Sports Business

Budget 24-hour gyms thriving - IBISWorld reports

EXTRA >> THE key growth segment in Australia’s gymnasium industry at the moment is the 24-hour operation – but traditional gyms are fighting back.

Overall, according to research from IBISWorld, the gym and fitness centres industry continues to grow at a rate of 3.3 percent a year and is currently worth about $1.3 billion. 

The 24 hour gyms – which do not typically provide classes to members, but offer all-hours access, lower prices and flexible membership plans – are a key growth segment as identified by IBISWorld.

The most popular establishments in the sector include Anytime Australia, Jetts Fitness and Snap Fitness. Full-service gyms are beginning to fight back against this fierce competition by reducing prices, offering more flexible contracts and providing special services.

The concept of 24-hour gyms is not new, but consumer preference for the price and convenience of these establishments has grown rapidly. Two 24-hour gym chains, Anytime Fitness and Jetts Fitness, have aggressively expanded their networks, and now have about 600 locations between them.

These types of gyms require less space than full-service gyms, as they do not offer classes, which means reduced rental costs and a greater number of suitable locations. Low wage costs, due to the facilities being unstaffed for some hours during the day, allow these gyms to reduce their prices even further.

Strong growth in the number of 24-hour gyms has come at the expense of full-service gyms, causing the revenue and market share of major player Fitness First Australia to decline over the past five years.

In response to this fierce competition, some full-service gyms have begun to engage in price wars with 24-hour gyms. Many full-service gyms now provide a range of contract options, with different durations and prices.

These gyms still depend on high volumes of customers to remain viable, as they cannot compete with 24-hour gyms in terms of rent and wage costs.

Full-service gyms are also employing other strategies to lure consumers back, like providing women-only training areas. While this strategy is not expected to affect 24-hour gyms, it may take market share away from women-only gyms like Fernwood Women’s Health Clubs and Curves.

The IBISWorld report suggested as competition between full-service and 24-hour gyms intensifies, an overall rise in the number of members will be offset by declining prices.

Looking towards 2015-2020, this is expected to lead to an annualised fall in industry revenue of 0.5 percent.

“In a highly saturated market with limited room to expand further, the continuing trend of consumers switching over to 24-hour budget gyms, or taking advantage of cheaper memberships due to the price war, will lead to a revenue contraction in the gyms and fitness centres industry,” an IBISWorld spokesman said.

www.ibisworld.com.au

Current market share: 2014

 

Relevant industries include: Gyms and Fitness Centres, Women’s Gyms

3D printing, modelling to Disrupt Surfing

EXTRA >> TWO University of Sydney Business School MBA students, Gary Elphick and Jason Rogers, have taken the surf sports market by storm with an innovative new business concept which allows customers to affordably customise their surfboards.

Disrupt Surfing is one of a growing number of enterprises dispensing with the traditional business model of designing products in a studio, manufacturing them in a factory and displaying in a store. 

Instead, Disrupt offers an online service allowing customers to design products according to their desired size, shape and colour. Using the latest technology, Disrupt Surfing creates three-dimensional (3D) renders of the customer’s desired board which are then used in the manufacturing process.

“3D printing, modelling and manufacturing are going to revolutionise the way the world thinks of their sports gear, you should never have to settle for anything less than exactly what you want,” said Disrupt Surfing co-founder, Gary Elphick.

The company has been in operation for only eight months and is already cash flow positive, selling more than 1000 products to happy customers from as far as the US, Kenya and Japan.

A large part of the success has come down to an astute and engaging website that not only provides an easy path to design and manufacture, it also has a high-touch approach including online live help on a personal basis, often linking with the owners of the business themselves.

So successful is the start-up venture that Mr Elphick and Mr Rogers are now extending their customisation to other sports lines such as kite surfing, snowboarding and stand-up paddle boards.

“The level of customisation we are able to provide is almost limitless,” said Mr Rogers said. “You can visualise a customer’s character through how they personalise their sports gear – a shark proof surf board, a leopard skin print snowboard or a bumblebee stand-up paddle board, it says a lot about a person.

“Our sports gear is made in the same location, using the same materials and engineering as many big surf brands. We only sell online and ship direct. We offer 100 percent customised boards at 50 percent of the cost,” he said.

Mr Elphick and Mr Rogers attribute much of the success of their start-up to the practical nature of their MBA course.

They said learning from experienced business professionals about leading teams, managing a business, and seizing opportunities has helped them avoid the pitfalls a lot of start-ups face. The course also encouraged the duo to be progressive leaders.

“People are either going to love us or hate us, it’s a very polarising concept especially for traditionalists and traditional retailers,” Mr Elphick said. “You can expect to see a lot of commentary.”

www.sydney.edu.au

www.disruptsurfing.com

 

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Australian-made innovative horse racing helmet to set global protection standard

EXTRA >>

IMPROVING safety for professional jockeys around the world is the impetus for the collaborative development of an Australian designed and manufactured helmet.

A prototype of the new safety helmet – Albion’s ‘Coonan and Denley’ racing helmet – was released at a critical time for the racing industry, in the wake of two promising young jockeys, Caitlin Forrest and Carly-Mae Pye suffering tragic and fatal falls in October and champion riders Desiree Gill and Simone Montgomerie in late 2013.

Every year nearly 500 jockeys in Australia suffer a fall, according to the National Jockeys Trust. Around 330 will have a fall which prevents them from racing for an average of five weeks, while on average 16 jockeys will suffer a career-ending injury. There have been 313 jockeys killed in race falls in Australia since the profession began. Currently, about 5000 professional jockeys ride nationally.

META, a collaborative network of manufacturers and researchers, in partnership with the Australian Sports Technologies Network (ASTN), local sporting goods company Albion Sports and leading researchers from RMIT, launched their first collaboration at Flemington Racecourse recently – a gold-standard safety helmet prototype, pioneering safety in the horse racing and equestrian industries.

The META and Albion collaborative prototype helmet has been designed specifically to better absorb and spread impact across the head injury spectrum, reducing the risk of injury from a fall, kick or knocks to the head. The Albion Coonan and Denley racing helmet will undergo extensive testing that will replicate speeds of up to 60 kmh, equivalent to thoroughbred racing conditions, as part of Australian Racing Board racing regulation.

Champion jockey Craig Williams said jockeys require greater protection because of the dangers associated with their sport.

“Racing is one of the most dangerous sports in the world and jockeys have sustained serious injuries through high performance competition,” Mr Williams said.

“We need to ensure the safety of athletes involved in the sport and prevent the kinds of incidents we’ve seen recently from occurring. It’s great to see an Australian company taking the lead in protecting our jockeys.”

Albion CEO Brendan Denning said the helmet sets the standard for jockey safety and provides greater confidence for jockeys to focus on racing.

“The helmet is made with carbon fibre and is enhanced with additional materials, along with new foam technology which provides superior protection for jockeys,” Mr Denning said.

“Early results thus far indicate the performance benefits from the helmet will significantly decrease the likelihood of serious injury at both ends of the injury spectrum, from high speed, high impact injuries, to lower speed barrier knocks which can result in concussion for riders.

“We had been working on an advanced racing helmet for about three years and progressed to the stage of manufacturing but couldn’t get the manufacturing consistency from our overseas partners,” Mr Denning said.

“The support from META has allowed us to partner with local suppliers and manufacturers who we were unaware of prior to our involvement in the hub. It allowed us to upgrade the technology to the point where we are well and truly industry leaders in sports safety.”

META co-funded research and development of the helmet, the first project completed under the auspices of the META Sports Advanced Manufacturing Hub. Launched in July this year, the Hub connects manufacturers and the sports industry to create new and innovative products leveraging Australia’s outstanding research and technical ability in manufacturing.

META chairman Albert Goller said the helmet was an example of how Australian manufacturers were pioneering collaboration between industry and research to produce global-first products.

“Australia is a leader on the sports field and we want to ensure we are also a leader in sports manufacturing and technology,” Mr Goller said. “This helmet proves demonstrates the capability of manufacturers working closely with researchers to create a world-class and unique product that we can export to the world.

“Through the success of the Advanced Sports helmet, we hope to promote Australian sports manufacturers internationally and raise our profile as elite high-tech sports protection specialists.”

ASTN chairman James Demetriou said a number of other Hub projects were in the pipeline.

“Australia currently imports $2 billion in manufactured sports products and exports just $286 million worth of product,” Mr Demetriou said.

“The Albion helmet, designed and manufactured here in Australia, will help balance the equation, as will future projects resulting from the Sports Advanced Manufacturing Hub.”

The Hub will continue to allow industry participants to identify opportunities and then enable transition to the mass sports consumer markets.

The Albion ‘Coonan and Denley’ racing helmet is currently with the Victorian Racing Council (VRC) for approval as the preferred choice for all VRC events.

Australian manufacturers are being invited to participate in the Sports Advanced Manufacturing Hub.

www.meta.org.au

Australian-made horse racing helmet to set global protection standard

IMPROVING safety for professional jockeys around the world is the impetus for the collaborative development of an Australian designed and manufactured hi-tech helmet.

A prototype of the new safety helmet – Albion’s ‘Coonan and Denley’ racing helmet – was released at a critical time for the racing industry, in the wake of two promising young jockeys, Caitlin Forrest and Carly-Mae Pye suffering tragic and fatal falls in October and champion riders Desiree Gill and Simone Montgomerie in late 2013.

Every year nearly 500 jockeys in Australia suffer a fall, according to the National Jockeys Trust. Around 330 will have a fall which prevents them from racing for an average of five weeks, while on average 16 jockeys will suffer a career-ending injury. There have been 313 jockeys killed in race falls in Australia since the profession began. Currently, about 5000 professional jockeys ride nationally. 

META, a collaborative network of manufacturers and researchers, in partnership with the Australian Sports Technologies Network (ASTN), local sporting goods company Albion Sports and leading researchers from RMIT, launched their first collaboration at Flemington Racecourse recently – a gold-standard safety helmet prototype, pioneering safety in the horse racing and equestrian industries.

The META and Albion collaborative prototype helmet has been designed specifically to better absorb and spread impact across the head injury spectrum, reducing the risk of injury from a fall, kick or knocks to the head. The Albion Coonan and Denley racing helmet will undergo extensive testing that will replicate speeds of up to 60 kmh, equivalent to thoroughbred racing conditions, as part of Australian Racing Board racing regulation.

Champion jockey Craig Williams said jockeys require greater protection because of the dangers associated with their sport.

“Racing is one of the most dangerous sports in the world and jockeys have sustained serious injuries through high performance competition,” Mr Williams said.

“We need to ensure the safety of athletes involved in the sport and prevent the kinds of incidents we’ve seen recently from occurring. It’s great to see an Australian company taking the lead in protecting our jockeys.”

Albion CEO Brendan Denning said the helmet sets the standard for jockey safety and provides greater confidence for jockeys to focus on racing.

“The helmet is made with carbon fibre and is enhanced with additional materials, along with new foam technology which provides superior protection for jockeys,” Mr Denning said.

“Early results thus far indicate the performance benefits from the helmet will significantly decrease the likelihood of serious injury at both ends of the injury spectrum, from high speed, high impact injuries, to lower speed barrier knocks which can result in concussion for riders.

“We had been working on an advanced racing helmet for about three years and progressed to the stage of manufacturing but couldn’t get the manufacturing consistency from our overseas partners,” Mr Denning said.

“The support from META has allowed us to partner with local suppliers and manufacturers who we were unaware of prior to our involvement in the hub. It allowed us to upgrade the technology to the point where we are well and truly industry leaders in sports safety.”

META co-funded research and development of the helmet, the first project completed under the auspices of the META Sports Advanced Manufacturing Hub. Launched in July this year, the Hub connects manufacturers and the sports industry to create new and innovative products leveraging Australia’s outstanding research and technical ability in manufacturing.

META chairman Albert Goller said the helmet was an example of how Australian manufacturers were pioneering collaboration between industry and research to produce global-first products.

“Australia is a leader on the sports field and we want to ensure we are also a leader in sports manufacturing and technology,” Mr Goller said. “This helmet proves demonstrates the capability of manufacturers working closely with researchers to create a world-class and unique product that we can export to the world.

“Through the success of the Advanced Sports helmet, we hope to promote Australian sports manufacturers internationally and raise our profile as elite high-tech sports protection specialists.”

ASTN chairman James Demetriou said a number of other Hub projects were in the pipeline.

“Australia currently imports $2 billion in manufactured sports products and exports just $286 million worth of product,” Mr Demetriou said.

“The Albion helmet, designed and manufactured here in Australia, will help balance the equation, as will future projects resulting from the Sports Advanced Manufacturing Hub.”

The Hub will continue to allow industry participants to identify opportunities and then enable transition to the mass sports consumer markets.

The Albion ‘Coonan and Denley’ racing helmet is currently with the Victorian Racing Council (VRC) for approval as the preferred choice for all VRC events.

Australian manufacturers are being invited to participate in the Sports Advanced Manufacturing Hub.

www.meta.org.au

Jetts power up Australian-first Velocity partnership

JETTS has extended its reputation as an innovator in the fitness industry by entering into a ground-breaking three-year partnership with Virgin Australia’s loyalty program, Velocity Frequent Flyer – including a massive loyalty points offer for new Jetts franchisees.

The Australian-first partnership sees Jetts become Velocity’s first official fitness partner, enabling members to earn points through Jetts Fitness. 

The partnership will also generate the largest Velocity frequent flyer points earn opportunity available in the market – Velocity Platinum, Gold or Silver members who purchase a Jetts franchise will earn 500,000 bonus points.

Benefits for Velocity members will include the ability to earn two points for every dollar spent on Jetts’ membership payments and one-off club access fees. Jetts members who visit a Jetts gym five or more times each month will also earn 60 bonus Velocity points.

Jetts CEO Martin Oliver said the decision to partner with Velocity was the result of 12 months of planning and discussions.

“We want to put our members’ needs first to ensure they continue to get the most out of their membership,” Mr Oliver said. “By partnering with a leading Australian loyalty program like Velocity Frequent Flyer, we can ensure Jetts members’ experience continues to be nothing but rewarding.”

Velocity Frequent Flyer general manager, Sid Gokani said, “This Australian-first partnership is another example of the program’s ongoing quest to add meaningful partners and reward its members on everyday spend.

“At Velocity, we are proud to provide members with an extensive portfolio of partners across a range of categories, and from today, this will include our first fitness partner.

“We recognise the importance of health and well-being to our members and we are thrilled to welcome Jetts to the program, offering the ability to earn while you burn so to speak,” Mr Gokani said.

Velocity Frequent Flyer members who join Jetts, during the launch offer period to November 30, will receive 3,500 bonus points when purchasing an annual membership, or 750 bonus points on their first Freedom direct debit payment.

Points can also be redeemed for a one month membership and an advance 12 month membership on the Velocity Online Rewards Store.

Mr Oliver said the Velocity partnership further solidified Jetts’ position as the number one fitness chain in Australia for customer satisfaction “and Australia’s leading 24/7 fitness group”.

Jetts currently operates more than 250 clubs across Australia, New Zealand and the Netherlands.

Jetts was established in 2007, leading with the major points of difference of having round-the-clock, seven-days-a-week access to its fitness clubs and no lock-in contracts.

www.velocityfrequentflyer.com

www.jetts.com.au

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Exploring Australia’s sporting innovations … for fun, export and profit

By Mike Sullivan >>

AN ATHLETIC approach to developing Australia’s sports manufacturing sector was recently launched in Melbourne by manufacturing support organisation META and the Australian Sports Technologies Network (ASTN).

The jointly supported Sports Advanced Manufacturing Hub aims to help commercialise Australia’s sporting innovations and provide pathways to local manufacturing – something badly needed as the Hub tries to emulate Australia’s few stand-out successes in the global sports product market.

ASTN chairman James Demetriou said a key aim of the Hub was to help break down the silos that exist in Australia between various forms of manufacturing and sports innovators, “it’s so critical that we assist here”.

While Australia produces and export some of the world’s finest athletes and coaches, and its households consume about $8.2 billion in sports goods and services annually, in 2011-12 sports exports amounted to just $286 million. That is just a tenth of one percent of the $300 billion global market, according to incubator group ASTN.

The Sports Advanced Manufacturing Hub has been created to address this imbalance and to take Australia’s sports technologies to the world.

The aim is to help other companies follow in the footsteps of such game-changing innovations as the POD knee brace protection systems, Pro-Ride Racing’s synthetic all-weather horse racing surfaces, Geelong-based Baum hand-crafted racing bicycles and Sykes Racing’s rowing equipment, Fusion Sport athlete performance systems, the ASX-listed Dorsavi wireless wearable tracking systems and Albion’s equestrian and cycling high-protection helmets.

META, chaired by manufacturing industry leader Albert Goller, is a collaborative network of more than 250 high potential manufacturing businesses and researchers. ASTN chairman Mr Demetriou  heads an industry-led national collaborative network of more than 150 small and medium businesses, universities and national sporting organisations set up to provide leadership in the commercialisation of Australian developed sports technologies. 

They have joined forces to develop the sports technology industry in Australia, focussed through the creation of the Sports Advanced Manufacturing Hub.

Mr Goller, a former Asia-Pacific chief executive for hi-tech manufacturer Siemens, said Australia was unique in the variety of top-performance sports people it produced – and that in itself presented a unique opportunity for sports manufacturing leadership and innovation.

“We need to harness that kind of feedback, to produce world-leading products for these sports,” Mr Goller said.

LEGENDARY LAUNCH

At the recent Melbourne Cricket Ground launch event, Australian Football League (AFL) legend Kevin Sheedy explained how collaboration and innovation between the sports and manufacturing sectors is vital if Australian sports technology and sports manufacturing is to realise its potential globally.

Also at the event, leading Australian jockey Craig Williams told of the importance of high level sports safety technology, as he had witnessed develop over the years in horse racing, and why Australian innovation has a critical role to play in global development of the sector.

The Sports Advanced Manufacturing Hub aims to provide stronger connections between high potential sports technology SMEs, manufacturers, researchers and large corporations to support the development, marketing and export of new Australian sports technologies globally.

META’s Mr Goller confirmed that within the organisation there were initially currently few manufacturers of sports equipment. However, there was a major opportunity for Australia’s hi-tech manufacturers to apply their capabilities to the sector, if links could be built. He said there was also the opportunity for sports technologies to translate to other sectors, such as aged care, healthcare and even police and defence forces.

“Tracking sports people versus tracking ageing people, for example,” Mr Goller said. “We will continue to analyse the whole global market for these products, to help guide companies.”

Another example is the spin-off for sporting technologies into the defence realm.

“Define the SAS – they are elite athletes,” Mr Demitriou said. “There is every reason to look at adaptations of these technologies as they may apply in other realms, such as elite forces and medical technologies.”

Mr Demitriou said there had already been a lot of work done in the area of cognitive abilities and skills as they applied to elite sportspeople and elite troops – and there had been strong crossovers, mentioning the work done by Axon Sports in the US. His point was that developments in these areas naturally cross into other spheres and the new Hub was designed to help catalyse such opportunities.

He said Australian-made products had once been especially sought after – but while that had been lost in many respects in recent years because of declines in local production, he was confident it could return.

“Overseas sporting associations look to Australia as thought leaders in this area,” Mr Demitrious said. “That is a fact. Now we need to translate that into design-manufacturing. High quality advanced manufacturing.”

The Hub has already identified about 450 companies in Australia with the equipment and capability for high-value manufacturing in the sports area. Mr Goller said what the Hub intends to do is help these companies to achieve 100 percent asset utilisation by promoting new sporting product work.

“So we will share it, collaborate on it,” Mr Demetriou said. “There is a lot of movement in IT as well here. We want to find the hidden champions and help them to target US and Europe markets in this way.”

Mr Demetriou pointed out that of all sports-related expenditure worldwide, about 41 percent was commanded by the US.

“That nation has a high regard for Australian (sports) products and, of course, there are lots of Australian coaches working in the US. We need to capitalise on that.”

He said the wide use of Australian sports performance tracking products such as Dorsavi and Catapult had primed the way for others – if Australian producers can get moving fast.

He talked of a demand-pull approach to seeding the market. Suggestions include an audit of the 30 top national sports organisations in the US, for example, and their specific needs in the high performance area.

The model has already been proven, he said, citing the work Australian helmet maker Albion completed for the Australian Institute of Sport, leading up to the Rio Olympics, on developing a safer and more aerodynamic helmet for the Australian cycling team, using crossover technology from the equestrian area.

NEEDS LEADERSHIP

The point is, Australia can excel in sports manufacturing but it takes leadership and that is what the Sports Hub is all about, Mr Goller said.

“We can do it. We have some great products already leading the way. There is a $300 billion market and if we can increase our share by just two percent we are heading for $6 billion.

“So, what hinders us? What has to happen? This is the spirit we must bring into this.”

Mr Goller said one of the hurdles seemed to be Australia’s challenges with exporting manufactured goods. “Here, we are not very well practised,” he warned.

He also warned that Australia still does not have a very good record of bringing through and commercialising manufacturing innovations developed by universities. Linking and building those capabilities was where the Hub would play a major role, Mr Goller said. 

There are 16 universities and 60 SMEs in the network, Mr Demetriou said and 39 national sporting organisations (NSOs). The Hub was seeking out existing “islands of excellence” and connecting them.

“In the past, we have not been very good at joining the dots,” Mr Demetriou said.

“But in today’s world, digital marketing can sell a lot about you and explain your value … and people pay good money for good products – especially, as we know well, in the action and extreme sports areas.”

Mr Goller gave the example of an Australian company that had been making hi-tech radiators for Formula 1 cars for the past five years and that work had come out of development for the Australian V8 Supercars series.

The Hub changes things by giving sports industry access to META members who may be able to expertly assist in bringing a good idea to market.

Mr Goller said the Sports Advanced Manufacturing Hub would open up a greater understanding of what sports technologies are, the potential for cross industry applications and how these are also now translating to daily life.

“We are ready for it,” Mr Goller said, pointing out that the Hub was developing a special customer relationship management system (CRM) to assist various industries with the change process.

www.meta.org.au

www.astn.com.au

www.catapultsports.com

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Harnessing sports women’s leadership for business

A NEW global mentoring program has been created by EY’s Women Athletes Business Network, in partnership with the International Women’s Forum (IWF). Its aim is to “harness the untapped leadership potential of female athletes after their retirement from sport”.

Elite women athletes, who have transitioned or are in the process of transitioning from a career in sport, will be matched with prominent female business leaders from the IWF membership. EY also recently launched a new online community for female athletes to facilitate connections among current and retired athletes around the world. 

For the duration of the program, mentees will also be connected with an EY liaison that will provide access and introductions to EY’s internal and external global business networks.

Beth Brooke-Marciniak, EY’s global vice-chair for public policy said in this inaugural year, 25 elite athletes will be selected.

Ms Brooke-Marciniak said the program defined ‘elite athletes’ as “having currently or previously competed professionally or semi-professionally or at the national or international level”.

“Female athletes have leadership skills that can't be taught in the classroom,” Ms Brooke-Marciniak said.

“Our research shows that 96 percent of top female executives played sport, with more than half competing at the university level. The world needs more women leaders and we believe that elite female athletes are a unique talent pipeline.

“This new mentoring program is focused on building a bridge between women in the business world and women in sport to help open doors and create new career and leadership opportunities for these extraordinary individuals.”

The partnership gives the Women Athletes Business Network access to IWF’s membership of 6,000 senior women executives in 33 nations on six continents. Their mentor members – women who have reached the pinnacle of leadership in their respective field – will share their insights, lessons and leadership expertise with athlete mentees. 

Deedee Corradini, immediate past president and global ambassador for the International Women’s Forum said,  “For more than 20 years, IWF has lifted the prospects and expanded the reach for emerging women leaders around the world. We are especially excited to join with EY on this new mentoring program to support elite women athletes as they move forward in their leadership journeys. IWF knows the value these women of talent and potential can bring to the world.”

Olympic champion. broadcaster and former president of the Women’s Sports Foundation, Donna de Varona has become the lead advisor to EY’s Women Athletes Business Network and its new mentoring program.

“Connecting accomplished women athletes with the world’s most pre-eminent women outside the sporting community can only enhance the talent pool of those who are eager to lead, inspire and make a positive impact in our changing world,” Ms de Varona said.

The associated online community provides individualised career assessments, resume building tools, networking tips, stories of post-sport career success and a host of other resources.

An example is the recent webcast recording featuring some of the greatest female champions of sport and business, including tennis legend Martina Navratilova, Olympic gold medallist and TV host Summer Sanders, Brazilian Olympic swimmer turned CEO Fabiola Molina, British Olympic champion and DKH Legacy Trust Founder Dame Kelly Holmes, and Newton Investment Management CEO Helena Morrissey.  In the webcast they share their lessons of success and failure on the field and in the workplace.

Female champions webcast

www.ey.com

www.iwforum.org

 

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