It takes vision

AUTHOR: Lachlan Colquhoun   DATE: 30.08.01   ISSUE 2, 2001

{	SMART STRATEGY AGSM team members and clients (from left): Cochlear’s Georgina Sanderson and Dig Howitt, Reach’s Lee-Anne Liang, Cochlear’s Joy Liu, Management Projects manager Samantha Morley, Reach’s Greg Baxter, Andrew Armstrong, Danny Li (seated)and Angel Zonaga.

PHOTO: Karen Mork

You’re a business that needs a three-month consulting job – who are you going to call? PricewaterhouseCoopers? Accenture? Or, as a growing number of companies have discovered, are you going to call in a team of MBA candidates from the AGSM?

The AGSM’s ‘Management Projects for Business’ has been up and running since 1996 as a major practical component of the postgraduate course, and the latest round of projects has put students right at the cutting edge of new technology and the new economy.

At hearing technology company Cochlear, a team of students designed a framework for the company to identify outsourcing opportunities. Another team took on the challenge of designing a set of key performance indicators for Reach, the 50-50 IP connectivity services joint venture formed by Telstra and Hong Kongbased PCCW (formerly known as Pacific Century Cyberworks) earlier this year.

According to the manager of Management Projects, Samantha Morley, the latest batch of projects shows the power of the AGSM’s network in action. At Cochlear, for example, the initiative for the project came from Georgina Sanderson, an AGSM graduate now working as Cochlear’s manager of strategy development.

“It’s a great network we have here at the school and it’s one of the benefits of doing an MBA program,” says Morley.

“Alumni, previous employers, academics and their networks – it’s a widening circle. And sometimes you’re just out and about, and you meet people and tell them what you do and they say ‘that’s great’, I’d love to participate.”

Many of the students, says Morley, have up to 10 years’work experience at a high level and are already the types of people who would be involved in, or qualified for, consulting.

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We were very attracted to the academic thinking combined with the students’ solid work experience

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Diverse experience
“We have a diverse mix of students and the whole benefit of working in a team is what we are promoting,” Morley says.

“There may be someone who has worked for a consulting company in England, or managed an IT start-up in India.”

Georgina Sanderson joined Cochlear at the beginning of 1999, and her thoughts turned to her old school when the company decided it needed a framework to make outsourcing decisions.

Floated off from parent Pacific Dunlop in 1995, Cochlear now has a market capitalisation of about $2 billion, and has implanted more than 30,000 of its Australian designed hearing systems in patients around the world. The company has also made some international acquisitions, buying Philips Hearing Implants in Belgium last year.

“We’re a high-tech company and we have been growing at about 20 per cent a year in the last four or five years,” says Sanderson.

“Previously the business was all self-contained but now as we grow more rapidly we must adopt new technologies at a faster rate while maintaining flexibility. Developing partnerships to develop new technology rather than doing everything in-house allows us to achieve this.

“What the group was looking at was how do we identify our core competencies, those things we want to keep in Cochlear and provide us with a competitive advantage, and what are the possible things we could look at outsourcing.”

Under the supervision of AGSM faculty member Dr Robin Stonecash, the team of four students – from differing cultural backgrounds – set to work to understand Cochlear and its needs, interviewing a wide range of people within the company to build perspective.

The aim was to restructure how Cochlear made outsourcing decisions, and to establish a framework for outsourcing and evaluating the results over time.

“I think the students can do a very good job of being an outsider,” says Stonecash.

“Companies tend to get a lot of tunnel vision, and contact with a student consulting team forces them to take a step back and look at issues from a slightly different perspective.”

Applying academic learning to a ‘live’ company situation demanded some initial adjustments, but access to people at all levels of the company was a vital part of understanding Cochlear and its core competencies.

“The students came to Cochlear with the freedom to interview whoever they wanted. We just set them up with confidentiality agreements and suggested interviews they might like to do to get a feel for the business,” says Cochlear’s Sanderson.

After an interim report, the students got some feedback from the company, set back to work and came up with a final report, which the company is now using as a process to evaluate outsourcing decisions.

“They came up with a solution that was integrated into the business process that we already have,” says Sanderson.

“They did develop something very useful and got it down to a practical level that we could implement, starting from a quite theoretical framework and eventually working with our people to create something that was actually realistic in a company setting.

“From a company perspective it was a very inexpensive way of accessing the latest thinking, and as a past student I know it’s such a great opportunity to get out and get some real experience.”

Business talent
Her verdict on the students?

“They were a highly talented group and spent quite a lot of time in the infancy of the project to understand the company.

“It’s always exciting to be involved with a group of young people who are so motivated, and who are so willing to learn and contribute.

“Definitely Cochlear would be interested in doing it again.”

As for the students, Indonesian Eka Sugiato says the project gave her a feeling of achievement beyond academic course work.

“This is a company that helps profoundly deaf people and we hope that some assistance we are giving might also benefit those people,” she says.

“It was also immediately apparent to us that Cochlear was committed to the very highest quality, and that made for a very inspiring learning environment.”

Colleague Joy Liu says the Cochlear project was a steep learning curve on teamwork, interviewing and applying academic knowledge.

“In the interim presentation the managers said we were too academic, so we did a new round of interviews, picked up more information about the company and applied it in a final presentation which was a great improvement,” says Liu.

For Dr Charles Hopley, a medical doctor as well as an MBA student, the project was a perfect mix of his medical background and his business aspirations.

“The combination of team involvement, problem solving and dealing with people from different backgrounds was very useful, and I’d recommend it to anybody as an excellent process to go through,” he says.

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TEAMWORK (Far left): members of the Reach team (from left) Andrew Armstrong, Angel Zonaga, Lee-Anne Liang, Danny Li and Greg Baxter. (Left): Cochlear project participants (from left) Dig Howitt, Joy Liu, Georgina Sanderson and Samantha Morley.

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Key performance indicators
At Reach, the Telstra-PCCW joint venture, the task was perhaps even more challenging. Reach is a new company formed as a result of last year’s $5 billion deal between Telstra and PCCW, and it carries data traffic around the globe.

Telstra has folded some of its regional business into the company, which has 1100 staff and is looking to build rapidly on its position as the largest value-added connectivity services provider in Asia outside of Japan. Reach is also the single largest shareholder in the new high-speed APCN-2 cable launched in September last year to carry data throughout the region.

A system of establishing key performance indicators was considered essential for measuring Reach’s performance, but establishing that system presented a unique challenge to the students given the cross-cultural and cross-border nature of the company.

“They certainly gave us something to work with and build on, and they’ve done very good work,” says Raymond Cheung, Reach’s Hong Kong-based acting head of finance.

Cheung says that even though the company was used to dealing with some of the major consultancies, it could see advantages in turning to the AGSM students.

The latest research
“What made the AGSM option attractive is that we understood that some of the students have very solid work experience, and they were guided by the [research of the] academic [Paul Walsh], which was important for us,” Cheung says.

“The second most important thing was the presentation they made to us on their five-point approach to developing KPIs.

“Even though they did that through a video conference, the presentation was pretty convincing, and made us think we should give them a try.

“The fact that it was much less expensive than some consultants was a small factor, because first of all we realised that they could probably do the job we wanted.”

Under the supervision of faculty member Dr Paul Walsh, the students came up with a five-point methodology for determining KPIs, going beyond the company’s accounts and cash flow to looking at some of the so-called ‘softer’ strategic issues.

The five dimensions were – in rated order – strategy, project management, risk management, business financial and operational issues. The AGSM team defined objectives within each of these areas which would enable Reach managers to evaluate the performance of the company.

“The difficulty with most performance measurements is that they measure the easy things,” says Walsh.

“We call them housekeeping. They measure variance to budget and operational issues, but what they don’t look at is strategic, or steering measures – the kind of thing that lets people know how to row together, and in the right direction.

“The soft and intangible issues are often much harder for companies to do because historically the custodians of KPI have been accountants, and they’ve done very well putting together systems and measuring everything to the last penny.”

Walsh says that when the AGSM project began, Reach had focused on financial data against which to measure its performance. The student input widened that perspective to include strategic issues such as knowledge management, the communication of the company’s value proposition, and customer acquisition and retention.

Raymond Cheung’s assessment is that the students gave the company “something to work with and build on”.

“They did very good work, and produced a good foundation on which to move forward,” he says.

“Now, we need to discuss it with senior management and the related function heads and get their buy-in, and then it can become a formal part of our reporting structure.”

The key to the project’s success, he says, was the combination of the students’ hard work in understanding the company, and the academic framework provided by the AGSM and backed up specifically by Paul Walsh’s input.

“We were very attracted to the academic thinking, but if it was only pure research it wouldn’t have been very useful.

“The key thing was to combine academic thinking with the students’ technical experience.”

MBA student Stuart Stott says the Reach project gave him invaluable exposure to a new organisation, and one that had subtle differences of culture and strategy between Sydney and Hong Kong, which had to be incorporated into the process.

“It was excellent being involved in something that is current, that is live, that is really fluid,” he says. “And I think that they were looking for a fresh perspective, for some up-to-date theories and ideas.”
Another student team member, Andrew Armstrong, says the key to the Reach project was flexible thinking. “We didn’t want to go in and just rehash – we wanted to introduce a new way of developing KPIs in a more wholistic fashion.”

* Lachlan Colquhoun is a freelance business journalist.