Paul Wallbank | Paul Wallbank - Communications Professional

“This is transformation” – the challenge of leading digital change

Former CEO of Australia’s Digital Transformation Office, Paul Shetler, talks about the challenges of leading change in government and large organisations

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 21^st 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.

Australia’s changing startup landscape

The 2016 Startup Muster report tells us a lot about the state of Australian business.

Last week, the annual Startup Muster report on the Australian startup sector was released, giving investors, founders and policy makers a valuable snapshot of a vibrant sector of the economy.

The 2016 report had 2711 responses to the online survey which the researchers whittled down to 685 startup founders, 239 potential founders and 474 startup supporters.

Compared to the previous years, the replies are an increase from the 602 in the 2015 survey and 385 the year before. It shows how the Australian scene is growing and evolving.

Still a boys club

A key finding from the 2016 Startup Muster report is the changing gender composition of a group that, quite rightly, has been criticised for being too much of a ‘boys club’. This year’s survey found 24.6% of founder respondents were female, up from 17.4 and 16.1 in the previous two years.

One area where Australia’s startup community does boast diversity is in its industry composition with 17% of the country’s startups in 2016 being focused on the most popular category of Fintech. Notably that sector came in at seventh in 2015.

2015	2016
Marketing	Fintech
Content/Media	Retail
Retail	Content/Media
Big Data	Internet of Things
Health	Education
Education	Marketing
Fintech	Social media

Also notable in that list was the disconnect between startups and investors. While 17% of Australian startup founders were focused on Fintech, 42% of investors were. The area most of interest to investors was medical technology (47%) with the Internet of Things second (43%).

Over the next few years it will be interesting to see how investment fashions change, in the UK the bottom seems to have fallen out of the fintech boom while global investments seem to have increased. It’s likely Australia will follow a similar pattern to the wider global trends.

Sydney’s decline

Another interesting shift is the balance between cities and states with New South Wales and Sydney remaining dominant but its position slowly falling,

	2015	2016
outside capital cities	n/a	23.1
NSW	44	40.9
Vic	17	18.8
Qld	16.5	19.3
WA	8.9	7.3
SA	2.9	6.3
Tas	0.6	2.3
ACT	6.4	6.2

The fall in Western Australia is probably due to the state’s economic collapse in the face of the dying mining boom – many of WA’s skilled and affluent workers are moving out rather than struggling with a declining economy.

Efforts by the Victorian and Queensland governments to promote their startup sectors seem to have had some success although the real winner is South Australia, something underscored by US incubator TechStars’ recent launch in Adelaide.

The big question though is how attractive Australia is as a location for startups and investment capital.

Funding woes

In the 2016 Compass Global Startup Ecosystem Ranking report, Sydney fell four points from the 2012 survey to 16th while Melbourne fell out of the top twenty city rankings.

Due to its position as the second lowest on the Growth Index within the top 20, and its comparably weak statistics around Performance, Funding, and Market, Sydney now ranks #16 (down from #12 in 2012).

Compass’ findings show a critical problem for the Australian sector, regardless of its location, industry or founders’ gender – the lack of later stage investment funds.

That lack of funding means Australian startup founders are particularly sensitive to money issues with Startup Muster finding the most common hindrance to people launching startups is life circumstances requiring a stable income. In a high cost society, the need for a regular salary isn’t surprising.

Startup Muster’s 2016 report is a very useful snapshot of the state of Australia’s tech startup community. It serves as a good guide to what business founders, investors and policy makers should be considering.

Avoiding a neo-feudal future

We have to rethink our economies if we’re to avoid a neo-feudal future warns writer Paul Mason.

“Neo liberalism is dead” was Paul Mason’s opening for his talk ‘Will Robots Kill Capitalism?’ At Sydney university on Monday night.

Mason, who was promoting his book ‘Postcapitalism: A Guide to Our Future’ was exploring how we create an alternative to the failing neo-liberal world while avoiding the failings of the past.

Describing the current ennui towards establishment politics as being “the biggest change since the fall of the wall in 1989,” Mason believes that the neo-Liberal, pro-markets, view of the world is now failing because the general population increasingly can’t afford the credit which powers the current system.

Increasing voter hostility

With increased insecurity the general population’s hostility towards the global elites is only going to increase, Mason says, as a low work future is traps people into low income ‘bullshit jobs’.

Mason describes a bullshit job as being something like the hand car washes that have popped up around UK (and Australia) where workers are paid the absolute minimum to provide a service cheaper than any machine.

With bullshit jobs, it’s hard not to consider the white collar equivalent – just yesterday The Guardian, which Mason writes for – described a report by UK think tank Reform which suggested 90% of British public service jobs could be replaced by chatbots and artificial intelligence.

It’s easy to see those same technologies being employed in the private sector as well with middle management and occupations like Human Resources and internal communications being easily automated out by much flatter organisations.

A low work future

The result of that, which we’re already seeing, is increasingly profitable corporations that barely employ anyone.

However for companies like Google, Facebook and Apple those business models also present risks as they are valued by the market far beyond any reasonable expectation of return – even if they do manage to eat each other.

Another risk to today’s tech behemoths is the commoditization of many of their industries. “Not all of the high tech economy will be a high value economy.” Mason point out, going on to observe that Google may have recognised this in carrying out their Alphabet restructure.

The neoliberal Anglos

Not all countries though have followed the Anglo Saxon neo-liberal model over the past forty years though. In what Mason describes as “The yin and yang of globalIzation,” he point out China, Germany, Japan and South Korea Have focused on production and raising living standards while the English speaking nations enforced austerity on their populations with large groups being left behind both socially and economically.

Which leads to Mason’s key question, “will the low work future see neoliberalism replaced by ‘neo-feudalism’ or something more enlightened?”

To support the latter, Mason suggests a transition path into the ‘low work future with the following features;

automation
basic income
state provided cheap, basic goods
externalising the public good
attacking rent seeking
promoting the circular economy
investing in renewable energy

That list seems problematic, and at best hopelessly idealistic, in today’s economies – particularly in the neoliberal Anglosphere.

A need for new mechanisms

Mason’s points though are important to consider if we are facing a ‘low work’ society as there has to be some mechanisms to allow citizens a decent standard of living even if the bulk of the population is unemployed.

Even if we aren’t facing a low work future, the transition effects we’re currently experiencing where many of today’s jobs are going to be automated away threaten serious political and economic dislocation in the short to medium term.

What Mason reminds us is that the political and economic status quos can’t be maintained in the face of dramatic technological change. We have to consider how we’re going to manage today’s transformations so we don’t end up in a neo-feudal society with the discontent that will entail.

The age of the curious business

Researching, experimenting and paying attention will be the keys to business survival during the coming technological wave

Last year the Committee for Economic Development, Australia (CEDA) warned over 40% of the nation’s jobs were at risk from automation over the next 15 years.

While that focus was on the risks to workers, it’s equally threatening for small business. Many companies and sole traders are facing the same disruptions from technological change.

This isn’t a new phenomenon, in the Twentieth century the motor car displaced thousands of small businesses that catered to the horse drawn economy and family run corner stores were displaced by the arrival of supermarkets in the 1950s.

Beyond the personal computer era

At the end of the last century the personal computer’s arrival revolutionised small businesses as suddenly tools that were previously only in the reach of big organisations were suddenly accessible to the most modest venture.

One of the early beneficiaries of that shift to desktop computers in 1990s was the bookkeeping industry which took off as a legion of home based contractors catered for local small businesses.

As the internet and smartphones came along, the bookkeeping market changed as features like bank feeds and receipt apps automated many previously manual tasks.

Despite those challenges the bookkeeping industry has survived and continues to grow with IBIS World estimating the overall accounting industry, which includes bookkeepers, grew 2.6% per year over the past five years.

Close to customers

The success of bookkeepers and accountants in navigating change is probably due to industry being close to their clients along with being early adopters of new technology, two things that caught the taxi industry out when Uber arrived.

Uber’s success in upturning the taxi industry illustrates just how important understanding emerging technologies is for smaller businesses. One industry currently facing massive disruption from robots is the construction sector.

The trades were thought to be relatively immune from automation – after all, who’s going to build a robot plumber? But now robots are moving into trades like bricklaying, as Australian startup Fastbrick Robotics shows.

Fastbrick are building a commercial bricklaying machine, Hadrian X, that automates the trade’s physical work and integrates with 3D printing technology.

In one respect the robot bricklayers are bad for the trade’s employment prospects but for older brickies with bad backs having a machine to help you is a godsend while for employers it improves productivity and reduces workplace accidents. It won’t be the end of the trade but the contractors who survive will have adapted to a very different construction industry.

Restructuring industries

That Fastbrick integrates with design software shows how the dynamics of the construction are changing. In 2014 Chinese company Winsun demonstrated how they can build ten houses in a day with large scale 3D printers.

While we may not see that particular technology in Australia, aspects of it will be used and they are going to change all the trades and professions related to the building industry.

Architects are one building industry group that have long dealt with technological change. Like bookkeepers, the arrival of personal computers completely changed their profession and those who adapted thrived.

Now with cloud computing services plugging into builders’ supply chains like Winsun and machines like Fastbrick’s, architects are closer than ever to the worksite and their customers. The ones who are adapting are the earlier adopters who are getting into these technologies further.

Disrupting the professions

Accountants and architects aren’t the only professions being affected, lawyers are facing a new wave of services using artificial intelligence to do many legal tasks ranging from a chatbot that appeals traffic fines to a program that predicts US Supreme Court decisions.

Like other sectors, it’s the early adopters in the legal sector who are adapting to a very different industry with much of the manual, lower level work being automated out.

The wave of technology we’re now seeing appear – including robots, autonomous vehicles, machine learning and artificial intelligence – are going to change our industries and workplaces dramatically in the next few years.

What the accounting industry and the architecture profession teach us is the businesses closest to their customers and those adopting technology early will be the ones who thrive in a very different industries. Researching, experimenting and paying attention will be the keys to business survival.

An open mindset

Even for the trades, survival during this wave of technological change will be a matter of watching the marketplace closely while being open to new methods and technologies.

Assuming it won’t happen to your industry is probably one of the riskiest things of all. Ten years ago the idea of smartphones revolutionising the taxi business or that robots could replace bricklayers was unthinkable. Now it’s almost expected.

The forces that are changing the workplace are also changing industries and markets, so small businesses will also be affected. It’s going to pay to be smart and curious.

Disruption comes at a high price

The cost of an industry’s disruption is felt by many stakeholders, as one US bank is finding.

Not so long ago, lending for taxi medallions was a safe bet. Now it’s pretty risky, as US lender Capital One revealed in a presentation last week.

Bloomberg reports the lender believes over eighty percent of its taxi loans are at risk of default.

In New York, medallion values have halved while in San Francisco taxi companies are going out of business. As a result Capital One’s loans that looked good a few years ago are now risky.

That problem is global. As I wrote two years ago for The Australian, the Aussie taxi industry has been tipped upside down by Uber and a cast of smaller competitors.

How the taxi companies failed to adapt is interesting. In most cities they were protected by a nest of laws and regulations that were ostensibly to protect passengers and drivers but actually acted to create high barriers that benefited license owners.

In most cities, certainly in New York and Sydney, taxis were dirty and unreliable – drivers were treated poorly and passengers were taken for granted – which made alternatives attractive even before the cheaper UberX and Lyft services arrived.

The protection also made the taxi companies slow to adopt new technologies. There was no reason why Australia’s Cabcharge or San Francisco’s Yellow Cab Company couldn’t have developed a smartphone app to order taxis, track progress and improve business expense reporting – that they didn’t speaks volumes about their inefficiency and complacency.

Being complacent was understandable though as regulators were tame and kept competitors out. Customers had nowhere else to go.

When customers did get the chance, they voted with their wallets and now its the bank accounts of taxi owners and their lenders who are hurting.

That Capital One is feeling the effects of that change is telling – when genuine disruption happens there’s a range of businesses, people and stakeholders affected. We should never underestimate that.

A gigabit milestone for mobile networks

The rollout of Telstra’s gigabit 4G network is another step on way to the next generation of connected devices.

Yesterday communications vendors Qualcomm, Netgear, Ericsson and Telstra, unveiled their Australian gigabit LTE service that gives users high speed internet connections over the 4G mobile network.

Billed as a world’s first, Telstra will offer customers the Netgear supplied hotspots that can connect up to twenty devices over WiFi.

Listening to the Telstra spiel yesterday, it wasn’t hard to conclude the company is making a pitch for the market frustrated by the National Broadband Network’s tardy rollout and patchy service.

The service doesn’t come cheap though, as Finder’s Alex Kidman points out, an hour’s movie streaming on one device could easily cost $4500 dollars on Telstra’s current plans with one of the company’s executives emphasising the product is “aimed at the premium end of the market.”

Being aimed at the premium end of the market is shame for Qualcomm as their spokespeople were keen to show off the gaming, AR and VR potential of the Snapdragon CPUs driving these devices. It would be a brave or very affluent family that bought one of these devices for their kids given the data costs.

While the Telstra Gigabit LTE service might be an NBN replacement for deep pocketed customers, telco veteran John Lindsay points out the mobile network can’t support too many people doing so unless many more cells are deployed.

For the moment the Telstra service is going to be attractive for companies needing high speed. low volume connections in the central business district and as the gigabit LTE upgrades roll out across the country, it will be useful for travellers as well as frustrated NBN customers.

Ultimately the gigabit LTE product is another step toward the 5G networks that we’ll be seeing appear at the end of the decade, something that both the Ericsson and Telstra PR folk were keen to highlight.

The key message for consumers and businesses is the rate of innovation in the mobile communications market is not slowing and another generation of connected devices is coming that will change things as dramatically as the smartphone did.

Scamming the Jobs Act

JOBS Act equity crowdfunding replaces the ‘fools, family and friends’ that startups relied for seed capital. Hopefully there won’t be too many fools

When the Obama administration approved the US JOBS Act in 2012 it was almost certain the crowdfunding aspects would attract charatans looking to separate gullible investors from their money.

And so it has turned out, with the New York Times reporting how some crowdfunding sites are worried by the poor quality of startups touting for funds on some platforms.

The Times piece follows the story of Ryan Feit, the founder of New York’s Seedinvest who tells how he has rejected substandard proposals only to have seen them embraced by other crowdfunding platforms with often terrible results for investors.

One of the early companies he rejected was shut down by regulators — who labeled it a fraud — after it raised $5 million from investors. And Mr. Feit expects it won’t be the last.

That fraudsters would be attracted to crowdfunding sites is unsurprising and with regulators still working out how to manage investor protection the field is still very much ‘buyer beware.’

High valuations are also an investor warning sign.

Mr. Feit has been particularly worried about companies that have assigned themselves sky-high valuations that will make it hard for investors to ever make their money back. In several cases, companies that he rejected because of their high valuations have shown up on other sites with the same valuations

The unicorn mania of recent years is the cause of this focus on high valuations and is strange for investors as those richly priced stakes are not in their interests or those of employees taking equity in the business. If anything, a ridiculous market valuation should be the biggest warning of all to potential stakeholders.

Ultimately though it may be that crowdfunding equity isn’t about taking a stake in a business but more showing one’s support for a venture suggests, Nick Tommarello, the co-founder of Wefunder.

Mr. Tommarello also noted that many small-time investors so far were viewing their investments more as donations to businesses they like, rather than as investments that will make money.

As JOBS Act equity crowdfunding campaigns are limited to a million dollars each, being the modern equivalent of the ‘friends, families and fools’ may be the future of these capital channels. Hopefully there won’t be too many fools.

Counting the digital pennies

The hopes of media companies that Facebook and Google could provide new income streams appears to have been stymied.

With media companies around the world struggling to make money, the publishing platforms on Facebook and Google promised to bring in much needed income streams. They appear not to have worked.

Business Insider reports how US based premium publisher trade body Digital Content Next surveyed its members on their online platform income and discovered some disappointing answers.

On average, premium publishing companies generated $773,567 in the first half of 2016 by distributing their content on YouTube. Content published to Facebook earned an average of $560,144 in the period, Twitter generated an average of $482,788, and Snapchat generated $192,819 for each publisher in the sample.

To call these returns derisory is an understatement and it illustrates how the current media model is unsustainable as it’s impossible to sustain a basic newsroom, let alone produce investigative features with those sort of budgets.

It isn’t just the media model that’s unsustainable, Business Insider cites the CEO of Digital Content Next, Jason Klint, who flagged in a blog post last year that all the growth in digital advertising is being accounted for by Facebook and Google – the rest of the industry is shrinking.

Even Facebook and Google aren’t immune from the unsustainable model that’s currently in place, Klint points out that fraud and intermediaries further skew the model which undermines advertisers’ confidence in the platforms and online media in general.

For the moment though, the intermediaries seem to be doing okay. Klint cites IAB research which claims AdTech companies are making 55% of the online advertising industry’s revenues while publishers are only getting half.

That illustrates how the tail is currently wagging the dog with publishers and content creators losing out while middlemen who add little in the way of value get the bulk of the revenue. That too is not sustainable.

We’re still in early days for online media and the models are still being worked out. While we wait for the 21st Century’s David Sarnoff many sectors are threatened including the advertising, marketing and PR industries. At least the publishers aren’t alone.

A Chinese cure for internet addiction

As Chinese families send children to boot camps to solve internet and gaming addictions, the question of how we manage this online problem remains unsolved.

Internet and electronic games addiction is a problem that regularly surfaces in the media. In 2015 a Taiwanese man died after three solid days of gaming while in 2010 a South Korean couple allowed their three month child to starve while they concentrated on playing with a virtual child.

Some Chinese families have taken to dispatching their kids to boot camps to cure their addictions with the New York Times reporting how some are resorting to electrotherapy treatments to wean children off games and the web.

Three years ago the Times posted a fascinating and somewhat distressing video story on those Chinese boot camps with tearful teenage boys writing letters home telling their parents how they felt betrayed.

More telling are the comments by the Addiction Specialist Director of the Daixing rehabilitation camp, Tao Ran, who believes the parents are responsible for what their children’s addiction to what he calls ‘electronic heroin’.

“One of the biggest issues among these kids is loneliness,” he tells a parent group. “Did you know they feel lonely? So where do they look for companions? The Internet.”

The problem of internet and electronic game addiction is real – exacerbated by the incentives for developers and social media sites to maximise the time users spend on their platforms.

It’s also not just an issue for parents and children. For adults and business owners the lost time, productivity and health issues of spending too much time behind the computer are immense – not to mention the distorted view of the world that comes from a narrow slice of information and opinion.

While electroshock therapy certainly isn’t the answer, we do need to be asking questions about responsible and safe use of computers and the internet.

The Chinese response is an extreme, and probably unworkable, solution to the problem of electronic addictions however we will have to find ways to manage it.

Microsoft sees off the Google threat

With their Office365 success, Microsoft have shown they are far from a spent force in the software industry.

Earlier this decade it looked like Microsoft’s most profitable business line was doomed as Google Docs threatened to disrupt the Office franchise.

Yesterday Microsoft showed how they had seen off that threat when reporting their second-quarter results that beat Wall Street analysts’ estimates and saw the company’s stock market capitalisation topped $500bn, the first time since the year 2000.

Microsoft’s results were mainly due to its cloud computing products with Azure growing at 93% year on year, Office 365 commercial at 47% and Office Consumer Products and Cloud Services at 22%.

Earlier in the week, cloud security company Okta released its Business at Work study that looked at trends in the commercial use of online services which showed how Microsoft’s products are dominating the market.

Microsoft’s advantage was underscored in a Gartner paper late last year. The Current State of Cloud Office and What to Do About It report found 10.7 percent of public listed companies surveyed were using Office 365 as opposed to 5.2% using Google. The rest had deployed hybrid or on-premise productivity suites.

So Microsoft seemed to have seen off the biggest threat to one of their most important products which for Alphabet/Google should be a worrying development as G-Suite (as it’s now called) has failed to become a meaningful revenue centre – advertising profits still made up 22 billion of the company’s $25 billion revenues in their last results.

Google’s failure to diversify should worry Alphabet investors, particularly given the headstart the company had over Microsoft Office in the early days of G-suite as then Microsoft CEO Steve Ballmer struggled to shift the company’s key product lines onto the cloud.

How much the initiatives of G-Suite’s new leader Diane Green can go in making Google’s product more attractive is a big question as Microsoft have shown they can match or beat their competitors’ offerings in areas like collaboration and artificial intelligence.

Despite Microsoft’s success in seeing off Google in the office productivity market the company still lags Alphabet market capitalisation of $570 billion but Microsoft have show they are far from a spent force in the software industry.

Inside Samsung’s exploding batteries

It’s not easy to design a safe and affordable portable device as Samsung found with the exploding Note7

One of the most humiliating corporate crises of recent history has to be last year’s recall of the Galaxy Note.

Airlines around the world started telling passengers that the devices were banned during their pre flight briefings, causing untold damage for the Samsung brand.

Now Samsung have completed a review into what happened including an infographic illustrating the exact problem with the batteries.

That review shows the design and manufacturing errors that resulted in the batteries bursting into flames. How Samsung are fixing it or putting in systems to prevent that happening again isn’t discussed.

What the infographic does show is how complex the design, engineering and manufacturing is in modern technology – something that is often overlooked by many technologists.

Battery technologies are particularly fraught as a lot of energy is compressed into a small space and the chemistry of Lithium Ion batteries makes them particularly dangerous should they be damaged or incorrectly used, as Boeing found with the early models of the 787 Dreamliner.

Modern life and the devices that we take for granted are complex and that complexity though can easily come back to bite us. As Samsungs’ exploding batteries show, sometimes that complexity is difficult to manage.

Zen and the art of digital disruption

When driving an organisation’s transformation, consensus is the first casualty warns the former head of Australia’s Digital Transformation Office, Paul Shetler.

“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.