Aug 312015
 
Fibre broadband rollout

How much does broadband really matter in developing a competitive and innovative modern economy? A corporate lunch with US software company NetApp last week illustrated that there’s more to creating a successful digital society than just rolling out fibre connections.

Rich Scurfield, NetApp’s Senior Vice President responsible for the Asia-Pacific was outlining the firm’s plans for the Australian market and how it fits into the broader jigsaw puzzle of economies across the region.

Like many companies in the China market NetApp is finding it hard with Scurfield describing the market as “chaotic”. This isn’t unusual for western technology companies and Apple is one of the few to have had substantial success.

Across the rest of East Asia, Scurfield sees them ranging as being mature, stable and settled in the cases of Japan, Singapore, Australia and New Zealand through to India where the opportunities and the challenges of connecting a billion people are immense.

Digital outliers

The interesting outlier is South Korea, one of the most connected nations in the world, where the promise of ubiquitous broadband isn’t delivering the expected economic benefits to the entire community.

In theory, South Korea should be seeing a boom in connected small businesses. As Scurfield says, “from a technology providers’ view this connectivity means you could do more things very differently because of the infrastructure that’s available.”

Global Innovation Rankings

Korea’s underperformance is illustrated by last year’s Global Innovation Index that saw South Korea coming in at 16th, just ahead of both Australia and New Zealand whose broadband rollouts are nowhere near as advanced as the ROK’s.

Making a close comparison of Australia and the Republic of Korea’s strengths in the WIPO innovation index, it’s clear the technology and engineering aspects are just part of a far more complex set of factors such as confidence in institutions, the ease of doing business and even freedom of the press.

Putting those factors together makes a country far more likely to encourage its population to start new innovative businesses that can compete globally. When you have a small group of chaebol dominating the private sector then it’s much harder for new entrants to enter the market – interestingly a private sector dominated by big conglomerates is a problem Australia shares.

Small business laggards

NetApp’s Scurfield flagged exactly this problem, “Korea is an interesting market in there’s about six companies that matter and from a competitive view those companies are extremely advanced, they have great technology and great people.”

“However what’s not happening across the rest of the country is this adoption isn’t bleeding into the broader community,” said Scurfield “Because of that I don’t see broadband connectivity as having a wide impact.”

That Korean small and medium businesses aren’t using broadband technologies to develop innovative new products and service in one of the most connected economies on earth raises a question about just how effective investment in infrastructure is when it’s faced with cultural barriers.

Certainly we should be keeping in mind that economic development, global competitiveness and the creation of industry hubs is as much a matter of people, national institutions and culture as it is of technology.

We shouldn’t lose sight of the importance of our people and institutions when evaluating the strengths and weaknesses of a nation in today’s connected world.

Aug 212015
 
Sydney Lord Mayor Clover Moore presents the prize to the small businesss award winner

Yesterday I hosted the second day of the CPA Australia Technology, Accounting and Finance Forum that looked at how the accounting profession is being affected by the changing technology landscape.

There’s plenty to write about from the day and how the accounting profession is facing technological change which I’ll write up shortly but one theme from the day was striking – that older small businesses owners are struggling to deal with adopting new tech.

Gavan Ord, the CPA’s policy advisor warns older practitioners are opening themselves to disruption and  the Australian business community is in general is at risk as older proprietors aren’t investing or embracing technology at a rate comparable to their overseas competitors.

Older small business owners

That older skew in small business operators is clear, in 2012 The Australian Bureau of Statistics found 57% of the nation’s proprietors are aged over 45 as opposed to 35% of the general population.

Even more concerning is many of those small business owners expect to retire with a 2009 survey finding 81% were intending to retire within ten years – it would be interesting to see how those ambitions changed as the global financial crisis evolved.

A risk to the broader economy

This blog has flagged the risks of an aging small businesses community previously, but Gavan Ord’s point flags another risk – that older proprietors being reluctant to invest in new technology means a key segment of the Australian economy is unprepared for today’s wave of technological change.

A key message from the CPA forum was that the shift to cloud computing is radically changing the business world as sophisticated data management, analytic and automation tools become easily available. Companies, and nations, that don’t take advantage of modern business tools risk being left behind in the 21st Century.

Aug 192015
 
Stagecoaches were dominant in the 19th Century but failed when technology changed

One of the constant questions posed to anyone reporting on the technologies changing the workforce is “where are the jobs coming from?”

A paper by Deloitte UK economists Ian Stewart, Debapratim De and Alex Cole titled Technology and people: The great job-creating machine looks at how technological change has affected the British workforce over the past 170 years.

While the study itself seems somewhat hard to get hold of, The Guardian earlier this week reported on what the economists found when they examined employment patterns through the rapidly changing economy of the last 150 years.

One clear shift the collapse in manual jobs, particularly farm labourers whose numbers fell from a peak of 950,000 in 1881 – 7% of the workforce – to less than 50,000 or 0.02% in 2012.

UK-agriculture-labour-employment

The decline in the employment of farm labourers shouldn’t be surprising – in 1871 the proportion of the British workforce employed in agriculture was 15% while today it is less than 1%. A graph from the UK Census office illustrates that shift.

UK-employment-infographic

It’s notable comparing the UK to the US in this respect; at the beginning of the Twentieth Century nearly half the US workforce was still working in agriculture while the Britain had been a predominantly service economy for nearly fifty years.

Even today nearly 3% of American workers are employed on farms, a number not seen in Britain since the mid 1930s.

In both countries, the late Twentieth Century saw a shift to a service economy, something illustrated in the Deloitte survey by the rise of the British barman where the proportion of workers in the liquor industry tripled from 0.2% of the workforce between 1961 and today.

UK-barstaff-workforce-proportion

That British bar employment tripled in the post World War II years probably illustrates best the rise of the consumerist culture during the late 20th Century.

What should be flagged is those transitions away from agriculture to consumerism weren’t painless, much of Britain’s economy was racked by recessions through the Twentieth Century and many of the nation’s regions were devastated by the shift away from manufacturing in the 1970s and 80s.

In the US, the transition away from an agricultural economy in the 1920s was particularly painful, Steinbeck’s book the Grapes of Wrath tells of the human costs to families displaced from their mid-west farms during that time.

That technological and economic factors have driven massive changes over the centuries isn’t new, but the fact the vast majority of today’s workforce are in jobs which couldn’t have been imagined a hundred years ago should encourage us about the prospects for the future workforce.

However, assuming the future will look like today and that employment will be largely in consumer service industries may be as mistaken of the beliefs among 1960s policy makers that manufacturing would be the future.

Even more pressing for today’s policy makers and leaders is to prepare for the pain of transition. If we are seeing a workforce shifting to new business models then there will be high community and personal costs. We need to be preparing for the pain of the shift as much as we anticipate the benefits.

Aug 142015
 
Brisbane_CBDandSB

Australia is one of the world’s most urbanised countries with the bulk of the nation’s population clustering in half a dozen centres mainly strung along the east coast of the continent.

The northernmost of Australia’s population centres is South East Queensland, a sprawling collection of suburbs extending from the upper class enclave of Noosa Heads down to the Gold Coast and the New South Wales state border.

Cisco believe this sprawling region of three million people can become a ‘Smart Region’ with the use of technologies such as intelligent lighting and parking, citizen applications, and smart power metering could add up to 30,000 jobs and $10 billion of value to the community over coming years.

“The residents of South East Queensland told us they want to experience greater convenience and integration of public transport, greater digital engagement and intimacy in their cities, more reliable local government services, and new digital ways to further reduce the cost of red tape,” said Cisco Australia & New Zealand Vice President Ken Boal in releasing the South East Queensland: A Smart Region report.

Local civic leaders in the cities making up the South East Queensland conurbation see this as an opportunity to grow their economies.  “The future of cities and regions and their ability to create enduring employment opportunities are entirely linked to their digital capabilities,” says Sunshine Coast Mayor Cr Mark Jamieson while Ipswich Mayor Paul Pisasale said Ipswich was already preparing for a strong future as a digital city.

“We have recognized that building and taking advantage of digital highways now will set Ipswich on a secure and successful path to capitalise on the ballooning digital economy,” said Cr Pisasale.

For South East Queensland, the challenge in creating new industries and jobs is becoming acute. The Australian miracle economy has left the region – like most of the nation – hopelessly uncompetitive and the bulk of employment is in domestically facing service industries underpinned by property prices.

In fact, the residential construction industry has been the mainstay of the SE Queensland economy and the region remains probably the most economically volatile of the Australian conurbations given its high dependence upon the building sector.

The digital economy does hold out hope for diversifying South East Queensland’s economy from building and domestic tourism, but the work is just beginning. Cisco’s smart region initiative is a first step, but there’s much more work to be done by business and civic leaders.

Brisbane image, “Brisbane CBDandSB” by Stuart Edwards. – Own work. Licensed under CC BY-SA 3.0 via Wikimedia Commons – https://commons.wikimedia.org/wiki/File:Brisbane_CBDandSB.jpg#/media/File:Brisbane_CBDandSB.jpg

Aug 132015
 
General Electric GEnx jet engine is social media enabled

Technologies like the internet of things, cloud computing, 3D printing and big data are changing our industries and society. At the ACI Connect event today, I gave a presentation on some of the opportunities, risks and ethical issues facing technologists and engineers in the connected economy.

While many of the engineering principles underlying these technologies aren’t new, their scale and the power they give businesses and governments means there are serious ethical, security and societal issues we have to consider.

This presentation explores some of those issues and the technologies and trends driving them.

Entering the Data era

A conceit among technologists is that we’re in an unprecedented era of change. This is not true.

The Twentieth Century saw massive restructuring of our society as the telephone, mains electricity, the motor car and television changed our society. Many of today’s settled industries came out of the huge technological steps forward over the last hundred years.

Just as cheap energy – delivered to us through the motor car and mains electricity – defined the Twentieth Century, this century will be defined by easily accessible and abundant information.

Those changes over the last hundred years give us some hint as to where we are going; the shifts that saw coal carters, newspaper sellers and night soil men eventually become extinct, along with a shift from a largely agricultural workforce to industrialised employment, is going to be repeated this century as information becomes abundant.

Harnessing the Internet of bees

Cheap and small sensors mean it’s easier to put a chip on something. In this case we have a CSIRO project tracking bee activity where Tasmanian scientists have put tracking devices on bees.

Those tracking devices would have weighed several hundred grams and cost hundreds of dollars ten years ago but today they are small and cheap enough to fit onto the backs of bees.

Being able to deploy these sensors means we can fit them to things we couldn’t have imagined a few years ago and the data they generate is going to give us insights into patterns and behaviours we couldn’t have contemplated.

However not all of this data is useful or necessary and some may even be damaging to individuals and groups. One ethical question we have to ask ourselves is whether it is in the community’s interests to collect this information.

Another aspect of connecting devices, or even animals and people, to the Internet or a network is it opens the possibility of hacking, as we’ve seen in the recent Jeep case where engineers showed they could control a vehicle remotely. The security and privacy aspects of the IoT are critical and something designers and product engineers can’t overlook.

Decoding the data

It’s often said that Data is the New Oil. In truth it isn’t, data is increasingly cheap and easy to access. Being able to analyse that information is where the power lies.

Data analytics is probably going to be one of the most important fields in an information rich economy and already we’re seeing companies springing up to help farmers estimate crop yields, truck drivers plan their routes and even organisations like the Royal Flying Doctor Service using cloud services to better plan their operations.

Again these services plan a lot but there’s also downsides as inappropriate data matching risks breaching consumers’ privacy and even drawing false conclusions from confusing correlation with causation. A good example of this is Facebook being used to judge credit worthiness.

Removing the human element

Automation – whether it’s through robotics, machine learning or algorithms – will change many industries and the workforces employed by them.

One understated field is management where many white collar supervisor jobs are at risk from business automation. It may be that the executive suites are the next sector to be decimated by computers and robots.

Similarly, many services industry jobs such as taxi drivers and baristas are at risk from robotics while large scale 3D printing of buildings threatens to put many building trades under pressure.

No more truck drivers

Driverless vehicles have a whole range of applications, in logistics were seeing them put forklift drivers out of work while mining companies are rolling out massive dump trucks in their new mines that don’t require $200,000 a year drivers.

One study estimates that half the police workforce in the United States would become redundant as law abiding driverless cars become common.

Similarly electric cars will have a massive impact on government revenues. Currently Australian governments raise $17bn a year from fuel excise and has ramifications for businesses involved in the supply chain for service stations.

Once driverless vehicles become commonplace we may well see them changing industries like daycare, public transport and couriers as it becomes possible to summon an autonomous vehicle, put the kids or the luggage into it and then send it off to its destination. If you’re worried, you can track the progress on an app.

The effects of the driverless car show how we have to think laterally about the effects of new technologies on our businesses, sometimes the effects of a new way of doing things could indirectly hurt our business or create new opportunities.

Squeezing out inefficiencies

One of the great promises for the IoT, Big Data and business automation is to remove inefficiencies from industry. Cisco believe that up to 14% of the Oil and Gas industry’s costs could be stripped away with today’s technologies. That in itself is worth over a 100 billion dollars a year in cost savings.

GE are deploying their technologies into a diverse range of industrial equipment ranging from jet engines to railway locomotives and wind turbines with spectacular results in reducing costs and improving productivity.

The effect of these improvements means less downtime and maintenance costs which are good news for customers and shareholder of these companies, but bad news if you’re a maintenance business. It also means the speed of change in business is accelerating.

Skilling the future workforce

In summary the skills needed today are very different to those of 1915 and 1965 and those of the next fifty years will be even different.

As a society we have to decide what skills we are going to give not our children but those currently still in the workforce who are going to be working longer and later into their lives as the workforce ages.

We also have to consider what sort of ethical compass we have. While the technology we have today is powerful and capable of great things, it’s also capable of great harm. We need to have an understanding of what the effects and limits are of our actions with the Internet of Things, Big Data and analytics.

Ultimately we need to ask what value we as individuals can add to our communities and society.

Aug 062015
 
Skilled workers are essential to building industries

We need to rethink how we measure performance in the workplace says Andrew Lafontaine, Senior Director Human Capital Managemet Strategy & Transformation at Oracle Australia.

As business adapts to a changing society and mobile technologies, one of the questions facing managers is the mismatch between the Millennial generation and those GenX and Boomers who make up most of the executive suite, Lafontaine sees this as been in how the younger cohort approaches authority.

“There certainly can be a disconnect between Millennials and boomers. Millennials don’t see hierarchy the way boomers see it as important,” says Lafontaine. “Boomers have ingrained view of the way they have come through the workforce.”

Breaking the old rules

Unfortunately for those older managers, their world was based on a formalised, ‘straight line’ hierarchy dating back to the days ships’ captains used flags and voice tubes to communicate.

That rigid military style worked well for nearly two hundred years of business with mail and then the telephone only reinforcing that management model. Now newer collaboration tools mean different ways of working becoming possible.

A problem with those different ways of working in teams is how performance is measured warns Lafontaine.  “What they are not measuring at the moment are what I call ‘network performance’. How workers they helping their colleagues, collaborating and working together.”

Separating home and office

With mobile technologies becoming ubiquitous it becomes harder to separate work from home life, “we working now from home and on the tram. You don’t need a nine to five workforce nad companies have to deal with and embrace the technology,” says Lafontaine.

In the context of babyboomers and GenX workers, that technology meant longer hours in the office but Lafontaine suggests things are now changing. “There other areas to measure. How are they looking after themselves? The days of babyboomers working 12 or 14 hours a day and neglecting their health or outside life are over.”

For the future company, the key to success lies in engaging their employees Lafontaine says. “A more highly engaged workforce delivers better outcomes. Engagement is the three S’s: Stay, Say and Strive”

Those S’s come down to three questions for the worker; should I stay? What should I say? and How should I strive to do a better job?

For managers the challenge is engage all workers regardless of age, the task of finding what engages and motivates workers of the computer generation is only just beginning.

Aug 012015
 
uber-logos

Stop calling it the sharing economy, cries marketer Olivier Blanchard in a blog post describing how the label is inappropriate and doesn’t accurately describe the imbalances in the relationships between providers, users and the online platforms that facilitate them.

The question is what do we call the business model of companies like Uber, AirBnB and the myriad other services that take providers’ time and resources – cars in the case of Uber, homes or spare rooms for AirBnB – then make them available to people who can use them, taking a commission in the process of course.

Blanchard wonders if much of the success of these companies is because America’s cash strapped middle classes are desperately trying to find additional source of income and there is very much a strong argument for that.

More importantly, is what do we actually call these businesses? While they are potentially are as exploitative as the free labour models that have evolved in the media with businesses like Huffington Post, at least they provide some type of income even if for Uber drivers the net returns may be marginal at best.

Blanchard himself suggests the Microtransaction Economy however that’s not a satisfactory label as the transactions – which may be many thousands of dollars for some AirBnB rentals – are not always small.

Maybe we should call it the downtime economy, where we’re using the time we’re not busy or when we’re not using our homes, cars or others assets to earn income. That too though doesn’t strike me as satisfactory although it does seem to address the underlying idea these services are really only intended to supplement somebody’s earnings, not be their primary livelihood.

None of these labels though are satisfactory and maybe we have to ditch the economy moniker. It’s time to start thinking about what we really should call these businesses.

Your thoughts.