Jul 242017
 

One of the stark realities of the technology industry is there is no third place – if you aren’t the biggest or second biggest in a mature market then you need to get out.

With internet businesses it’s now appearing there may not even be room for second placed businesses as increasingly each market segment is dominated by one player.

For Silicon Valley’s leaders, having a monopoly is their nirvana. As PayPal founder Peter Thiel once wrote, competition is for losers, which is ironic given his fortune is based upon challenging the banking and payment oligopolies.

So with attitudes like Thiel’s, and the massive power of companies like Amazon, Facebook and Google, it’s not surprising there are now calls to break up the tech giants.

There are some compelling arguments for this, the splitting of Bell Labs in the 1950s spawned the birth of Silicon Valley and the breaking up of AT&T created the conditions for development of the internet and mobile network. Monopolies stifle genuine innovation.

For customers, the argument is moot. Very rarely does a monopoly result in anything but poorer service and higher prices.

Even for shareholders, there’s a good argument for breaking up monopolies. A company with massive market power is often over staffed and poorly managed and the splitting of Standard Oil in the 1911 gave rise to dozens of new oil companies who returned far more to investors than the staid giant ever would.

It’s hard though to see how companies like Google, Facebook and Amazon could be broken up. Unlike telephone networks, oil refineries and gas stations it’s difficult to separate assets or products. Breaking up Google, for example, may only result in more monopolies over smaller markets.

However in the tech industry, a monopoly may not be permanent thing. Forty years ago IBM was the untouchable incumbent and twenty years ago it was Microsoft. Both today are shadows of what they once were as markets overtook them.

So perhaps it’s too early to call for the breaking up of today’s tech giants because, like Microsoft and IBM, their success is based on a fleeting technological moment.

May 122017
 

An interview with Media scholar Jonathan Taplin, author of the new book Move Fast and Break Things, on the Pro-Market website poses some interesting questions about the direction of the digital economy and innovation as market power coalesces around the big four internet giants. 

This power is particularly marked in online media with Facebook and Google pocketing most of the global advertising spend which leaves little for content creators.

I kept coming back to these three—Google, Facebook, and Amazon. All have extraordinary market shares. Google has an 88 percent market share in search advertising and an 80-plus percent market share in Android. Amazon has a 74 percent market share in e-books, and Facebook controls 70-plus percent of mobile social media when you add Instagram, Messenger, and WhatsApp. What more empirical evidence does one need to prove concentration?

Over the past decade we’ve seen the power of the big four online gatekeepers growing although ironically Apple’s light seems to be dimming as the company’s innovative vision fades following Steve Jobs’ passing.

The monopoly problem is broader than just the tech industry though, as The Atlantic pointed out last year, market dominating corporations are suppressing innovation throughout the US. The problem is even greater in Australia and some other countries.

The rise of the monopolies shouldn’t be a surprise as the neo-liberal policies of the United States and most of the western world for the last 40 years have been largely focused on increasing the wealth and power of corporations and their managers. It’s fair to say those policies have been successful.

Where we go next is the big question. An economy dominated, and suffocated, by a handful of well connected and powerful corporations is not going to drive wealth creation, particularly in a world where more businesses functions are being automated.

One short term step may be to break up the monopolies, something that Taplin himself suggests.

This just goes to show how quickly the ground is shifting. I now have a piece coming out in the New York Times that explores the idea of breaking them up, but when writing the book, I tried to be reasonable. I thought no one would buy the idea of breaking them up. And now people are raising that idea.

While that’s a start there’s vastly more that needs to be done from bankruptcy reform – the last 40 years have seen governments make it harder for small businesses and households to seek financial protection – through to intellectual property reform.

Generational change may turn out to be the solution though as the lucky generation of business and government leaders – those born between 1935 and 55 – responsible for the ideology and policy that allowed such an accumulation of corporate power move on.

May 082017
 

“It’s like we lived through five minutes of innovation sunshine,” says Federal shadow treasurer Chris Bowen about the Australian government’s innovation policy.

Bowen was appearing at the Future of Innovation panel at Sydney’s Stone and Chalk fintech hub with his colleague Ed Husic where laid out the Labor Party’s platform for the tech industry and the changing workforce.

Both Husic and Bowen represent Western Sydney electorates which, along with outer suburban Melbourne, are key election battlegrounds and the districts dealing with most of Australia’s surging population growth.

Uneven spoils

As Bowen indicated in his speech, those regions haven’t shared in the country’s economic growth over the past ten years.

Some parts of the Australian economy are doing well.  Other parts are doing it tough.

Half of all the jobs created in Australia in the last decade have been created right where we are: in a two kilometre radius of the Sydney and Melbourne CBDs.

The economy feels good from this vantage point.

 

Not understanding the mismatch between different parts of the economy was one of the failures of the government’s 2015 Innovation Statement. The multi million dollar advertising campaign was full of fine buzzwords but none of the rhetoric resonated with the broader electorate, something not helped by the Prime Minister retreating from his policies at the first opportunity.

Spreading the gains

Bowen and Husic made a good case for their policies being focused on the wider population as a changing workforce is going to affect all parts of the economy.

So I spend a lot of time travelling to and talking to people in regional economies.  It doesn’t feel as good there.

Regional central and North Queensland. Tasmania. South Australia.

Here, unemployment and youth unemployment are high and show no signs of budging.

So Bowen’s commitment for his party to work on innovation, education and industry policies that help suburban and regional Australia – not just the leafy bits of upper middle class Sydney and Melbourne – is welcome and essential for the nation.

Refreshingly Bowen also acknowledged many of the jobs that currently exist in suburban and regional Australia are very likely to be automated and that education, reskilling and investment are all critical factors in dealing with employment shifts.

A familiar tale

However we have heard this before, the Rudd Labor government came in with high hopes when it was elected in 2007 which it quickly dispelled and then compounded its errors with cancelling the COMET commercialisation program and making a mess of employee option schemes.

Given this history of poorly conceived thought bubbles posing as policy, this writer asked (or rather begged) Bowen to consult with industry and the community before announcing major policy changes – something both parties have become notorious for.

In answer to the comment about consulting with the electorate before substantive policy changes, Bowen suggested a Shorten ALP government will be requiring senior public servants to be more engaged with industry.

Suggesting that senior public servants should engage with the community and industry is a good idea. That the idea is seen as revolutionary illustrates the problem found by former Digital Transformation Office boss Paul Shetler when he arrived in Australia with the country’s top bureaucrats being isolated and aloof from the citizens they deign to rule. This isolation is in itself a challenge facing Australian governments.

Memories of earlier oppositions

 

The Sydney tech community’s lauding Husic and Bowen bought back some memories. Fifteen years ago Australian technologists  were doing the same thing with another Labor shadow spokesperson, Kate Lundy. We ended up with factional warriors Stephen Conroy and Kim Carr when Labor finally won. While both were no doubt wonderful at delivering the numbers to party faction warlords their understanding of the changing economy was marginal at best.

While the Rudd government at least paid lip service to the Twenty-First Century, unlike the Howard government which was firmly focused on taking Australia back to the 1950s – with some degree of success it should be said, the Labor Party did little apart from getting the National Broadband Network underway.

In opposition, the Liberal Party too made similar noises however communications spokesperson Paul Fletcher, like Lundy, has been marginalised since winning power and Paul Keating’s description of Malcolm Turnbull as ‘Fizza’ has never seemed more apt since Malcolm became Prime Minister.

For Australians hoping some of the Lucky Country’s luck would be applied to the nation’s tech sector, government policies from both parties have been a succession of broken dreams.

Husic and Bowen are promising this time it will be different. Many of us hope it will be, it may be the last chance for Australia to have a fair economy fit for the 21st Century.

May 072017
 

Last week saw the inaugural Sydney Techfugees Meetup at the Australian offices of TripAdvisor, an initiative that not just assists new arrivals to the country but shows the importance of keeping a society diverse.

Techfugees is a UK founded initiative harnessing the international tech community’s skills to assist with the global refugee crisis, the Australian offshoot was set up in 2015 with the aim of helping refugees settle into the Australian community.

Moving countries is stressful for most people and migrants often face problems accessing services and capital. For refugees who’ve been traumatised by dislocation and war, the problems are even greater.

Having had four hackathons, the Sydney meetup was an opportunity for the organisers to showcase their work and five new projects that addressed problems facing immigrant communities.

A refugee’s story

Kicking off the event was a brief presentation from Mahir Momand, former refugee from Afghanistan and now the Australian CEO of Thrive, a microfinance business for refugee businesses.

Momand’s story tells us much about the refugee story, born in Afghanistan his family fled to Pakistan after the 1979 Soviet invasion. Twice he returning to his home country before having to flee each time after his charitable work incurred the wrath of the Taliban.

For migrants and refugee families, microfinancing an important idea, with few assets or business links in their new country is hard for them to access capital so this is an important way to stimulate employment among groups that tend to be entrepreneurial. This is one area where an concept designed for developing communities applies just as well to advanced economies.

Presenting the apps

The groups that presented at the meet up were diverse, One Step App offers walking tours which aims to build bridges between the immigrant and established communities while Cinema of the Oppressed looks at using video and other creative tools to help alleviate depression and isolation among new arrivals.

On a more functional level, Water Democracy is developing a cheap and accessible device to purify water in disadvantaged communities while mAdapt uses mobile technology to increase refugee access to essential reproductive health services.

Upload Once, the first project to present, is intended to keep a new arrival’s documentation in one place to make it easier for them to maintain and access important records which is essential for dealing with the bureaucracy when arriving in a new country.

Bringing in diverse skills

All of the Techfugees projects showed the diverse range of needs and talents of refugees and new immigrants.

In these troubled, and scared, times it shouldn’t be forgotten how refugees and immigrants have been the strengths of most the successful Twentieth Century economies – most notably the United States and Australia, countries which are erecting greater barriers at the same time they are congratulating themselves for their successful immigrant societies.

With technology changing the workforce, harnessing the talents and work ethic of displaced people could well be one of the strengths for this century as well. Techfugees is a small taste of what could be done.

Apr 192017
 

This piece originally appeared in The Australian in July 2014. I’m republishing it here given the recent future of work related posts.

For the past four decades it’s been the working class that has suffered the brunt of the effects of globalisation and automation in the workforce. Now machines are taking middle class jobs, with serious implications for societies like Australia that have staked their future on white collar, knowledge-based service industries.

Yesterday, the Associated Press announced it was replacing business journalists with computer programs, following sports reporting where algorithms have delivering match reports for some years.

Some cynical media industry commentators would argue rewriting PR releases or other people’s stories — the model of many new media organisations — is something that should be done by machines. Associated Press’ management has come to the same view with business data feeds.

AP’s managing editor Lou Ferrara explained in a company blog post how the service will pull information out of company announcements and format them into standard news reports.

Ferrara wrote of the efficiencies this brings for AP: “Instead of providing 300 stories manually, we can provide up to 4,400 automatically for companies throughout the United States each quarter.”

The benefit for readers is that AP can cover more companies with fewer journalists, the question is how many people can afford to read financial journals if they no longer have jobs?

Making middle managers redundant

Many of those fields that cheered the loss of manufacturing are themselves affected by the same computer programs taking the jobs of journalists; any job, trade or profession that is based on regurgitating information already stored on a database can be processed the same way.

For lawyers, accountants, and armies of form processing public servants, computers are already threatening jobs — as with journalism, things are about to get much worse in those fields, as mining workers are finding with automated mine trucks taking high-paid jobs.

Most vulnerable of all could well be managers; when computers can automate financial reports, monitor the workplace and make many day-to-day decisions then there’s little reason for many middle management positions.

Removing information gatekeepers

To make matters worse for white collar middle managers, many of their positions are only needed in organisations built around paper based communication flows; in an age of collaborative tools there’s no need to gatekeepers to control the movement of information to the executive suite.

Irish economist David McWilliams — his television series on the rise of the Celtic Tiger, The Pope’s Children, and the causes of the Global Financial Crisis, Follow The Money, are highly recommended viewing – last week suggested that the forces that disrupted the working classes in the 1970s and 80s are now coming for middle classes.

“The industrial class was undermined by both technological change and globalisation, but rather than lament this, many people who were unaffected by this social catastrophe labelled what happened from 1980 to 2010 as the “inevitable consequences” of global competition.” Mc Williams writes.

Those ‘inevitable consequences’ are now coming for the middle classes, asserts McWilliams.

On the right side of progress

While this is sounds frightening it may not be bad for society as whole; the Twentieth Century saw two massive shifts in employment — the shift from manufacturing to services in the later years, and the shift from agriculture to city-based occupations earlier in the century.

A hundred years ago nearly a third of Australians worked in the agriculture sector; today it’s three per cent. Despite the cost to regional communities, the overall economy prospered from this shift.

Answers in the makers movement

The question today though is what jobs are going to replace those white collar jobs that did so well from the 1980s? The Maker Movement may have answers for governments and businesses wondering how to adapt to a new economy.

Two weeks ago President Barack Obama welcomed several dozen leaders of America’s new manufacturing movement to a Maker Faire at the White House, where he proclaimed “Today’s DIY Is Tomorrow’s ‘Made in America'”.

In Singapore, the government is putting its hopes on these new technologies boosting the country’s manufacturing industry in one of the world’s highest-cost centres.

“The future of manufacturing for us is about disruptive technologies, areas like 3D printing, automation and robotics,” Singapore’s Economic Development Board Managing Director Yeoh Keat Chuan told Reuters earlier this year.

Britain too is experimenting with modern technologies, as the BBC’s World of Business reports about how the country is reinventing its manufacturing industry.

Tim Chapman of the University of Sheffield’s Advanced Manufacturing Research Centre describes how the economics of manufacturing changes in a high-cost economy with a simple advance in machining rotor disks for Rolls-Royce Trent jet engines.

“These quite complex shaped grooves were taking 54 minutes of machining to make each of these slots. Rolls-Royce came to us and said can ‘can you improve the efficiency of this? Can you cut these slots faster?'”

“We reduced the cutting time from 54 minutes to 90 seconds.”

“That’s the kind of process improvement that companies need to achieve to manufacture in the UK.”

While leaders in the US, UK and Singapore ponder the future of manufacturing, Australian governments continue to have faith in their 1980s models of white collar employment — little illustrates how far out of touch the nation’s political classes are with reality when they proclaim Sydney’s future as an Asian banking centre or Renminbi trading hub.

Old business ideas

In the apparatchiks’ fevered imaginations this involves rooms full of sweaty white men in red braces yelling ‘buy’ into telephones as shown in 1980s Wall Street movies. In truth, the computers took most of those jobs two decades ago.

As McWilliams points out, the dislocations to the manufacturing industries of the 1970s and 80s were welcomed by those in the professions as the inevitable cost of ‘progress’.

Now progress might be coming for them. Our challenge is to make sure we’re on the right side of that progress.

Apr 122017
 

It’s hard not to see Google’s decision not to move the mooted digital hub at Sydney’s White Bay as nothing short of a humiliation for the New South Wales state government.

The White Bay project is the centrepiece of the NSW government’s startup tech startup strategy and Google were hoped to be the anchor tenant for  the refurbished power station that’s been abandoned for over thirty years.

With Google’s Sydney office currently overflowing and its staff numbers expected to increase from around 1500 today to 10,000 over the next few years, the White Bay precinct with its cathedral like power station made some sense.

For the startup community, having something similar to the London Google Campus would have been a valuable part of the city’s ecosystem.

However the location is in a traffic blackspot served by a woefully inadequate and unreliable bus service with a series of major road projects planned to start in the neighbourhood over the next five years which forced Google to rethink their plans.

Now it looks like the White Bay project getting underway this year is doomed and meanwhile the Victorian state government is spending big to attract tech companies to Melbourne.

This is far from the first time the NSW government has had ambitions for a digital hub and again a project stumbles in the face of poor planning by the NSW government.

We don’t know if the Victorian government has made an offer to Google yet, but it wouldn’t be surprising if they have. It could be New South Wales is about to pay the price for its lack of vision and forethought.

Apr 062017
 

This morning I’m talking with Steve Austin on ABC Brisbane about the future of retail as the city’s biggest shopping mall opens.

What does such a huge complex mean to the local economy and is it sustainable as the retail industry evolves?

Having had a massive upgrade, we can be sure Westfield Chermside will have plenty of technology to help customers spend money and we covered some of the ways modern retails have to understand consumer behaviour and predict what individuals will spend.

Prior to the segment (which starts around the 60 minute mark), Steve took calls from listeners about how retail has changed in Brisbane over the past fifty years.  The demise of fondly remembered department stores is a reminder of how the sector changed as consumer behaviour changed over the last half of the Twentieth Century.