Paul Wallbank – Brilliant Communications

Author: Paul Wallbank

  • Small business in the future workforce

    Small business in the future workforce

    While the discussion of the workforce of the future focuses, quite rightly, on the role of workers how employers and businesses fit into a changed economy is important as well.

    For businesses, the future of work affects not just the staff they employ but also the markets they cater for as those workers are also their customers. This is even truer for small businesses catering for local markets.

    The Committee for Economic Development Australia (CEDA) report issued last week describes some of those shifts in the economy and they are as important to businesses as workers.

    Where the money is

    The key thing from the report is that some communities are going to be more seriously affected by automation than others. The map of Australia that accompanied the CEDA report showing the likelihood of jobs being lost in across the nation underscores that imbalance.

    australia-likelihood-of-losing-jobs-to-automation

    In those areas expecting large disclocation, business is about to get tougher as workers find their skills are no longer valuable in the face of automation.

    Similarly, if local industries are becoming more automated then businesses servicing those industries are also going to need the skills to meet their customers’ more advanced needs.

    Consumer facing risks

    So small businesses in those districts of great disruption have to consider their markets; if they are consumer facing then their customer base could be shrinking while if they cater to other businesses then capital investment and finding skills in the new technologies are going to be required.

    Even there, the picture is cloudy as upstream industries will be affected. A town that serves as an agricultural centre, for example, will see smarter farms using less labor.

    In that town, those businesses servicing other businesses that serve local consumers will see their market getting thinner while those servicing the smarter farms and processors will need to buy new equipment and find workers with the skills to operate it.

    This isn’t a new phenomenon, it describes what’s happened to rural communities around the developed world as farming became industrialised through the Twentieth Century and the process is continuing as combines become self driving and automation replaces a lot of tasks currently done by labourers or manually operated machines.

    Challenging the commuter belt

    The question though is not just for rural enterprises, it applies for businesses everywhere as the workforce changes. It may well be the areas affected the most are commuter belt suburbs where white collar workers are displaced by artificial intelligence and algorithms creating problems for the local economy that’s based on services the needs of those middle class households.

    It’s difficult to say for sure and that’s why the CEDA measures are based upon probability. For business owners and managers though, they’ll need to watch shifts in their marketplaces closely and watch for the opportunities that will undoubtedly arise from a changing economy.

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  • Creating a new class of worker

    Creating a new class of worker

    With the ‘sharing economy’ becoming more widespread and freelance workers possibly being the norm in the future, the question of how are they defined arises.

    The simple answer is they become contractors after the California Labor Commission ruled for an Uber driver in a dispute over expenses incurred on the job. However it’s still possible that the level of control many of these services exert over workers may see many defined as employees.

    For the ‘sharing economy’, the definition is important as the business model depends on shifting all the costs onto the contractors and customers. The service, like Uber and AirBnB, is only there ostensibly as a platform to match buyers and sellers.

    Buzzfeed’s Caroline O’Connor suggests a third definition of worker, a ‘dependent contractor’. Under this category contractors would receive social security benefits, insurance and other features of permanent employment with the flexibility of being on call.

    In many ways O’Connor’s suggestion is similar to the national insurance schemes of many European countries where workers contribute towards their eventual retirement or for the benefits they may receive should they be unfortunate to become sick or unemployed.

    While the suggestion is worthwhile, it’s still not hard to see how the ‘sharing economy’ companies would want to put their contractors in whatever category reduces their costs and risks.

    The discussion about workers’ protection and social security benefits needs to be had as we enter a period of economic change not dissimilar to the 1920s or late nineteenth Century where work patterns changed and there was substantial dislocation.

    As the 1920s saw the start of concepts like unemployment and sickness benefits, we will need new employment and social security concepts develop to cater for the new economy and modern workforce.

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  • A generation free of poverty and labor

    A generation free of poverty and labor

    How will the future workforce look? A report by Australia’s Committee for Economic Development seeks to give a picture of how employment might look at the end of next decade.

    Australia’s Future Workforce is a weighty tome covering the current structure of the nation’s economy, its trends and the factors affecting employment over the next two decades.

    The report makes it clear the economy will be very different observing 40 per cent of Australia’s workforce, more than five million people, is likely be replaced by automation over the next twenty years.

    In the opening chapter, Reshaping Work for the Future, Professor Lynda Gratton of the London Business School describes the share of the future workforce where roles are more specialised and automation increasingly takes over less complex jobs.

    An important aspect Professor Gratton also flags is the aging population which in a rapidly changing economy will require frequent retraining.

    From a technology perspective Professor Hugh Bradlow, the Chief Scientist of Telstra, suggests the workforce will be more mobile and employed in fields less amenable to computerisation involving skills like social intelligence, creative talents and social intelligence.

    Those without those skills are deeply at risk with Bradlow being the first in the report to cite the likelihood that two fifths of the workforce are at risk of losing their jobs.

    Bradlow concludes his analysis with the observation that if we work to satisfy our basic needs then machines looking after these requirements free up the workforce to address higher intellectual pursuits.

    Rethinking management

    Belinda Tee and Jessica Xu, both of IBM, agree with Bradlow that technologies like IBM Watson will help skilled workers like doctors and teachers deliver their services more efficiently.

    Xu and Tee suggest change in the workforce will need to start at the top with managers needing to enhance collaboration within the organisations and build diverse teams working on open data.

    A two speed economy

    How the effects are distributed across the workforce is probably one of the most important aspects of this report with a team from the soon to be abolished National ICT Australia mapping the regions that will be most affected by automation.

    The news for many of the country’s regions is not good with the survey finding workers in most areas have more than a fifty percent chance of losing their jobs to automation.

    NICTA’s bad news for the regions ties into a recent PwC report that found Australia’s economic power has been increasingly concentrated in the nation’s capital cities.

    A mixed future

    In many respects the CEDA report is disappointing, while it flags many of the issues facing today’s workforce and the forces shaping it, the survey doesn’t identify the industries and occupations likely to benefit.

    Despite not stating the growth sectors, the report’s overall view of the future workplace is optimistic as Telstra’s Hugh Bradlow says: “The change could result in a new generation free of poverty and the burden of labor, thereby unleashing the next wave of human innovation and creativity in directions we can never imagine.”

    This may be the case but the to achieve that will require, as the report later suggests, a new social compact.

    It’s building that new social compact which could be the greatest task ahead of us.

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  • The Chinese sock fallacy

    The Chinese sock fallacy

    “We have an addressable market of four hundred million dollars a year. It’s a huge opportunity and we could win half of it.”

    The business manager speaking – who we’ll call John – was talking about the potential market for his company’s small business product that promises to earn around two hundred dollars a year.

    How John came to the four hundred million dollar number was simple. He multiplied the two hundred dollars by the two million small businesses in Australia.

    John had fallen for the ‘Chinese sock fallacy’ where a simplistic assumption creates the illusion of a huge market. The idea being that there are a billion people in China all of whom will own five pairs of socks so therefore there’s demand for five billion pairs of socks.

    The key part of the fallacy is not knowing whether those billion Chinese or two million Aussie small businesses want your socks or cloud computing services.

    Other complications include who are the incumbents currently selling to that market, how many pairs of socks do most Chinese people own, how often do they replace them and what do they pay for a new set?

    Suddenly things get complex and the assumptions don’t look so promising as we find with John’s projection of his market.

    Looking at the figures for Australia’s small business sector with 61 percent of enterprises having no employees, it’s hard not to conclude most are contractors or consultants who mostly don’t need John’s cloud service.

    So the Chinese sock fallacy strikes again.

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  • Rewriting the Silicon Valley playbook

    Rewriting the Silicon Valley playbook

    Silicon Valley’s lean startup model may not be relevant to most regions warns writer and entrepreneur Steve Blank.

    The lean startup model is based on getting the minimum viable product into the marketplace and should users be enthusiastic seeking investor funding to develop the business further.

    Guy Kawasaki described this in an interview last year where he described the minimum viable valuable product idea of getting the most basic service to market at the lowest cost and then getting users and investors on board.

    However it might be that model only works where “startup entrepreneurs have full access to eager and intelligent business customers, hosts of industry angels and venture capitalists with money to burn,” reports Canada’s Financial Post.

    Blank came to that conclusion on a trip to Australia where he met with sports tech startups: “Meeting with a coalition of entrepreneurs in the tech and sports space, he realized the lean startup framework didn’t account for the vagaries of local economies. Australia sports-tech entrepreneurs trying to scale their businesses would find that their major customers are in the U.S., halfway around the world. And unlike most Valley startups, the Aussies would need to source manufacturing expertise — which means budgeting for several trips to China.

    The problems facing Australia’s entrepreneurs probably extend further as the nation’s investors are notorious risk averse and the high cost of doing living means the burn rates for startups are much harder.

    Blank’s recommendation is any region looking at establishing a startup community should identify its own strengths and advantages then build its own playbook.

    That it’s difficult for other regions to copy Silicon Valley shouldn’t be surprising, since the start of civilisation each industrial or trade hub has risen and fallen on its own strengths and weaknesses.

    We can be sure the next Silicon Valley – be it in the US, China, Europe or anywhere else in the world – will have different strengths than the Bay Area today.

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