Category: economy

  • The agents of change

    The agents of change

    It’s understandable technologists see technology as driving change. Often it’s true – technologies do build or destroy businesses, alter economies and collapse empires.

    Sometimes though there’s more to change than a new technology changing the economy and while it’s tempting to credit innovations like the web, social media and cloud computing with many of the changes we’re seeing in the world, we have to consider some other factors at work.

    The end of the 40 year credit boom

    In the 1960s, the United States started creating credit to pay for the Vietnam war; they never stopped and after the 2001 recession and terrorist attacks the money supply was kept particularly loose.

    The worldwide credit boom allowed all of us –Greek hairdressers, Irish home borrowers, Australian electronics salesmen, US bankers and pretty well everyone else in the Western world – to live beyond our means.

    In 2008, the start of the Great Recession saw the end of that period and now the economy is deleveraging. Consumers are reluctant to borrow and businesses struggle to find funds to borrow even if they want to.

    Any business plans built on the idea of almost unlimited spending growth are doomed. The era of massive consumer spending growth driven by easy credit is over and the days of expecting a plasma TV in every room are gone.

    The aging population

    An even bigger challenge is that our societies are getting older, the assumption we have an endless supply of cheap labour is being challenged as a global race for talent develops.

    The lazy assumption that economic growth can be driven by building houses and infrastructure to meet increased demands will be found wanting as the Western world’s populations fail to grow at the rates required to power the construction industries.

    Our societies are maturing and increased economic growth and wealth is going to have to come from clever use of our resources.

    Innovations in computers and the Internet – along with other technologies like biotech, clean energy and materials engineering – will help us meet those challenges but they are tools to cope with our transforming societies, not the agents of change themselves.

    Had  tools like social media come along in the 1970s or 80s they probably would have been massive drivers for change, just like the motor car and television were earlier in the 20th Century. In the early 21st Century they have been overtaken by history.

    Smart businesses, along with clever governments and communities, will use tools like social media, local search and cloud computing with the demographic and economic changes, but we shouldn’t think for a minute the underlying challenges will be business as usual.

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  • A clear, guiding vision

    A clear, guiding vision

    Two weeks ago the Melbourne fashion store Gasp caused outrage over their attitude to customers and the business’ owners might have been relieved the story was finally pushed off the news pages by Steve Jobs’ passing.

    In a strange way, there’s a similarity between the Gasp stores and Steve Job’s Apple – a vision for their product and low tolerance for those who don’t share their ideals.

    Steve Jobs was notorious for dismissing those who didn’t ‘get’ Apple, famously saying “they have no taste” when asked about his biggest competitor Microsoft and stating “we don’t ship junk” when questioned by a journalist about Apple’s perceived premium status.

    Regardless of your opinion of Apple’s products, philosophy, labour practices or community relations, there was no doubt where they stood in the marketplace.

    A similar thing can be said of the Gasp store, while there’s no question the Gasp folk could have handled their customer relations better, they certainly can’t be accused of not having a clear vision of where their brand sits in the marketplace.

    In a world of bland mission statements where corporations and governments seem intent to paint the world a mediocre beige, having a strong statement on what your business stands for is a genuine competitive advantage.

    What do you stand for?

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  • Digital art is more than iPod wielding basket weavers

    Digital art is more than iPod wielding basket weavers

    This is a transcript of the digital arts opening keynote for the Digital Culture Public Sphere conference discussing the Australian government’s cultural strategy.

    Thank you Senator Lundy. A little bit more about me, as well as being a writer and broadcaster on change I spent 18 months with the NSW Department of Trade & Investment setting up the Digital Sydney project.

    Digital Sydneyis a program designed to raise the profile of Sydney as an international centre of the digital media industry.

    One of the problems with Digital Sydney was that it was very inner Sydney centric and this is a perennial question we face as to where does Australian culture, and art, spring from? The first idea I’d like to throw to the room is that ‘digital’ frees us from many narrow geographic boundaries.

    When we add the term ‘digital’ we hit another problem, that almost every aspect of our lives – be it in art, business or our personal lives – is being affected in some way by the Internet and digitalisation. In reality all art is becoming ‘digital’ in one way or another.

    As broadband becomes more pervasive, particularly as the National Broadband Network is rolled out, we’ll see art and the creative industries become even more digitised.

    In many ways we are today at the point in history not too dissimilar to that our great grandparents found themselves a hundred years ago. In 1911, our forebears couldn’t imagine the massive changes the century ahead would bring and we’re in a similar position in the first decades of the digital century.

    The first half of the Twentieth Century saw radio start a cultural shift which was accelerated in the second half as television radically changed and redefined our culture. Today the Internet is doing exactly the same in ways none of us quite understand.

    Given the massive disruption and technical advances we’re going through we need to be cautious about being too prescriptive as we can’t foresee many of the new technologies that will become normal to us over the next decade.

    This provides a challenge for government agencies supporting the arts as the established gatekeepers such as galleries, production studios and regional organisations become less relevant as the means of distribution evolve and become easier to access.

    We’re already seeing the traditional model of government support to big producers; be they factories, movie producers or games studios suffering as economic adjustment undermines many of their business model. The old economic development models are becoming irrelevant as history overtakes them.

    It may well be that the role of governments over the next decade is to create a framework that allows new mediums, creation tools and distribution channels to develop.

    One area we should be careful of when looking at the digital future of the arts is not to follow the UK’s Digital Economy Act where the protection of existing rights holders took precedence over the creative process.

    It is important that governments create legislative frameworks that balance the rights of all stakeholders, consumers and new content creators with the objective of encouraging new works and innovations to evolve.

    In an Australian context we need to acknowledge and develop our diverse population and the opportunities this presents. Our indigenous and immigrant communities with their artistic and cultural traditions give our national economy advantages that many other countries lack, this is one thing I regret I wasn’t able to push more in my role with the NSW government.

    Education is another critical area, this isn’t just in the arts but right across Australian society and industry as new entrants into the workplace are expected to spring forth with the skills making them as productive as experienced workers, this is clearly a flawed idea, particularly when many of the tools business expects students to be skilled in weren’t invented when the students started their studies.

    Over the next decade we’ll also have to confront one of the great Twentieth Century conceits; that artists are a separate breed from scientists, Engineers and business people.

    Prior to the beginning of the last Century it was accepted a tradesman or inventor could also be an artist and this damaging idea of silos between creative and so called ‘real’ industries, suited only to a brief period of our mass industrial development, will have to forgotten. This will be a challenge to our governments, educators and training providers.

    The digital arts are not about iPad wielding basket weavers, they about giving today’s workforce the creative tools and flexible, imaginative thinking to meet the challenges our mature, high cost workforce faces in a world where the economic rules are changing as fast as our technology.

    We have a great opportunity at events like today to determine how we as a nation will benefit from the next decade’s new technologies that will change our arts communities and society in general.

    The great challenge to policy makers will be dealing with the rapidly changing and evolving world that the digital economy has bought in the arts, in business and in society in general.

    Today I’m sure we can bring together ideas on how we, and our governments, can meet these challenges.

    Thank you very much Senator Lundy, Minister Crean and Pia Waugh for giving the community an opportunity to contribute to the development of this valuable policy.

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  • Price points

    Price points

    It’s no coincidence Amazon’s media release announcing the new range of Kindle e-book readers was headlined introducing the All-New Kindle Family: Four New Kindles, Four Amazing Price Points.

    The $79 price for the base model has authors excited, and quite rightly too as this will guarantee sales of the e-readers and spur sales of e-books.

    Once a product’s perceived as being affordable by the market, sales take off. The classic is Josiah Wedgwood selling bone china at prices affordable to the 18th Century English working classes. The basic product was similar in all but the decoration to the ornate wares Wedgwood sold to Europe’s royal families and the then new methods of mass production guaranteed a quality product to all customers.

    Just over a century later, Henry Ford did a similar thing with the motor car, meeting the price points that made the horseless carriage accessible to the middle classes in early 20th Century United States.

    In more recent times we’ve seen similar trends happen; the under $2,000 personal computer in the 1990s, the sub $500 netbook in 2008 and the affordable smart phones of recent years.

    We can add broadband Internet and budget airlines as other examples of how demand has exploded when the cost has dropped below a certain price point.

    As technology becomes affordable, we use more of it. A point that’s often lost monopolists and established players in industries.

    This is the real opportunity Amazon are now offering with the cheap Kindles and we’ll see e-books boom as people are prepared to make a small investment in the devices.

    Almost certainly this will open new markets and unforeseen opportunities for entrepreneurs and writers. The resulting pressures on competitors like the Apple iPad and the various Windows or Android tablet devices should increase innovation as well.

    In our own businesses we need to ask what those price points are and what is stopping us from meeting them. As other price busters have shown, if you can meet these price points, the riches are there for the taking.

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  • Is the social media business model dying?

    Is the social media business model dying?

    Is the social media business model dead?

    The frenzied rush to release new features such as Facebook’s latest changes, along with Google’s updates to their Plus platform, may be the first indication the big social media business model is broken.

    Driving the adoption of social media services has been the value they add to people’s lives; MySpace was a great place to share interests like bands and music, Facebook’s is to hear what was happening with their families and friends, LinkedIn is for displaying our professional background and Twitter keeps track on what’s happening in the world.

    Now the social media services want to be something else, Facebook wants to become “a platform for human storytelling” where you’ll share your story with friends and friends of friends (not to mention the friends of your mad cousin in Milwaukee) while Google+ wants to become an “identity service”.

    The fundamental problem for social media services is their sky high valuations require them squeezing more information and value out of time poor users by adding the features on other platforms; so Facebook tries to become Twitter while Google+ desperately tries to ape Facebook and Quora.

    Adopting other services’ features is not necessarily what the users want or need; you may be happy to follow a Reuters or New York Times journalist on Twitter for breaking news but you, and them, are probably not particularly keen on being Facebook friends or professionally associated on LinkedIn.

    If it turns out we don’t want to share a timeline of our lives with the entire world but just know how our relatives or old school friends in another city are doing, then the underpinnings of the social media giants value may not be worth the billions of dollars we currently believe.

    This isn’t to say social media services themselves aren’t going away, it could just be that the grandiose dreams of the online tycoons where they become an identity service or a mini-Internet are just a classic case of overreach.

    For Google and Salesforce, whose core businesses aren’t in social media, this could be merely an expensive distraction, but for those businesses like Facebook it could be that Myspace’s failure was the indicator that making money out of people’s friendships isn’t quite the money maker some people think.

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