Feb 272017
 
government subsidies for film industry hurt the sector

With the movie industry’s Academy Awards taking place last night, albeit not without mishaps, it’s worth reflecting on how Hollywood has defended itself against a range of disruptions over the last century.

From when the first movie was shown by the Lumiere brothers in Paris just after Christmas 1895, cinema has been both a disruptive force and one that’s been subject to its own challenges.

The immediate effect of the new technology was an explosion of new businesses, trades and techniques not dissimilar to the first dot com boom of the early days of the web as the traditional theatre industry was displaced by movie theatres.

As the  technology evolved, the movie industry itself was subject to disruption as sound was developed – ending the careers of many silent film stars – followed by colour both of which allowed new techniques and markets to developed.

Then came television and, it would have seemed, the end of the movie industry. Although that didn’t happen and it’s instructive how the industry reacted to the challenge.

In a 2007 paper, academics Barak Orbach and Liran Einav showed the movie industry’s evolution starting just after the introduction of talkies in 1927.

The shift to sound drove the movie industry to its all time heights prior to the Great Depression, however the economic downturn hit the film business hard – something to consider when people talk about the ‘lipstick effect’ -however steady growth returned through the 1930s and until the end of World War II.

Following the war, economic change and the arrival of television were tough for the movie business as attendances fell dramatically until stabilising in the late 1960s. Interestingly, the price of movie tickets went up dramatically shortly before the decline tapered off.

The graph finishes at 2002, at the end of the first internet boom and it’s notable the early days of the web, or the rise of Pay-TV in the 1970s and the Video Cassette Recorder in the 1980s had little effect on the industry’s attendance figures.

Despite those new technologies, the movie industry managed to attract audiences despite the plethora of entertainment options on offer at home.

Much of this was due to technological change with advances in computer generated graphics and recording techniques giving film makers far more creative scope while the roll out of multiplex cinema complexes allowed patrons far greater choice in movies.

Fifteen years later the effects of technology are still telling. In 2002, the average American was buying five movie tickets a year, according to the 2016 Motion Picture Association of America’s annual report this had fallen to 3.8, no doubt partly due to the success of Netflix.

However the film industry has still remained lucrative, partly through developing alternative streams of income like product licensing and international sales – China is by far the US industry’s biggest market and non-North American sales are growing by 21%. At the consumer level, movie houses increasingly make their money from concession sales and add-ons like premium seating.

So the answers to the movie industry’s success in staying profitable in the face of disruptive technologies seems to be in adopting new tech, diversifying income streams and globalising their product – although a bit of legislative protection in extending copyright probably helps.

The lessons though from a century of disruption though are clear, how well the movie industry responds to continuing disruption from the likes of streaming services like Amazon Prime, Netflix and their Chinese equivalents remains to be seen.

Feb 202017
 

Last week the City of Sydney and councillor Jess Scully came under fire for an apparent backflip about the need for a Chief Digital Officer.

Scully, who was elected at last year’s council elections, told InnovationAus “the idea of a CDO or chief innovation officer seems a little bit redundant” a day before the organisation advertised for ‘chief, technology and digital services officer’.

To be fair to Scully, the roles being advertised by the City of Sydney were not truly CDOs in the way Brisbane, which has a small business focus, and Melbourne’s city councils have appointed them however it raises the question of whether Scully is right that an organisation doesn’t need a Chief Digital Officer.

As with most questions of this nature, the answer seems to be ‘it depends’. A key part of that discussion is where a CDO sits in an organisation. If they are senior executive or even board role, then it’s likely they are going to come into conflict with other c-suite managers such as the COO and CFO.

What’s worse, such a conflict in the c-suite can mean digital issues can be seen as ‘belonging’ to the CDO and not other key business units, which can only be to the detriment of the organisation.

There’s an argument too that the changes to organisations is so great from the changing economy and emerging technologies that responsibility of understanding and dealing with these changes is the role of the CEO and the board.

Where a CDO can be very effective is being an advocate for change and a trusted adviser to senior management, however even there risks lie as identified by Paul Shetler who found the siloing of agencies within the Australian Public Service meant it was very hard to effect any change in the face of resistance from an organisation’s vested interests.

It seems from the story that the City of Sydney has chosen an advocate and support role for the digital officer position, rather than formalise a CDO position who becomes a figurehead for the organisation’s digital evolution.

For a CDO or any technology advocate to be effective, there has to be support from the board and senior management. A technologist can only drive change if they have a mandate from the top.

Even then in some organisations the culture may be so factionalised that the response to change and drive for digital transformation has to come from the existing powerbrokers and a CDO could be at best a hindrance and even obstruct the process.

So the City of Sydney and Jess Scully aren’t wrong in not having a Chief Digital Officer, and neither are Melbourne and Brisbane for having one, it’s a deliberate decision by the various managements to choose the structure and roles that works best for their organisation. Driving change though always remains the responsibility of the board and the CEO they appoint.

Feb 132017
 

To say Paul Shetler’s stay in Australia has been controversial would be an understatement.

After leaving the UK’s Government Digital Service in 2015, Shetler was the founding CEO of the Australian government’s Digital Transformation office. He lasted 16 months before being managed out.

In January I interviewed Shetler where he discussed the relative differences between countries, the challenges facing those trying to digitally transform governments and large organisations along with some scathing observations about the management of the Australian Public Service.

Parts of this interview were the basis for separate articles in Diginomica and the Australian Financial Review however the entire conversations is worthwhile publishing.

Some of Shetler’s answers have been lightly edited for clarity.

How do we compare the digital transformation journey of different countries?

In terms of the UK, the Government Digital Service really has done a great job. If hadn’t been for GDS we wouldn’t be having the conversation we’re having in Australia today, much less in New Zealand, the United States and other countries.

Digital Transformation wouldn’t be on the table and an awful lot of the basic ideas on how you fix government IT by looking at structural reasons for behaviour rather than just saying “let’s make a nicer interface.” they were really good at identifying those things.

Britain was the pioneer. Every country in the naughties had their own digital strategy but the UK led the way. The US right now is a mess, they don’t really have a digital strategy.

How does the US look with the new Trump administration?

They do have a lot of potential there. I do think the new administration is more likely to do something big to fix things than perhaps the Obama Administration was, because they are talking about national infrastructure.

If you to the United States it’s shocking, the physical level infrastructure is falling apart and on a digital level things are pretty much the same, if you look at the government websites many of them look like they are from the 1990s and they all look and act differently.

They are very much like the UK before Britain started the digital transformation and they’ve had several years to fix it but there’s been no concerted effort because no-one really owns it.

They do have the USDS which operates out of the White House that gets really great talent in to do fix something but they don’t have the authority across the government.

They have 18F who operate on a cost recovery basis who act like an internal consultancy… they have some extremely talented people there and we’ve learned quite a bit from them.. and they help agencies with individual things, like looking at contracts or procurement or whether it’s fixing a particular service. But there’s no vision or strategy that guides it all.

If you go to New Zealand you’ll see they’ve been doing a lot of great thinking. It really influenced us in Australia on user journeys across governments, where you want to get something done that goes across agencies.

Let’s look from the standpoint of the end user; the end user wants to send a child to school, to emigrate to New Zealand or to open up a business. What do they need to do and how can we map it out for them.

The problem in New Zealand is that the team has no authority, all they can do is propose and it depends upon other people saying ‘oh, that’s a great idea’ although there’s been a lot of great design thinking coming out of there and it difficult for that being translated into practice.

One of the things I learned here was you can have all the great ideas and talent but if you don’t have the political will and authority to drive it then a recalcitrant bureaucracy will not going along with it because their interests aren’t in alignment with their users.

What did you find on coming to Australia?

There was a lot of excitement and enthusiasm on what we could do with the idea of the DTO, particularly among the public there was a lot of goodwill as well as in large parts of the Canberra bureaucracy, generally speaking the lower you got down the ranks there was more enthusiasm.

In the UK you have two layers of governments; you have the central government and local administration.

You have the split between politics and policy, you have the politicians who just don’t spend time in their departments. When I was with the UK Justice Ministry the Secretary of State, Chris Grayling, and his ministers were in the building every day.

As a consequence they were very aware of what was going on. There were in there everyday and they could see things. It made it easier for the ministers to give direction and cover for the civil servants.

In Australia it’s much easier for public service to capture the minister, direction is spotty and politicians are easily manipulated, partly because of lack of information.

There’s also the gap between policy and delivery, the UK Department of Justice, for example, works on legal and constitutional policy but is also responsible for prisons, courts and other services. So there’s a tight feedback loop where if a policy isn’t working, you find out pretty quick.

How important are people and existing processes?

You can’t fight human nature you have to acknowledge it and live with it and make it work for you.

In Australia we did a terrible job of working with human nature. This idea we could get Australian government to magically transform itself because it was told to, that I could come here and put up some pretty pictures and say some nice words and everyone would say ‘hey we never thought of that.’

That’s not going to happen when you have entrenched interests, habits, structures and groups who are committed to doing things a particular way. It’s not going to happen and it’s vary naïve to think you can do it, it’s just not how people work.

In the UK, we didn’t focus on consensus we focused on getting things done. When I first met with Francis Maude he said ‘this is not a change management process – this is transformation.”

When we talk about change management it’s often about appeasing people who are throwing up obstacles, this isn’t about appeasing them, it’s about them doing their job. Too often here there was too much appeasing bureaucrats which I think comes down to a lack of political will and perhaps cowardice.

One of the major reasons why the UK was a successful as they were was because Francis Maude was the minister for five years. It became clear he was going to see this through and if you were going to fight, you were going to lose. People got into line.

Because they understood people were competitive they created a group called ‘Digital Leaders’, the digital leaders were the Director-Generals from various departments who were future leaders – most likely to become Permanent Secretaries – and said, “you guys will be those driving the transformation from the Civil Service side.” Of course because these people were all competitive they’d try to outdo each other.

How does the Australian political culture compare?

“It’s quite a bad culture. In Canberra you have people who think they are the intellectual elite of the nation who aren’t really, it’s a relatively mediocre elite.”

The idea you have a group of people sitting around thinking their Big Thoughts in a bubble and telling each other how great they are who then hand those thoughts down to proles who do the service delivery. It’s a very weird class system that’s been built up – you have the Big Thinkers and then even the proles you give it to, they pass it on to the states or an NGO to deliver it.

There is no feedback loop, there is none. You don’t know how much these policies cost, you don’t know what they’re delivering you don’t know what’s a success. That probably suits lots of people.

We saw that with digital dashboard where citizens and ministers could monitor public services’ performance. There was so much pushback, there were some agencies that worked with us but getting information directly from the systems was difficult.

What are the lessons from the Australian experience and for those trying to drive digital transformation?

When the DTO was set up, they had to make a series of trade-offs. It wasn’t GDS, it didn’t have the powers of GDS. It didn’t have the powers to mandate or block.

GDS had both, the idea you could kumbaya your way to transformation, no-one there believed it. That’s why they set up GDS the way they did. They could stop you from spending money, even if you had the budget approval or not, so that was a massive stake in the heart for a number of zombie IT projects.

It’s particularly hard for IT managers in departments to admit that a long running project was a failure so GDS was great. That ability to do the right thing and to have it sanctioned by authority was brilliant. The years of ass-covering were over.

Some kind of spending controls are good and some ICT procurement reform is absolutely essential. That’s potentially really, really good.

How important is finding the right people?

People coming into senior digital roles in the UK government were hired by GDS and that was massively important to get the right people in.

I was thoroughly vetted as were all the other hires and it was important because it created a community of people who thought the same way. We were all committed to the same mission and we all came in at the same time. It’s not talked about much, but there was also a general clearing out of the old leadership.

Having a common sense of mission was important, we would work together and collaborate with each other.

You need to have political will to see them through because the departments will kick and scream but if their autonomy was working we wouldn’t have this problem.

Why are Australian governments suffering IT problems?

If all major government projects were failing we’d not be having this conversation. That said, there is an unacceptable rate of failure and it has to be fixed. Again, departmental autonomy is not working.

Departments have chosen to deskill, departments have chosen to become dependent upon vendors and departments have chosen to put their own interests ahead of users – as we in the case with Centrelink. Infrastructure failures like the ATO or the Census were easily preventable. The idea you’re building data centres in 2016 is insane and anyone who tells you that should be fired.

These are all predictable outcomes and as long as you have a public service that’s not really comfortable with 21st Century technology and which still views as its own departmental in-group as being more important than its end-users then you’ll end up with these problems.

Public servants have to start operating the way a bank or insurance company would – how do I get onto the cloud, not how do I keep workloads off the cloud? How do I build around the user? It’s crazy to be asking these conversations because it’s an incredibly deskilled when it comes to IT. It’s appalling, much more than in the UK.

That’s the problem, when you talk to actual practitioners in the Australian government they acknowledge it. It’s not the guys doing the designs or those trying to use the technologies, it’s those further up the management chain who don’t have the skills or have too close relationships with certain vendors where you see these anti-social behaviours kicking in.

Where next?

I’ve spent sixteen months banging my head against a wall so I’m not in a hurry, I’m looking some opportunities in Australia and a few elsewhere in the world.

Jan 232017
 

“You can’t kumbaya your way though it,” says Paul Shetler, the former head of Australia’s Digital Transformation Office, about the task of bringing an organisation or government into the 21st Century.

Shetler, who previously worked for the UK’s Government Digital Service (GDS) and Ministry of Justice, was reflecting on how a brutal approach to change was necessary when confronted by management resistance and a recalcitrant bureaucracy.

I had the opportunity to interview Shetler two weeks ago with part of that discussion being published on Diginomica. One of his key points is when driving a transformation, consensus is the first casualty.

“In the UK, we didn’t focus on consensus we focused on getting things done. When I first met with Francis Maud he said ‘this is not a change management process – this is transformation.’”

However to drive such change forcefully strong leadership is needed and Shetler emphasised that one of the great drivers for digital transformation at the UK’s Ministry of Justice was having a committed and powerful minister.

“One of the major reasons why the UK was a successful as they were was because Francis Maude was the minister for five years… It became clear he was going to see this through and if you were going to fight, you were going to lose. People got into line.”

Ultimately a lack of strong leadership is why the Australian DTO failed, with the country’s political culture seeing ministers rotated out of positions on a regular basis – the Innovation portfolio is seeing its fourth minister in 18 months  – it’s almost impossible for any leader, however forceful, to drive meaningful change.

This raises the question of whether some organisations can culturally handle change, it may well be that some institutions are impervious to change given the nature of their management structures and the people that lead them.

Australian taxpayers may hope that their public service isn’t an institution that resists change but Paul Shetler’s experience is a worrying warning.

Dec 022016
 

One of the biggest impressions from the AWS Re:Invent conference is the company’s rapid innovation with the firm’s executives boasting how they have offered over a thousand features on their services this year.

That sort of rapid change requires a fairly tolerant attitude towards new ideas and risk, which was something AWS CEO Andy Jassy explained at the media briefing.

“In a lot of companies as they get bigger, the senior people walk into a room looking for ways to say ‘no’. Most large organisations are centrally organised as opposed to decentralised so it’s harder to do many things at once,” he observed.

“The senior people at Amazon are looking at ways to say ‘yes’. We don’t say ‘yes’ to every idea, we rigorously assess each on its merits, but we are problem solving and collaborating with the people proposing the idea so we say ‘yes’ a lot more often than others.”

“If you want to invent at a rapid rate and you want to push the envelope of innovation, you have to be unafraid to fail,” he continued. “We talk a lot inside the company that we’re working on several of our next big failures. Most of the things we do aren’t going to be failures but if you’re innovating enough there will be things that don’t work but that’s okay.”

While Amazon’s management should be lauded for that attitude, they are in a position of having tolerant investors who for the last twenty years haven’t been too fussed about the company’s profits. Leaders of companies with less indulgent shareholders probably can’t afford the same attitude towards risk.

There’s also the nature of the industry that AWS operates which is still in its early days, sectors that are far more mature or in declines – such as banking or media respectively – don’t have the luxury of saying ‘yes’ to as many ideas as possible.

Jassy’s view about encouraging ideas in the business is worth considering for all organisations though. With the world changing rapidly, having a workforce empowered to think about new ideas is critical for a business’ survival.

Sep 302016
 

“In a world where stupidity dominates, looking good is more important than being right,” writes Professor André Spicer of London’s City University in Aeon Magazine.

Spicer and his fellow author Mats Alvesson described their results of studying dozens of organisations for their book The Stupidity Paradox.

What they found is the smartest don’t get ahead in most organisations, but those who conform with the prevailing culture which usually sets a low bar.

We started out thinking it is likely to be the smartest who got ahead. But we discovered this wasn’t the case.

Organisations hire smart people, but then positively encourage them not to use their intelligence. Asking difficult questions or thinking in greater depth is seen as a dangerous waste. Talented employees quickly learn to use their significant intellectual gifts only in the most narrow and myopic ways.

The tragedy is these organisations squander the talent of those working for them. In many respects management is destroying value rather than adding to it.

Probably the most dangerous type of organisation though are those run by managers who want to be leaders.

They see their role as not just running their business but also transforming their followers. They talk about ‘vision’, ‘belief’ and ‘authenticity’ with great verve. All this sounds like our office buildings are brimming with would-be Nelson Mandelas. However, when you take a closer look at what these self-declared leaders spend their days doing, the story is quite different.

Spicer’s article is well worth a read, if only to nod in agreement with many of the organisations and managers you’ve had to deal with in the past.

It’s worth reflecting how organisations are changing in an information rich age. While it’s tempting to think better access to data will improve their collective intelligence, it may be that algorithms only further entrench poor management practices.

Sep 022016
 

US retail giant is to slash 7,000 back office jobs reports The Wall Street Journal as the company looks to focus on customer service. The process that’s seeing those jobs lost are part of a bigger shift in management.

The automation of office jobs isn’t new – functions like accounts payable have been steadily computerised since the early days of computers – but now we’re seeing an acceleration of white collar and middle management roles.

As increasingly sophisticated automation and artificial intelligence increasingly affects middle management roles, we can expect further changes to organisations’ management structures.

The opportunity to streamline and flatten management will be something company boards will have to focus on if they want to keep their enterprises competitive and responsive in rapidly changes markets.

For managers, there’s a lot more disruption to come for their roles. Those stuck in 1980s or 90s ways of doing things are very much at risk.