which never materialised because of red tape.

Red tape, in other words, is disempowering. It prevents Australian workers, businesses, families, and community organisations from applying their skills and talents to achieve a goal of their own design. People flourish in environments which allow, and support them, in achieving their potential. Red tape prevents this by taking power, authority, and choice away from Australians and giving it to politicians, bureaucrats, lobbyists, and consultants. Two sectoral examples demonstrate the pernicious effects of red tape on business investment and economic growth: the finance and resource sectors.

As alluded to earlier, monetary policy has been highly accommodative since 2011. So why does monetary policy appear less effective in stimulating economic activity than in the past? To consider this, it is important to remember that the key conduit through which changes to the cash rate are expected to influence the broader economy is through the financial sector. Traditionally, a lower cash rate would be associated with an expansion of economy activity, and vice-versa. The key transmission mechanism is via the effect the cash rate has on other interest rates in the economy. The cash rate is the market interest rate for overnight loans between financial institutions. As such, according to the RBA, “the cash rate serves as a benchmark for interest rates at which funds can be lent or borrowed in financial markets, including for different sources of bank funding, such as wholesale debt and deposits”. A lower cash rate reduces the cost of bank funding, which in turn can be passed on to borrowers through lower interest rates. Lower interest rates flow on to more economic activity, such as higher investment and spending. Accommodative monetary policy will only work its way through the economy if financial institutions behave accordingly. However, the major banks have been less willing to pass on interest rate cuts than in the past. The range of factors for this include the costs of international financing, risk aversion, and general economic conditions. But it is also partly a function of government regulation and red tape. Just the last three years alone has seen the Banking Executive Accountability Regime (BEAR), the imposition of the bank tax, $150 million extra to APRA, and the Royal Commission into Misconduct in the Banking, Superannuation, and Financial Services Industry.

On top of these recent incursions sits a morass of further regulation, including macroprudential standards which dictate capital and liquidity requirements administered by APRA, corporate governance regulation administered by ASIC, competition and consumer regulations administered by the ACCC, as well as laws which have a general application. Is it any wonder financial institutions are becoming more risk averse? Next, consider the resources sector. Declining investment and economic activity in the mining sector is partly, and perhaps in large part, due to changing global economic conditions beyond the influence of the domestic market or policy making in Australia. Nonetheless, public policy has made the decline sharper and faster. Some examples illustrate the point.

The Roy Hill iron ore mine in the Pilbara region of northern Western Australia required more than 4,000 licences, approvals, and permits for the pre-construction phase alone. While the Adani Carmichael Coal project in the Galilee Basin of Central Queensland took nearly a decade to achieve final approval, faced more than 10 legal challenges, and prepared a 22,000-page Environmental Impact Statement. Only the substantial swing against Labor in Queensland in the 2019 Federal Election convinced policymakers that further outstanding impediments to the project should be removed so as to allow the mine to proceed. And then there is Section 487 of the Environment Protection and Biodiversity Conservation Act (EPBC 1999), which extends special legal privileges to green groups to challenge federal environmental project approvals. Research by the Institute of Public Affairs found that from 2000 (when the EPBC Act was introduced) to 2016, proponents of major projects have spent approximately 7,500 cumulative days held up in legal challenges as a result of section 487.

On top of this are a range of policies which discourage economic development in the resources sector, including Renewable Energy Targets at both the Commonwealth and state level in Victoria, South Australia (until 2017), Queensland, and Tasmania, the Paris Climate Agreement, the prohibition on the development of a nuclear power facility in Australia, and state-based limitations on the development of onshore and offshore gas. The total effect of these policies is a resources sector which is far smaller than would otherwise be the case.

The cumulative effect of a high corporate tax rate, a rigid industrial relations system, and a large and growing red tape burden is a collapse of the supply-side of the Australian economy. Australia’s economic potential— the ability of businesses, workers, and civil society to generate growth and prosperity— has been diminished by two decades of public policy failures of commission and omission. The imposition of new policy, such as higher income taxes, introduction of the Fair Work Act, and signing the Paris Climate Agreement, has met close to two decades of policy inaction in the areas of reducing red tape, reducing the corporate tax rate, and liberalising Australia’s industrial relations system to produce stagnant per capita income growth. Only by expanding the supply-side of the economy through a program of economic liberalisation will the Morrison government be able to lift Australia out of its per capita income recession.

Daniel Wild is the Director of Research for the Institute of Public Affairs (IPA). Find out more about the IPA by visiting www.ipa.org.au.

ECP Asset Management Chairman & CIO Dr Manny Pohl AM: Redefining active investing

At the beginning of his funds management career, Emmanuel “Manny” Pohl never dreamed that three decades later his contributions to the industry would receive recognition from Queen Elizabeth. Despite amassing an impressive list of accomplishments over the years, including building two multibillion-dollar businesses from the ground up, Pohl says that receiving the Order of Australia in June is at the top of his professional highlights reel.

The founder of one of Australia’s top-tier investment firms, ECP Asset Management (ECP), Pohl was among the elite recipients of this year’s Queen’s Honours List for Australia for his significant service to the finance sector and general community. While the process was nerve-racking, he describes the recognition as “an amazing accolade. It was a really wonderful moment for me and certainly not expected.”

Since immigrating to his adopted home of Australia in 1994, the native South African has made an undeniable mark on the industry. Employing a three-point strategy that Redefines Active Investing, ECP has skyrocketed over the past year into the country’s preeminent asset management firm. With $1.3 billion in funds currently under management, the company is guiding retail investors through a unique style that delivers long-term results outpacing the general market.

The Road to Excellence

Pohl began honing his skills as a financial investment whiz more than 30 years ago with a leading South African brokering firm followed by a large Australian investment house. During his time as a member of the South African Accounting Practices Board, he was appointed as a delegate to the annual meeting of the Board of Governors of the World Bank and the International Monetary Fund in Bangkok.

Along his impressive journey, Dr. Pohl has accumulated a string of credential letters behind his name, including DBA, BSc (Eng), MBA, FAICD, MSAFAA and F Fin. His engineering background gives him a methodical and disciplined approach to his role as a director, which he views primarily as a mentor position rather than a dictatorship. He has attained status as a Master Practitioner Member of the Stockbrokers and Financial Advisers Association and is a distinguished fellow of the Global Federation of Competitiveness Councils, Australian Institute of Company Directors and the Financial Services Institute of Australasia.

In 1994, he brought his expertise to Australia by joining forces with Wilson HTM. Two years later, he co-founded Hyperion Asset Management, which he guided into an award-winning fund management firm overseeing more than $5 billion in assets. Five years ago, he sold his stake to form EC Pohl & Co and, with his son, Jared they started the investment house ECP Asset Management. “It’s been a wonderful run. Australia has been really good to me,” says Pohl, who is energised about the future potential of his latest venture. “ECP is certainly firing on all cylinders.”

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The founder of one of Australia’s top-tier investment firms, ECP Asset Management (ECP), Pohl was among the elite recipients of this year’s Queen’s Honours List for Australia for his significant service to the finance sector and general community

Redefining Active Investing

With corporate headquarters based in Bundall, Queensland, ECP has already raised $2.5 billion in committed funds. ECP operates as a holding company for four different entities: ECP Asset Management; Flagship Investments (ASX:FSI) for general Australian equities; Barrack St. Investments (ASX:BST) for non-traditional smaller mid-cap stocks; and Global Masters Fund Limited (ASX:GFL), which grants access to Warren Buffet’s high-status Berkshire Hathaway portfolio.

This time around, they consciously approached the investment strategy differently. “We coined the term ‘Redefining Active Investing’ because active investors have started to lose their way a bit, particularly if they come from a stock picking background like I do,” explains Pohl, who is dismayed that so many firms are scaling back forensic research. Rather than following the trend of rating stocks based on future performance, ECP looks at the results the management team has achieved and the tenure of the business. If they like the business model, then they start to look at the potential.

“We consider the performance over the past three to five years and then asses its potential. Then we have small, concentrated portfolios. We don’t bet on everything, but we certainly bet on the ones we like and ensure the alignment of interests within our team,” Pohl says. “We insist that all our guys put their money into the same stocks that we include in our clients’ portfolios so that there is total alignment of interests. That’s what I think creates a really successful fund management business.”

Tapping the Vision of Younger Teams

ECP is also bucking the tradition of having senior employees looking after client portfolios. In fact, tapping the vision of younger teams has become a breakout strategy in achieving outstanding results. Pohl cites their agile minds and ambition as well as their understanding of modern technology and what is going on in the world as tremendous assets. He also applauds their generational viewpoints on corporate governance and respecting the attitudes towards social and environmental issues.

“We pick a group of young men, get their buy-in into the process and what it delivers. It’s a very different approach, but the results speak for themselves,” he says, noting ECP’s top ranking among 64 asset management firms over the past year, according to research house data. Over the past five years, the company ranks sixth overall. His investment management strategy, which he has been perfecting since 1998, has delivered a long-term return of 12.5 percent in comparison to the general market’s 8 percent.

“This is an amazing feat thanks to the team around me. I’m really happy with the progress we’ve made. We’ve got a young team that is going to be around for 20 to 30 years working together. Over that period, they are going to be one of the pre-eminent firms in Australia,” he predicts.

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“I’ve always said that fund managers have nothing to offer people other than their reputation. We want to be seen as a firm that puts something back into the community.”

By putting young teams within this framework and allowing them to follow the process, the company is also able to minimise the inherent key-man risks that plague asset consultants and research houses. Pohl has found that many of the typical workaround strategies, such as hiring people of different age groups and demographics, are not as effective. Developing a system and processes that everybody consistently follows is important, but you must hire the right people to follow your philosophy, he says. “That’s not to dictate the things you are going to invest in but rather teach an investment philosophy and allow the team to apply it to their knowledge of companies. If companies don’t live up to their testing, then they fall by the wayside.”

Investing in More Than Financial Returns

As a firm believer in taking personal responsibility for building strong communities, Pohl shares his expertise as a board member for various causes, major corporations and professional organisations. His passion for sports, arts and the environment drive his continual involvement with Bond University’s Rugby Club, Athelney Trust PLC, Flagship Investments Limited, Global Masters Limited and the Currumbin Wildlife Hospital Foundation.

This same commitment to community is a differentiating factor in ECP’s success, says Pohl, especially because it resonates so strongly with the younger workers, who are more global in their thinking. Each senior team member is expected to contribute their time to a non-profit organisation. “If it takes them away from the office for a couple of hours, that’s accepted. We insist that everybody is involved in the community in some way.”

Company-wide participation is also strong for a cooking event for the homeless, and 8 percent of annual profits are directed into the Pohl Foundation. “The younger people believe in this kind of approach, maybe a little more so than what the older generation does,” Pohl explains. “They are all keenly contributing in their own time, and the firm contributes with money as well.”

Looking forward to the future, Pohl wants his companies to “perform well and generate wealth for our clients. Clearly, we want to be recognised as one of the pre-eminent firms in Australia. That goes not only for investment performance but also the ethics of the business and how we conduct ourselves. Reputation comes from both of those things.”

In Pohl’s world, working with integrity is the most important factor. “I’ve always said that fund managers have nothing to offer people other than their reputation. We want to be seen as a firm that puts something back into the community. When we invest your money, you know that it’s going to be invested in a way that I’ve always referred to as ‘it’s better to sleep well than to eat well.’ We are very particular about businesses and investments and what we do in the community to make sure it really rings the right bells.”

Find out more about EC Pohl and ECP Asset Management by visiting www.ecpohl.com and www.ecpam.com respectively.

Luina Bio: Growing impressively

Brisbane-based company Luina Bio, a drug development and contract manufacturing organisation serving the pharmaceutical, biotechnology and veterinary industries, has over 20 years’ experience in providing comprehensive manufacturing solutions for both biological and small molecule drugs.

Managing Director Les Tillack leads the company’s innovation and committed pursuit of this world-leading contract manufacturing. A bio-tech expert, Mr Tillack brings over two decades of experience, ensuring the organisation is able to continuously adapt to the changing needs of the industry. Mr Tillack spoke recently with The Australian Business Executive to discuss the two main types of drugs manufactured by Luina Bio, the issues and opportunities facing the biopharmaceutical industry, and the impressive recent growth that has seen the company expanding into new areas of development.

Contract manufacturing organisation

“What we do, in essence, is make biopharmaceutical drugs for use in human clinical trials,” Mr Tillack explains. “When drugs are being developed, they have to go through an extensive safety and efficacy testing process, which are called clinical trials.”

Luina Bio’s main function is to manufacture drugs for other companies that are intending to test their drugs in these trials. This is usually undertaken at the early phases of the trial, before a company establishes their own manufacturing arrangements.

“We manufacture two main types of drugs. We manufacture recombinant protein drugs – they are drugs where a custom protein has been designed to mimic various biological activities in the body. We take bacteria that have been genetically modified, to then express and produce those proteins.”

The second type of drug manufactured by the company is an exciting new class of drug in the microbiome space, an area concerned with the healthy flora of bacteria that people have inside and outside their bodies.

“The theory around microbiome is that various disease states are being caused by having an imbalance of unhealthy and healthy organisms. There’s been a lot of development happening now in manufacturing of live microbial biotherapeutics, which are essentially live bacteria, which are then used in these microbiome therapies.”

The company’s clients are generally drug development and pharmaceutical companies in the process of developing new products. This includes only a small number of Australian customers, with about 90-95% of work last year coming from overseas.

“They can be smaller companies that have taken a product that’s been developed at a university or research institute, which has been spun out into a development company, right through to multinational pharmaceutical companies that also have drugs in development that want to use the services of a contract manufacturer rather than their own facilities.”

Australia is also well positioned in the biopharmaceutical space.

“The reason a lot of people get interested in coming to Australia to work is the R&D tax incentive, which a lot of people overseas have heard of, and it’s why they’re interested in talking to Australia in the first place. They end up staying for other reasons.”

However, the country’s pharmaceutical space does have a positive global reputation. The regulatory system around manufacture of pharmaceutical products is particularly strong, and the work that comes out of Australia is well-recognised internationally.

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Luina Bio is a drug development and contract manufacturing organisation serving the pharmaceutical, biotechnology and veterinary industries

Fast-growing industry

Being one of the only companies of its kind operating out of Australia, Luina Bio doesn’t experience a lot of competition domestically. There is only one other contract manufacturer in the country, also located in Brisbane.

“[The company] is owned by a multinational corporation, Thermo Fisher, and they manufacture monoclonal antibody drugs from mammalian cell culture. We have a completely different service. We manufacture from bacterial and yeast fermentation.”

There are a number of other companies internationally that do the same work as Luina Bio, although the company has several unique selling points separating it from any direct competition, the primary one being its commitment to flexibility.

A company mantra of ‘how hard can it be?’ encourages this flexibility. Such an ethos can be seen in its work with microbiome products, most of which involve growing anaerobic organisms. These can be hard to grow, as they require no oxygen to be present during the entire manufacturing process.

About three years ago we were approached by a fairly large US drug development company, and we were asked if we could manufacture those products – could we grow anaerobic organisms under GMP? Our answer to that was, ‘well we’ve never done that before, but how hard can it be?’”

Within 48 hours, the company was discussing the idea with a senior member of the company at Luina Bio’s facility. It turned out the US firm had approached 39 other contract manufacturers around the world to do the work, none of which had been willing to try.

“The answer to the question was that it was actually very hard, but we persevered with it and have become now one of the world leaders in the space. We speak at a lot of the technical conferences, and we have technical expertise probably better than anybody else in the world in this space. We have a very high success rate, and we know that we’re doing very well in comparison to our competitors internationally.”

There is huge potential for growth in production of products from bacterial fermentation. The microbiome space is already offering exponential growth, but there are also significant opportunities in the recombinant protein space.

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“The microbiome space is the next big thing in drug development. Everybody is rushing to get on the bandwagon with that one. We probably have about thirty discussions running at the moment with potential clients who are looking for manufacturing in that space.”

The growth in the recombinant protein space is also positive, with new technologies being developed which allow products to be manufactured using bacterial expression systems rather than mammalian expression systems, which result in a much lower cost of goods.

“I mentioned that we have very few customers from Australia,” Mr Tillack says. “It’s not because there aren’t potential products to be manufactured for Australian companies. The real issue is a lack of accessible capital for drug development companies, for our customers to take their product into clinical development. It’s very expensive.”

In other international areas, such as the US and Europe, capital seems to be much more free flowing, with companies being able to raise significant amounts of money to develop drugs and take them to trial.

“The microbiome product manufacturing space is actually very new. It’s really only existed in the last 3-5 years as even a concept, of taking live bacterial products into the pharmaceutical space. Regulators around the world are rushing to try and develop a regulatory system around those products, so that is leading to a fast-changing environment.”

With the regulatory rules in this space changing almost yearly, this presents a challenge in manufacturing and developing products for companies like Luina Bio, which must work hard to keep abreast of fast-changing regulations.

Beginning a new chapter

“We used to be a company called PharmaSynth, a wholly-owned subsidiary of a drug development company called Progen Pharmaceuticals. Just over three years ago an opportunity arose to buy the PharmaSynth company through a management buyout.”

This prompted a number of employees and other investors to buy PharmaSynth from its parent company, Progen. The result was a new independently held entity, which was later rebranded to become Luina Bio.

“We decided to rebrand and refocus the direction of the company, and we made the decision to change the name to Luina Bio. PharmaSynth was a little bit confusing, because it made it sound like we’re a synthetic chemistry company, rather than a biologics company.”

PharmaSynth came into existence in 2008, being a part of Progen beforehand. This particular group has therefore been performing contract manufacturing for about twenty-five years, with competing interests proving a barrier to any real success.

“Now that we have a complete mandate to chase the business, we’ve actually been very successful with it. Three and a half years ago, when we had the management buyout (MBO), we had twelve staff. Today we have 65 staff. We are currently recruiting and will be about 85 people in a couple of months from now, and we’re projecting that 2-3 years from now we’ll have 300-350.”

With this impressive growth in staff numbers, revenue has likewise been rising, increasing five-fold over the three years that Luina Bio has been in existence, and meaning the company is now significantly profitable.

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The company has several unique selling points separating it from any direct competition, the primary one being its commitment to flexibility. Credit: Pat Brunet / Event Photos Australia

“In 2017, we won the Queensland Export Awards in the Health and Biotechnology category, and in 2018 we were a winner in the Westpac Top 200 Companies of Tomorrow. So things are going very well.”

When Luina Bio started three years ago, it was working out of a manufacturing facility purchased as part of the MBO with Progen. Since then the company has opened a new manufacturing facility in the local area, allowing it to perform process development work and to give additional development and storage space.

“The big new thing coming up for us is the development of a much larger manufacturing facility, to give us bigger capacity. The biggest challenge we face at the moment is the fact that the facility we have now is essentially sold out for more than twelve months.”

With there now being trouble fitting new customers into the facility, the company is looking to start construction on a newly designed and developed facility early next year, with manufacturing happening towards the latter part of 2020.

The future looks bright for Luina Bio, with rapid growth helping them become a significant player in the global biopharmaceutical space.

Find out more about Luina Bio by visiting www.luinabio.com.au.

Think Childcare (ASX:TNK) CEO & MD Mathew Edwards: Advancing Early Education

Think Childcare Limited (ASX:TNK) is emerging from the recent volatility of the early childcare sector as a premier brand in the Australian sector. At the helm of this success is Mathew Edwards, who serves as CEO and managing director of one of Australia’s leading early childcare networks.

Headquartered in Drummoyne, New South Wales, the company has grown from 12 initial centres to 80 facilities owned and managed that provide long-day care to children ages six weeks to six years. More than 1,500 educators work between 6 a.m. and 6 p.m., five days per week, delivering about a million days of learning and care each year.

Edwards brings a wealth of experience to the table. After operating a multisite retail group that he started from the boot of his car and grew into a publicly listed company, he moved on to managing a group of childcare centres in the early 2000s. Under the Think Childcare banner, his strategy is to acquire underperforming childcare centres, identified by a strict acquisition criteria. He then integrates them into the Think Childcare network. Consolidating marketing and compliance programmes relieves the administrative burden at the centre level, which optimises performance and increases occupancy to boost profitability.

After acquiring holdings from the failed ABC Learning Centres, Think Childcare launched its first listing on the Australian Securities Exchange (ASX:TNK) in 2014 with a plan to revitalise underperforming centres into strong trading groups. Edwards has successfully achieved his goal in just four years with the company building up $78 million in total assets and delivering an overall shareholder return of 19% compared to the ASX300 Accumulation Index of 11.9%, according to its latest annual report.

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Banking on a Long-Term Investment in Childcare

“Think Childcare has grown up in full view of the public as a public company,” says Edwards, who is proud of how his company has weathered the sector’s strong headwinds. Less than two years ago, key operators in the industry, including Think Childcare, experienced a significant 25% drop in share prices due to oversaturation and stagnant enrollments. However, the future is looking brighter, reassuring Edwards that childcare is a smart long-term investment.

Driving steady sector growth during the past year are the recent regulatory reforms that now allow the government to heavily subsidise the cost of childcare. Currently, the funding provides families with up to 85% of $120 per day. With government payments being issued every Tuesday, the subsidy system now underpins Think Childcare’s revenue. Enrollments are also increasing as more affordable childcare options become accessible, prompting mothers and low-income families to return to the workforce.

Another boost to growth comes from the Australian Department of Education’s extension of Commonwealth preschool funding. The 2019-20 budget earmarks $453.1 million for the National Partnership on Universal Access to Early Childhood Education to ensure that 350,000 children engage in a quality preschool programme for 600 hours before starting full-time school.

During this industry downturn, Think Childcare pivoted. The company pledged a $3.1 million capital investment to significantly improve its quality of care offerings, elevate marketing efforts, streamline operations and strengthen human resources. One of the company’s most aggressive positions was acquiring the premium childcare brand, Nido Early School, in 2017 to transform how it delivers childcare.

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Think Childcare Limited (ASX:TNK) is emerging from the recent volatility of the early childcare sector as a premier brand in the Australian sector

“It’s actually slightly more expensive to deliver that care, but being best in market ensures that you have a higher occupancy, and therefore, a higher profitability,” says Edwards, who anticipates all centres will be fully transitioned into the Nido model by the middle of next year.

Edwards believes that the earnings cutback this year, which was used to fund the new platform, is an essential part of delivering tomorrow’s growth. “We are making the decision to build a company for the long-term,” he explains. “We always operate on the premise that every decision we make is in the long-term interest of building a stable and predictable business. Obviously, we expect that to literally pay dividends for many years to come.”

Think Childcare is also shifting strategies in its target demographics by moving away from more affluent, higher-density areas to fill the void for high-quality care and education in the outer suburbs. Not only is this an untapped market, Edwards notes, but higher subsidies are typically paid to families living in these areas.

“The theory is that most families in the outer suburbs are aspirational,” Edwards says. “They have a desire for their children to have a better life than they had, so they are certainly seeking a higher-quality offering. We’re probably the first organisation to really focus on that quality piece.”

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Implementing a Forward-Looking Growth Plan

Moving forward, Think Childcare expects its growth to stem from three key areas. A central approach is to expand its network of centres across Australia through acquisition. Edwards describes the company as a lease-hold operator working closely with various developers around the country. This ranges from small developers producing two or three centres each year to larger national developers.

“We have a very unique model where we develop childcare services with incubator partners and develop some services internally,” Edwards explains. “We manage those childcare services until they trade up to our bankable metrics, which is around 75% occupancy and at a certain profit level. We can acquire those centres off our incubator partners at four times earnings. We have minimal integration risk. As far as everyone is concerned, from day one, it’s a Think Childcare service under a Nido brand.”

The company has also started to enjoy some economies of scale, Edwards notes, as the operational and educational transformations come to a completion. “That will see us be able to operate at scale in the future. In hindsight, it’s probably something we should have done prelisting, but it’s something we are actively invested in now.”

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“What families are looking for is to ensure that we help prepare a child for the rest of their life”

“Interestingly, we are the first listed childcare operator to actually invest a large amount of capital back into our existing businesses,” says Edwards, who revealed that Think Childcare is investing up to $7 million to upgrade all its centres to best in market status. He is banking on the integration of the Nido philosophy as being the company’s key differentiator in a fairly homogenous sector. Like most operators in the market, Think Childcare first launched as a typical run-of-the-mill childcare service, he admits. “It was honest, good childcare service, but there was no differentiator in terms of our service delivery. When you do that, you just get your share of the market. When everyone is at 70% occupancy, you are at 70% occupancy.”

He defines Nido-quality service as “an exceeding quality of care and education,” which he believes drives parents’ decisions in childcare. “We are certainly a place of education as opposed to just a place of care. The word care is a critical piece, but it’s a place of education,” he says. The Nido curriculum is play-based to inspire curiosity for learning and nurture a love for learning. The school readiness curriculum meets standard educational outcomes, but it is also focused on building resiliency.

“What families are looking for is to ensure that we help prepare a child for the rest of their life, that we allow them to be little, that we build resilience into a child’s makeup and we provide an environment full of love and caring,” Edwards says. “This ensures a child has a love of learning that carries them through the rest of their life.”

“It’s important for investors to understand that we are building something that is built to last,” he stresses. “We are steadfastly driven on building a robust business and always ensuring we’ve got a balance between operational risk and acceptable debt exposure. We certainly see the best years for the sector and for Think Childcare still ahead of us.”

Find out more about Think Childcare (ASX:TNK) by visiting www.thinkchildcare.com.au.

Rick Fenny Group: Creating a legacy

As one of Australia’s most successful career vets, Rick Fenny has established a network of Western Australian metropolitan and regional vet clinics, using the Rick Fenny Group to build a diversified portfolio of businesses across the state and beyond.

Dr Fenny’s work is well known across Australia, and he has been widely recognised for his contributions. He was a finalist in both the 2018 and 2019 Western Australian of the Year Awards, growing a business empire while ensuring WA’s outback residents have access to quality veterinary services for their pets and livestock. Dr Fenny is a passionate advocate for West Australian tourism, owning a range of ventures in the state including the Maitraya Private Retreat and the award-winning Ocean Park Aquarium. Dr Fenny spoke with The Australian Business Executive about the various divisions that make up this family run business, the issues in WA’s regions still failing to get nationwide attention, and the legacy he intends to leave behind in the form of new TV show Desert Vet.

Family-run business

The Rick Fenny Group is a family run business working across several divisions throughout Australia, and owning a number of vet practices, pastoral stations, real estate and hospitality ventures in the form of travel and tourism services.

“We’re mostly vet practices,” Dr Fenny explains, “and they’ve really evolved rather than being planned. It happened in a haphazard way, starting in the Pilbara [region], where I started my first vet practice in 1975.”

Whilst moving around the country trying out new business endeavours, Dr Fenny continued opening vet practices, admitting that they have followed him around the many Australian regions he has found himself working and living in.

“I usually bought the property – that’s been one of the things I’ve done all the way along, always try to own the property. I built a vet hospital in Karratha in the late-seventies and then either started or took over other vet practices [in other regions].”

After being told by a client up north that in order to be an ‘A-Grade’ vet he would need to set up in the city, the next logical step was to do just that. This resulted in the establishment of a practice in Victoria Park, Perth in 1982, before a return to his roots.

“In the mid-eighties I decided I’d go back to my home town of Albany, in the south of Western Australia, where I’d grown up. I thought my kids were growing up a bit and I’d love them to have the same kind of childhood as I did in that beautiful part of the world.”

The move to Albany followed the same principle as previous moves, with Dr Fenny finding a well-located property in the middle of town to turn into a vet clinic. It was around this time he realised the benefits of running his various practices more remotely.

“I had one in Perth, one in Karratha, and I thought I know what to do here – we just find a way to run them at arm’s length. And it continued from then, and I really just indulged myself in doing what I wanted to do and building up vet practices at the same time.”

Dr Fenny admits this approach may not make the most sense business-wise, but it has served him well over the years. He has used this approach to branch out into other interests, building up a portfolio of pursuits stemming from his ongoing passions.

“Other interests followed me in the same way, and it’s evolved into having my love of the ocean and for everything marine. I bought into an aquarium in Shark Bay. My son Ed had just graduated in Marine Science, so he came and worked there about 12-13 years ago.”

Another key passion has been farming, which Dr Fenny has been involved in since his childhood. He has owned farms in Albany, and helped his youngest son Sam purchase and run a station in the Gascoyne area of Western Australia, which he still runs today.

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Quality veterinary services

The establishment and growth of a network of vet clinics was the first chapter in Dr Fenny’s vast success, and the journey in developing the growth of the business provided a number of key business lessons that have permeated all the group’s enterprises.

“I put my trust in having young vets, who I empowered to run the businesses, to run my business,” Dr Fenny says. “We had a few things that were a little bit adventurous at the time. I gave them a percentage of the turnover right from the word go.”

As soon as Dr Fenny was happy that the people he was employing were competent and committed, he began to give them real ownership of the practice, stressing that the harder they worked the more money they would earn.

“Those that had a bit of a business head on their shoulders certainly grabbed that opportunity with both hands. That almost ensured they would be successful, because that person depended on the performance to make the practice turnover as much as possible, and be as viable as possible, and at the same time that helped me and gave me peace of mind.”

Much of the success of the group’s vet practices has come from the fact that regional areas have often been neglected, with a dearth of quality veterinary services meaning many places were crying out for the kind of practices Dr Fenny was starting up.

“WA’s become more and more city-centred, everyone thinks that everything is bigger and brighter in the city, and the regions have got neglected. Unfortunately, that trend’s continued. I think it’s a government thing as well as an attitude over here.”

This has led to a number of issues in the regional animal care industry across the state, with a significant amount of mining taking place and huge potential for tourism that has so far not been exploited in the same way as some of the eastern states, such as Queensland.

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As one of Australia’s most successful career vets, Rick Fenny has established a network of Western Australian metropolitan and regional vet clinics

“Farming is the other area that there’s a huge divide between the city and the country, and people generally in the city just don’t know what goes on. The big thing that they fail to realise is that farming generally is very difficult work, but you’ve also got to have all your ducks lined up. There’s about ten things you have to have in place.”

Farming success is hugely dependent on a number of factors, such as adequate rainfall, a market for the product, prices that are competitive but also high enough to make it worthwhile, having proper finance in place, and a labour source.

“When the mining boom was happening in WA, that had a dreadful effect on other businesses, and especially farming operations, because people could earn ridiculous money being a stop-and-go guy on a mine site, or a cleaner.”

There is also a big role for the government to play in a successful farming season. The process requires a government that is not only helpful to farmers and regional businesses, but one that doesn’t tie up proceedings with endless red tape.

“Politics is a huge one,” Dr Fenny says. “When the Gillard government just arbitrarily stopped live exports, we lost the live export trade overnight. There was just shocking political interference, and the repercussions are still there.”

Diversified portfolio

Having already diversified within the vet industry through a string of different practices, Dr Fenny was keen to further diversify by branching out into other industries and ventures based around his passions.

“With the tourism side of it, [we have] Ocean Park Aquarium in Shark Bay, and we’ve diversified in that business as well. Ocean Park is actually ten businesses in one. We’ve got the marine display, but we’ve also got a nice little café, a bookshop, we’ve got a bar there.”

The group also offers four-wheel drive tours around Shark Bay, and has just purchased a 40-foot boat from which it provides diving lessons and a marine safari, where visitors can experience the natural marine life up close.

“We’ve also purchased Maitraya,” Dr Fenny explains, “the most beautiful property in Australia I think, but it’s got all the elements. It’s not only a beautiful property, it has ocean frontage and about 650 acres of farmland and bushland and heathland.”

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Over the years of diversification, Dr Fenny has learned a number of key business lessons to help his many ventures run smoothly, not least how to conduct business with a number of different partners across different industries.

“If you want to be in business, you’ve got to be ethical, you’ve got to be honest. Otherwise, people see right through you and you’re out the door. Any advice for any budding entrepreneur is to take that on board well and truly.”

In addition, Dr Fenny is not averse to taking risks, recognising this as a key business strategy. This involves having self-belief, trusting in your own ideas. Without taking risks, businesses can stagnate and growth can be hard to come by.

“Trust is the big one, I suppose. I do trust people, sometimes to my detriment, but I reckon I’ve got about a 99% pass mark by trusting people. 99% of people I’ve trusted have given that trust back, and returned it with interest.”

One of the hallmarks of Dr Fenny’s belief in business is in building networks and a strong support team. By gathering good people around you, people who know more than you about certain areas, the chance of having a successful business increases.

“It’s all about partnerships,” he says. “I’ve got some of my partnerships that go back forty or fifty years, and we’ve been helping each other all that time, and a lot of it’s done on a handshake, on trust. That’s the Aussie way to do it.”

Creating a legacy

Dr Fenny’s newest venture is one he describes as a being a culmination of his career, the path down which his interests and passions have led him. It is a new TV show, called Desert Vet, set in the desert of Western Australia with Dr Fenny as the lead character.

“It’s got all the elements of stuff that I’ve always done, and always loved,” he says. “It’s got vet practices, it’s got all sorts of animals and wildlife, it’s got beauty and the scenery of Western Australia, the regions. But most of all it’s got my family.”

Dr Fenny’s Marine Scientist son Ed and his daughter Louisa, who is a vet, are both involved in the project. It is just another way for the Fenny family business to expand and evolve, offering new ways of seeing life.

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“If you want to be in business, you’ve got to be ethical, you’ve got to be honest.”

“We’ve just finished filming for our new series, a four-episode series. We’re editing it at the moment. Before that we had a pilot, which was so successful that we were asked to do a series. It’s been sold to UK TV and also to Europe, and it’s going to be shown on Channel 9 later in the year, probably on prime time viewing on the main channel.”

The aim of the show is to highlight the beauty of Western Australia, giving tourism a boost and showing viewers how wonderful the region is to visit, with particular focus on the Shark Bay and Pilbara areas.

“There’s some spectacular scenery, swimming with wild sharks and tagging them, and flying over the desert country chasing camels. It really is lovely. I know it’s going to help WA, particularly the regions, because I’m a great supporter of the regions of the state, and they do need that little bit of help.”

Additionally, the show will be used as a vehicle for Mr Fenny to discuss important regional issues, particularly around farming and animal care, to highlight some of the problems in the state to the country as a whole.

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Dr Fenny sees the show as a key part of the legacy he aims to leave behind for his family. His children and grandchildren are always in his thoughts, and leaving something both to remember him by and to continue work on is hugely important to him.

“I’ve got eight children and thirteen grandchildren, and I’ve already got two of the children involved with Desert Vet, but we’ve got potential for all the others to be involved too. It’s a huge life, a little bit like what Steve Irwin and his family did.”

As a businessman with a knack for finding success in unrelated industries, Dr Fenny really has the world at his feet in terms of where the Rick Fenny Group goes from here. It is no surprise to hear him excited about what the future might hold.

“I guess I’d like to diversify even more within what I’m doing,” he says. “The classic one is on our station [in the Gascoyne], there’s this beautiful, organic goat and sheep meat that’s grown from saltbush and other natural herbages, and we’d like to promote it as its own brand.”

Within a number of months, Dr Fenny also intends to release a series of books about his life, called Red Dog Vet. The first book will be released to coincide with the start of Desert Vet in order to further diversify Dr Fenny’s portfolio.

Dr Fenny admits that making money is not always that easy, but he is now committed to putting back everything he earns into the projects that are his passions, building even more worth into his professional legacy.

Find out more about the Rick Fenny Group by visiting www.rickfennygroup.com.

O’Shannessy’s Quality Tours: Luxury coach touring

Multi-award winning family owned and operated touring company O’Shannessy’s Quality Tours has over 30 years’ experience of coach touring throughout Australia, operating luxury coaches that are custom built for the comfort of senior travellers.

The O’Shannessy family’s involvement in the bus and coach industry started back in 1967, when co-founder Laurie O’Shannessy established a school bus run in Victoria’s Wimmera region. Many years later, the family moved to the Mornington Peninsula and developed a coach tour company specialising in extended accommodated tours across Australia. The Australian Business Executive spoke recently with Managing Director Chris O’Shannessy, who took over the business in 1997, to discuss the company’s accidental beginnings, its numerous industry awards, and the multi-generational approach that promises to keep the business running for many more years.

Word-of-mouth expansion

“Laurie and Margaret, my dad and step-mum, had buses down on the Mornington Peninsula in the early eighties,” Mr O’Shannessy explains. “They were busy doing charter and school runs and so on, but they also had a passion for outback Australia.”

The couple often holidayed up in Alice Springs, in Central Australia, and enjoyed regaling family and friends with their experiences. The idea to expand the business into tours came from an extended friends and family trip to the area in the early-eighties.

“It started by accident really. The people that had travelled on that one-off tour told everyone about it, and due to demand and people finding out about this tour, Laurie and Margaret the next year did another two tours to the same area. The following year, still due to word of mouth, there was three tours, and the next year there was four tours, and so on.”

Those who had travelled on those first tours to Central Australia soon began requesting similar tours to other areas, and Laurie and Margaret were more than happy to oblige. Within a few years they had realised that the foundations of a sustainable business had been set.

“That’s when they decided they were going to have a real go at this, and create O’Shannessy’s Tours. Then they started to do their research and find more destinations to travel to, and set off in the car to travel around Australia to make up the itineraries, and then come home and market the material.”

Mr O’Shannessy grew up watching the development of his father and stepmother’s operation, giving him an excellent knowledge of the burgeoning business. When Laurie and Margaret retired in the late nineties, he was perfectly suited to taking over.

“When I was young, Dad also had buses. So I was always interested in the business, and in bus travel. By the time Laurie and Margaret had decided to start doing tours to Alice Springs, I was at the stage where I had just finished my schooling, so I was able to come along and drive the buses and learn the tours.”

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O’Shannessy’s Quality Tours has over 30 years’ experience of coach touring throughout Australia, operating luxury coaches that are custom built for the comfort of senior travellers

Over the years, Laurie and Margaret began running less of the tours, giving Mr O’Shannessy the opportunity to run more himself, culminating in the co-founders reaching retirement. At this point, Mr O’Shannessy and his wife Bernadette, who was his girlfriend at the time, took over the business.

Award-winning service

“These days, our tours range from about four days in duration, right through to about twenty-five days,” Mr O’Shannessy says. “We offer tours all over Australia and also these days quite a few international tours.”

The variety of tours that the company now offers suits a large demographic, and they run throughout the year, with different tours put on to take advantage of the varying seasonal conditions across Australia. This has come about from a demographic that is more than happy to escape the winter weather and seek warmer areas.

“In the autumn and the spring, we’re in the southern parts of Australia, where we get the nice weather, and then of course in the winter, all of our tours are generally north of the Tropic of Capricorn, so up through Queensland and Western Australia.”

The company also offers some local ‘Christmas in July’ tours, but generally speaking tours run in the north during the winter months, heading south again in the spring. Offering around 100 tours a year, the company occupies the higher-end of the market.

“When it comes to the service we provide, it’s certainly high-end, and I’d say second to none. As far as our cost base, we’re probably medium, but what we try to do is keep the price affordable but also add amazing service.”

When it comes to great service, O’Shannessy’s Quality Tours is recognised as a major player in Australia, having been awarded the Australian Achiever Award for Excellence in Customer Services seven times, including for five consecutive years from 2003-2007.

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“I think our customer service is a really important part of why people like to come with us. Our folks know that when our chauffeur picks them up from their home to start the tour, right through to when our chauffeur drops them home again after the tour, that everything is included throughout their time away, and that they’ll be really well looked after.”

Changing with the industry

Being a multi-generational family business, it’s fair to say the company has seen significant changes in the industry over the years since Laurie and Margaret O’Shannessy were running it. Mr O’Shannessy thinks most of the changes have been for the better.

“Back in those early days, a lot more of the places we would travel to, the roads were rough and unfilled, such as the road up to Alice Springs. As well as that, there were a lot less accommodation places around Australia. In fact, tourism in Australia was still quite young, there was a lot of Australia that hadn’t been explored by groups and so on by that stage.”

On top of these practical changes, Mr O’Shannessy recognises that the amount and level of competition has greatly increased since the tour company began. This means that O’Shannessy’s must now vary its tours to stay ahead of the game.

“The internet has bought about a wealth of information and choices for people. It’s very important for us to stay in touch with our customers, using both the internet and still the traditional printed material, to make sure that they can find us.”

The tourism industry in general is pretty steady, particularly in domestic touring, which has seen a lot of retired seniors travelling across the country. However, low-income rates have had an impact on discretionary spending, particularly for retired people.

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“When it comes to the service we provide, it’s certainly high-end, and I’d say second to none.”

“On the other hand, we have the baby boomers entering that age bracket now,” Mr O’Shannessy says, “which is also a benefit, and I think those people will be very eager to travel [domestically].”

Mr O’Shannessy believes there will always be a demand for domestic and overseas travel of the kind the company offers, especially in the retired senior market. But there will also be subtle changes to the specifics of how people like to experience their tours.

“One of the things we’ve noticed more recently is people tending to enjoy or prefer smaller group travel rather than the larger groups, so we’re now offering quite a lot of small group departures, with a maximum of only 20 people.”

This allows for a more intimate feeling amongst the group, allowing people still to enjoy the benefits of a group tour, but perhaps having a greater chance of getting to know more of the individuals with which they are experiencing the tour.

“Group travelling is a great way to make new friends, and of course they have the safety of group travel. It’s also great for single travellers as well, because they can still share the experience with other people and not be on their own.”

One thing’s for sure, O’Shannessy’s will continue to grow and offer great tours, most likely while keeping its successful multi-generational format. “Ultimately, I’d like to see some of my children continue in the business and take it forward in the long term,” Mr O’Shannessy concludes.

Find out more about O’Shannessy’s Quality Tours by visiting www.oshannessys.com.au.

Destination Quebec City: Canada’s Eastern Wonder

Situated deep in the heart of French Canada, Québec City is one of the oldest European settlements in North America. The city is the capital of Québec, the second most populous of the thirteen provinces and territories that make up Canada. It is also the second largest city in the province after Montreal, and the eleventh largest in the country.

The economy in Québec City is going through something of a boom, with the city currently experiencing its lowest unemployment rate in decades. Such a thriving economy helps create exciting opportunities for businesses, key industries and entrepreneurship. The city’s prosperity helps contribute to a diversified economy throughout the province.

Québec City is strategically located in Eastern North America, making it an excellent location for business events and conferences. Nearby Jean Lesage International Airport, the eleventh-busiest in the country, is a world-class facility meeting the very highest industry standards, and providing an excellent experience for passengers.

Conveniently located in Old Québec, the Québec City Convention Centre is central in driving the city’s economic activity, welcoming over 200,000 national and international visitors for conferences and events each year. In 2006, the International Association of Congress Centres named it the Best Convention Centre in the World.

When visiting the city, Old Québec is the perfect place to kick off the trip. A UNESCO World Heritage site, this walled city on the banks of the Saint Lawrence river is filled with quaint, winding streets, towering fortresses and lavish castles, as well as a selection of charming cafés and antique shops.

Historic attractions such as the Citadel make the area a fascinating place to spend a few hours. The largest British-built fortress in North America, the Citadel took thirty years to construct and has been active since 1850. Equally impressive is the breathtaking Notre-Dame Basilica, one of the oldest cathedrals in North America and a favourite of visitors to the city.

Perhaps the best way to get started exploring the city is to take part in a walking tour with Tours Voir Québec, a dynamic and attentive tour company that has been welcoming tourists from across the world since 2004. Choose from a variety of fascinating tours including the Grand Tour, the Food Tour, and a river cruise around the city.

A visit to French Canada just wouldn’t be the same without experiencing the region’s love for ice hockey. The Québec Remparts team plays in the Quebec Major Junior Hockey League and can be watched at the impressive Videotron Centre near the city’s Lairet area, the seventh-largest indoor arena in Canada.

Equally important to sample is the region’s cuisine. If you go to Québec and don’t experience the uniquely French Canadian dish of poutine (fries, gravy and cheese), then you’ve certainly missed a trick. In Québec City, the traditional dish is tourtière, a meat pie best experienced at Aux Anciens Canadiens, a restaurant specialising in old-fashioned Quebecois cuisine.

Auberge Saint-Antoine

Our accommodation provider of choice when staying in Québec City is Auberge Saint-Antoine, providing farm-to-fork dining and luxury accommodation in the heart of historic Old Québec. Find out more at www.saint-antoine.com.

How Google Scores Your Website and Why Your Business Needs Good Domain Authority

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In keeping with the dynamics of technological advances, Google is continually updating their criteria for ranking websites in the user’s search results. In 2010, page rank authority was the dominant factor used to determine the order of which sites would be displayed. Fast forward to 2014, and the search engine giant had made some significant changes to its website ranking signals.

Before their 2014 update, a brilliantly designed website with perfectly implemented on-page search engine optimisation (SEO) would have dramatically increased the chances of a high ranking. However, Google began to tweak their criteria, meaning that off-page SEO became a critical factor when ranking pages. Consequently, page rank became less important while domain authority stepped up as the primary rank determiner.

Through a series of multiple scoring criteria with advanced algorithms, domain authority is how Google automatically determines the score of a website. All websites begin with a score of zero when new, and then effectively work their way up over time. The maximum score of one hundred out of one hundred is very difficult to attain. Anything between thirty to one hundred is considered good.

As the name suggests, domain authority takes into account how authoritative your website and its content is compared to that of similar websites. Google will consider the relevance and quality of your content before displaying it to its users. Therefore, if your website offers extremely high-quality content relevant to your business’ niche, your site will be boosted up the ranks towards page one as Google gradually continues to increase your website score. On the other hand, if your website design and content is inadequate or irrelevant, your site continues to be reduced and slip down the page rank.

Google uses highly sophisticated algorithms to calculate your website score. There are over two hundred and forty factors that influence a website’s authority, such as the root domain and the number of inbound links a site has. An example of a website with high a high website score is Wikipedia, due to its popularity and reference-based model. The incredibly high number of inbound links contributes significantly to its high score with Google. Conversely, newer websites that have no – or even very few – inbound links to have a domain authority score of one out of a hundred.

To ensure its users are provided with the very best content, Google’s domain authority scale works on a logarithmic basis. This means that the higher a website’s authority score is, the more difficult it will be for that score to improve. For example, increasing your score from seventy-five to eighty-five would be more of a challenge, than increasing from twenty-five to thirty-five.

The bad news is that it’s not all plain sailing when your website has attained a high domain authority score, as your score can also decrease – even if any of your high-quality backlinks are not lost.

Although Google has over two hundred and forty criteria to determine a website’s authority – and therefore, it is ranking in search results – domain authority can be described as four main factors:

  1. Prestige – both of the website itself and its authors
  2. Quality of website design, function, presentation, and content
  3. The centrality of the website and the information it provides
  4.  Topic competitiveness and relevancy

Depending on the ranking body, the influence each of these factors has when determining domain authority can vary tremendously. A website’s prestige, along with that of its authors play a significant role when its domain authority is being calculated. Additionally, all aspects of the quality of a website such as its design, function, ease of navigation, and content contribute to a website’s score. The competitiveness of a particular topic a website is based on, as well as the quality of in-and-outbound links, and the relevancy of the content also helps to determine a website’s domain authority.

During the website scoring process, search engines such as Google rely on specific algorithms and automated analysis to help determine how relevant each of these factors are to each website being ranked for a particular search term. As it would be incredibly ineffective to rely on human reasoning to judge domain authority, these algorithms must be continually developed to ensure the highest-quality information is being presented for each search term to the user, in the most logical order.

However, how can you, as a business owner, improve the score of your website?

It’s simple; one action would be to publish high-quality content relevant to your target audience regularly.
By doing so, you will increase user engagement of your website, which invariably leads to organic backlinks to your site from other industry-relevant websites – all of which positively affects your domain authority.
Here are some sure-fire ways to help increase your website’s domain authority:

Earn high-quality backlinks

The more high-quality inbound links from high authority websites you can earn, the more authoritative your website becomes. This can be achieved by regularly publishing fresh, insightful and industry-specific content, then asking relevant, pre-established websites to link to your content.

Eliminate Poor, Toxic, and Broken Links

It would help if you made a habit of exploring your link profile to search for backlinks that are of poor or toxic quality, as these can harm your domain authority. Not only that, but broken links or links from your site to poor or low-authority websites will have a negative impact – so be sure to remove these as well.

Increase Your Website Loading Speed

Web users are impatient – you could have the highest quality content on the web, but if it takes too long to load, your potential audience will go elsewhere. This is your bounce rate, and the more it happens, the more it will negatively affect your domain authority.

Use Social Media to Promote Your Content

Websites are about people, and therefore, social media signals are important when trying to increase your domain authority score. The more eyes you have on your content – through self-promotion on social media – the higher your content is likely to rank. This can be achieved by using your social media channels to post a link to each fresh piece of content you publish and occasionally adding a new twist to older publications.

Embrace Domain Authority as a Long-Term Commitment

Attaining high domain authority will not happen overnight – much like anything else worthwhile; it takes time to develop. However, by continually monitoring the health of your link profile, publishing a variety of high-quality, relevant content, and earning backlinks from authoritative websites, your domain authority score will begin to grow steadily. When this happens, your website will organically rise with greater visibility on Google’s search engine, reaching out to your future clients.

Senka Pupacic is the founder of Top 10 SEO: www.top10insydney.com.au.

I’ve just been appointed to the board, what now?

Co-founder & CEO of Future Directors Institute Paul Smith

At the Future Directors Institute, we help next generation leaders overcome the challenges and obstacles of becoming influential non-executive board directors. This most often starts with the finding (and securing) of their ideal first position, whether that’s on a company board, nonprofit, school, start-up etc.

Assuming you have overcome the most significant challenge, having enough time, we’ve often found that once you achieve this initial goal, there are many new challenges to deal with. It’s also worth noting that time continues to be a challenge, but if you’ve found the time to secure a board role you probably have the time for all the meetings, preparation and other duties of a director.

Based on the experiences of hundreds of younger directors, I’ve compiled the most common challenges new directors are most likely to encounter, as well as how to best overcome them in order to make the transition from board amateur to board influencer.

Figuring out exactly which skills you’ll need

One of the most common questions we find new directors asking is “What kind of skills will I actually need?” This stems from the common belief that before you can join a board, you must have already maximized your skill development. This simply isn’t true.

You don’t need to be at your professional peak to be a great board director. In fact, many effective directors are at the beginning of their career. The likes of Parrys Raines and Holly Ransom are still in their 20s and are both already influential board members. As a new director, you aren’t always required to have an extensive list of skills and specialist achievements. Often, all you need is an open mind, the right level of experience, an eagerness to learn and that all important, unique perspective.

Of course, it is helpful to have a clear idea of the type of technical skills you’ll need. It’s not entirely necessary however, to begin working on them right away. You can build these skills throughout your board career, once you have a more profound understanding of the company’s structure as well as the roles and responsibilities of its board directors.

For example, the most common skills-based question we get is about finance knowledge: “Can I become a board director if I cannot fully understand financial statements?” Again, it depends on the type of organization and what they need from you. While it is your responsibility to be able to govern to the best of your abilities without relying solely on other directors’ skills, the reality is that you cannot know everything—you just need to know enough. You might not need this knowledge immediately, but your aim should be to acquire it quickly.

Whenever you develop the necessary skills, your network and connections will be critical. Make sure to surround yourself with many mentors, perhaps a coach, and others who can assist you in expanding your skills. Enlist their help to get a solid understanding of the structure of the organization, the roles and responsibilities of the directors on the board, and the specific duties you will have to undertake.

Better still, get trained up beforehand.

Finding your voice and becoming influential

It can be uncomfortable when you feel that you lack presence and influence because you’re the newbie in a situation. It’s understandable if you feel apprehension and nervousness when you join a board. Indeed, these feelings can continue deep into a board career. You are not alone, though, and the most confident-sounding person can be hiding a mess of nerves and ‘speaking-up anxiety’.

Fortunately, there are really simple and effective ways of overcoming these feelings. First, remember that you belong there. It sounds stupidly simple, because it is. You have been accepted onto the board, and that gives you an equal voice with everyone in the room regardless of tenure.

Next, be as prepared as possible. This includes getting to know your fellow directors before your first meeting and continuing to build those relationships. You’ll find that your first board meeting will feel a lot less nerve-racking than it might otherwise because you’ve already met a few (if not all) of your colleagues.

NB: If the board is effective and professionally run, it will have a comprehensive onboarding and orientation process that will get you up to speed quickly. If it doesn’t, ensure that you help create one based on your experiences.

The more you know your audience, the more influential and helpful you can be, on both an individual and an organizational level. To learn about your audience on a larger scale, reach out to key company stakeholders such as management, major donors/investors, suppliers, and important customers. You should ensure that doing so doesn’t break any protocols, so check with the chair first.

Depending on the company’s culture, the board and chair may or may not encourage that sort of transparency and integration. If you encounter resistance, it might help to remind the chair that the more you speak to and understand the different stakeholders, the better you can serve and govern them in your board role.

Adjusting your expectations

As a leader holding both executive and non-executive positions simultaneously, you’ll have to get used to switching hats, and often quickly on the same day. If you have been well-trained in the differences between management and governance then this will be a little easier.

It can be hard for even the most practiced to move from being involved at a granular, hierarchal and operational level to providing guidance and oversight at a collective board level. You’ll potentially want to get into the trees when you must keep your view on the forest. The best way is to understand how best to transition.

Allow time to get yourself mentally prepared. Some of our program graduates have a cheat sheet of reminders to ensure they go into a board meeting with their governance hat on. Whatever you need to do, just being aware of which hat you are wearing is a step closer to being a truly effective director.

The other part of expectations management relates to resources. We often see those who have only ever worked for large companies struggling with the lack of operational resources in say the nonprofit that they are a board director for. It’s also the same in reverse and I’ve seen a few joining company boards overwhelmed with what is possible and at their disposal.

When to talk and when to listen

Even after you’ve overcome the first three challenges, it’s important to know when your input is (and is not) needed. This is not about having the confidence to speak up in the first place. It’s about speaking only when you have real value to add.

Knowing when to speak can come from your preparation. Read the necessary papers and conduct all research beforehand so you know what will be discussed. Understand your own point of view and why you have that point of view. With this preparation, you will be able to join in with the proper relevancy and knowledge.

Not only will prior preparation enable you to mix well with your fellow directors, it’ll also get your ideas heard faster and to better effect. Demonstrating that you’re well informed on the topics you’re speaking about will encourage your colleagues to listen to you and respect your opinions. You can further extend your influence by talking to directors outside of board meetings too. Establish yourself as an authority in whatever areas you’re passionate about, and people will pay attention.

However, no board is going to appreciate the input of someone who is clearly talking just to be heard or who is repeating what’s already been discussed by others. So pick your battles, do your research beforehand, and really think about the value of what you’re trying to say. If you are invited to contribute but don’t have anything new to say, just say so. You’ll earn more respect for moving things along and not wasting precious time.

If you’re struggling with knowing how to approach your new position, it can help to consider the board as a family. You have to work on building relationships and trust, getting to know them, and even dealing with any potential dysfunction (because some families are like that!). Remember that you have been recruited because they have seen something in you. If your confidence falters, remind yourself that you have a right to be there, no matter whether you’ve been with them for five minutes or five years.

The most important thing is to be consistent and patient. Take one step at a time and you will find your stride. Work on building a great support network of mentors and teachers around you, and lean on these people for opinions and advice when you’re feeling lost. No one has achieved success alone—all of the most successful people have had supporters around them the whole time.

So, in summary:

  • You deserve to be there. They appointed you.
  • Say it as you see it. Why hold back?
  • However, don’t speak unless you have something valuable to add. It’s ok to say; “I have nothing new to add”. You’ll potentially increase your influence if you only speak when you have value to add.
  • Practice being courageous and confident. Take acting classes or practice with your independent board mentors!
  • Be prepared, draw together different issues, and arrive with questions.
  • Manage your expectations and your different executive v non-executive hats.
  • Try testing your ideas in subcommittees or with individual directors.
  • Keep developing your skills in key areas and become known as a trusted source of well-thought out opinion.
  • Learn how to interact with different types of people and get the most out of the relationships. Remember, the board is just a group of humans.

Paul Smith is an author, and founder & CEO of the Future Directors Institute, www.futuredirectors.com.

Introducing higher standards to raise the bar and build trust with real estate buyers and sellers

With both the Federal and NSW State elections now out of the way and an interest rate cut from the Reserve Bank of Australia under our belt, the signs are that the declines in the property market in NSW are now bottoming out and the threat of political uncertainty has been replaced with a sense of business as usual.

According to CoreLogic, Sydney values had declined at their slowest rate at the end of May – drifting just -0.5 per cent lower for the month. Annually, Sydney has seen a -10.7 per cent fall in property values, but this had reduced to just -2.0 percent for the three months to end May.

What this means is that the freefall the market seemed to be in is now pulling out of the nose-dive. The median value of a dwelling in Sydney is now $776,135, and while this is considerably lower than previously, it is still significantly higher than the rest of the country.

With the median value more than $300,000 higher than property in most other state capitals, it would be fair to assume that the legislation governing property transactions was also a stand-out. Sadly, this is not the case.

Education standards for real estate agents are woefully inadequate in NSW. Prior to 2002, to gain a real estate licence you had to go to TAFE for three years and demonstrate industry experience. However, under a regime of industry ‘improvements’, NSW Fair Trading now makes it possible to gain the qualification required for a Certificate of Registration in less than a week.

This has created a pool of real estate agents who are grossly under prepared – not just for the general challenges of selling what is, for most of us, our most valuable asset both financially and emotionally – but especially in a market that in itself is trickier to deal with.

As the peak industry body for real estate agents in NSW, REINSW represents more than 2000 real estate agencies and more than 20,000 individual members. Property services is a $107 billion industry annually in NSW, making property bigger than the mining industry ($21 billion), the retail industry ($22.8 billion) and tourism industry ($38.1 billion) combined.

Our members are integral in the majority of the 220,000 plus residential transactions that occur across the state every year. And real estate agents in NSW work with nearly two million landlords and tenants every month.

We passionately believe the real estate industry needs to improve and move away from old stereotypes about agents to create new performance expectations of genuine accountability, transparency and good governance. We want to raise the bar and work with Government at the highest levels to solve the challenges of housing across NSW.

This is why we are currently seeking a Commissioner for Property Services to manage the regulation of the industry in NSW, moving the industry out of NSW Fair Trading.

As an institute with more than 100 years’ experience in the industry, it is our observation that property buyers, sellers and the industry as a whole are being short-changed by the current structure of governance for property in NSW. The legacy has been increasing affordability issues, unnecessary risks for property consumers and the erosion of education standards for an industry that demands a high level of skill and trust.

Real estate practice is not easy. Real estate agents manage high value transactions of significant complexity that occur infrequently for most property owners. Our homes are the most valuable and psychologically important assets many of us own. Such a transaction requires an experienced and dedicated specialist.

Sydneysiders invest nine years of their income into a typical dwelling, need to save for 12 years for a deposit and service the loan with 48 per cent of their income according to CoreLogic. Governance that treats property transactions the same as any other high street purchase – like a haircut or purchasing a toaster – while ignoring fundamental issues of value, complexity and trust is both inappropriate and inherently risky.

A Commissioner for Property Services would overcome the silos that exist across government departments, which play a significant role in the red tape and expense that makes up housing and planning in NSW. A Commissioner would create regulatory consistency and deliver both improved standards of real estate service and higher levels of consumer protection.

In addition to a new property services commissioner, REINSW is working to introduce higher and additional standards of training that raise the bar and build trust with buyers and sellers.

To this end we are seeking to increase entry level education and experience requirements to become an agent and add the requirement to engage in quality on-going professional development training in a way that is monitored and regulated under State legislation.

We are also working on a Pathway to Professionalism program, creating an additional qualification that meets the strict standards of externally recognised professionalism, as a way for dedicated agents to prove their merit, and for consumers to easily distinguish excellence.

The word “profession” means different things to different people. But at its core, it’s an indicator of trust and expertise.

In the same way that travellers can choose between different standards and levels of service when booking a holiday – either a camping option, a middle of the road option or a five star luxury service – we believe property sellers should be able to decide on an appropriate service based on a combination of skill, complexity and price.

The Professional Standards Council (PSC) is the independent statutory body responsible for promoting professional standards and we are working to establish a scheme that will be accredited through the council.

They use the 5 E’s to define the elements that are necessary to qualify as a profession: ethics, education, experience, examination and entity. On our pathway to professionalism, we’ll need to demonstrate that we not only meet but exceed the required standard in each of these areas.

But REINSW believes we need to add another E to our journey – evolution. If real estate agents are to be recognised as professionals, then along with the 5 E’s we must also embrace the reality that our industry must evolve. If we don’t collectively embrace a mindset of evolution, we simply won’t be in a position to commit to the work required to elevate ourselves to a recognised professional standard.

The Pathways to Professionalism journey is a long one, and once implemented, will extend to other states through our association with the Real Estate Institute of Australia.

Our goal is to change hearts and minds – both our own and those of consumers.

The irony is that this all sounds like a blast from the past. It harks back to an era when our education standards were much higher, and ethics actually stood for something. But it’s undeniable that our industry has suffered greatly over the years due to the constant lowering of education standards and a lack of oversight, including weak disciplinary and enforcement powers.

It’s time for real estate to go back to the future and change.

Tim McKibbin is the CEO of the Real Estate Institute of NSW, www.reinsw.com.au.

Stop talking. Start teaching

Neale Daniher is addressing the young Melbourne Football Club players prior to the Queen’s Birthday game against Collingwood a couple of years ago. It is a big game for the improving Demons against their most traditional of rivals. The promise of an 80,000 plus crowd at their home ground, the magnificent MCG.

The man addressing them is very familiar to everyone in the room. He was the Demon’s coach from a decade earlier, and while few of the young Demons played under him, he is for those few precious minutes, again their coach and mentor.

Everyone in the room understands that their old coach is dying. He has Motor Neurone Disease (MND) and has known of his fate for a number of years.

And Neale’s response to his personal tragedy?

Firstly, give his disease a name, “The Beast”, and secondly, dedicates his life to building a not-for-profit, FightMND that has raised millions of dollars to fight it.

But for Neale Daniher, this moment is not about him, or his insidious disease, or even his charity. It is about the young men in the room. Simply, every opportunity to speak is an opportunity to teach.

It is a great lesson for leaders…

“Stop talking. Start teaching.”

As he speaks to the Melbourne players, he is asked the question, “Neale, knowing that you are dying, why aren’t you working through your life’s bucket-list? Living in Tuscany, going to the world’s great sporting events…?”

Neale pauses, and while his disease has clearly impacted his speech, in his very familiar Ungarie rural drawl made famous by the four Daniher brothers who got to play in the AFL, he says…

“Because son, when it is all said and done, more is said than done.”

Our words tell others what we think, but our actions tell them what we believe.

Neale well and truly understands that to find a cure for MND is to play a long game, and Neale doesn’t have a long time. Neale’s relentless efforts to slay “The Beast” are for the benefit of those who will receive the same heartbreaking news he and his family received a few years ago.

No one in the room is left with any doubt what Neale believes.

He is a teacher.

Jarryd Roughead, champion Hawthorn player and captain was dropped from the senior team for the first time a few weeks ago. From a performance perspective, he responded by kicking five goals, but an act that just happened to be captured on video was far more significant.

In the field of battle, in the middle of the MCG, Jarryd is seen taking time to coach his young Bulldogs opponent, Reuben William. I have never seen this before in 35 years of involvement in the AFL. It is a wonderful moment.

Jarryd Roughead has had quite the football journey, four Premierships and the captaincy of his great club, but also a career put on hold by his courageous fight with cancer. He has achieved so much as a player, but it seems his best is yet to come.

He is a teacher.

When leaders undertake the programs we offer at designCEO, the question isn’t “What did I learn today?”, it is “What can I teach tomorrow?”.

Challenge yourself to answer this same question when you finish a podcast that captured your attention, the book that just made sense, or the wise conversation with someone whose views you respect.

Take the time to write a few notes, collect those important first thoughts, the memorable quote, the compelling argument, the insightful take.

Then build deliberate time away into your routine, remove yourself from the busyness of your day-to-day, to curate your thoughts by aligning the new thinking against your personal experiences and current beliefs.

Have they shifted, changed your view, or added greater depth and meaning to your understanding, be it your broader view of leadership, or a more specific, perhaps tactical approach to your leadership challenge?

Finally, ask yourself “Can I teach it?”.

This question will force you to go even deeper, test your assumptions, seek feedback, as well as encourage important conversations with trusted colleagues, acknowledging their wisdom, and adding even greater depth to your understanding.

This process requires humility, courage and generosity. The vulnerability of not knowing, the bravery to acknowledge this, and then magnanimity to share your learning.

In elite sport, and in my experience, it is the curious and courageous learner-teacher that separates the great coaches/teachers.

Hall of Fame coach Allan Jeans is my favourite example, and his influence on generations of football people is evidence of his remarkable leadership legacy.

The reason for this is simple. For Allan Jeans, identity was fundamental, and he educated and coached based on ensuring you had an understanding of where you have come from, where your place is now, and providing a clear understanding of where you were heading.

The basis from which he built this was trust, and Allan was the type of person who trusted easily, and trusted freely.

Whilst he had a somewhat intimidating veneer, his warmth and wisdom quickly become apparent, as he did what he could to help you find who you are, what you want to be, and what you want to stand for.

And for many young people finding their way in this most distracted of environments, identity can be elusive. It needs to be taught.

You quickly learn however, to benefit from the Allan’s wisened methodology meant leaving your ego at the door, opening yourself up knowing that your confidences were safe, and you would be emboldened by his preparedness to reciprocate your openness.

While Allan’s booming coach’s voice was legendary, his silences were even more profound.

“I was born with big ears, so I figured I might as well use them”, he would say, and listen he would. He also had a unique way of creating the space required for you to work it out for yourself – surely the best form of teaching.

“Success needs no explanation, failure accepts no alibis”, he would say, knowing fully that building resilience means you have to learn from your disappointments. That’s how you find out who you are.

As a personal reflection, my greatest regret as a leader was not spending more time teaching. There were too many times I allowed myself to get lost in far less meaningful aspects of the role, the busyness, the stuff that really doesn’t matter.

With leadership, if you understand what really matters, you get to appreciate what seems to matter.

Teaching really matters.

Cameron Schwab has been the CEO of AFL football clubs Richmond, Melbourne and Fremantle. He is a leadership mentor, and Founder & CEO of designCEO. Find out more about designCEO by visiting www.designceo.com.au.

Trust issues? It might be time to embrace the power of PR

Trust is an elusive thing. Faith in an organisation can be lost at the drop of a hat, a badly-written statement can turn into a full-blown crisis within seconds, and a single tweet can cause a business’s share price to come crashing down.

Business leaders must look to long-term trust-building methods to build a strong foundation that can withstand such a volatile environment. And what better place to turn than the media outlets and platforms that have spent years, if not decades, building their audience’s trust?

Don’t just take my word for it: according to research by BBC StoryWorks, 45% of Australians believe that if they see a brand on a trusted platform they will also trust the brand, while 40% believe a brand is positively or negatively affected by the platforms it appears on. It’s difficult to overstate the power of appearing on credible platforms, and the positive impact it has on your brand’s own trust levels.

In short, PR allows you to show off the best aspects of your business, without directly shouting about it from the horse’s mouth. It implies a level of confidence: that a journalist, publication or influencer chose to support or seek out the advice of your business. In doing so, you’re automatically able to position yourself ahead of the pack.

Trust by association

If your business is mentioned in a respected media outlet that targets your ideal clients, those clients will come to associate your brand with all the positive attributes of that outlet. Earned media, rather than paid advertising, implies that the brand is trusted by the journalist and the outlet they work for. An independent third party saying good things about your business will always be more credible than saying the same things about yourself.

Take this article, for example. You’re reading a piece, written by me, in a highly-regarded publication for executives. By appearing in this publication, you will associate my brand with the prestige and high-level thinking of The Australian Business Executive. I am offering advice and guidance that shows I truly understand the industry I work in. I’m showing, without telling.

Be careful though, as it can work in reverse too. Imagine reading a think piece from a high-level executive in a cheap tabloid newspaper. Would you take that executive seriously, or would you begin to associate all the negative aspects of that publication with the author? A PR professional will have a good idea of which publications to target, and will be able to recommend the best outlet for your particular story. They will also be able to help you avoid any unwanted negative media coverage.

The power of stories

Humans are curious creatures. We only trust someone once we get to know them. We’re interested in what people do, and how they do it. We like to get to know people: their interests, personality, and sense of humour. This is something the media intrinsically understands, and publishes its content accordingly.

Businesses, however, sometimes struggle to remove the mask and show the human face of their organisation. Who is your CEO? What are their interests? Why should we trust them? The story behind the business – the ‘why’ – is far more compelling than technical information, business offers or sales messages. Many businesses believe facts and figures are the best way to communicate their trustworthiness, but the truth is, without a human face telling a great story, trust is hard to win.

Public relations can help tell those stories. Many business leaders are so focused on building their own business, they don’t notice the great stories they have sitting under their noses. They default to cliches and platitudes, because it’s easier telling the truths of their business. It might be easier, but cliches simply won’t cut it in the world of public relations.

Instead, try and find opportunities to share stories that involve human interest or pull on the heartstrings. These don’t necessarily have to focus on the founder or CEO: look for other people in your business or your customer base who can bring its story to life.

Getting comfortable with failure

Honest, open communication is the perfect way for a business to build trust. Part of that transparency means getting comfortable with talking about failure, no matter how difficult it might be. Failure is not shameful, in fact, the world’s most innovative and successful people have a string of missteps behind them. Think of Steve Jobs, who was fired from the company he created in 1985. Or JK Rowling, who was rejected 12 times before she sold Harry Potter to a publisher. If they were able to take their failures, learn from them, and share them with others; so should you and your business.

If an executive can prove they’re not afraid to tackle hard questions, the confidence it exudes is unparalleled. Confidence, openness and honesty are all keys that unlock the path towards trust, so it’s important to get comfortable with sharing. A PR practitioner can offer your business the opportunity to answer those questions more often, on platforms with bigger and more engaged audiences.

Journalists have an in-built understanding of the importance of failure in storytelling, so don’t expect comfortable, fluffy questions. If you can accept this and learn to plan ahead for the inevitable hard-hitting interview, your communications efforts will run a lot more smoothly.

Ultimately, PR helps a business and its leaders be heard above the noise, on platforms that audiences trust. By sharing the stage with other respected voices, businesses are able to turn a simple piece of communication into a long-lasting stamp of authority. All it takes is keeping your eyes and ears open for those genuine, truthful stories that are sitting within your organisation, waiting to be shared.

And while earned media takes more time and specialist knowledge than simply paying for an ad, the results are always worth the effort. In our age of fickle consumer confidence, a reliable way to build trust is priceless.

Phoebe Netto is the founder of Pure Public Relations, a PR firm for SMEs and not-for-profits, www.purepublicrelations.com.au.