Paul Wallbank | Paul Wallbank - Communications Professional

Small business in the future workforce

An evolving workforce means changing markets, something that businesses have to pay attention to

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.

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.

Creating a new class of worker

The future of work is going to need new classifications of workers

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.

A generation free of poverty and labor

Technology promises to free the next generation of poverty and labor but a new social compact will be needed.

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.

The Chinese sock fallacy

Simplistic business assumptions often turn out to be more complex than first appears.

“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.

Rewriting the Silicon Valley playbook

Each region needs its own playbook to create an industrial hub warns veteran entrepreneur Steve Blank

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.

Let the algorithm do the investing

Could robots be our financial advisers in the near future?

Investment advisers could be the next occupation to face automation reports Bloomberg Business with the prediction two trillion dollars worth of investment funds could be managed by computers by the end of the decade.

An important aspect of the change to computerised investment advice is the reduced fees that makes professional knowledge far cheaper and more accessible.

The downside, as Bloomberg points out, is that there may be fewer investment advisers enjoying corporate hospitality and conventions in future so there may be other industries feeling the job losses too.

The sharing economy’s wobbling wheels

A Californian labor ruling may curb investor enthusiasm for the sharing economy

Ride service Uber had a setback last month when the California Labor Commission ordered the company pay one of its drivers, Barbara Ann Berwick, over four thousand dollars for expenses.

For sharing economy services like Uber this is a problem as their business model depends upon shifting all the costs and as much of the risks as possible onto contractors.

Should the ruling set a precedent the economics of these services start to look shaky and could even challenge the shifting of risks to users and contractors.

Take away the new age romanticism spouted by some over services like Uber, Freelancer and 99 Designs and there’s a ruthless business model that minimises costs and risks, that low level of overheads is why these companies have been so successful in attracting investors.

For the workers, carrying the costs and the risks isn’t such a good deal. “If you work it out,”Barbara Berwick said, “if I didn’t get compensated for expenses, I’d be working for less than minimum wage.”

While the ruling makes life less precarious for drivers like Berwick, it may curb the enthusiasm of the investor community for the sharing economy.

The pulse that’s barely beating

A survey on Australia’s workforce and ICT education reveals some important questions for the nation’s managers and leaders

Earlier this week Deloitte Access Economics released Australia’s Digital Pulse, an overview of how the nation is responding to the needs for the IT related jobs required in a changing global economy.

Deloitte pointed out that most of the Australian economy’s IT jobs aren’t actually in the IT industry with less than half the sector’s employment being with technology companies and the majority of software writers and engineers employed by everything from finance companies to retailers.

This ties in with results found by recruitment website Indeed.com whose Senior Vice President, Paul D’Arcy, visited Australia last month and pointed out globally three quarters work of software developers work for non-tech organisations an in the US that proportion drops to seven percent.

As technology becomes more embedded in industries the need for workers who understand the tools becomes critical. This isn’t a new thing as we saw word processing and spreadsheet software enter workplaces twenty years ago which required typists, secretaries and accountants to become far more acquainted with the workings of personal computers than they otherwise would have cared to.

Intriguingly in Australia during the twenty-five years that computers and the internet have taken over the workplace interest in IT careers and enrolments in computing subjects has risen and fallen.

Between 2000 and 2008 the number of students doing IT related courses halved as Australian businesses cut back on tech spending, offshored their work and bought in an army of 457 visa workers to replace local workers.

Coupled with an economy where renovating kitchens or driving mining trucks is better rewarded than most technical jobs, it wasn’t surprising that students chose not to study computer science related subjects. In the last few years undergraduate numbers have started to tick upwards as the resources boom has faded and coding has become cool due the successes of people like Facebook’s Mark Zuckerberg.

Interestingly, despite the dearth of entrants into the sector over the last fifteen years, Deloitte found the overall Australian ICT labour market appears to be adequately supplied at present, however the expected increase in future demand for ICT workers means that skills shortages could constrain future economic activity.

With many things Australia has been lucky for the last twenty years and our neglect of ICT training has been one of many fields we’ve been able to neglect. As we’re seeing with the internet of things, cloud computing and big data all becoming a common part of business the skills we’re going to need in our workers are going to change.

The challenge for both companies and our education system is give today’s kids the skills they, and the nation, needs to be globally competitive. We may not stay so lucky over the next two decades.

Social media and the changing media landscape

A Reuters report looks at the changing media landscape and how the older news industries’ decline has some way to go yet.

“We seek news on Twitter but bump into it on Facebook” points out the Reuters’ 2015 Digital News Report in its analysis of global media consumption.

The broad trends from surveying over 20,000 online news consumers in the US, UK, Ireland, Germany, France, Italy, Spain, Denmark, Finland, Brazil, Japan and Australia are clear – social media is becoming the main way people are finding their news while television is slowly declining.

Probably most concerning for the television networks how younger viewers have turned away from TV with only a quarter of those aged between 18 and 25 tuning in as opposed to two thirds of those aged over 65.

Given the aging of television network audiences it’s not surprising that last week Australia’s Network Ten, part owned by Lachlan Murdoch, found a lifeline from the country’s main cable network as the broadcaster is finding revenues declining.

The question is how long advertisers are going to stick with television as audiences increasingly move online creating a revenue gap estimated by analyst Mary Meeker to be worth around thirty billion dollars a year.

For the moment, the great hope for the online world is Facebook with Reuters finding the service is dominating users’ time. In that light it’s not surprising the company has such a huge market valuation.

The competing social media services are still facing challenges, particularly with Twitter showing a far lower level of penetration with the general public, leading Harvard professor Bill George to speculate the company risked becoming the new BlackBerry.

While the online services struggle for supremacy and television slowly declines, the real pain continues to felt by the newspapers who continue to find their relevance erode and few of their readers prepared to pay for their content.

The Reuters report confirms the trends we already know while giving insights into the unique peculiarities of each market.

How software defines the Industrial Internet

The Internet of Things is a fourteen trillion dollar opportunity for industrial companies says Bill Ruhe, the head of GE Software

The Internet of Things is a three legged stool of the consumer, enterprise and industrial applications says Vice President of GE’s software division, Bill Ruh.

“It’s about connecting machines, connecting people and driving a new kind of experience. For the consumer it’s a social experience, for the enterprise it’s a whole new way of how their IT departments running, in the industrial space it’s a revolution where we get to rethink how we operate.”

Ruh sees the IoT as being worth over 14 trillion dollars to GE over the next two decades, making it bigger than the other two legs combined.

Eliminating downtime

Most of that value comes from three areas; improved resource utilisation, operational optimisation and eliminating unscheduled downtime.

“The fact is downtime is expensive, for airline 41% of all delays and cancellations are due to mechanical errors. If we get rid of those your life gets better, my life gets better and the airline’s lives get better.”

“Zero unscheduled downtime doesn’t sound sexy but it’s one of the most profitable and sexiest topics ever.” In this Ruh agrees with Salesforce’s Peter Coffee that eliminating outages is a key part of delighting the modern customer.

Ruhe sees that the industrial sector hasn’t used IT and the internet well in the past, “RFID was going to change the world and it didn’t, we saw smartgrids were going to be the biggest thing and it didn’t achieve a lot of the hype that people saw.”

“Now the technology is aligned not just with technology for technology’s sake but to an outcome that leads to growth for an industrial sake.”

An example of the operational efficiencies that Ruh is particularly proud of is GE’s PowerUp technology that promises to improve the output of wind turbines, “it is a series of technologies used to analyse information about every wind turbine on a farm and to dynamically adjust each and every one to optimise the wind speed.”

“When you do that we’ve found we can generate up to five percent more electricity per wind farm because of software, which adds twenty-five percent more profitability.”

“In the next generation of wind turbines all this kind of software is going to be embedded in it from the design phase through to the operational phase,” Ruh says. “It’s going to change how our customers are going to operate wind turbines.”

Building digital twins

Another aspect Ruh sees with the changes is how machines and data will work together where equipment or parts are shipped with a ‘digital twin’, a software representation of the device that lets the customer test scenarios on their computers.

“I can now do ‘what if’ analysis on that machine using its data and that’s going to change how things work. That takes everything from 3D modelling, to manufacturing, to maintenance to operations.”

Building on domain knowledge

Ultimately Ruh sees GE’s strength with the Industrial Internet being the company’s domain knowledge, “this world is different and you cannot come from outside and pretend you’re going to learn it as you go.”

“The way people buy equipment is totally different, we have equipment that’s eighty years old and we still support it. That’s totally different from the software world.”

Cisco and the connected stadium

Cisco’s Mike Caponigro explains the company’s smart stadium strategy

One of the challenges facing sports administrators and leagues around the world is that the quality of broadcast coverage has become so good it’s become increasingly harder to get fans out to the games.

Coupled with the constantly improving television coverage, fans are also expecting more as they go to games with their smartphones and tablets. Part of the solution for venue managers is to roll out smart stadium facilities that enhance spectators’ experience at the games.

Mike Caponigro, Cisco’s head of Global Solutions Marketing for Sports and Entertainment, sees the smart stadium as complementing the ground experience and Cisco are working with over three hundred venues in thirty countries around the world.

Improving the live experience

“Live is always going to be best,” states Caponigro. “You can’t replace that tribal passion of the crowd. No matter how excited I get in my living room or with some friends in a pub you’re never going recreate that enthusiasm.”

However the expectations of sports fans are changing Caponigro points out citing how HD television and the internet is changing the experience for spectators outside the stadium, “fans don’t want to be removed from that action.”

Cisco started their Connected Stadium program when the Oakland Athletics were looking at moving home stadiums seven years ago. While Oakland decided to remain at their existing stadium the company realised the market for connected stadiums was potentially huge, “it really pushed our thinking on how could we service an industry sector that hadn’t been well served.”

Accelerating innovation

“Arguable you’ve seen more innovation in that last seven years in the sports and live entertainment field than in the five decades prior to that,” says Caponigro who attributes the rate of change to consumer adoption of smartphones. “Now we’re working with three hundred properties in thirty countries around the world.”

“What fans are saying is that in order to continue to go to events there are things that need to be tweaked around the experience,” Caponigro states. “We did a study two or three years ago that found seventy-five percent of fans bring a smartphone to the venue. In the latest studies we’re finding ninety percent.”

Those fans are expecting a reliable signal to share information and access data. At last year’s Superbowl the crowd consumed 6Tb of data, half of which was outward traffic. “That just reinforces that fans aren’t just consuming services but it’s also become an increasingly social environment.”

Improving revenues

One of the areas Caponigro sees as an opportunity for connected stadium administrators is in seat management citing the Golden State Warriors NBA team that have used BlueTooth beacons to drive their seat upgrade application to generate $300,000 in additional revenue.

Fans have two frustrations with attending live games says Caponigro, is the convenience of getting to and from the game and not getting a good view of the play from their seats.

The ‘single seat experience’ as Caponigro describes it, uses the stadium’s smart vision TVs and the apps on spectators’ phones to give fans the same access to replays and stats that viewers watching the game on TV or the internet can access.

Making transport easier

Getting to and from the game is another advantage the smart stadium technologies offer both spectators and stadium administrators, by giving real time information on parking and public transport status crowds can be better managed and fans can have a smoother experience travelling into and away from the event.

In the future, Caponigro sees the next wave of innovation integrating back of house services into the connected stadium giving administrators greater understanding of concession sales and crowd movement.

Another opportunity lies in bringing player biometrics to the spectators, “you might find out if Ronaldo is really as cool as he looks when he takes a penalty” grins Capringo.

While it’s still early days for the connected stadium, like many Internet of Things applications businesses are exploring the limits. For sports fans, they can expect a richer experience being delivered to their smartphones and seats.

The IoT undergoes a restructure

Quirky’s restructure shows the IoT isn’t the easy road to riches, regardless of how well funded a business is.

Quirky, the well funded Internet of Things startup that came to attention for its connected egg holder, announces a restructure.

It looks like the IoT isn’t the easy road to riches, regardless of how well funded a business is.