QUEENSLAND Leaders is driving support for the state’s business leaders – and beyond – to new levels as it begins its 10^th year of programs in 2015.

With stronger support than ever among its ranks of Industry Partners, Industry Experts, and Alumni, Queensland Leaders has renewed its emphasis on extending its programs to help business leaders drive for success. 

Apart from the extensions of the Queensland Leaders-based series to Victoria in late 2014 – and New South Wales and New Zealand this month – there has also been a strong push to assist business leaders in regional Queensland along with the new Future Leaders program that assists leaders of early-stage and fast-growth companies.

“What we have developed is a multi-various program to support business leaders and build capability, structured similarly to an investment banking platform,” Queensland Leaders founder and executive director James Paulsen said. Mr Paulsen is also the executive director of the International Leaders umbrella organisation for the rapidly expanding series.

“We are particularly pleased with the interest at the moment in our Future Leaders programs – which are now also starting in other states and New Zealand – for they are immediately helping business leaders who need a structure around them to help develop their companies rapidly,” Mr Paulsen said. “Our Future Leaders program has really hit the mark in these challenging times for early-stage businesses.

“The series in Queensland is already working very well for some amazing fast-growth companies that are making the most of their opportunities. Companies like RTO Management Group, The Thinking Corporation and The Training Institute of Queensland are forging ahead in challenging markets, from what we are hearing.

“The Future Leaders series is all about assisting the leaders of these young companies and helping them to tap in to the knowledge, experience and networks of Queensland Leaders when they need it.”

Queensland Leaders has also agreed to joint-venture with Brisbane Business Angles to run a second Future Leaders Series. The second series will be tailored towards earlier stage companies that are looking to raise funds, having direct links with Brisbane’s Angel community.

Victorian Leaders had also recently launched its Future Leaders program, Mr Paulsen said, and as NSW Leaders progresses it is also in the pipeline.

LEADERS INNOVATION

Mr Paulsen said the entire Leaders network was benefitting from the innovation and new potential markets that came with careful expansion. A good example was the planned Sports Leaders program, designed to develop business acumen and future pathways for professional sports people, which had come out of discussions with Victorian Leaders CEO Robert Ford and chairman and former Australian Cricket coach John Buchanan.

“Queensland Leaders has always been a highly innovative program that could react rapidly to changes in business conditions and in meeting the progressive needs of our members,” Mr Paulsen said.

 “Even though we have seen great success as an organisation – and our success is really in helping to facilitate the conditions that bring success to our members – we are seeing some great innovations come to fruition that will both attract new members and advance our existing members, partners and alumni.”

Mr Paulsen said the organisation was also now underpinned technologically by a versatile and rapidly developing online Leaders Resource Centre.

Apart from the online communication and networking capabilities of the system, its expanding information resource – in a mix of video, text and special report presentations – was proving to be a boon for members and partners alike. Special offers for products and services among members are also introduced through the Leaders Resource Centre.

“This platform is interconnected, so its content develops and becomes even more useful to the network as International Leaders expands,” Mr Paulsen said.

“This was always part of our strategy and we have been careful to under-promise and over deliver in terms of our digital strategy and in how we are building and delivering this powerful business knowledge resource.”

Now International Leaders is investing in a significant technology platform to assist its licensees with the roll out of their individual series.

“This will help greatly with ensuring the continuity of the structure, culture and philosophy of the initiative, and consistency with the content and outcomes delivered,” Mr Paulsen said.

STRONG SUPPORT

Queensland Leaders has always enjoyed the support of the state’s most successful and visionary business people and it has a long-serving Advisory Board of Mr Paulsen, John Allpass, Keith De Lacy, Sallyanne Atkinson, Peter Birtles, Ian Runge and Jamie Pherous, whose company Corporate Travel Management was the first to IPO through the Queensland Leaders system.

Corporate Travel Management is also one of the Industry Partner organisations that has gone on to support the new Leaders organisations in other states, while the network regularly receives presentations from other luminary partners such as Graham ‘Skroo’ Turner of Flight Centre, Martin Ward of century-old automotive retail group AP Eagers, Peter Birtles of Super Retail Group, Adrian DiMarco of TechnologyOne and Maxine Horne of Vita Group.

“I have heard Queensland Leaders described as the ‘brains trust’ of Queensland business and you’d have to say that’s quite true,” Mr Paulsen said.

“It’s great to see how our business growth and development network, with its foundations in Queensland, is being so successfully  translated to other states and even international markets. Everyone is benefitting from the innovations being brought through.”

www.queenslandleaders.com.au

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THE rise of Corporate Travel Management from a small Brisbane booking agency for business travellers to one of the world’s leading travel management companies is remarkable.

But it is also understandable, when you consider the relentless approach to measuring performance, assessment of customer expectations and the sheer delight in innovation that has been bred at Corporate Travel Management (CTM).

The company that was one of the first to develop its own mobile ‘apps’ to assist customers while travelling has little fear of changing things to go a better way. That is in the DNA of a corporate travel company that specialises in doing just that – finding better ways – day in, day out.

Jamie Pherous, a chartered accountant for Arthur Anderson at the time (now EY), founded CTM in 1994 as he realised that many business travellers, like him, were not happy with the way travel arrangements were made more complex and, at that stage, more expensive than what retail travel offered. 

He travelled a lot with Arthur Anderson – frequently orbiting Dubai, Chicago and cities in Asia – and experienced how poorly organised that travel was, with few options and little accountability.

“So, at age 23, I left Andersons to form my own corporate travel business,” Mr Pherous said. “I was young and had no strategy … but did it anyway. I had no brand plan. We just did what the name said we did.”

It was a two-man start-up, headquartered in his home town of Brisbane. CTM searched from day one for more efficient and economical ways to manage corporate travel.

“It was tough to start with, proving to companies that we could save them money by organising their entire corporate travel program,” Mr Pherous said. “We plugged away and tried not to get too disheartened by knockbacks and early setbacks. I even used to go the long way to work, just so I would not have to see the big Flight Centre billboard offering $1499 return airfares to Europe.”

CTM’s early days were all about word-of-mouth promotion and, eventually, the firm started to make headway by focusing on clients making up to $10 million in travel bookings a year.

At that pre-internet time, the major airlines and big hotel brands dominated with their business travel offerings; or, instead, business travellers could look to card-based program organisers such as American Express and Diners Club. Big retail travel groups such as Flight Centre were only just coming to grips with the business travel market, launching The Corporate Traveller and Flight Centre Corporate out of a legacy retail travel system.

Mr Pherous knew from his own experiences, and chatting with other frequent travellers, that all these approaches were missing the mark.

Corporate travellers, he believed, were spending too much time, money and resources on their trips. They lacked vital flexibility and speed in organising and re-organising their travel itineraries, and they were desperate to reduce the personal toll of business travel on both their private lives and their work efficiencies. CTM had to demonstrate the bargaining position their client companies were in, by properly organising their travel budgets.

Importantly, Mr Pherous realised there was a successful international business to be made, if he could get the formula right.

Little did he realise at the time how successful it would become – the largest privately-owned travel management company in Australia went on to list in December 2010 and today employs more than 1800 staff globally operating out of 46 cities in 23 countries including Australia, New Zealand, the US, Asia and lately eight European countries.

DOWN TO BUSINESS

The CTM business scoreboard is an impressive one for any industry – but within the tumultuous travel and tourism sector it seems almost miraculous.

It is a company that has grown in every single one of its 20 years of existence. It has gone from a baseline of about $1 million in annual revenues to more than $2 billion today. Its Australian Securities Exchange (ASX) list share price in 2010 was $1 and the shares today trade at over $9. That growth, along with an astute company shareholding incentive scheme, has already created over 20 millionaires among CTM staff.

For the past nine out of eleven years, CTM has been voted the best national travel management company in the Australian Federation of Travel Agents National Travel Industry Awards.

In 2013, Mr Pherous told a Queensland Leaders graduation event that CTM would “double in size over the next two years” – and if anything he is ahead of schedule. Mr Pherous has over the past decade made something of an art form of identifying, collaborating with and often purchasing symbiotic travel management companies in Australia and internationally.

That growth goal was cemented in early December 2014 when CTM purchased corporate travel agencies in the UK and the US at a combined purchase price of $52.6 million.

Mr Pherous said the acquisitions of multi-award-winning UK travel management company Chambers Travel and respected Diplomat Travel – both companies CTM has worked with extensively in the past – are in line with CTM’s strategic plan to establish a strong base in the UK and European markets and continue to expand in North America.

Chambers Travel is headquartered in London, with operations in England, Scotland, France, Germany, The Netherlands, Switzerland, Sweden and the Czech Republic. Mr Pherous said this expansion for CTM establishes an immediate and mature scalable presence in eight countries in Europe, the last key region in the company’s global strategy.

“It makes CTM even more competitive in the global/regional client segment, estimated at US$200 billion,” Mr Pherous said, noting that Chambers Travel services clients in 10 European languages, giving CTM an additional competitive advantage.

FINANCING GROWTH

Mr Pherous readily admits that CTM’s transition from steady private growth company to a fast-moving international strategic acquisition-driven growth multi-national was precipitated by the company’s IPO in late 2010.

He also cautions business leaders about the choice to list, insisting it must be for the right reasons for IPOs bring their own particular challenges that can make or break an organisation.

“It can be a good experience – but it has to be for the right reasons … for example, access to capital for growth overseas,” Mr Pherous told a Queensland Leaders gathering last year. CTM was one of the first companies to go through the Queensland Leaders system and it was through several organisations underpinning Queensland  Leaders – particularly stockbrokers Morgans – that CTM was shaped for listing success.

In fact, CTM was the first IPO to come out of the Queensland Leaders system – it is a private collaborative organisation helping to develop and mentor the next generation of great companies and their leaders based in Queensland – and has led the way for several others. In fact, Mr Pherous credits Queensland Leaders’ support as being instrumental in the pace of CTM’s growth and he has joined the organisation’s advisory board to encourage other Queensland companies through to success.

Mr Pherous happily points out the challenges of an IPO along with the upside.

“Listing helps you to become a better business,” Mr Pherous said. “But being a public company brings with it a level of scrutiny, which you must embrace.

“My advice, for anyone looking at an IPO, is to talk to people who have been through it – talk to as many as possible.

“In our experience, it has been great for staff and it encourages longevity – we now have a significant number of our staff that have taken ownership in CTM. That’s very satisfying.

“Board selection is critical. You have to find directors who will add diversity to your business and, I would suggest, not only those used to an IPO and operating a public company, but members that can bring some extra experience to your business from outside your industry.

“You also have to get experienced advisors. I would say you also should be someone who enjoys investor relations – as I do – for this is critical to your success,” he said.

“Finally, don’t be greedy with pricing at the IPO – I’ve seen that it goes well, if priced right for investors.”

INNOVATION IMPERATIVE

Jamie Pherous credits CTM’s focus on innovation and adaptability as qualities that have helped it thrive in the international public company environment. He points out, however, that this innovation imperative developed out of a time of crisis – a near-death experience in the formative years of the company.

He counts as his worst moment in business the day a $5 million client walked away from CTM in the early days of expansion.

“I had a few tears about that, I admit,” Mr Pherous said. “It looked disastrous for us. It was a huge loss and brought home the warning: don’t put all your eggs in one basket.

“But I knew I had lost that client because we had not invested in the technology we needed to maintain their business.”

But he learned from that huge loss. It was a turning point as CTM re-organised to never again be behind the game in technology.

Instead, Mr Pherous vowed to lead with technology to improve the customer experience.

“It was a blessing, as innovation is now in the Corporate Travel Management DNA.”

In fact, clients can help CTM to design products, as opportunities come through from CTM’s rigorous client satisfaction survey regime. CTM also moved to hiring key technology expertise from outside the company and often outside the travel industry, “like an army needs external support services”.

Mr Pherous said the constant innovation touchstone – and everyone in the company understands it – is understanding and meeting the needs of CTM clients.

“Client-staff surveys are the cornerstone of our business,” Mr Pherous said. “This practice has helped us to not only constantly improve our business relationships, it has helped us to identify opportunities and understand the key drivers of our business.

MANAGEMENT-LEARNING SYSTEM

Constantly listening to clients, passing on those insights throughout the company, and using client feedback as a baseline for change is the trigger for CTM’s constant innovation.

Mr Pherous realised many years ago that CTM needed momentum driven by constant growth.

“You have to grow and the best organisations do it regardless of the economy,” Mr Pherous said. He found CTM was winning lots of market share – but he had to navigate from the focal point of a small business to large.

“I was a control freak. I always paid great attention to detail,” he admitted, “but that in itself can be a problem for empowering people to take up the load for growth. We all had to change.”

The first problem he encountered was that the flat structures that had made the company nimble were now slowing growth.

“When you are growing continuously, it is easy to lose your way – we were not nimble enough,” Mr Pherous said.“You need experts in their roles and with clear responsibilities,” Mr Pherous said. “It has to become like a beehive, where every manager has a responsibility that all others can unconditionally rely upon.”

It brought on a particularly challenging period some years ago when some key people found they could not adapt and grow with the business and Mr Pherous realised that some people reach a glass ceiling.

“I had to change the people,” he said.

“These are awful things to deal with at the time – in fact I had to replace one of our most dedicated people in a key role that was, at the time, holding the company back – but that is the kind of decision that has to be made, if you are in charge of a high-growth organisation like this. The Managing Director has to lead by example and cannot shirk what is best in the long run for the company and the team. But it was tough for me, personally.”

Mr Pherous said out of the re-organisation came a very clear focus for all staff, energised by a rigorous business system.

“Every business has four or five key drivers,” Mr Pherous said. “In CTM’s case the drivers are win (business), retain (business), profit per person, client satisfaction and staff engagement.

“At CTM, everyone knows the key drivers. Everyone will do something to meet them. Everyone reports on them.

The litmus test is to ask staff, ‘What are the key drivers of our business and how are you contributing to them?’ That is how we improve constantly.”

It also explained why CTM focused on what Mr Pherous called “remuneration alignment” – a large part of his bonus, for example, is tied to staff engagement and client retention outcomes – not just profit.

“Values are really important,” Mr Pherous said. “client service values that we cherish – and we reward those via remuneration – some of which are teamwork and going the extra mile.

“CTM manages by exception,” Mr Pherous said, “for instance, we spend the majority of our time focussing upon the key drivers and metrics that are not quite going to plan. We look at those exceptions and solve them, not the 80-odd percent of the time that things are going fine.

He said the CTM approach was to look at reasons ‘not why we can’t do it, but what will it take to achieve something”.

So-called ‘cancers’ identified in any growing business include ‘project creep’, communication rhythms, slow decision making, and understanding the fact that these are symptoms of a lack of accountability or people not tied to the key goals of the business.

Succession planning is a key challenge for CTM. Mr Pherous said there were more than 1800 staff now and CTM had already identified 17 people with skills to run a state or a country.

This forward-looking approach has already produced several successes as a result of early identification of those with the right attitude, training and knowledge drivers.

“The number one fear we have every year,” Mr Pherous said, “is that we are getting too big. However, staff engagement scores continue to rate highly in empowerment and connectivity to the business goals, all of which suggest we are staying true to our values.

“We have to strive to continue to be the very best. We want people to say, oh, now it’s CTM pitching against us. That’s our litmus test.”

CTM, it seems, is going for world corporate travel domination, one country at a time.

“I am not the biggest fan of global companies, unless of course it is us.”

www.travelctm.com

• Corporate Travel Management is a Queensland Leaders Partner and also now partners NSW Leaders and Victorian Leaders.

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THE State Library of Queensland’s annual history research fellowships, for awards of up to $20,000, are open for nominations until March 16.

State Librarian Janette Wright has invited applications for both the John Oxley Library Fellowship supported by the Queensland Library Foundation ($20,000) and the Queensland Business Leaders Hall of Fame Fellowship ($15,000). 

The fellowships, as part of the broader Queensland Memory Awards, are awarded annually to acknowledge excellence and innovation in historical research and to foster future exploration into our state’s history.

“Each year State Library selects two Fellows as our resident researchers to contribute to a greater understanding of Queensland’s heritage,” Ms Wright said.

“Applications are welcomed from people of all professional backgrounds and historical interests as fellowship outcomes may be quite diverse,” she said.

“Projects may include a publication, an online engagement, a cultural activity or product, or a curatorial contribution to the John Oxley Library collection.

“These fellowships enable researchers to investigate our state’s past, and to find innovative ways to uncover and share this history with others.”

In addition to the stipend, the successful fellows will each be provided with a personal workspace in the Neil Roberts Research Lounge within the John Oxley Library where they have ready access to State Library’s rich resources as well as staff expertise.

Since 2004, fellows have delved into the unique collections in the John Oxley Library to research, evaluate and document forgotten narratives across diverse topics including architecture, migration, classical music, politics, and Queensland’s ongoing ties with Pacific and South Sea Islander peoples.

The current John Oxley Library fellow, Thomas Blake, is using the John Oxley Library collections in the completion of his project Liquid Gold: the history of the Great Artesian Basin in Queensland.

Mr Blake will be giving a free public talk at State Library on February 19, discussing his research to date into the Great Artesian Basin and its role in serving and sustaining more than 30 Queensland towns.

Now in its second year, the Queensland Business Leaders Hall of Fame Fellowship is awarded for a proposed research project that examines an aspect of Queensland’s business history.

The fellowship facilitates deeper engagement with State Library’s business records, so Queenslanders can learn the stories of the state’s commercial, social and economic development.

The inaugural Queensland Business Leaders Hall of Fame Fellowship was awarded to fashion innovators Madeleine King and Nadia Buick (The Fashion Archives) for their project to examine 12 key Queensland businesses and their impact on the communities around them.

This fellowship is an initiative of the Queensland Business Leaders Hall of Fame, a partnership between State Library of Queensland, the Queensland Library Foundation and QUT Business School.

Applications for both Fellowships close on March 16, 2015.

The winners will be announced on May 28 at the annual Queensland Memory Awards Ceremony, alongside the recipients of the John Oxley Library Award and the John Oxley Library Community History Award.

The State Library is a Queensland Leaders Industry Partner.

www.slq.qld.gov.au

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ONE of the real sticking points that crops up in mergers and acquisitions (M&A) continually is the allocation of ‘working capital’.

That has been the experience of Pitcher Partners Brisbane, which has seen the issue emerge in both large and small acquisitions. 

“Whilst ‘working capital’ is generally comprised of monetary items that will crystallise short term into cash inflows/outflows, it is fair to say one man’s definition or interpretation, is generally not that of another,” Pitcher Partners Transaction Services partner Warwick Face said.

He said the key to a successful completion of an M&A deal was to have working capital’s components properly defined, as even textbook definitions of it varied. He said the accounting basis and policies for working capital needed to be defined, such as using the International Financial Reporting Standards (IFRS).

“Utilise experienced lawyers, and ideally have these terms agreed upfront,” Mr Face said. “Ensure you involve an experienced M&A accountant alongside your lawyer.”

In the experience of Pitcher Partners, Mr Face said, when negotiating the enterprise value (EV) at which to acquire or divest a business, in the most simple terms this reflected fixed assets, such as plant and equipment; intangible assets such as brands, and intellectual property; operating assets or ‘normal working capital’ such as debtors, stock and creditors; and a residual amount of business goodwill.

“Businesses need cash to function, they must be able to fund receivables, carry inventory, and pay suppliers and wages,” Mr Face said. “Acquirers will generally value a business on the assumption it contains a ‘normal level’ of working capital.

“Each business and industry sector have different dynamics, and it is not uncommon for ‘interesting arguments’ to enter negotiations particularly in businesses which collect money in advance, for example subscription software, or project and construction businesses.”

Mr Face said it was important for purchasers to understand a target’s working capital.

This included an understanding of what were the industry norms, including seasonal and historical levels of working capital.

ACCOUNTING FOR CAPITAL CHANGES

In the real world, an adjustment of the transaction price for any M&A completion usually takes into account natural fluctuations in working capital.

“Assuming agreement on ‘normal working capital’, the business reality of collections and payments, means that the components at the date of the original offer may vary materially versus those at transaction completion,” Mr Face said.

“A working capital completion mechanism is generally inserted into a sale/purchase agreement (SPA) whereby the agreed EV is adjusted to account for such shifts,” he said.

“These mechanisms are also a source of robust debate, and often despite supposed agreed/understood terms, are also a key area of post completion dispute.”

Mr Face said that was why Pitcher Partners always recommended businesses engage experienced lawyers and an M&A accountant to help these sometimes complex transactions to run smoothly.

Pitcher Partners is an Industry Expert member of Queensland Leaders, the organisation helping to develop and mentor the next generation of leading Queensland companies.

www.pitcher.com.au

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