Australia’s lost business agility

The latest IMD digital competitiveness ratings show Australia sliding down the ranks, how can we address this decline?

The recent digital competitive index by Swiss business school IMD, flagged a worrying trend in Australian industry, reporting the nation’s commercial sector is falling behind its international counterparts in digital competitiveness.

Overall the IMD’s digital competitive rankings weren’t terrible for Australia with the nation only sliding one place to 15th globally from its 2018 place — albeit down from ninth five years ago.

But the indicators that kept Australia in the top 20 were in the nation’s international student numbers and the national credit rating, hardly the mark of an economy on the leading edge.

Jarringly, the survey ranked the nation’s business agility, 45th out of the 63 economies surveyed.

IMD’s definition of an economy’s business agility includes the local industry’s adoption of big data, IT integration, concentration of robots and local companies’ ability to respond to opportunities among other factors.

For those of us who’ve spent the last two decades proselytising about the importance of investing in technology, the fall was disappointing but unsurprising as Australia has long been lagging in its digital investments.

The answers to why this is happened over a twenty year period that saw Australia become one of the world’s richest economies lies mainly in the investment priorities and opportunities of the nation’s small business and corporate sectors.

With the exception of the mining industry, Australian corporations aren’t globally focused. Most of the nation’s large corporations are domestically facing service providers like banks, telcos, toll road operators and supermarkets which sees them focused on maximising local profits rather than competing in international markets.

Most of them also operate as duopolies or monopolies, so much so that in most sectors, Australia can be described as the ‘Noah’s Ark of business’.

Added to that, those dominant local corporates have shareholders addicted to high dividends., in turn reducing the funds available for reinvesting in the businesses.

When Australian corporates do invest in digital technologies, it’s almost always to slash costs. A mindset which leads them into disastrous deals with global IT outsourcers and tech vendors.

Of course continual failure on that level doesn’t matter when you can pass the costs of failure onto customers by increasing milk prices or credit card fees.

For the small business sector there’s a slightly different set of constraints, however with most SMB’s also being local service providers they haven’t needed to invest to stay competitive.

But small businesses trying to compete in global markets, or looking to invest invest, face another problem — accessing capital.

Over the last 30 years, Australia’s small business sector has been frozen out of bank lending with loans only accessible to proprietors able to pledge 100% collateral — usually home equity — against their loans.

For providing effectively risk free loans Australian banks charged handsomely, helping make them the profitable banks on the planet, something that was missed in the weak, and dare one say naive, conclusions of the Hayne Royal Commission into the nation’s finance industry.

The upshot of the banks’ refusal to lend to small businesses means their investment and subsequent productivity has stagnated and fewer have been able to compete in global markets.

So Australia’s fall in competitive indexes isn’t surprising and it’s an added handbrake on the economy as the government struggles with flat income growth, stagnant private sector employment rates and declining GDP per capita.

Fixing these roadblocks is wholly up to government — the banking system needs to be reformed, taxation policies need to be overhauled and serious consideration has to be made about breaking up the nation’s more inefficient and dominant corporates to stimulate domestic competition and innovation.

Sadly, there’s little recognition of the problem among Australian’s politicians, bureaucrats, business leaders or media and, one suspects, there’s no appetite for meaningful reform.

So Australia will muddle along for the moment, but its hard to see how living standards can be maintained as the country’s business sector stagnates.

Which is the real warning from the IMD.

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Changes

Last month everything changed.

Instead of waking up at 5am, lying in bed and checking the overnight news and media releases on my phone, I was able to lie in, consider going to the gym and wandering into work at a sensible hour.

My two years as Mumbrella’s news editor had come to end.

Modern digital journalism is not for the lazy or the faint hearted. The tyranny of a daily newsletter means the editors are always hungry for stories and stressing about scooping the opposition.

The hours up to sending the daily newsletter – around 10.30am for Mumbrella – go in a blur.

After the newsletter is sent, the duty editor’s challenge is to keep the website up to date while keeping a beady eye out for breaking news, story ideas for coming days, complaints about earlier stories and moderating the often defamatory comment stream.

Lucky editors have great reporters in their teams. In my case, I had Zoe Samios and Abigail Dawson who both awed and scared me with their work ethic and ferocious competitiveness.

I was very lucky.

That luck held in working alongside Josie Tutty, Mumbrella’s deputy editor, whose editorial sense and attention to detail saved me from countless shocking howlers.

With that team, Mumbrella managed to score its highest ever traffic in 2018.

Those opportunities, privileges and challenges came at a cost, though with stress an every-present problem for everyone in editorial teams.

One former editor of an industry website told me they had PTSD after four years of running one site.

Despite the stresses, those two years had been interesting. I’d learned a lot and I’m eternally grateful to Tim Burrowes for the opportunity to have a deep, if short, dive into an industry which I didn’t really understand along with the privilege of working with some of the smartest and hardest working young journalists in Australia.

It was also the opportunity to be on the editor’s side of journalism, a challenge I genuinely thought I would never get.

However when Zoe, Abby and Josie decided to move on for their own individual reasons, it was time for me to move on as well.

Again, I was lucky. A role at the Australian Computer Society opened up which allows me to get back into tech in a position that gives me the opportunity to help raise the IT industry’s importance to the nation’s and political leaders.

This has been my passion and was too good an opportunity to pass up.

Added to the attractions were a much shorter commute, nicer offices, more civilised working hours and far less stress.

I’ll miss the hipster vibe of Chippendale, even though I was probably the oldest person in the suburb, let alone the office, along with the opportunity of dressing like an extra from Mr Robot.

Now I’m at Barangaroo (the towers in the featured image) I have to dress like a sensible, middle aged adult.

The last two years were at times fun, at times dispiriting and at times infuriating. On the latter point, it’s remarkable how sensitive those outwardly hard-nosed agency bosses, journalists and publishers can be when relatively trivial stories upset their fragile egos.

I won’t miss those panicked phone calls from hysterical publishers, journos and agency bosses who, quite frankly, were old enough to know better. You know who you are.

But on balance, my time at Mumbrella was a challenging and fun adventure. I wish the new team, as well as Tim and his co-founder Martin Lane, all best in navigating a business reporting on an industry that doesn’t understand its own challenges.

So I’m thankful for the opportunity, and I’m grateful for the change.

I hope to see many of you around in the new role.

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Building a billion dollar start up

Zendesk founder Mikkel Svane describes the journey of building a billion dollar startup

Two years ago we interviewed Mikkel Svane the founder of cloud service provider Zendesk about modern customer support.

Since we spoke to him Zendesk have had a successful IPO and is now worth over a billion dollars.

In the latest Decoding the New Economy video interview we catch up with Mikkel and discuss the journey from being a three person startup to a billion dollar listed company.

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