Nov 282014
 
Digital bus stop

Earlier this week a group of industry groups, telcos and local councils launched their 2030 Communications Visions initiative; an initiative “to shape a digital vision and set of goals for Australia to achieve global digital age leadership”.

The project is a worthy one, particularly given the failure of Australia’s National Broadband Network, which I’m writing about early next week in Technology Spectator however one thing that bugs me is what exactly is ‘digital age leadership’.

If we look at the rollout of technologies like the motor car, electricity or telephone through the Twentieth Century it was a mix of private companies, community groups and governments that championed the development of roads, mains power and phone systems. People either demanded their towns became connected or raised the capital to do it themselves.

So on one level, the champions need to be us. We have to lead our communities and industries by using the technologies and showing what can be done, that also makes our businesses more likely to succeed in the future.

On another level, we need to consider the genuine leaders of the ‘electrical age’ or ‘motor car age'; people like Thomas Edison and Henry Ford built businesses that led the world and still exist today.

For countries, it’s no coincidence that the United States is the richest nation on the planet after having most of the leading business in their industries over the last hundred years.

That latter point is really what the Digital Visions project is about; do Australians want to remain a wealthy nation in the Twenty First Century?

Governments have a role in this, as the UK is showing, and political leaders need to be encouraged to take the digital economy however governments can only do so much and successes like Silicon Valley are more a fortunate by product of spending rather than the consequence of strategic policy.

Ultimately, leadership starts with us — we can’t afford to wait for governments, big business or someone else to take the reigns.

Nov 272014
 
economist world in 2015

One of the annual features in The Economist is it’s World In… edition where the magazine makes predictions on the year ahead.

For 2015 the magazine has its usual wide range predictions; some safe, some risky and some out of left field, like Papua New Guinea topping the world growth lists for next year on the back on a new LNG plant comping online.

Economy: The fastest-growing economy in the world in 2015 will be Papua New Guinea, where GDP will expand by nearly 15%. China will drop its growth target to 7% (from 7.5%). Overall, global growth will be higher in 2015 (3.8%) than in 2014 (3.2%).

Business: Singapore tops the Economist Intelligence Unit’s global business environment rankings for 2015. Watch out for Xiaomi, a Chinese mobile-phone maker, as it continues its meteoric rise and goes global. And expect a welcome return, at least in some places, to the nine-to-five culture in the

Interest rates: In the United States and Britain, where growth is relatively robust and unemployment is coming down, interests rates will start to rise in 2015, ending a long period of ultra-low rates. In the euro zone and Japan, by contrast, central banks will continue to ease monetary policy, to battle against deflation. The diverging paths of the main central banks will lead to more volatility in equity,

Statistical landmarks: It will be a year of striking “crossovers”, as America overtakes Saudi Arabia to become the world’s biggest oil producer, China overtakes America to become the world’s biggest economy (measured at purchasing-power parity) and Facebook overtakes China in terms of its

Elections: Britain will have another hung parliament after its general election in May, with David
Cameron probably remaining prime minister. But Canada’s leadership is likely to change hands in an October election, with the Liberals’ Justin Trudeau taking the helm.

The environment: A deal of sorts will emerge from the Paris summit in December 2015. Hydrogen- powered cars will hit the road, as Toyota and Honda launch the first mass-market fuel-cell models. And Australia will be in the global spotlight as the UN decides whether the Great Barrier Reef should be put on the endangered list.

Technology: “Wearable” technology will be all the rage, thanks to the launch of the Apple Watch and other devices. Virtual-reality firms will overcome the cost and technology problems that have prevented their products from becoming mass-market hits. And mobile phones will become mind-readers, thanks to “anticipatory computing”, which enables them to trawl their users’ data to predict events

Sport: Australia will win the cricket World Cup, New Zealand will win the rugby World Cup and the United States will win the women’s football World Cup.

Space: America’s New Horizons spacecraft will fly by Pluto, after a journey of nearly nine years – maybe igniting a campaign to reinstate Pluto as a fully-fledged planet from its current “dwarf” status.

Some of the predictions are obvious while others may be a bit longer term than 2015. Overall it’s an interesting range of predictions and in the next few days I’ll post an interview with two of The Economist’s editors, Vijay V. Vaitheeswaran and Daniel Franklin, justifying their forecasts for the year ahead.

Nov 182014
 
andrew-mcafee-researcher-futurist-management-business-economy-change

At the Australian Gartner Symposium conference today MIT researcher and futurist Andrew McAfee gave the day’s closing keynote on his book The Second Machine Age, a book written with co-author Erik Brynjolfsson “because we got confused” about technological change.

McAfee’s message is that the rate of technological change is about to accelerate dramatically, that change is not going to be gradual but abrupt and businesses have to prepared for a very different world.

Another of McAfee’s points is a decoupling between incomes and growth has happened around the world, particularly in the US, which has changed the assumptions underlying economic growth.

US-productivity-GDP-employment-income-1953-to-2011

Interestingly, McAfee’s chart shows US household incomes diverged from growth in the mid 1970s during the post oil shock stagflation predating the personal computer and internet booms.

The breaking of the linkage between economic growth and incomes underpins the rise of the precariat — those with uncertain jobs and career prospects — which gave rise to Douglas Coupland’s Generation X.

While the bulk of the pain in the last forty year’s disruption was felt by lower income and younger workers, the pain is now extending to the middle classes as described by Stephen Rattner in the New York Times.

US-inequality-gets-worseThose changes are certainly not wholly attributable to technological change but as more jobs are lost to robots and algorithms, that process will accelerate.

For McAfee, the challenge for business leaders and policy makers is to ensure growth and opportunities are evenly spread; “our job is to make smart choices to create a healthy society and economy.”

How well we as a society manage this will define our times.

Nov 162014
 
G20_2014_brisbane_leaders_meeting

This year’s G20 talkfest has come to an end with the usual communique of fine words.

Apart from the discussion of climate change there’s little in the communique that wouldn’t have furrowed the brows of Margaret Thatcher or Ronald Regan thirty years ago with most of the pronouncement a being around opening markets, reducing unemployment and freeing capital.

On the latter point, the call to reduce tax avoidance given this was an obvious consequence of the 1980s reforms would be met by with a rueful laugh from those responsible for the deregulation wave of the Reagan and Thatcher years given reducing taxes on corporations was one of the reasons for the ‘reforms’

An aspect that would trouble Maggie’s and Ronnie’s ghosts would be the commitment to ‘address deflationary pressures’, something undreamt of in the 1980s, although a clear warning to today’s commentators and investors that Quantitative Easing is not going away any time soon.

What today’s communique shows is the world’s leaders are still very wedded to the economic models of the Twentieth Century despite the massive demographic and technological developments changing our society.

The real message from the G20 is don’t wait for your country’s leaders if you want progress; at best they probably won’t comprehend what you’re saying.

Although if you can put your ideas in terms of creating growth or reducing youth unemployment then you might have a willing audience with your local minister, chancellor or President.

Nov 022014
 
las-vegas-downtown-project-tony-hsieh-tour-container-park-praying-mantis

Stepping off the bus at Las Vegas’ Fairmont Street in the early morning is a reminder of how seedy nightlife areas look in the harsh daylight.

The reason for being in Downtown Las Vegas on a warm Monday morning was to tour Tony Hsieh’s Downtown Project, a scheme to revitalise the rundown and neglected town centre of the gambling and convention mecca.

One of the striking things about Las Vegas is how much of it pretends to be somewhere else; The Luxor, New York, New York, The Ballagio. It’s almost as if the fantasy land of the American Dream is a little embarrassed about where it is.

Not that the tourists are embarrassed with millions pouring in every year to enjoy the gambling, entertainment and the pasteurized sin on offer along Las Vegas’ glitzy strip of mega casinos.

welcome-to-las-vegas

Five miles north the mega casinos and bright lights, the luck runs out. The best thing locals have to say about Las Vegas’ downtown district is “it is better than it was.”

One of the reasons it’s better is because of one man — Tony Hsieh, the founder of online shoe retailer Zappos. Hsieh moved his business to Las Vegas because, in the entrepreneur’s view, San Francisco was ‘hostile towards company service.’

The Downtown Project is the result of a promised $350 million investment by Hsieh to invigorate the city centre of Las Vegas.

However the project has hit problems with Hseih recently stepping down from his position, layoffs being announced and community programs being cut back, leading critics to claim the project is in jeopardy.

So a tour of the project during a recent visit to Las Vegas was well timed to judge how things are going.

The tour starts with the small group meeting at The Window, an arts and meeting space on the ground floor of the Ogden residential tower which closed down in September as part of the scheme’s recent cutbacks.

Gathering in the room with our tour leader Maggie is a somewhat spooky experience with all The Window’s furniture, books and exhibits intact as on the day they were left at the end of the space’s six month lifespan.

las-vegas-downtown-project-tony-hsieh-tour-deserted-windows-space

Leaving the room’s contents intact and unpacked doesn’t engender confidence that The Window will find a new home. In all, starting the tour in the abandoned workspace is an unsettling start.

After a quick explanation of The Downtown Project, Maggie leads takes us around the corner to the Ogden’s residential entrance where we ride the elevator to Tony Hsieh’s upper level apartment.

The building doesn’t have a fourth or fourteenth floor; something familiar to anybody who’s lived in a city where property developers are courting Chinese investors — the sound of the word ‘four’ in Mandarin and Cantonese has unlucky overtones.

On the way up to the Twenty-Third floor apartment it’s also an opportunity to gauge the dynamic between the residents of the building; in reviews of the complex, many residents not associated with Hsieh’s projects have complained they have been marginalised.

las-vegas-downtown-project-tony-hsieh-tour-apartment-hanging-garden

Once in Hsieh’s apartment, it’s an impressive look into the domestic life of a modern successful internet tycoon with common workrooms, open plan living and a jungle themed party room featuring a hanging garden.

las-vegas-downtown-project-tony-hsieh-tour-refurbished-casino

The most important thing about Hsieh’s apartment is it gives a sense of perspective of the project with views across the downtown district, a panorama of the Las Vegas strip with the huge casinos rearing out the suburbia and the refurbished Goldspike Casino that is becoming a community hub of sorts.

Hsieh’s apartment also gives some ideas of the plans the tycoon has, particularly the  Life Is Beautiful festival that Maggie promises will be a “combination of Burning Man and South by South West.”

las-vegas-downtown-project-tony-hsieh-tour-life-is-beautiful-festival

Returning to street level from Hsieh’s apartment does give the impression there are two breeds of residents in The Ogden; the Zappos and Downtown project crowd who treat the other residents with polite disdain.

The dismissive attitude towards non-tech outsiders is common among the technology startup communities around the world but that doesn’t make it any less jarring for those living with it in their building.

Stepping out into the mid morning heat of Las Vegas, we go around the corner to the Beat Coffeehouse, part of the Emergency Arts Collective that’s based in a disused medical centre and which, interestingly, isn’t part of Hsieh’s downtown project.

las-vegas-downtown-project-tony-hsieh-tour-refurbished-department-store

A block further along is The Container Park, the retail and entertainment hub of the Downtown Project that welcomes visitors with a giant preying mantis, shown at the beginning of this post.

The container park is an interesting rag tag collection of independently owned food and retail outlets, a test laboratory for hospitality and bricks-and-mortar shopping outlets. In the mid morning heat it’s somewhat deserted.

Unfortunately that’s where our official tour concluded and it was time to explore the dubious delights of downtown Las Vegas on our own. The locals are right, there isn’t much.

Later that evening I returned to see how The Downtown Project and downtown Las Vegas itself do at night. The difference with daytime is spectacular.

Getting off the bus at the Fremont Street Experience with its roofed in mall the boasts the world’s biggest video screen is a great difference from its dowdy daytime appearance.

Fremont Street jumps with the tame bacchanalia that’s the hallmark of Las Vegas; all the false unfulfillable promise of sexual and economic success that defines modern America.

las-vegas-downtown-project-tony-hsieh-tour-fremont-street-experience-at-night

The three block walk from West Fremont street to the Container Park is stark; while the Beat Coffeehouse is packed with drinkers enjoying the live band, the street is dark and quiet; it’s quite easy to feel uncomfortable on the short walk.

At the Container Park itself, things aren’t exactly busy. A few families play on the central green while a band plays. Few of the food stalls are selling anything and most of the shops are closing at 8pm. While it’s a Monday night, it’s not encouraging.

las-vegas-downtown-project-tony-hsieh-tour-container-park-at-night

Leaving Downtown Las Vegas on the WAX express bus — fifteen minutes to the MGM Grand down the interstate rather than the hour plus trudge down the strip on the Deuce — it’s a good opportunity to reflect on a superficial tour of the Downtown Project.

For young families wanting to move from the wallet crushing costs of San Francisco  and Silicon Valley, Las Vegas could be an option but it’s going to require more business than Zappos and a small cluster of startups.

The city is going to need more drop in spaces like The Windows – something like Google Campus is going to be needed to encourage smart young entrepreneurs to make the journey and try their luck.

Another aspect is more accommodation is needed as right now the housing stock around the downtown district is either run down or overpriced — while cheap by San Francisco or New York standards prices don’t reflect the fact Las Vegas is not an economic powerhouse like the two cities.

The Ogden building is an example of everything that is wrong in the current global property mania with high priced, high maintenance apartments aimed at rich investors rather than ordinary people and their families.

For residents transport also remains a problem although Las Vegas’ public bus system is surprisingly good, one suspects the service is subsidised by the immensely popular Deuce double decker buses carrying crowds of tourists up and down the strip.

To get a San Francisco or Brooklyn type critical mass into the city requires a high density population and a deeper local tax base which is something beyond Hsieh’s power.

Las Vegas also has the problem that it is in a competitive field with towns like Kansas City and Des Moines among others all vying to attract young entrepreneurs to their low cost communities. Just being cheaper than Mountain View or South of Market is not enough on it’s own.

Overall, it’s not hard to leave Las Vegas with a feeling that the Downtown Project is floundering. To build a community like that envisioned by Tony Hsieh takes more that $350 million and a few years work; it’s a lifetime commitment and it needs several generations of funding.

That the Fremont Street Experience and The Beat Coffeehouse are both jumping while the Container Park is quiet also tells us that building a community requires diverse groups and that no one guiding agency, private or public can build a thriving industrial centre.

It is possible that Zappos and Hsieh may plant the seed for Las Vegas to become a technology and business hub, but there’s a long way to go and it will need more than one man to drive it.

“Build it and they will come,” was something I heard constantly about the plans to invigorate the city’s centre from its supporters and Las Vegas residents. Whether the Downtown Project is Tony Hsieh’s field of dreams is for history to judge.

las-vegas-downtown-project-tony-hsieh-tour-apartment

 

 

Oct 232014
 
sales methods are changing in an era of cloud computing and social media

Today GE had their At Work conference in Sydney where CEO Jeff Immelt was interviewed by Westfarmers’ boss Richard Goyder.

One of the key messages from Immelt in his interview with the Australian conglomerate’s CEO was that finding growth in a flat global economy is going to take hard work and creativity; just relying on increased domestic spending is not longer an option.

Immelt was particularly pointed about the developed world’s economies, “the US is best since the financial crisis, growth is broad based but it’s still in the two to two-and-a-half percent range. It may be that’s the new normal.”

“Europe and Japan are pretty tough, forty percent of the world’s economy is still difficult, not going downward but stable and flat.”

Preparing for a slow growth world

“We’ve prepared ourselves for a slow growth world but one where you can invest in growth.”

“There’s still opportunities out there,” Immelt observed. “We’re going to have to make our own growth.”

Part of that growth story relates to the end of the consumerist era where debt funded consumer spending, particularly in the US, drove the global economy.

“We are coming out of a time period of the last ten or fifteen years where the US grew four and half percent every year with no inflation. So the US was the dominant economy in the world during the 1980s and 1990s.”

“We knew that was not going to be the same, so we’re in a world with no tail wind where we think greater focus on things like R&D, globalisation and things like that which will be critically important.”

Changing business focus

One of things Immelt did after the global financial crisis was to change the focus of the business away from the consumer finance division that had been a river of gold over the last thirty years back to being an industrial infrastructure company.

“Everyone needs to paranoid about relevancy and what they do great in the world today. There is no shelf life for reputation or anything else.”

“The engine of growth in the US when it was growing at its best was the US consumer, both in the combination of their own wealth and in taking on leverage. That was the engine of growth from 1980 to 2007.”

“It ended badly, but those were big engines of growth. What will be the next engines of growth?” Immelt mused.

Asian consumers to the rescue

Immelt sees the rise of Asian economies as being the next growth drivers with over billion consumers rising in affluence.

Whether those Asian economies can generate the growth that the hyper-developed economies of North America, Europe and Japan were able to provide during the past thirty years remains to be seen given China’s, and most of Asia’s, consumers having nothing like the West’s spending power.

The truth is we’re decades off Asia’s huddled masses having the economic strength to carry the global economy in the way the western world’s consumers did for the closing decades of the Twentieth Century.

For economies like Australia that are largely based upon domestic consumption funded by debt, this will mean a massive redirection of the economy away from renovating houses to investing in productive industries.

Immelt’s message to business leaders is clear; don’t rely on a rising tide of domestic growth to keep you afloat. Companies are going to have to find new markets and products if they want to grow, waiting for customers to arrive is no longer an option.

Oct 182014
 
nokia-feature-phone

Last week the Finnish Prime Minister, Alexander Stubb, raised eyebrows with his suggestion that Apple killed the country’s economy with the iPhone putting Nokia out of business and the iPad reducing global demand for paper.

The real reason for Finland’s immediate problems is a lack of diversity; any country dependent upon one or two businesses or industries is going to be vulnerable should markets move against them.

In the longer term though the problems facing Finland are similar to those across the western world; an aging population, shrinking workforce and tepid export markets.

Finland’s real problems are our problems. How the Nordic nation deals with them will provide some valuable lessons to us all.