Item 15.3 – Business Innovation Hub Business Plan · The ground floor coffee shop will have facilities for anyone to hotdesk with a coffee – free public WiFi, power and digital

Item 15.3 – Business Innovation Hub Business Plan ATTACHMENT 1 The Business Innovation Hub Report

ATTACHMENT 2 Draft Request for Expressions of Interest

CONFIDENTIAL COUNCIL AGENDA ATTACHMENTS - 28 FEBRUARY 2017 FOR INTENDED RECIPIENTS ONLY

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THE BUSINESS INNOVATION HUBa place for growing business and creating jobs in Gawler through digital business

The Town of Gawler November 2016

ATTACHMENT 1


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Table of Contents Executive Summary ............................................................................................................................... 3

Defining the Hub concept for opening in 2018 ............................................................................................................................ 3

1. Defining the Business Innovation Hub ................................................................................................. 4

2. Why? .................................................................................................................................................. 5

3. How it works .......................................................................................................................................6

Membership ....................................................................................................................................... 7 Membership criteria..................................................................................................................................................................... 7 Business types ............................................................................................................................................................................ 11 Membership services ................................................................................................................................................................. 12

Digital Commitment ......................................................................................................................... 12

Digital Advisor In-Residence ............................................................................................................. 13

4. Management .................................................................................................................................... 14

Operating Model Comparison .......................................................................................................... 14

Operating Model Comparison .......................................................................................................... 15

5. Benefits ............................................................................................................................................ 16 For Members ............................................................................................................................................................................. 16

6. Financial Model ................................................................................................................................ 17

Summary: ......................................................................................................................................... 17

Detail: .............................................................................................................................................. 18

Cost versus revenue over time: ......................................................................................................... 19

7. Critical Success Factors ..................................................................................................................... 20

8. Next Steps ........................................................................................................................................ 21

9. Recommendations ........................................................................................................................... 22

APPENDIX 1. Who We Consulted With ................................................................................................. 23


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Executive Summary

Defining the Hub concept for opening in 2018

The redevelopment of the Council building as described in the Gawler Connect funding submission is due to be completed in the first quarter of 2018. By then the submission will be over 3 years old and this planning of the Hub will be eighteen months in the making. In the fast-paced digital world these are significant timeframes so we can expect there to be many new digital technologies, innovations and trends by 2018 that will impact customers, businesses and communities. This plan for the Hub is therefore based on an anticipated future state (2018-2021) in which the use of digital technologies and solutions by businesses is certain to be require a more sophisticated and informed approach. Most businesses by 2018, start-up or otherwise, will need to embrace digital technologies and solutions for managing their business and delivery of services if they are to be profitable, competitive, sustainable and relevant to customers.

The original submission in 2014 listed some specific features of the Digital Hub -

business incubator services for entrepreneurs, teleworking (hot desking), networking and video conferencing facilities, meeting rooms, business coaching, training and education facilities, admin support suite with photocopy and printer stations, lounge area, home office, gaming area and an area for private phone calls

This plan for the Hub incorporates these features with some modifications and recommendations for other features based on what our research suggests will be the needs of businesses in the region by 2018. This plan builds on the original description of the Hub by articulating: the purpose; the management and governance requirements; optimum business model; the financial model; who should be targeted as users; and how it would operate on a day-to-day basis.

The research for this plan included reading relevant reports, undertaking online research, inspecting co-working spaces that already exist in Adelaide and Playford and meeting with key players and stakeholders in Council and the Gawler region. The consultants also contributed their experience advising on digital strategy, business development strategies and financial modelling.

In developing this plan, the appropriateness of the original name was questioned. Digital Hub seemed to place emphasis on technology, not on who was in the space and what they were doing. To that end, a new working title for the space has been adopted: Business Innovation Hub.


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1. Defining the Business Innovation Hub

The Business

Innovation Hub

Digital training & facilities for the community

Multi-functional

space

The Business Innovation Hub (the Hub) is to be a commercially-focused, flexible working space occupied by businesses that are intent on wealth generation, who collaborate as appropriate with each other, and use digital technologies and solutions to work smarter and grow.

The Hub is to be a vibrant, welcoming space that exudes a sense of business purpose, innovation, resilience and success.

The commercial orientation is based on the principle that the Hub is about growing the local economy and creating jobs as well as assisting startups and existing businesses to develop capabilities to achieve commercial success in local and international markets.

Some earlier thinking about the Hub suggested that it might house public servants or local community groups. However, making it available to those groups will not in itself directly satisfy the principle of growing the local economy and creating jobs. This is not to say those groups do not contribute to the local economy, but the Hub is about wealth generation for those who use it because that means self-generating and sustainable business growth and jobs.

People working in the Hub will be a bring their own digital devices - computer, mobile etc. The Hub will provide a desk or office, meeting rooms, Internet connection via WiFi and the NBN and fast colour printing.


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The Hub’s commercial focus does not mean the building will not cater for individuals seeking a spot to do a little business and community groups seeking digital advice and training. Individuals may use the Hub, provided they meet the criteria, refer to Section 3. Community Groups will be able to use the adjacent community facilities. The Community area is for providing digital training facilities for the community including specific digital infrastructure and solutions – eg 3D printer, green room, sound studio. This space will also provide services for re-skilling. The Hub users can book meeting rooms and use the facilities in the Community area. The ground floor coffee shop will have facilities for anyone to ‘hotdesk’ with a coffee – free public WiFi, power and digital device re-charging facilities.

2. Why? Gawler is a low socio-economic and disadvantaged community. The population of Gawler is expected to double over the next 10 to 20 years according to the RDA Barossa Roadmap. The prosperity of Gawler is therefore going to be reliant on the economic stability of the region.

The unemployment rate in Gawler is below the average of the state, however due to recent economic conditions such as the closure of Holden in Elizabeth, maintaining a high level of employment will need to be actively managed.

The Gawler Business Development Group was established in 2002 to represent local business with the aim to promote, develop and support the businesses in the region. Each year a levy (approximately $160k) is collected from the businesses of Gawler to assist with the activities of the group.

The Hub will complement the current business ecosystem of Gawler to help overcome barriers to local jobs and business growth by:

growing the size and profitability of regional business through improving their digital literacy, business practices and expanding their markets through networks

complementing Council’s long term strategies and policies and supporting current initiatives

providing a safe-to-fail environment in which businesses are encouraged to innovate and collaborate

attracting workers to the town centre who become consumers of local goods and services

encouraging those who commute to Adelaide or local towns to stay and work in Gawler either full-time or for a few days a week.

improving the vibrancy of the town centre and community well-being

attracting business from outside Gawler region to setup a local presence in Gawler.


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The aim of the investment in The Hub is to help Members grow through being more:

• profitable

• productive

• competitive

• resilient

• innovative

This growth will be a result of using digital channels and solutions within their business processes.

Local jobs and business growth is essential for a liveable, cohesive, active, innovative and sustainable community, but in this Digital Age, many businesses are struggling to understand how to:

• grow and employ more local people

• be more profitable

• be more efficient

• market themselves better

• be more competitive nationally and internationally

• be more resilient to digital-related change.

The reason that many businesses are struggling to leveraged off digital solutions is that:

• use of digital for business innovation is not understood

• lack of local support and expert advice

• productivity gains from digital technologies not understood or realised

• low understanding of how to leverage the NBN and other digital technologies

• lack of understanding of customers’ online habits and needs

• uncertain how to use digital channels to market themselves and sell.

3. How it works “The real power of technology (such as e-commerce…) is not that it can make the old processes work better, but that it enables organisations to break old rules and create new ways of thinking – that is, to re-engineer.”

Hammer, M and J. Champey, Reengineering the Corporation: A Manifest for Corporate Revolution

There are several factors that will assist the Hub in achieving its purpose as a centre for growing jobs and the local economy.


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Membership The Hub will run on a membership basis. That is, the Hub is not open to the public. There will be different membership types based on the members desired use of the facility. A membership structure ensures there is a sense of ownership and accountability to the facility.

Three types of memberships:

1. 4max – up to 4 hours a week

2. 20max - up to 20 hours a week

3. NoMax – no limit (desk or office)

Membership criteria

There needs to be criteria set on who can become a member of the Hub. This criterion will come into the critical success factors, refer to help fulfil the economic aims of Gawler Connect

help fulfil Council’s general mandate to help maintain a vibrant and sustainable local community

business and jobs growth decreases demand on Council social services and shifts demand to its business services

broadens the experience and skills of Council staff in dealing with commercial oriented operations


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6. Financial Model Summary:

Assumptions and notes

• There are 18 desks available for Members in the open space and 2 offices available. • Commercial rent receivable from a third party provider is not included in the tables. • These figures are not based on any one business model. They indicate all the costs and

revenue involved in operating the facility. The editable model will be provided to Council who can manipulate the model to come up with different scenario’s based on what Council is willing to bear.

• If the Council/Private partnership model is adopted costs and revenue would be allocated according to Council’s appetite for supporting The Hub and what the commercial market will bear.

• Manager of The Hub would need to be appointed at least 6 months prior to the launch. • After the fitout costs have been incurred, costs should remain relatively stable. • Ongoing maintenance costs are an estimate of The Hub’s share of maintenance costs as a % of

the whole of building.


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Detail:






the whole of building. If a commercial/council partnership is chosen as the desired structure, there are two options for the development of the model:

1. Council determines entirely the model and goes to tender for participants. The risk with this method is that the Council’s desired model may not be valued by commercial providers.

2. A tender is released to the commercial providers who will then submit their own proposal of the structure of the model. This method may provide the Council with more options and the commercial providers may come up with structures that the Council had not thought of. The risk is that no proposal comes up with a desired model.


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Cost versus revenue over time:

Assumptions and notes: • The first 6 months, the fit out (desks and chairs) will be incurred along with 6 months of salary,

The Hub manager and the one-off branding and marketing expense. • After the fit out costs have been incurred, costs should remain relatively stable. • Revenue has been assumed at 0% realisation for the first 6 months increasing to 20%, 50% and

100% of realisation by December 2018.


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7. Critical Success Factors. Getting the right membership base is critical the achieving the goals of the Hub. Membership criteria should be set by the Hub manager and each membership needs to be appropriately vetted by the manager to ensure the right mix of membership exists. If a poor mix is established, the success of the Hub may be compromised.

Criteria for membership should include:

• Non-competing Members

• Signing the Digital Commitment

• Non-government

• Have an ABN or ACN

• Main business is commercial, NFP or Profit for Purpose.

Business types

The members of the Hub will include start-ups, emerging businesses, mature businesses and businesses in a transition stage.

The population of Gawler is not large enough for the Hub to be so exclusive. It is determined that the various businesses in their different stages of the business life cycle will feed into the success of the Hub. For example, mature business will be able to assist the new businesses in what might work and what doesn’t work in business processes. Start-up’s who tend to me less risk averse may be able to show mature business more about risk taking.


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Membership services

Various services are required to be provided to Members as part of a Membership fee. These services include, but are not limited to:

• concierge service for members and their guests

• unlimited WiFi and printing

• access to the Digital Advisor in Residence

• locker and desk or office

• meeting room hire at no charge – either in The Hub or the community rooms

• access to the Multi-Function Space.

These services will enable the members of the Hub to effectively run their business and assist them in the success of their business goals. The services need to include basic office services (e.g. printing, internet) as well as the Hub specific services (e.g. Digital Advisor).

Digital Commitment The purpose of the Hub is to assist businesses to grow through the use of digital technologies. In order to ensure the Hub meets its purpose, it is recommended that all categories of Members must sign up to and commit themselves to a digital action plan:

1. undergo a digital maturity assessment and gap analysis

2. develop with the Digital Business Advisor an appropriate digital adoption plan

3. agree on an Action Plan and milestones (eg 6 months, 12 months and 18 months)

4. commitment to the plan by the Member and The Hub.

The Digital Commitment will assist members in identifying where they have gaps in their digital journey. This will enable members to develop a clear path to reach their digital maturity goals. The Analysis will be accessible for the manager of the Hub and the individual members only. The Hub management and the members will work together to achieve the goals of the business.

It needs to be ensured that the goals can be flexible, however there does need to be evidence that efforts are being made by the business to reach its goals.


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Digital Advisor In-Residence To ensure the success of the Hub of increasing the digital capacity of its members, members need to be provided with specialist advisors to assist them on their digital improvement. Members will have access to a range of specialist Digital Advisors In-Residence who will work out of The Hub on a revolving basis.

They will provide advice and training on:

• digital strategy

• digital channels for marketing and selling

• digital and cloud-based productivity tools for business

• digital-led innovation

• digital leadership, futures and trends.

The In-Residence advisors will offer training and advice covering digital solutions and strategies to help the Members be more productive, competitive and profitable.

The Digital Advisors will then also be able to run training or courses out of the Community Facility to the wider community.

It needs to be ensured that the In-Residence Advisors are not trying to sell a particular product, but rather advising on a concept. For example, an advisor on cloud accounting should not work specifically for Xero or MYOB. A breach in an independent view will detract from achieving unbiased advice.


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4. Management Operating Model Comparison

Option C is preferred to ensure the appropriate commercial intent is achieved


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Operating Model Comparison

Contractual issues

If the operating model chosen for The Hub is either the Privately Operated or the Private/Council Partnership, a contract is required with the third party operator that addresses at least the following issues:

revenue and cost sharing

the respective responsibilities of both parties eg marketing, venue maintenance and security

selecting and managing Members and digital advisors in residence

reporting and monitoring.

The terms of the contractual arrangement with a third-party should reduce the risks and enhance the positive aspects of each of the Privately Operated and the Private/Council Partnership models. A lawyer should be engaged to prepared appropriate and robust contracts.


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5. Benefits There are many beneficiaries and benefits that will flow from the Hub. Some of these will be direct and some indirect.

For Members

networking with other Members helps motivation and brings wider business opportunities

business acumen and understanding

work more effectively and productively

skills and business offerings

understanding of the marketplace

resilience and agility in a constantly changing business environment

For the Community

more local jobs improves community wellbeing and vibrancy

variety of job types provides diversity and choice

improving the success of local businesses and the range of business skills, strengthens community groups and their activities

For the Regional Economy

more successful businesses employ more people and feed money back into the local economy

shift from traditional business models to digital age models improves sustainability and long-term viability of local businesses

this initiative will attract investment and businesses to the greater Gawler region

For Council

help fulfil the economic aims of Gawler Connect

help fulfil Council’s general mandate to help maintain a vibrant and sustainable local community

business and jobs growth decreases demand on Council social services and shifts demand to its business services

broadens the experience and skills of Council staff in dealing with commercial oriented operations


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6. Financial Model Summary:






the whole of building.


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Detail:






the whole of building. If a commercial/council partnership is chosen as the desired structure, there are two options for the development of the model:

3. Council determines entirely the model and goes to tender for participants. The risk with this method is that the Council’s desired model may not be valued by commercial providers.

4. A tender is released to the commercial providers who will then submit their own proposal of the structure of the model. This method may provide the Council with more options and the commercial providers may come up with structures that the Council had not thought of. The risk is that no proposal comes up with a desired model.


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Cost versus revenue over time:

Assumptions and notes: • The first 6 months, the fit out (desks and chairs) will be incurred along with 6 months of salary,

The Hub manager and the one-off branding and marketing expense. • After the fit out costs have been incurred, costs should remain relatively stable. • Revenue has been assumed at 0% realisation for the first 6 months increasing to 20%, 50% and

100% of realisation by December 2018.


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The right people managing and advising will ensure an appropriate culture is set within the Hub.

The operation model will define the culture of the Hub which will determine the success of growing the local economy and creating jobs.

The marketing and promotion needs to be right to ensure the Hub reflects its true purpose to the community and business community.

The right mix of members will be critical to ensure the appropriate culture exists within the Hub to promote business and innovation.

For businesses to succeed they need to be able to concentrate on their business and not the technology. The technology needs to be easy and reliable.

7. Critical Success Factors The following factors are deemed to be critical in order to achieve the goals of the Hub. Each factor is critical and compromises should not be made in these areas or else there is a risk that the Hub will not be the right environment to achieve the success of improving the local economy and creating jobs.


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8. Next Steps


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9. Recommendations

# Recommendations Reference

1 The Hub will be commercially-oriented 1. Defining the Business Innovation Hub

2 The Hub needs to be well marketed and promoted early on (name, purpose, etc)

3 The Hub will be based on a membership basis Membership

4 Membership criteria is set so that there is a vetting process for members and members align to the purpose of the Hub

Membership criteria

5 The Hub is a place for all commercial business types including start-ups, emerging, mature and transitioning businesses

Business types

6 Services provided to members includes; concierge service, unlimited Wi-Fi, unlimited colour printing, locker and desk, meeting room hire at no charge, access to use the multi-function space.

Membership services

7 Members of the Hub are required to sign up to a digital commitment and action plan

Digital Commitment

8 The Hub will host a digital advisor in-residence who is available to members on a rotating basis. Skills of the advisors will include cloud accounting, websites, social media, CRM etc.

Digital Advisor In-Residence

9 The Hub will be run as a private/council partnership operation to ensure the appropriate commercial intent is achieved.


10 A lawyer will be engaged to ensure that an appropriate and robust contract is prepared for the partnership agreement. This contact should include appropriate terms and conditions, reduce risks to both parties and enhance the positive aspects of the chosen model. In addition, legal assistance is required to develop the terms and conditions for each type of membership.



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APPENDIX 1. Who We Consulted With United focus consulted with the following people as part of the engagement:

Name Position

Henry Inat CEO

Andrew Martin Special Projects Officer

Ryan Viney

Anne Moroney RDA Barossa

Elena RDA Barossa

Erin Findlay

Bryce - Erin meeting

Linda - Erin meeting

Maz McGann Play Your Part

Slava Grigoriev

Karen White KAW Consulting

Jared Ahren Stretton Centre


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Documents

Item 15.3 – Business Innovation Hub Business Plan · The ground floor coffee shop will have facilities for anyone to hotdesk with a coffee – free public WiFi, power and digital