Eight years ago I found myself on the floor in tears. My father had just passed away, my business was failing and my love life sucked. Oh wait! That’s always sucked (and not in the good kinda way).

I was at a cross roads in my life and didn’t know which way to turn.

Have you ever experienced that? No, of course you haven’t! Hmmm.

Sometimes when we wake up in the morning and wipe the sleep out of our eyes, we don’t always awaken to the reality we want to see.

A profitable business is nowhere to be seen, acknowledgement and praise is way out of reach (even with a 10ft pole in hand) and our partner ends up having a face that looks like a potato sack. My apologies go to the potato sack.

With this awakening brings a harsh reality; the reality of not knowing whether or not continuing your business enterprise is worth it or indeed the best idea for yourself or those around you.

But how do you really know when it’s time to give up or go on?

Do any of us really have the answer? Does our ego get in the way of making a logical decision or does the fate of the business lie beyond our personal influence?

Seeing as you’re looking for answers, let’s play a little ‘what if’ game…

• What if… you got a contract tomorrow that turned your entire business around?
• What if… you gave up just before you hit critical mass and things took off?
• What if… your life lesson was to go through hardship to understand what ‘really’ matters in life?
• What if… the business was meant to fail so you found your true calling in another area?
• What if… the struggle was simply to prepare you for more to come?

What if!

What did this exercise achieve? Nothing really, it probably just caused you to be more confused than Joan Rivers on ice!

That’s the problem. Knowing whether or not a business should continue isn’t as simple as looking at the profit and loss statement for the year. It has more to do with intangible factors that, ‘fortunately’ for us, we have a whole lot of influence over.

Walt Disney was a tyrant. Are you?

Success can sometimes come at great cost. Look at some of the most successful business owners, actors and celebrities in the world. In many cases they each experienced a breakdown before they experienced a breakthrough. It was this breakdown that eventually gave them the contrast of what they did and did not want in their lives and careers. For many it was the impetus for significant change in their careers and personal lives.

Take Walt Disney. His numerous setbacks not only forced him to become more savvy in business but it also turned him into the infamous tyrant within the Walt Disney Company. Now I’m not suggesting you become a tyrant, but consider the success of his business. He put himself on the line continually and it did eventually pay off after years of slogging it out and overcoming barriers.

Did you know that his studio at one stage was taken over by the military for an entire year at his own expense? Huh, maybe your business challenges aren’t so bad after all.

Each of us reaches a point in our lives where a significant decision has to be made. Ending or continuing a business is one of those moments that not only has immediate impact but long-term repercussions, especially centred around our own self-worth.

It isn’t just about the business, it is about how much resilience you have and whether or not you have the persistence to do what it really takes to make it work. It is a test of personal strength.

What’s farming got to do with it?

I grew up on a cattle and cropping farm and learnt very early on that you need to be patient. I also learnt that you can go for years in drought without being able to do a thing about it. That means no water, no money and no wins to boost confidence in the interim.

That, however, doesn’t mean that you just pack everything up and give in. You prepare the soil as you normally would and continue to plant seeds in hope that next year will be different all the while employing new strategies to assist along the way.

You don’t just give up! You pull out all of the stops, diversify where you can, take stock of where you are and lay out future plans with every intention of achieving them.

So, my question to you is:

Do you really have what it takes to make your business work? Even through a drought?

If the answer is yes, make your decision and stick to it. No ifs, no buts and no going back. Your only option now is to make it a success. Sit quietly when you’re at peace and ask yourself: Do I have what it really takes?

The answer will come. Maybe not immediately but it will come. Only you can answer this for yourself. No one else, only you.

So why did I decide to continue on after my meltdown? Because it was the way I was brought up. You pick yourself up, dust yourself off, adapt and get on with the job. It’s the only way.

Ben Angel is the author of the brand new controversial and revealing book, ‘Sleeping Your Way to The Top in Business – The Ultimate Guide to Attracting & Seducing More Customers.’ Grab your copy today by visiting www.benangel.com.au

We’ve all seen the “Hitler loses it” mashups, where aspiring Spielbergs have taken the now famous bunker scene from Downfall and replaced the sub-titles. In fact, it’s fast becoming a new benchmark for popular culture.

If your ‘issue’ hasn’t been expropriated by Hitler yet, it can’t be that big a deal. That’s why we were pleased to discover this clip by YouTuber BleakIsolationist. Finally innovation rates! Okay, it’s not as funny as Hitler’s Alan Didak eruption or finding out that Michael Jackson has died (and it’s extremely raw).

But in the context of Anthill it is topical.

We must warn that this clip rates high on Anthill’s ’salty language’ meter. (But we’re sure that none of the expressions used will be new to those who oft pass through the corridors of Australian Parliament, right?)

Salty ‘dictator’ language warning: High

In the seventh post in this series, Nigel Malone shares the contents of another of his favourite business keynote slides, drawn from a cross-section of sources that includes some of the great business, brand and military planners of all time.

Also in this series:

• Favourite Slide #1: The Hedgehog
• Favourite Slide #2: Six Buying Roles
• Favourite Slide #3: Creative Development
• Favourite Slide #4: Values
• Favourite Slide #5: Message Development
• Favourite Slide #6: Competition

Favourite Slide #7: Positioning

This slide comes courtesy of the genius of Gerald Nanninga. Gerald is a retail guru with the best blog planninga-from-nanninga.blogspot.com on strategic planning I’ve ever read. He literally has an analogy for everything, but in this particular slide, I draw directly on his wisdom regarding ‘positioning’.

What is positioning?

A position explains why your business has a right to exist in the marketplace and why a certain customer segment would prefer it. It is the place where your business is genuinely successful. It may be based on price, service, quality, durability, convenience, variety, taste or status. The point is that trying to be all things to all people at all times will fail.

Alexander Chernev, a Professor at the Kellogg School of Management, recently proved this with an experiment detailed in the November 2008 edition of Kellogg Insight.

Chernev surveyed consumers about everyday items like laundry detergent and toothpaste. Some of the products stressed excellence in a single attribute, while others claimed to excel at multiple attributes. For example, there could be one toothpaste brand emphasising just whitening, while another brand claimed expertise at whitening, cavity prevention and fresh breath.

What Chernev discovered was that products specialising in a single attribute were perceived by consumers to be superior in that attribute relative to a multi-attribute product making the same claim. In other words, even if I tell you that the teeth cleaning powers in my multi-attribute brand are as strong as the brand that only claims whitening, consumers won’t believe you. They’ll think the specialist is better at whitening.

Are you in position?

So let’s put your positioning strategy to the test. If you don’t already have one you may wish to use Proctor and Gamble’s positioning statement template:

“For [your audience] [your product name] is a [category name] which provides [main benefit] unlike [primary competitor] which provides [competitor’s main benefit]”

Now put it to the acid test…

1) Is the position Desirable?

Do people want what you are trying to sell? Sure, people desire cars, but if you pick a position of selling cars so cheap that they are unreliable and unsafe, you have chosen an undesirable position.

2) Is the position Sizeable?

To make a profit, you need enough sales to cover all your costs plus a little more. You may have found a position that several people find very desirable, but is there enough of them?

3) Is the position Ownable?

Highly desirable positions are often already taken. Being known for “selling everyday essentials at the lowest prices” is a great position, however K-Mart already owns the position, and will not give it up without a fight.

4) Is the position Preferable?

Why should a customer prefer your position versus what the competition is offering? Decisions are not made in a vacuum. People need to like your position more than the competition, otherwise you’re in trouble.

5) Is the position Achievable?

A position looks great on paper, but can you pull it off in reality? It’s okay to aim high with your positioning goals, but don’t aim for the impossible.

6) Is the position Believable?

Even if you could make the best quality sports car and sell it as the lowest priced vehicle on the market, customers might have trouble believing your claim. Is your position too good to be true?

7) Is the position Understandable?

If you cannot explain your position in just a few words, then the customer will give up on trying to understand it. All successful positions share the idea of simplicity.

Is the position Profitable?

Pick a position that will provide a financial return on investment. Ask yourself how much are people willing to pay for what you have to offer?

If you are thinking you may have to go back to the drawing board on your positioning statement, Gerald has a few points to keep in mind.

• First, don’t pick a position that is already owned by someone else. Choose something else.
• Second, clearly communicate that position to the customer, so that they will associate your brand with that attribute.

Third, don’t get greedy and try to make too many claims of superiority. The more attributes you claim to own, the less likely customers will believe that you own any of them. A simple, narrow position almost always wins out over claims that “I can do it all.”

Nigel Malone is a freelance brand strategist and writer, with particular expertise in the fields of tourism, finance, technology, sustainability and social change. Connect with him on Linkedin http://au.linkedin.com/in/nigelmalone

New kid on the insurance block Youi drew a few arched eyebrows when it took out the Big Kahuna Award at the 2009 Anthill Cool Company Awards. After all, how can an insurance company be cool? Youi wowed our judges with its fresh and innovative entry into a very stuffy, uncool industry.

Well now it seems that the marketers at Youi thought an insurance company winning a national business award for coolness was a pretty good point of difference. So much so that they have launched a national radio advertising campaign crowing about their cool triumph.

We think that’s pretty… well… cool.

Here are the two spots currently playing on national radio:

Spot 1

Spot 2

The myriad uses and apps for the iPhone boggles the mind. Among the latest is Voice Band, which converts the user’s singing voice into individual instruments, laid down one on top of the other, to create a complete track.

In this example, the performer creates his version of ‘Fly Away’. Lenny Kravitz he aint, but there’s a certain charm to his final creation. This demonstration will leave you thinking about creating your own Voice Band masterpiece.

In this Fora.tv video, George Kembel, Stanford University’s design guru, delivers his creative take on the concept of creativity and the way more people should be approaching it. Interesting stuff.

From time to time we post a video on Anthill TV that is entirely unrelated to business but we think you’ll like all the same. Like the wingsuit basejumpers. And James May’s journey to the edge of space. And the Muppets coving Bohemian Rhapsody.

Here’s another: ‘Let Go’ is a five minute video of longboard rider Kyle Chin as he cruises luge-like down winding roads and round 360 degree bends at speeds you’d be wary of doing in a car.

Beautifully shot, blissful to watch and a very relaxing way to head into Friday’s beer o’clock.

Stuck for an idea for your next marketing campaign? Short on the cash to fund it?
Pick a card.

Elaborate professional marketing is mostly out of bounds for startups and SMEs. While many resources are available to the small business owner, it often come down a question of available time. This is where a novel product from Australian-based marketing company ChildsPlay Marketing can come in handy.

ChildsPlay Marketing Cards comprises three decks of cards and 125,000 marketing ideas. The first deck helps you identify a target audience. The second proposes possible promos, sales and services. And the third suggests communication vehicles.

This might appear a little too un-scientific to create a mind-blowing, knock-their-socks-off marketing campaign, but it could well help you break through those marketing mental block moments while still keeping all those other business balls in the air.

This year you’re going to follow through and make the changes in your life you’ve been talking about for ages. That’s right. You’re going to get that new job, shed those extra kilos, find a new relationship, start that novel, take some classes, go on that dream holiday (oh, wait… is this last one a goal or is it a reward? More on this later).

But how many of us have set goals or made New Year’s resolutions only to find ourselves quickly going back to old habits, reneging on our promises to ourselves or just plain giving up? I know I have! Until I came up with this process that really worked for me.

Most people have heard of that Harvard MBA study about the small percentage of a graduating class that wrote down their goals. Many of the graduates never even looked at their goals again, yet that small percentage achieved much more than the considerably larger percentage of graduates that leaped perilously into their future without direction. Whether truth or urban legend, the message of the story is a good one: you can achieve more if you have well-defined goals.

However there is something missing — a structure that helps you not only choose goals that are worth working toward but also gives you an action plan to help you make them become real.

That’s why this process works while others typically fail.

Brainstorm, Evaluate, Define

A robust goal-setting process should start with brainstorming. This is your chance to really be creative and crazy, think and dream big! Write down everything that comes to mind (don’t worry, you can and will cross many of these ideas out later). The point is to get everything down on paper. This should be a fun process.

Great. Now that you have a gazillion goals on paper, how do you know which ones to really pursue? Which ones can you make real? This is where the evaluation process comes in. And the first step in this process is to determine which items on your list are goals and which are rewards.

A goal should stretch you or change you in some way. A reward is just that… a present to yourself. So, while one of your goals for this year might be to take a dream holiday, perhaps that’s better used as a reward for having accomplished one or more of your goals. So start a separate list of rewards.

The next step in the evaluation process should not be an intellectual exercise, but rather an emotional one. Why?

Because people may take initial action based on a good idea, but they will only sustain that action based on a good feeling. So rate each goal that you’ve written down, from one to five based on how excited you feel about this goal. Completely subjective. Would accomplishing this really, truly make you happy? If it doesn’t light you up enough for you to assign it at least a three, cross it off. Then go back and re-evaluate the threes. Are they threes because you couldn’t make up your mind how excited you were? What’s missing? Does it need to be restated? Does the time frame need to change? If you can’t get it to truly move to a four, cross it off.

So, now you’re left with only those goals that really, truly excite you. Now it’s time to wrap more emotion around them by thinking of a higher purpose for the goal. The ‘what’ is not nearly as important as the ‘why’.

Here’s a hint: the why will almost always be something that helps you grow or helps you to contribute to others. If you can’t come up with a big enough why, you might want to re-evaluate whether it should be a reward and even whether it should be on your list at all. Perhaps it should be saved for another time in your life.

Once you’ve pared your goals down to those that really excite you and give you a higher purpose, it’s time to define them. Now, I’m sure you’ve all heard about smart goals so I won’t spend a lot of time on this. But suffice to say that goals really should be:

• Specific
• Measurable
• Attainable
• Realistic
• Time bound (have a time frame attached to it).

How will you know you’ve achieved your goal unless it’s defined in this way?

Reward

Now it’s time to bring your rewards back in. Make achieving your goals fun by attaching rewards to them. They can be big rewards (like your dream holiday) or small ones (like going to dinner with a friend). They can cost money or be completely free. It’s up to you. Whatever will make it fun, make it worth working or playing for and help to keep you on track daily. After all, as one of my mentors Keith Cunningham says, it’s not the first, big decision you make that creates change. Rather, it’s the myriad of small, daily decisions that you make to keep yourself on track and moving towards your goals.

Structure

And now it’s time to set up a structure: a plan for daily action to achieve your goals. Start with the end game in mind and work backwards. If you want to achieve something by the end of the year, where do you need to be by the end of June? The end of March? The end of January? What steps do you need to take right now to accomplish your short-term target? If you keep breaking your goals down into manageable pieces like this, the mid to long-term targets should take care of themselves.

And then do what Keith Cunningham suggests: start each day by re-writing your goals. That keeps them truly fresh and alive. Remind yourself why you’re going after them and what the rewards are for attaining them. Get excited every day about pursuing them to keep yourself on track.

Once you’re excited about them, plan them into your day. Schedule some daily action (or at the very least weekly) to keep you moving forward. You can even assign mini-rewards to these daily tasks.

Celebrate

And then celebrate! Celebrates steps big and small. Take advantage of those rewards and be sure to remind yourself why you’re enjoying that reward: because you’ve achieved your goals. You’ll become addicted to achieving big steps and small if you really take time to celebrate. This will then condition the behaviour until it becomes habit.

Gratitude

Finally, I believe that every goal-setting process should end with gratitude. Write down all of the things that you are grateful for now. All the things you have, are and do that make you happy. And don’t forget all the people you love and who love you.

After all, gratitude begets more things to be grateful for.

Happy goal setting!

Kim Seeling Smith helps people reinvent themselves professionally and personally. www.KimSeelingSmith.com

Limerick-based software startup Goshido recently completed its first round of private fundraising in only eight days. What is more impressive is that it accomplished this feat solely via the social media networking site LinkedIn.

Investors were offered 10 slots valued at €25,000 each and representing two percent of the company. Executive chairman Frank Hanigan has taken one of the slots.

The company sent 700 emails to possible candidates on LinkedIn that resulted in 200 replies and ultimately generated  €162,500 (approximately A$256,000) in just over a week.

Goshido produces a web-based application of task-sharing tools as well as more complex enterprise workflow software.

The company plans to raise an additional €200,000 from Enterprise Ireland later this year.

The full article in the Irish Times can be read here.

Photo: Ceslava.com

Part 1: Australian Innovation Policy… Where the bloody hell are you?
Part 2: Can Australia really claim to be a nation of innovators?

The proposed Australian R&D tax reforms…

Do they walk the talk?

I find it simultaneously flattering and saddening that so many innovative Australians and concerned industry observers felt the need to contact our offices over the past seven days to talk about the proposed reforms to Australia’s R&D tax incentive.

Not one caller had thought to contact his/her elected official or, indeed, our Federal Innovation Minister, Senator Kim Carr.

At the heart of the matter is a collective belief that their views have been ignored (or simply trampled upon) and that the range of opportunities to seek feedback over the past 26 months, from the outcry that accompanied the closure of Commercial Ready to the public forums staged to inform the creation of Venturous Australia, were cynically exploited to create the ‘perception’ of community involvement, rather than any genuine desire to gather real views from real people.

And, in politics, perception is reality.

Indeed, I wouldn’t be surprised if the folks responsible for assembling the Venturous Australia report, led by Dr Terry Cutler, feel a similar way.

After all, many of the recommendations (arguably most) featured in the report have not received any practical follow-through. (Correct me if I am mistaken.)

So, it was with initial enthusiasm that I greeted the proposed reforms to the Australian R&D tax concession.

Talking the talk

Earlier this week, I posted the second article in this Australia Day series, within which I quoted comments made by Senator Carr at the launch of the Venturous Australia report, whereby he echoed international opinion about the importance of this vital form of support for public and private sector innovation.

In case you missed it, this is what the Minister for Innovation had to say:

“Between 1995 and 2004, Australia was one of only three OECD countries to reduce its tax benefits for business R&D – and of those three, our cuts were the deepest. During the same period, sixteen OECD countries increased their level of support… In the nine months since Labor came to office, New Zealand, the United Kingdom, France, Belgium, the Netherlands and Spain have all introduced or extended tax incentives for business R&D. Japan and the United States have flagged their intention to do likewise.”

These words echoed the recommendations of Cutler’s report, which endorsed the importance of R&D tax concession, focusing on three key points: greater access for SMEs, higher benefit rate and ‘above the line’ government assistance for R&D (in terms of how it would appear as part of company budgets). The report also recommended that the government simplify the eligibility criteria.

However, if this endorsement of tax benefits for R&D is not encouraging enough, the Government’s white paper response to Venturous Australia, called Power Ideas – An Innovation Agenda for the 21st Century, should have left no doubt in the casual observer’s mind that the Federal Government clearly considers tax benefits for business R&D to be a good indicator of a country’s commitment to innovation.

Rousing sentiments from the report include:

“Business innovation translates creativity into jobs. The Australian Government’s ambition is to increase the proportion of businesses innovating by 25 percent, and lift the number doing R&D.”

And…

“Social and economic disadvantage persists in Australia despite our relatively high standard of living…. Innovation — and especially advances in information and communication technology — can help to deliver these things.”

And…

“The Commonwealth will also increase the use of ICT, including Web 2.0 technologies, to improve policy development and service delivery…. The government is mindful that advances in ICT accounted for a quarter of Australia’s output growth and a third of our labour productivity growth in the 1990s.”

And…

“By 2020, the Australian Government wants a national innovation system in which…. businesses of all sizes and in all sectors embrace innovation as the pathway to greater competitiveness, supported by government policies that minimise barriers and maximise opportunities for the commercialisation of new ideas and new technologies”

And…

“…many small firms lack the technical capacity to exploit these possibilities. They are also often starved of capital — and the global financial crisis has made matters worse. These constraints make it hard for smaller Australian firms to develop and commercialise new ideas. Too often, this means ideas are forced offshore, where the value they create is captured by our competitors.”

Wow! Rousing stuff, indeed.

So, let me summarise:

• The Federal Government acknowledges that R&D expenditure is a strong indicator of a government’s commitment to innovation.

• Its ambition is to increase the proportion of businesses innovating by 25 percent, and lift the number doing R&D.

• It recognises that ICT is fundamental to most aspects of innovation.

• It wants an innovation system that is accessible to businesses of all shapes and sizes, that will support funding-starved small businesses in particular.

I’m feeling really optimistic! So, let’s have a look at this in action.

The proposed R&D tax incentive

Shortly before the holiday break, the Australian R&D community was offered the chance to review the Draft Bill and Explanatory Materials for the design and operation of the new R&D Tax Credit. The Treasury has given interested parties until 5 February 2010 to submit a response. (That’s today!)

Here’s the good news.

The proposed amendments to the current R&D Tax Concession legislation will deliver a 45 percent refundable tax credit to small firms (group turnover less than $20 million per annum) and a 40 percent credit to companies with a group turnover more than $20 million per annum.

The new program will be extended to support R&D activities undertaken in Australia by foreign-owned firms and the complex 175 percent premium and international premium concessions will be abolished.

Sounds great! So why the dissent from the bleachers?

Too much ‘R’ and not enough ‘D’

The proposed reforms came about because apparently the program was being abused. It was being used by organisations that would have conducted the R&D anyway. That’s right. In the words of the Draft Bill:

“…an effective R&D tax incentive needs to result in firms conducting R&D that they would otherwise not perform because they cannot capture sufficient benefits from the activity to justify an investment.”

This makes sense, doesn’t it? Companies shouldn’t get a free ride for innovation projects that would be undertaken with or without the tax concession, right?

Just in case the intentions of the proposed reforms weren’t clear, the revised “Objects” clause states:

The object of this Division is to encourage industry to conduct R&D activities that might otherwise not be conducted because of technical uncertainty, in cases where the knowledge gained is likely to spillover to the benefit of wider Australian economy.

This eligibility clause is further narrowed by the proposed introduction of a dominant purpose test:

The tax offset is also available for directly related activities that are conducted for the dominant purpose of supporting such core experimental activities (rather than for a broader commercial or other purpose).

What the?! Now I’m confused.

As fairly pointed out by Kris Gale from MJA, in a blog post under the humorous headline Has Treasury Given Us What We Always Wanted or Just Another Pair Of Socks?, these statements do not reflect how real R&D decisions are made in the real world.

Essentially what this test does is place the emphasis of R&D eligible for support on the research side and not the development side of R&D. In the words of Gale:

“This equates to a meaningless incentive for companies (large and small) engaged in process technologies where downstream development costs and risks vastly outweigh the initial research effort involved, especially in manufacturing and mining.”

The problem with this approach is that it radically conflicts with global opinions about innovation and the purpose of R&D. To quote myself from the second piece in this series:

“Innovation is not the R&D you do, but what you do with the R&D.”

Novelty and Risk

There is a another, related element to this narrowed definition of eligibility that has innovators equally floored.

Claimants will need to qualify activities as either core or supporting. Core activities will need to display considerable novelty and high levels of technical risk. Supporting activities will need to demonstrate that their dominant purpose was to support the core R&D.

What this means is that, in the future, when the Treasury calls upon a concession recipient to demonstrate the validity of the R&D claim, companies will be required to show that their R&D activities are both novel and risky. In the past, innovators had to prove one or the other. There can be no doubt that this change is intended to significantly narrow the scope of eligible R&D.

Once again, this approach favours more academic activities designed to acquire new knowledge rather than the application of that knowledge. According to the Exposure Draft, new knowledge will generate greater spillover benefits to the wider Australian economy than the application of that knowledge.

Once again, it’s hard to reconcile this approach with what the rest of the world thinks.

How this will affect ICT projects

A final area of contention relates to a broadened list of excluded activities and, in particular, some provisions likely to hit the ICT industry particularly hard.

This aspect of the draft reforms is worthy of a post in its own right (my next post, in fact). But to summarise:

• The integration of ‘off the shelf’ commercial software or open source software is excluded regardless of the novelty or technical risk involved. (I personally can’t think of a software project that wouldn’t employ off-the-shelf or open software.)

• ‘Computer software services’ are also excluded, regardless of the novelty of technical risk involved. (This category, ‘computer software services’, is neither defined or explained.)

• The 20 year old statutory multiple sale prerequisite, unique to Australia and widely acknowledged as having outlived its relevance, is not only maintained but significantly strengthened and extended. (I’ll save the problems associated with this development for my next post.)

It doesn’t take a propeller head to realise that this ‘catch all’ has the practical effect of prohibiting all software services from being eligible for the R&D tax offset. But, more importantly, it stands to jeopardise almost any R&D project dependant on ICT, which sounds to me like… well… every R&D project.

Walking the walk

As above, it seems that the Federal Government acknowledges that R&D expenditure is a strong indicator of a government’s commitment to innovation. However, the overriding impact of the proposed reforms is seemingly to narrow the eligibility of applications and, therefore, limit access to the concession.

As above, the Federal Government’s stated ambition is to increase the proportion of businesses innovating by 25 percent, and lift the number doing R&D. However, the proposed reforms, in their current state, are likely to have the opposite practical effect. One arm has set a goal that can be measured, while the other has proposed reforms likely to render the achievement of this goal impossible.

As above, the Federal Government recognises that ICT is fundamental to most aspects of innovation. Yet, it has effectively prohibited computer software services and the use of ‘off the shelf’ commercial software or open source software in ICT R&D. Once again, it is hard to imagine any form of R&D, from mining to biotechnology, that does not require the inclusion of such ICT innovation.

As above, the Federal Government wants an innovation system that is accessible to businesses of all shapes and sizes, that will support funding-starved small businesses in particular. Yet, the reforms conflict with standard commercial R&D decision-making practices, which acknowledge that the true cost of R&D occur ‘downstream’.

But the greatest flaw of these reforms is in the ambiguity.

Consistency is king in R&D reform

From the perspective of the private sector, innovation is necessary for survival but can be unprofitable for a long-time. R&D tax concessions are among the most common ways to lower innovation costs.

We all know this.

As part of the Global Competitive Index for 2009 (which ranked Australia 22nd), the authors observed that a strong positive relationship exists between R&D tax programs, GPD and the performance of countries on its index.

But interestingly…

“…the size of the credit seems to have little impact — primarily because innovation is such a business necessity that companies rarely change their innovation activities on the basis of the availability of tax credits.”

More important than size is their dependability.

According to respondents involved in the development of this Index, inconsistency is what most influences an organisation’s decision to invest in R&D and the extent of its R&D investment. This is because a company cannot budget and minimise risk if it does now know the extent to which it is likely to be eligible for a tax concession.

The proposed reforms to the R&D tax concession not only conflict with their stated purpose but offer no consistency to organisations already engaged in the complex task of commercialising innovation.

Ironic as this may seem, ambiguity is the enemy of innovation… whether novel or risky.

Did you prepare a submission? If so, please feel free to link your submission as a comment below.

Late last year, Miles Burke, the founder of Perth-based Bam Creative, engineered a coup d’état within his own business. He invited all the company’s employees to become shareholders. Bam started the new year with everyone buzzing around the office, genuinely working for the collective good rather than selfish individual ends. Here’s Burke’s account of how (and why) it happened.

It became obvious that something had changed when on the first day of 2010, a number of employees brought in spare coffee cups from home to aid stocking our new kitchen. The office was buzzing with a new energy and motivation.

Our business, Bam Creative, had new owners: the collective employees. What have we got ourselves into?

The startup

But first, let me take you back eight years. It was in late 2002, when I founded Bam Creative, a Perth-based website design and development company, after leaving a full-time gig in media. I’d had enough of working for others, and believed I’d be happier working long hours for myself rather than someone else.

A friend of mine also saw my vision, and his business invested in my new direction at the start, taking a large cut of the shares in exchange. Things were great. Within a few months, we’d hired our first staff member and business was booming.

The business teenage years

In 2006, we decided it made sense to amalgamate both existing companies under one umbrella, and create a bigger company between us.

It was an exciting time. We moved offices into the same building.We saved on administration costs by combining reception, accounts and the like. Everything went smoothly. I personally ended up with a smaller piece of a larger pie. We had 17 employees in Bam Creative, more than 40 employees in total, and the market reacted positively to the move.

The downside of amalgamation

Over the last couple of years, we’ve tried unsuccessfully to merge the company cultures of two different organisations, and last year came to the conclusion that creative web designer types and corporate IT people just don’t get each other.

It was nothing major; just a sense that the two sides didn’t understand each other and that neither business had ever really gained much cross-traction with complementary service offerings to our wide client bases. That, on top of a softer financial performance in the last year, inspired the directors to start looking at our options of separating the two businesses.

Employee ownership: Is that a communist thing?

Ever since I started Bam Creative, I wanted to instil a sense of ownership in my employees. That old adage about business being as good as its employees can’t ring truer for a professional services business. Bam Creative really is only as good as the people who work in it.

I was keen to sell the business to the employees, and commenced looking into ESOP (Employee Share Ownership Plans) options, talking to my family and friends and the other Directors. I had mixed responses, from “Is that a communist thing?” to very positive. I even had a few non-employees keen to invest.

Why buy from within?

My reason was simple: I believe a business owned by its employees is more powerful than a business owned by only one or two shareholders. The benefits of an employee owned business include:

• Adds wealth and value for all shareholders.
• Creates a deeper level of employee commitment to the business.
• Encourages greater innovation at all levels.
• Creates a common purpose across the entire organisation.
• Aligns employees’ goals with those of the business.
• Encourages better customer service.

In early December last year, at one of our regular Friday afternoon staff drinks hours, I spoke to the team about what my vision for an employee-owned business where the majority of the employees had a real financial stake in the business.

I spoke individually to each employee over the following week, and out of ten staff, eight were keen to get involved. We all sought individual advice, many sought finance to cover their slice of the deal, and on Christmas Eve we sat in the boardroom sipping Champagne, celebrating the deal closure.

We closed for the festive break, to return on January 4, facing the start of 2010 with a new, revitalised business.

The (new) startup

Besides spending that first day back setting up our kitchen with all the equipment, we also voted in a new board of Directors, comprising myself and two fellow shareholders, and embarked upon setting a balance of communication and management, where traditional management still applies, yet all shareholders have a new, open visibility into every aspect of the business.

I’m focusing on delegating better, and reminding myself daily that those that surround me have displayed a deep commitment and a high level of trust in both myself and the team. I’m adopting complete transparency, educating employees (most of which have never owned a business) how to read Profit & Loss statements, how to forecast cashflow and what shareholder and Director responsibilities and liabilities they face.

Advice for business owners

• Employee ownership should be a consideration in any exit strategy.
• Face your fear of transparency — trust your team.
• Look long-term, not short-term. Sure, there’ll be a steep learning curve, but it won’t last forever!
• Empower everyone in decision-making — even when shareholdings are different from one another.
• Once you do it, tell the world about it. It’ll excite customers, suppliers and, most of all, your new shareholders.
• Focus on the business, not individual roles. Keep shareholding and organisation structure separate.

Most importantly, do your research and consider all the outcomes. Employee ownership could backfire without the right mix of people, or the right strategy to deal with morale and disputes.

Where to from here?

We’re seeing innovation and motivation across the whole team in the first two weeks. Suggestions of new products and services, a group focus on financial performance, and the new adopted mantra of ‘What’s in it for us?’ instead of ‘What’s in it for me?’

The future is bright. Sure, we expect to make some mistakes, and we’re prepared for the pain. However, the benefits far outweigh the dangers. We can’t wait to see where it heads!

Miles Burke is the Managing Director of Bam Creative, an award-winning (and now, employee owned) web design and development business in Perth, Western Australia. Miles is an awarded entrepreneur, published Author and has been working with the web since 1994.

This compelling ‘No Excuses’ Nike promo — featuring Wheelchair Basketball Player Matt Scott — is about dodging exercise workouts, but the spirit is just as relevant for business. As Sebastien Eckersley-Maslin’s recent series Build a startup in seven days and under $500 reveals, the best way to overcome uncertainty and doubt is to get stuck in. Or, as Nike would say, Just Do It.

Solar-Gem CEO Khimji Vaghjiani, winner of last month’s Australian Innovation Shoot Out in California, presents a checklist all international entrepreneurs should consider before sitting down with US venture capitalists.

Many Australian companies set their capital raising sights on California’s Silicon Valley, as the availability of venture capital funds there is much greater than in Australia. There are many reasons to seek funding in the US, and not all of them involve preparation for entry into the American market (my company, for example, is seeking funding to help us expand into the Indian, Asian and African regions instead of into the US market).

Today, a growing population of VCs in Silicon Valley hails from Australia, China, India and Singapore, among other countries. And because of this, these US-based investors are more willing than ever to invest in international companies that have a global vision. So even if your intention isn’t to move into the US market itself, the VC community there can still offer major support toward your goal of expanding in other international markets.

Last month, I was given the opportunity to participate in the G’DAY USA Australian Innovation Shoot Out — an event that connects Australian technology startups with investors and potential partners in the United States. There I received the extreme honour of being named Australian Innovator of the Year. Through the experience, I not only established valuable connections with US-based VCs — I also learnt quite a bit about the ins-and-outs of the US venture capital market.

Australian entrepreneurs seeking US venture capital need to be sensitive to the significant cultural differences that exist between Australia and the United States. If not handled properly, these can create serious roadblocks between your company andUS VCs.

For instance, US VCs want to know — first and foremost — what is your competitive strength. In other words: What makes you different and why? In order to answer these questions, innovators need to understand the global landscape of competition for their business. US VCs want to know upfront if you’re a leader in the market and, if so, how long you will be able to maintain that leadership.

As part of the Innovation Shoot Out journey, I’ve had the opportunity to work closely with ANZA Technology Network — an organisation that connects Australian entrepreneurs with people and programs to help companies maximise their US market potential and prepare for success in the US. In addition to what I observed from the US VCs, ANZA offers the following six considerations for Australian companies trying to raise capital in the US:

Six tips for raising venture capital in the United States

1. Drive-bys don’t work. In order to raise capital in the US, you have to establish yourself there. VCs like to be close to their investments, and they more often invest in companies that own the IP they are investing in. US VCs often take a board position and expect that board to have the final say on company matters … not take direction from a ‘parent’ company in Australia.

1. Think global, think BIG. Projecting $10M revenue in Australia is considered a reasonable success metric, but this number will not interest a US VC. In the US, $100M revenue projections are common and 10x returns on investment are expected.

1. Know your competition. Spend time familiarising yourself with your competition in the US market. If a VC names a competitor that you have not heard of, close your laptop and leave — the meeting is over.

1. Team. Option 1: You have the best team, proven track-records, no question that your team is the right team to execute the plan. Option 2: You have team gaps, you know it and one of your criteria for selecting your investor will be that you believe they can help you build the team.

1. Focus, focus, focus. Since Australia is such a small market, a company has to sell broadly across many market sectors in order to be considered successful. In the US, however, this could become a company’s downfall. Large, complex markets (like the US) need focus. Your VC wants to see a laser-sharp market entry strategy that will take the company to the next level (profitability or next investment round) as quickly as possible. Be prepared to give the ‘blue sky’ opportunities, but don’t make this part of your pitch.

1. Learn from every meeting. There are hundreds of quality VCs in Silicon Valley alone. Every meeting will provide you with invaluable advice and ideas that you can incorporate into your pitch and plan for the next meeting. Ask for feedback, and you’ll be able to improve your pitch with every meeting.

If your business is like Solar-Gem’s — i.e. not necessarily focused on the US market — there’s still great value in building VC connections in the United States. As I’ve already learned, your passion, business insight, sincerity and ability to learn with experience will win you goodwill. And this goodwill will expand your horizons in your search for business partners and funding.

KhimjiVaghjiani is the CEO of Solar-Gem and the winner of the 2010 G’DAY USA Australian Innovation Shoot Out. Solar-Gem provides solar-powered off-grid lighting and electricity systems, pre-pay tariffing systems and high-efficiency LED lighting modules targeting the 1.6 billion people without access to power.

Online Marketing by Design panel silhouettes. Photo @hear2listen

There were plenty of great insights and conversations about marketing and social media shared at last night’s Online Marketing By Design event held at the Shelbourne Hotel in Sydney, co-hosted by Mumbrella and Anthill Magazine.

We videoed proceedings and will be posting the best bits on Monday, but to get a taste of the passions that the event provoked in attendees, here’s a widget containing all the live tweets from the night, using the hash tag #mumhill.