Tag: economy

Do you really want help from the government?

Should a business spend time looking for government money?

Pity the public servant who stands up in front of a room and asks a bunch of business owners, executives or managers what they want from government.

While there will be plenty of comments about improved procurement, less red tape and reduced fees you can be sure there’ll be plenty of demands that the government ought to subsidise something – anything – that business does.

It’s notable how free enterprise, small government and low taxation loving business people will  drop their copies of Atlas Shrugged and barge their way to the feeding trough and the slightest scent of taxpayer money wafting in their direction.

But is government money really good for a business? In many cases it isn’t.

You run a business, not work in a government department

“Who pays the piper, calls the tune.” The whole idea of running a business is that you are the boss, so why do you want to answer to a government department?

If you’re self employed or just opened a startup, one of the main reasons for doing so is because you decided you no longer want to work for the man. A government grant may well open up a whole new world of paperwork that leaves you wondering why you ever left the cubicle.

The dependency culture

One of the dangers of government funding is if you are successful, you’ll find yourself hooked on it. Quickly you become better at filling in funding applications than delivering products your customers want. The Aussie film industry is a good example of this.

Governments are behind the innovation curve

Public servants are not employed to take risks, this is a good thing as it’s our money they are handling.

Because governments are risk adverse they’ll only recognise an industry – or a problem – long after it has become established.

If you find you are on the government’s help list, it might be time to consider an exit from a troubled industry.

Do you really have a business?

Many new business owners expect the government should do something to assist them in their start up phase. This is a common complaint from under capitalised proprietors.

Given the massive subsidises given out to the banks and other big corporations since the start of the great recession, this attitude can almost be excused but we can already see how well that strategy works.

If you really need a subsidy to run your business, then it’s time to consider whether you should be in business at all.

This isn’t to say all government funding is bad; well thought out programs help viable businesses with things like export assistance, skills development and employing young or disabled workers. There are many of these although the process of identifying what a viable business is usually eliminates the newest and smallest enterprises.

What is notable with the successful government programs is they address a specific need, they don’t have onerous paperwork and they are no substitute for a healthy, living cashflow and profit.

Overall though, if you really want government money then take a job with the public service. It’s a lot easier than scrabbling for grants.

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Survivor Bias – the danger of learning the wrong lessons

How the wrong lessons can be learned from listening to the winners

A recent blog post by Chris Guillebeau on his terrrific Art of Non-Conformity site looked at the value of qualifications.

Chris’ post is a great read and it’s obviously worked for him, though we always should keep in mind with these stories that we’re reading about someone who has managed to make it work.

We all have a lot to learn from Chris and other success stories however the winners’ tales are only half the story; that for every success who dropped out, started a business or travelled the world and did well there are many more who – for whatever reason – didn’t.

That’s part of the equation of risk, that for every success there are failures. For risking failure, the successes are rewarded – despite the best efforts of our political and corporate leaders to engineer away the risks and leave only the rewards for those best connected or placed to take them.

For every winner, it’s also worthwhile listening to those who didn’t quite succeed. The lessons from “failure” are probably stronger and just as enlightening.

Taking a jump, quitting your job, starting a business, becoming a freelancer or travelling the world isn’t for everybody. Many of us are happy staying in the cubicle or the workshop or the village and leading a comfortable, secure and safe life.

Societies need a balance of the risk taking adventurers and the anchors of solid, secure working people. Neither is wrong, neither is bad and a balance of the two is essential for a healthy, prosperous and sustainable society.

It’s not to say we shouldn’t take risks, just understand the dangers are there and your appetite for living with uncertainty before making a big step into business, travel or whatever it is where you see the opportunity.

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Digital art is more than iPod wielding basket weavers

What is the future for the arts in the digital economy?

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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The saddest sign you’ll ever see

When a landlord takes possession of a business, there’s a lot of pain behind the signs.

The sign on an abandoned business announcing “Landlord taken possession” usually hides a pile of pain and distress.

It’s not cheap or easy for a landlord to take possession of a business premises and for most to do so it’s usually the end of long period of unpaid bills and broken promises.

Behind that sign is usually months, if not years, of stress and despair as a business owner has held onto a failing enterprise, bluffing their landlord, their suppliers, their staff, their own families and often themselves.

Almost every one of those signs has a story of failed relationships, destroyed friendships and ruined marriages.

Often they didn’t understand the cost of doing business and in many cases because they hadn’t consulted a bookkeeper or accountant earlier they didn’t understand their venture was always loss making despite what appeared to be a healthy cashflow.

When the truth about the businesses becomes obvious, life for the honest owner of a failing enterprise tries to bluff themselves and those around them that things will be okay, that the dream is still alive.

This is what worries me about many of the businesses that participate in group buying deals, they are desperate to keep their business afloat and believe the cashflow or publicity will save their failing venture. Even worse, many don’t understand how that “50% off” deal will affect their ability to pay staff and the landlord.

Even where the failed proprietor has been one the “two percenters” – the 2% of our society that runs their affairs with no regard for the pain and suffering of those they hurt – many people, particularly the smaller suppliers and low paid workers, have taken a hit as bills went unpaid and promises were not kept.

Most business owners though believe in their idea or vision and work long and hard in an attempt to achieve it. The majority of those who end up with the landlord taking possession are often those who ignored the signs and believed things would come good next season, next month or next week.

I’m always saddened when I see a “landlord taken possession” sign like the one near me in the window of what was an Italian restaurant until recently. What’s the saddest business sign you see?

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Transition effects and changing employment

As the economy changes, so too do the opportunities and threats to our livelihoods

On Australia Day, it’s worthwhile considering one group of convicts in the early fleets who stood against an earlier time of economic change.

As the automation of the cloth weaving process accelerated through the 18th Century,  many trades in the English fabric industry, such as Croppers, found their skills in great demand.

Yet by the early 19th Century, their trades were near extinct as automation reduced the cost of weaving fabric dramatically and labourers replaced skilled workers.

This massive wave of change and loss of once well paid skilled jobs helped accelerate the Luddite movement, many of whom were transported to Australia for their role in attacking factories using the new technologies.

We should keep the plight of the croppers and Luddites in mind in today’s period of massive economic and technological change.

One notable aspect of the workforce when industries are going through major changes is how many high paid skills and business niches pop up for a short time before being overwhelmed by change.

We shouldn’t consider that many of the services and opportunities in today’s economy are permanent, quite a few businesses and skills that have appeared in the last two decades might not survive this one.

A good example is the web designer. In 1996, a punk with a little basic HTML knowledge could call them selves a web developer and three years later many of those punks were driving Porsches and Lamborghinis. By the mid-2000s most of those expensive cars were just memories for those who assumed those basic skills set them up for life.

Today we see the same thing with social media, group buying and cloud computing. Many of the services we see – some of them being valued for billions – are transition effects as markets adjust to changed conditions.

As we begin to understand the effects of trading our privacy for connections, trusting valuable data to anonymous corporations and mass selling for discounts, we’ll see consumers, governments and business adapt.

Some of today’s superstars will adjust to those changes and become the next Microsoft or General Motors while many others will fond memories after their reason for existing vanishes.

We should grab opportunities when we see them – many of the thousands of Groupon clones are doing exactly that ­– but we shouldn’t assume they are permanent and forever.

A time of change means none of us can assume our livelihoods, skills or assets are safe, just as those 19th Century industrial workers found when they were transported to Australia.

Mule-spinning room in Chace Cotton Mill in 1909 by Lewis Hine courtesy of Wikimedia

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Australia’s one trick economy

Businesses need fall back plans, particular when the nation doesn’t have one.

Earlier this week, Reserve Bank of Australia Governor Glen Stevens gave a speech to the Australian Industry Group on the world’s changing economic currents.

That presentation has a number of pointers for Australian businesses on how we use technology, our investments and, most importantly, where the Canberra sees our economy going.

Much of the Governor’s speech discussed how those of us who at the beginning of the century believed Australia’s economy had to diversify into new industry sectors — such as the IT sector — were proved wrong by the Dot Com Bust and the subsequent boom in the resources sector.

“Australia would probably do best, in its production structure, to stick to its comparative advantages in minerals or agriculture or various services.” Mr Stevens quoted from ten years ago, “but it was hard going trying to make sensible points against the barrage of market and media commentary.”

Perfect hindsight

It’s impressive the Governor had this perfect hindsight which can overlook the role of ramping the housing markets by the Rudd and Howard governments to avoid the 2001 and 2008 US recessions along with the sheer good luck of having a resources boom through the last half of the decade.

During his speech the governor referred to an RBA research paper, Structural Change in the Australian Economy which casts an interesting light on the comparative advantages in those “various services”.

That paper shows that service sector employment has risen to nearly 85% while its share of GDP has stayed around the same for the last twenty years, which to this non-economist’s mind implies the portion of national wealth is declining for service based workers and businesses.

Sleepwalking into the dutch disease

Of course those of us in the service sector could make it up by exporting but here again, service sector exports haven’t done much over the last decade which won’t be helped by the current high Aussie dollar — another aspect of the Dutch Disease we seem to have sleep walked into over the Howard and Rudd years.

Those same statistics show mining employment has declined over that period as well and if you’re considering sending your kids down the pit, or even packing in your own city job to drive a mining truck, you might want to read the interesting work being done by the University of Sydney’s school of robotics.

Generously, Governor Stevens didn’t completely write off the role of technology observing that, “in the old versus new economy stakes, it was probably in the use of information technology, rather than in the production of IT goods, that the gains would be greatest.”

Invest in, but don’t develop, technology

The Governor’s messages are clear to business people; our businesses have to invest in technology to be more efficient and we need to understand that government policy will be geared around the mining sector.

Most importantly, we need to understand that on a national level there is no Plan B.

In the last election it was clear both sides of politics based their policies, such as they were, on the assumption the China boom will last for the foreseeable future. Yesterday’s speech shows Glenn Stevens and the Reserve Bank share that outlook and no other alternative is being planned for.

That’s fine for Glenn, Julia, Tony and their colleagues as they have safe, indexed pensions when they deign to cease giving us the benefit of their visionary leadership.

In the business community we don’t have that luxury; a plan B is required just in case things don’t quite work out the way we hope. As the Governor says:

Succeeding in the future won’t ultimately be a result of forecasting. It will be a result of adapting to the way the world is changing and giving constant attention to the fundamentals of improving productivity. That adaptability is as important as ever, in the uncertain times that we face.

That’s excellent advice. How adaptable is your business in these uncertain times?

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The real digital divide

We’re often told that there’s a divide between the “digital natives”, those who grown up with computers, and the “digital immigrants”, those who’ve had to learn about computers. In reality this isn’t true, the real digital divide is about being prepared to learn and explore the possibilities being opened up every day by the Internet and computers.

The real digital divide isn’t between the young and the old; it’s between those who are prepared to explore new technologies and those who hide from change.

We’re often told that there’s a divide between the “digital natives”, those who grown up with computers, and the “digital immigrants”, those who’ve had to learn about computers.

In reality this isn’t true, the real digital divide is about being prepared to learn and explore the possibilities being opened up every day by the Internet and computers.

I was reminded of this shortly before Christmas when talking to a group of forty year old business owners who dismissed Internet tools like Twitter and LinkedIn out of hand – “a waste of time” “just for kids” and “I tried and received Chinese spam” being a few of the objections.

The contrast is the Australian Seniors Computer Clubs Association who prove you’re only as young as the computers you tinker with. These seniors, some of whom were retired well before computers became commonplace, are prepared to explore and discover possibilities that change their lives and the lives those around them.

The forty somethings all had successful businesses and they were the first to admit mobile phones, email and websites had changed the way they work. Yet nearly half of them didn’t have a website for their own business; a statistic consistent with business surveys that find almost 50% of small enterprises don’t have a website.

In many respects these businesses and their owners are reminiscent of the handloom weavers of the early 19th Century. At first technology worked in their favour and pushed wages up but as industrialisation continued they found their skills redundant and incomes falling. Eventually their trades and businesses disappeared; which is what will happen to complacent companies and industries in today’s industrial revolution.

A similar thing is happening to society and individuals. While you won’t disappear if you aren’t using the net, those who won’t will find it harder to do pay bills, communicate and simply get things done. Eventually they’ll find themselves marginalised as not being connected will make it harder for family and friends to keep in touch.

All of this is unnecessary, it’s just a matter of being prepared to try and to give something a go. The real digital divide is between those who choose to give things a go and those who don’t.

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