Archive for March, 2011

Reduce your budget and Grow the Business!

Tuesday, March 22nd, 2011

Reduce your budget and ”Grow the Business” – Now there’s a novel idea!                                

© Roger La Salle 2011

The business of business is simple

In business, whether profit driven like so many corporations, government services or not for profits organisations, of which there are many, at this time of year we start to review our budgets.

 Essentially all businesses are driven by simple arithmetic.

Profit (or final outcome) is derived by subtracting costs from revenue. It’s really all very simple.

In business in the aim is to grow revenues and of course profits. The mandate to achieve this is given to the senior executives that form the so called management team.

The message is to grow or stagnate and risk being overtaken by more aggressive competitors.

 The inevitable budget session

Predictably, as our executives develop their next year’s budget you can be sure there will be a requirement for more funds, more money to spend so the department can grow and consequently achieve the forecast improved outcomes.

It is quite amazing that despite all of the technological marvels we provide our staff with to make them more effective and more efficient, costs continue to grow.

Even in Government departments it is a long held tradition to get together in early June of each year and “blow the budget” by purchasing anything that can navigate the overseers of expenses in the few weeks before that mystical 30th of June, year end.

Is this a better way?

One wonders what may happen to ever expanding budgets if some inversion to this thinking was applied.

Take for example the head of a department that may have an annual expense budget of, say $20 million. Predictably the executive comes to the budget session with a well justified request for an additional 7% for the next year. Say an increase to $21.4million, a quite modest increase, but one the executive assures top management is essential to “grow the business”.

It may be interesting to consider what may happen if that very same executive was to be challenged.

“No instead of seeking more funds, if you can achieve your goals with 10% less, you will receive 75% of the reduction, in this case a whopping $1.4million, as a cash bonus, perhaps to be split among your staff in proportion to their salaries.”

Now there’s a novel and innovative approach to management.

 What now?

As the budget process starts maybe it’s time to give consideration to this radical, but perhaps very practical way of still achieving the desired results without the never ending need to spend more money.

Instead of more money, find better ways to achieve your outcomes. Again this is innovation, which is not a bad thing to introduce to a business.

Roger La Salle, is the creator of the “Matrix Thinking”™ technique and is widely sought after as an international speaker on Innovation, Opportunity and business development. He is the author of four books, Director and former CEO of the Innovation Centre of Victoria (INNOVIC) as well as a number of companies both in Australian and overseas. He has been responsible for a number of successful technology start-ups and in 2004 was a regular panellist on the ABC New Inventors TV program. In 2005 he was appointed to the “Chair of Innovation” at “The Queens University” in Belfast. Matrix Thinking is now used in more than 26 countries and licensed to one of the world’s largest consulting firms.  www.matrixthinking.com

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Solution to the Clever Country

Thursday, March 3rd, 2011

The Clever Country – if only!
© Roger La Salle 2011

Australians are indeed clever

Australian engineers and scientists are indeed world class, much like New Zealanders we “punch much above our weight”. Numerous examples could be cited including the Interscan Microwave aircraft landing system of the 1970’s that beat all comers, including the USA and Germany in demonstrating the best technology. Cochlear and Resmed are other examples and it is pretty well accepted that we excel in the biomedical sciences.

Australians are great technologists but still our economy relies on the recourses sector and with the decline in our manufacturing base, a growing emphasis on tourism and services in general.

The Governments part

In an endeavour the inspire innovation and investment in the sciences and “brain work” the Government over many years has provided accelerated investment allowance in the form of tax claims as R&D incentives. One may well ask if this is working as a real research incentive? Further, one may well ask just how easily it can be rotted by unscrupulous would be entrepreneurs?

The problem with the present system is that it comes at a great cost to Government whether successes are generated or not. Further, if you do happen to success with a new endeavour, you get punished.

Yes, in Australia we pump money in to the front end at great risk, then if you do succeed you get punished with a tax on your profits.

A Better Alternative

The search for an alternative should be made with the mindset of SME’s, not that of big businesses, these should not need incentives to research and innovate.

The system embraced should strike at the very heart of business by rewarding success and encouraging profit.

Thus a better system may include the following attributes:

• No cost to government
• Ultimate reward to Government with taxes on wages if the innovation is an export success that creates employment
• Clearly focuses innovation at export markets
• Can be readily audited

Such a system may seem like “snake oil”, but perhaps could be implemented with the following guidelines:

• No government money is used in seeding new initiatives and there are no accelerated investment write offs
• A tax holiday will be provided for a period, (suggested 3 years) for all income generated from exports where sales have been made to places where patents or formal IP protection is claimed (This could include registered designs, copyright and plant breeders rights)

If such a system were to be introduced I believe the shift in the mindset of SME’s and entrepreneurs would be almost instantaneous, focused and profound.

In short they would be saying – “Find me an export opportunity that I can protect with IPR and let me at it”.

The Naysayers

Doubtless there will be an endless stream of critics to the above suggestion, but one may question if the present system really works? Is it achieving its aim, what is the cost to Government and for what return and finally, is it being rorted?

Where to from here?

Let’s start the debate!

**** END ****
Roger La Salle, is the creator of the “Matrix Thinking”™ technique and is widely sought after as an international speaker on Innovation, Opportunity and business development. He is the author of four books, Director and former CEO of the Innovation Centre of Victoria (INNOVIC) as well as a number of companies both in Australian and overseas. He has been responsible for a number of successful technology start-ups and in 2004 was a regular panellist on the ABC New Inventors TV program. In 2005 he was appointed to the “Chair of Innovation” at “The Queens University” in Belfast. Matrix Thinking is now used in more than 26 countries and licensed to one of the world’s largest consulting firms. www.matrixthinking.com

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