Tag: change

  • Farewell to the knowledge economy

    Farewell to the knowledge economy

    One of the mantras of the 1980s was the future of western nations lay in becoming ‘knowledge economies’, unfortunately things don’t look like they are turning out that way.

    As the developed economies moved their manufacturing offshore – first to Japan and Korea, then Mexico and finally China – the promise to displaced Western factory workers was the replacement jobs would be in vaguely knowledge based industries like call centres and backoffice computer work.

    From the 1990s on, those jobs also started to go overseas  to lower cost centres in India, the Phillipines and other countries.

    When the internet became ubiquitous in the developed world in the late 1990s, the creative industries – musicians, artists and writers – found income dried up as their work became commoditised by digital distribution channels.

    Now the professions are being affected by combination of offshoring, artificial intelligence and automated processes. Many of the jobs that were done by highly paid accountants and lawyers can now be done by computers or in places not dissimilar to those that took away the call centre jobs twenty years ago.

    So it turns out the knowledge economy isn’t the key to riches after all and the future turns out to be more complex than what we thought in the 1990s.

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  • Rethinking the middle class

    Rethinking the middle class

    Technologist Jaron Lanier says the internet has destroyed the middle classes.

    He’s probably right, a similar process that put a class of mill workers out of a job in the Eighteenth Century is at work across many industries today.

    Those loom workers in 18th Century Nottingham were the middle class of the day – wages were good and work was plentiful. Then technology took their jobs.

    Modern technology has taken the global economy through three waves of structural change over the past thirty years, the first wave was manufacturing moving from the first world to emerging economies as global logistic chains became more efficient.

    The second wave, which we’re midway through at the moment, is moving service industry jobs and middleman roles onto the net which destroys the basis of many local businesses.

    Many local service businesses thrived because they were the only print shop, secretarial service or lawyer in their town or suburb. The net has destroyed that model of scarcity.

    The creative classes – people like writers, photographers and musicians – are suffering from the samee changed economics of scarcity.

    Until now, occupations like manual trades such a builders, truckdrivers and plumbers were thought to be immune from the changes that are affecting many service industries.

    The third wave of change lead by robotics and automation will hurt many of those fields that were assumed to be immune to technological forces.

    One good example are Australia’s legendary $200,000 mining truck drivers. Almost all their jobs will be automated by the end of the decade. The days of of relatively unskilled workers making huge sums in the mines has almost certainly come to an end.

    So where will the jobs come from to replace those occupations we are losing? Finance writer John Mauldin believes the jobs will come, we just can’t see them right now.

    He’s almost certainly right – to the displaced loom worker or stagecoach driver it would have been difficult to see where the next wave of jobs would come from, but they did.

    But maybe we also have to change the definition of what is middle class and accept the late 20th Century idea of a plasma TV in every room of a six bedroom, dual car garage house in the suburbs was an historical aberration.

    Just like the loom weavers of the 18th Century, it could well be the middle class incomes of the post World War II west were a passing phase.

    If so, businesses and politicians who cater to the whims and the prejudices of the late Twentieth Century middle classes will find they have to change their message.

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  • Exciting but vague

    Exciting but vague

    On Tuesday Tim Berners-Lee rounded off his Australian speaking tour with a City Talks presentation before 2,000 people at a packed Sydney Town Hall.

    After an interminable procession of sponsor speeches, Berners-Lee covered many of the same topics in his presentations at the Sydney CSIRO workshop the previous week and the Melbourne talk the night before.

    These included a call for everyone to learn some computer coding skills – or at least get to know someone who has some, wider technology education opportunities, more women in computing fields and a warning about the perils of government over-surveillance.

    On government monitoring Internet traffic, Berners-Lee has been strident at all his talks and correctly points out most of our web browsing histories allow any outrageous conclusion to be drawn, particularly by suspicious law enforcement agencies and the prurient tabloid media.

    Who owns the ‘off switch’ is also a concern after the Mubarak regime cut Egypt off the Internet during the Arab Spring uprising. The willingness of governments to cut connectivity in times of crisis is something we need to be vigilant against.

    The web’s effect on the media was discussed in depth as well with Sean Aylmer, editor-in-chief of the Sydney Morning Herald, saying in his introduction that Berners-Lee’s invention had been the defining feature of Aylmer’s career.

    While the web has been traumatic for a generation of newspapermen, Berners-Lee sees good news for journalists in the data explosion, “how do we separate the junk from the good stuff?” Asks Tim, “this is the role for journalists and editors”.

    One person’s junk is another’s treasure though and the web presents one of the greatest opportunities for people to “write on their blank sheet of paper.”

    When asked about what he regretted most about the web, Berners-Lee said “I’d drop the two slashes,” repeating the line from Melbourne the night before.

    At each of his Australian speeches Berners-Lee has paid homage to his mentor at CERN, Mike Sendall. After Sendall passed away, his family found the original proposal for the Hyper Text Markup Language (HTML) which formed the basis for the world wide web.

    “Exciting but vague” was the note Sendall made in the margins of Berners-Lee’s proposal.

    Vague and exciting experiments was what drove people like James Watt and Thomas Edison during earlier periods of the industrial revolution. Tomorrow’s industries are today’s vague and strange ideas.

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  • Towards the post car society

    Towards the post car society

    We don’t often think about it, but the design or our cities reflect the technologies of the day. Right now the way we live is built around the motor vehicle, but are we moving into a new era?

    After a visit to Ford Australia’s Centre of Excellence For Design and Engineering, Neerav Bhatt has some thoughts on the role of the motor car in an era where people don’t have to travel to their workplaces.

    One of Neerav’s points is that car use is falling among younger workers, a trend that’s happening across the western world.

    Much of this is put down to the generations of Millennials and Gen-Ys being more interested in technology purchases rather than cars along with changing work patterns.

    A more fundamental reason could be that we’re reaching the end of the motor car era.

    If there is one technology that represents the Twentieth Century it is the motor car; the automobile has shaped our cities, our lifestyles and our culture.

    However we are now in the Twenty-First Century.

    The three eras of motoring

    Roughly speaking, we could break the Twentieth Century’s love affair with the motor car into three phases; development, consolidation and dependency.

    In the first period, the automotive industry was developing with thousands of manufacturers experimenting with the technology and production methods. At the same time governments were beginning to build road networks and communities were demanding improved links.

    By the beginning of World War II, the motor car was an important part of life but ownership was largely restricted to affluent households and business.

    Following World War II governments made huge investments in road networks and automobiles became cheaper to own.

    This gave a generation a new taste of freedom as you could go anywhere with a tank of gas. It also changed the layout of our suburbs as people could now travel further to work, allowing them to move into bigger houses on the fringe of town.

    As government investment was focused on road building, passenger train and tram networks were starved of capital with many cities abandoning their transit systems altogether.

    Suburbs built in the early to mid Twentieth Century had evolved around trams and the legacy of that can still be seen today. However customers no longer wanted to fight for parking spots on crowded streets designed for horse drawn carriages and trams.

    Responding to this developers started building supermarkets and shopping malls which became popular largely because they offered easier parking. Cheaper goods made available by improved logistics systems – another effect of the motor car – was the other main reason.

    The beginning of dependency

    With the advent of the 1970s oil shock, the role of the motor car turned from being a tool of liberation into one of dependency. The suburbs of the 1960s and 70s had been built around the assumption of universal car ownership and cheap fuel. When fuel ceased being cheap, then households budgets were affected.

    Not coincidentally after the oil shock the reversal of ‘white flight’ – the movement of the middle classes to outer suburbs – started with the gentrification of inner suburbs that had been abandoned by the working class.

    Through the 1970s and 80s the cost of owning a motor car became more expensive as governments stopped externalising the costs of maintaining roads and saw car use and petrol taxes as a revenue source.

    At the same time the obvious effects of saturating society motor cars became obvious as roads increasingly became choked and planners began to realise that building more roads only attracted more traffic.

    Times of decline

    By the turn of the Twenty-first Century technology had also started to move away from centralised offices and factories. Today technologies like the internet and increasingly 3D printing mean that workers don’t have to commute vast distances. Automation also means many levels of management are no longer necessary.

    Changing work patterns is also affecting incomes, with car ownership being expensive many employees – particularly young workers – don’t want to buy automobiles.

    This all means that the era of the motor car is coming to an end, it’s not going to vanish quickly but the decline has started.

    For business, this means the post World War II assumptions that saw the rise of the supermarket, shopping mall and big box discount store are no longer valid.

    Some managers, most notably those of doomed department stores, won’t learn these lessons and will pass into history like the stagecoach companies.

    Just as the end of the horse and carriage era saw the demise of buggy whip makers and blacksmiths, the rise of the motor car saw an unprecedented rise in wealth, employment and productivity. Not only were the lost jobs created elsewhere, but many more were created.

    While the motor car isn’t going to disappear overnight, the decline has started and our society is adapting. For business and government leaders, the task is to understand those changes and adapt.

    Image courtesy of a Norwegian motorway by Ayla87 through SXC

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  • Squandering a reprieve

    Squandering a reprieve

    ABC Radio National’s Background Briefing has a terrific story on the struggles of the Fairfax newspaper empire during the early days of the Internet.

    One of the major themes that jumps out is how Fairfax, like many media and retail organisations, squandered the opportunity presented by the tech wreck.

    The tech wreck was an opportunity for incumbents to claim their spaces in the online world, instead they saw the failure of many of the dot com boom’s over-hyped online businesses as vindication of their view the Internet was all hype.

    As former Sydney Morning Herald editor Peter Fray said “In florid moments you could even think this internet webby thing would go away”.

    For Fairfax the profits from the traditional print based business were compelling. According to Greg Hywood the current CEO, for every dollar earned by the company, 70c were profits – a profit margin of 233%.

    The Internet threatened those “rivers of gold” and media companies, understandably, did nothing to jeopardise those returns.

    Another problem for Fairfax was the massive investment in digital printing presses in the 1990s. These behemoths revolutionised the way newspapers were printed as pages could be laid out on computer screens and sent directly from the newsroom to the press itself which printed out pages in glorious colour rather than with smudgy black and white images.

    Moreover these machines were fantastic for printing glossy coloured supplements and the advertising revenue from those high end inserts kept the dollars rolling in.

    When the tech wreck happened, the massive investments in printing presses were vindicated as the rivers of gold continued to flow while the smart Internet kids went broke.

    Fairfax’s management weren’t alone in this hubris – most media companies around the world made the same missteps while retail companies continued to build stores catering for the last echos of the 20th Century consumer boom.

    In 2008, the hubris caught up with the retailers and newspapers. As the great credit boom came to an end, the wheels fell off the established business models and the cost of not experimenting with online models is costing them dearly.

    Value still lies in those mastheads though as more people are reading Fairfax’s publications than ever before.

    Readers still want to read these publications, one loyal reader is quoted in the story that Sydney Morning Herald should aspire to “being a serious international paper.”

    That isn’t going to happen while management is focused on cutting costs to their core business instead of focusing on new revenue streams.

    Somebody will find that model, had the incumbent retail and media organisations explored and invested in online businesses a decade ago they may well have found that secret sauce.

    Now many of them won’t survive with their horse and buggy ways of doing business.

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