David Jacobson's External Insights

Murdoch Newscorp succession planning

Lachlan Murdoch has resigned as a News Corporation executive.

Whilst he will stay on the Board, the news confirms the difficulty in ensuring that the next generation stays in the family business. The only reason given for the move was Lachlan's desire to return to Australia.

Even though News Corporation is an international listed company, the Murdoch family has a significant interest in it and Rupert Murdoch is a strong chairman. He still has one son, James, working in the company.

UPDATE: News Corp has disclosed that Lachlan Murdoch will get a termination payout  and has signed a two year consulting and non-compete agreement. Lachlan will receive a separation payment equivalent to his salary and bonus for 2004-05, which has not yet been disclosed.

Corporate governance web sites

Forbes.com has issued its Best of the Web: Corporate Governance.

Obviously they are US centric but I liked Board Seat, Corporate Governance and Corporate Board Member.  Lots of tips and tools.

Innovation and Success

Wharton School Publishing has published online the first chapter of Making Innovation Work: How to Manage It, Measure It, and Profit from It.

In arguing that "in the long run, the only reliable security for any company is the ability to innovate better and longer than competitors" the book cites the examples of Nokia, Apple and Coca-Cola.

It then argues that how you innovate, or your execution, is critical. Managing the creative elements of innovation is not easy for business managers.

It concludes that " How your organization innovates determines what it will innovate. In the end, each company’s innovation process is unique. What a company produces in the way of innovations, business growth and industry leadership will be determined by how the various pieces are arranged and how well they work together."

Wal-Mart applies for banking licence

This New York Times story reports that Wal-Mart is applying for an "industrial bank" licence in Utah.

It will join Generral Electric, American Express and Target in doing its own financial transaction processing.

Can Coles and Woolworths be far away in Australia?

GE Money operates successfully here without a full banking licence as it does not take deposits, it just makes loans and offers credit cards.

The importance of the management team

Fast Company's article John Doerr's Startup Manual is an interview with venture capitalist John Doerr.

The theme is that when someone is asked to join a startup or to invest in a startup, look at the team assembled:

when you're putting your team together, look for really smart people. It's fundamental. When you get exceptionally smart people on your team, that's a big plus. Besides smart, look for a combination of experience, drive, commitment, and passion. You don't want all experience -- but you also don't want all drive, energy, and passion. Getting that mix right is the difference between ventures that achieve greatness and startups that are merely successful, or worse.

Wesfarmers CEO contract

The new Wesfarmers CEO has commenced.

His employment agreement shows there is no fixed term and there are no short term incentives.

More CEO contract reviews.

UPDATE: 28 July US Executive Paywatch

The Queensland Sustainable Energy Innovation Fund

Dr John Cole from the Queensland Environmental Protection Agency spoke about sustainable industries at the Founders Forum meeting this week.

He noted that:

• concern for the environment had fallen to #59 amongst Australians' list of concerns,
• South East Queensland was the 9th fast growing region in the world
• oil supplies were now at a peak
• we will have to start paying for things that we previously took for granted eg water
• there is a depleting capacity of the Earth to sustain life (compared to increasing demands)
• it is getting hotter with less rainfall.

He argued that business should move from a moral understanding of sustainability to practical applications.

He administers the Queensland Sustainable Energy Innovation Fund , a grants program focused on innovative projects dealing with research, development, demonstration or commercialisation of energy efficiency or renewable energy.

Dr Cole gave examples of recent grant recipients  including Poly Optics for a project involving refrigeration lighting which did not generate heat (which makes sense when you think of it!)

Together with ecobiz rebates,  the Fund provides grants of about $5m a year to business.

More about the environment: Worldwatch Institute

How big is the "nonprofit" sector?

A recent BRW article has raised the issue of how big is the nonprofit sector in Australia and what organisations are defined as nonprofits?

The BRW estimated that nonprofits had a turnover of $70 billion a year.

In BRW on the Non profit Sector Professor Mark Lyons says that the figure is probably right but that nonprofits cover a wide range of organisations from charities to churches to some credit unions and building societies. He calls them the third sector of the economy. He argues that there are 3 levels of non profits: firstly charities, secondly organisations which are not charities but whose constitution prohibits distribution of profits to members (eg sporting clubs, trade unions) and thirdly democratically run bodies which are not prevented from distributing surpluses to members but usually do not (eg credit unions, trading co-operatives, industry super funds).

The Non Profit Roundtable has issued a fact sheet on the size of the sector.

There are as many as 700,000 nonprofit organisations in Australia most of which are small and entirely dependent on the voluntary commitment of members. Approximately 380,000 nonprofit organisations are incorporated in some form or another (meaning that they have a legal identity independent from their members). About 35,000 nonprofit organisations employ staff. There are approximately 20,000 organisations with Deductible Gift Recipient status in Australia. Most of these are nonprofit organisations.

South East Queensland Regional Plan

The South East Queensland Regional Plan has been released following extensive consultation. It is  complemented by the South East Queensland Infrastructure Plan. Together they provide for Queensland's growth through to 2015.