Category: economy

Engineering for change – the ethics of the new economy

What are the ethical and societal considerations we should consider with today’s technology?

Technologies like the internet of things, cloud computing, 3D printing and big data are changing our industries and society. At the ACI Connect event today, I gave a presentation on some of the opportunities, risks and ethical issues facing technologists and engineers in the connected economy.

While many of the engineering principles underlying these technologies aren’t new, their scale and the power they give businesses and governments means there are serious ethical, security and societal issues we have to consider.

This presentation explores some of those issues and the technologies and trends driving them.

Entering the Data era

A conceit among technologists is that we’re in an unprecedented era of change. This is not true.

The Twentieth Century saw massive restructuring of our society as the telephone, mains electricity, the motor car and television changed our society. Many of today’s settled industries came out of the huge technological steps forward over the last hundred years.

Just as cheap energy – delivered to us through the motor car and mains electricity – defined the Twentieth Century, this century will be defined by easily accessible and abundant information.

Those changes over the last hundred years give us some hint as to where we are going; the shifts that saw coal carters, newspaper sellers and night soil men eventually become extinct, along with a shift from a largely agricultural workforce to industrialised employment, is going to be repeated this century as information becomes abundant.

Harnessing the Internet of bees

Cheap and small sensors mean it’s easier to put a chip on something. In this case we have a CSIRO project tracking bee activity where Tasmanian scientists have put tracking devices on bees.

Those tracking devices would have weighed several hundred grams and cost hundreds of dollars ten years ago but today they are small and cheap enough to fit onto the backs of bees.

Being able to deploy these sensors means we can fit them to things we couldn’t have imagined a few years ago and the data they generate is going to give us insights into patterns and behaviours we couldn’t have contemplated.

However not all of this data is useful or necessary and some may even be damaging to individuals and groups. One ethical question we have to ask ourselves is whether it is in the community’s interests to collect this information.

Another aspect of connecting devices, or even animals and people, to the Internet or a network is it opens the possibility of hacking, as we’ve seen in the recent Jeep case where engineers showed they could control a vehicle remotely. The security and privacy aspects of the IoT are critical and something designers and product engineers can’t overlook.

Decoding the data

It’s often said that Data is the New Oil. In truth it isn’t, data is increasingly cheap and easy to access. Being able to analyse that information is where the power lies.

Data analytics is probably going to be one of the most important fields in an information rich economy and already we’re seeing companies springing up to help farmers estimate crop yields, truck drivers plan their routes and even organisations like the Royal Flying Doctor Service using cloud services to better plan their operations.

Again these services plan a lot but there’s also downsides as inappropriate data matching risks breaching consumers’ privacy and even drawing false conclusions from confusing correlation with causation. A good example of this is Facebook being used to judge credit worthiness.

Removing the human element

Automation – whether it’s through robotics, machine learning or algorithms – will change many industries and the workforces employed by them.

One understated field is management where many white collar supervisor jobs are at risk from business automation. It may be that the executive suites are the next sector to be decimated by computers and robots.

Similarly, many services industry jobs such as taxi drivers and baristas are at risk from robotics while large scale 3D printing of buildings threatens to put many building trades under pressure.

No more truck drivers

Driverless vehicles have a whole range of applications, in logistics were seeing them put forklift drivers out of work while mining companies are rolling out massive dump trucks in their new mines that don’t require $200,000 a year drivers.

One study estimates that half the police workforce in the United States would become redundant as law abiding driverless cars become common.

Similarly electric cars will have a massive impact on government revenues. Currently Australian governments raise $17bn a year from fuel excise and has ramifications for businesses involved in the supply chain for service stations.

Once driverless vehicles become commonplace we may well see them changing industries like daycare, public transport and couriers as it becomes possible to summon an autonomous vehicle, put the kids or the luggage into it and then send it off to its destination. If you’re worried, you can track the progress on an app.

The effects of the driverless car show how we have to think laterally about the effects of new technologies on our businesses, sometimes the effects of a new way of doing things could indirectly hurt our business or create new opportunities.

Squeezing out inefficiencies

One of the great promises for the IoT, Big Data and business automation is to remove inefficiencies from industry. Cisco believe that up to 14% of the Oil and Gas industry’s costs could be stripped away with today’s technologies. That in itself is worth over a 100 billion dollars a year in cost savings.

GE are deploying their technologies into a diverse range of industrial equipment ranging from jet engines to railway locomotives and wind turbines with spectacular results in reducing costs and improving productivity.

The effect of these improvements means less downtime and maintenance costs which are good news for customers and shareholder of these companies, but bad news if you’re a maintenance business. It also means the speed of change in business is accelerating.

Skilling the future workforce

In summary the skills needed today are very different to those of 1915 and 1965 and those of the next fifty years will be even different.

As a society we have to decide what skills we are going to give not our children but those currently still in the workforce who are going to be working longer and later into their lives as the workforce ages.

We also have to consider what sort of ethical compass we have. While the technology we have today is powerful and capable of great things, it’s also capable of great harm. We need to have an understanding of what the effects and limits are of our actions with the Internet of Things, Big Data and analytics.

Ultimately we need to ask what value we as individuals can add to our communities and society.

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The three S’s of employee engagement

How do we engage with an always on, connected workforce?

We need to rethink how we measure performance in the workplace says Andrew Lafontaine, Senior Director Human Capital Managemet Strategy & Transformation at Oracle Australia.

As business adapts to a changing society and mobile technologies, one of the questions facing managers is the mismatch between the Millennial generation and those GenX and Boomers who make up most of the executive suite, Lafontaine sees this as been in how the younger cohort approaches authority.

“There certainly can be a disconnect between Millennials and boomers. Millennials don’t see hierarchy the way boomers see it as important,” says Lafontaine. “Boomers have ingrained view of the way they have come through the workforce.”

Breaking the old rules

Unfortunately for those older managers, their world was based on a formalised, ‘straight line’ hierarchy dating back to the days ships’ captains used flags and voice tubes to communicate.

That rigid military style worked well for nearly two hundred years of business with mail and then the telephone only reinforcing that management model. Now newer collaboration tools mean different ways of working becoming possible.

A problem with those different ways of working in teams is how performance is measured warns Lafontaine.  “What they are not measuring at the moment are what I call ‘network performance’. How workers they helping their colleagues, collaborating and working together.”

Separating home and office

With mobile technologies becoming ubiquitous it becomes harder to separate work from home life, “we working now from home and on the tram. You don’t need a nine to five workforce nad companies have to deal with and embrace the technology,” says Lafontaine.

In the context of babyboomers and GenX workers, that technology meant longer hours in the office but Lafontaine suggests things are now changing. “There other areas to measure. How are they looking after themselves? The days of babyboomers working 12 or 14 hours a day and neglecting their health or outside life are over.”

For the future company, the key to success lies in engaging their employees Lafontaine says. “A more highly engaged workforce delivers better outcomes. Engagement is the three S’s: Stay, Say and Strive”

Those S’s come down to three questions for the worker; should I stay? What should I say? and How should I strive to do a better job?

For managers the challenge is engage all workers regardless of age, the task of finding what engages and motivates workers of the computer generation is only just beginning.

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What should we call the sharing economy

What label should we give to businesses like AirBnB and Uber?

Stop calling it the sharing economy, cries marketer Olivier Blanchard in a blog post describing how the label is inappropriate and doesn’t accurately describe the imbalances in the relationships between providers, users and the online platforms that facilitate them.

The question is what do we call the business model of companies like Uber, AirBnB and the myriad other services that take providers’ time and resources – cars in the case of Uber, homes or spare rooms for AirBnB – then make them available to people who can use them, taking a commission in the process of course.

Blanchard wonders if much of the success of these companies is because America’s cash strapped middle classes are desperately trying to find additional source of income and there is very much a strong argument for that.

More importantly, is what do we actually call these businesses? While they are potentially are as exploitative as the free labour models that have evolved in the media with businesses like Huffington Post, at least they provide some type of income even if for Uber drivers the net returns may be marginal at best.

Blanchard himself suggests the Microtransaction Economy however that’s not a satisfactory label as the transactions – which may be many thousands of dollars for some AirBnB rentals – are not always small.

Maybe we should call it the downtime economy, where we’re using the time we’re not busy or when we’re not using our homes, cars or others assets to earn income. That too though doesn’t strike me as satisfactory although it does seem to address the underlying idea these services are really only intended to supplement somebody’s earnings, not be their primary livelihood.

None of these labels though are satisfactory and maybe we have to ditch the economy moniker. It’s time to start thinking about what we really should call these businesses.

Your thoughts.

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Discussing a post Capitalist future

Is technology taking us into a post-capitalist era?

Is capitalism dead? Journalist Paul Mason discusses his book outlining a post capitalist future on a Guardian Live panel that covers how technological change is undermining the foundations of what we understand to be capitalism today.

While it’s arguable that capitalism is dying, more likely its evolving away from the current corporatist, consumerist model driven by easy credit, the panel makes some excellent points about how technology is changing the underpinnings of our society’s economic structures.

While the video’s long at 90 minutes, it’s well worth watching for some interesting observations on how our society and economies are evolving in a connected century.

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Politicians cannot save you

Australia’s retail incumbents look set for a political win, but there’s no respite from a changing market

Around the world threatened incumbents are turning to their political cronies to protect them from competition with businesses using technologies their cosy managers and shareholders never envisaged would exist.

In Australia, one of the laziest industries has been the retail sector. Long coddled by cosy duopolies and favourable regulatory arrangements, retailers ignored the changes to their markets since the web arrived in 1995.

Of the Australian retail industry probably the most cosseted of all was the department store duopoly. Protected by their market share and product licensing agreements, Myer and David Jones neglected investments in their internal systems and largely ignored the online world, with DJs even shutting down their website in the early 2000s.

Insular Australia

Eventually it became obvious to even the most insular Australian retailer that the internet was here to stay however in the meantime canny Australian shoppers had discovered buying overseas online was substantially cheaper, and much easier, than local stores.

Faced with offshore competitors that beat them on price, range and service, the Australian retailers started lobbying the Federal government to lower the threashold, currently $1000, that customs would take an interest in and add the ten percent Goods and Services Tax (GST) and various fees and duties. In the hope the bureaucracy would discourage local shoppers looking overseas.

Mistaken lobbying

The campaign to lower the GST threashold was a mistake says Ian Moir, the current Chairman of now South African owned David Jones. “It set Australian retailers back because they spent more time trying to persuade governments to do this than they did thinking about what the long term future for the business is.”

Moir was speaking yesterday in Sydney at an Australian Israel Chamber of Commerce lunch panel titled ‘Reframing retail for the digital age: The importance of an integrated approach’. Joining the DJs executve on the board were Craig Dower, the CEO of Salmat and David Mustow, Head of Retail & Consumer at Macquarie Bank.

The message from the lunch was clear – technology savvy customers were demanding more from retailers now smartphones are driving purchase decisions. “Everyone talks about Big Data and how you use it as an organisation,” observed Scottish born Moir. “Not enough people talk about the big data the customer has on their mobile phones.”

Mobile first

Moir’s view on mobile was endorsed by Macquarie’s Mustow who stated “if you’re investing in this space it’s mobile first.” Salmat’s Downer added to this with Salmat’s research that found 55% of online retail sales are coming through mobile devices.

That Australian consumers have one the world’s highest smartphone penetration rates and are also among the planet’s most avid web user only shows how poorly local retailers have responded to the web and mobile devices over the past two decades.

When Moir took the reigns at David Jones last August after Woolworths South Africa – unrelated to the local supermarket giant – the company was making a piddling one percent of its sales online. The new management has grown this three fold but it’s still trivial compared to Australians’ appetite for online shopping.

Dampening overseas demand

The appetite of overseas online sales will dampened should the proposed GST changes reducing the taxable threshold on imports to $20 be introduced as consumers deal with the bureaucracy, delays and costs of Australia’s dysfunctional customs system however Moir warns this will only be a temporary respite, “these changes only affect you in the short term, it tends to sort itself out over time.”

Indeed for retailers, the GST changes will probably only benefit customs agents and bloated ticket clippers like Australia Post along with introducing a whole range of unexpected consequences as foreign retailers and local entrepreneurs find opportunities in the new tax regime.

While the champagne may taste sweet for Australia’s retail lobbyists as they celebrate their likely win over brunch at Sydney’s exclusive Balmoral Beach Club this Sunday, their employers are going to find that swaying the politicians is the easy part – it’s ultimately the market that guarantees your success.

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Japan’s adjustment to a low growth society

Japan’s decades of malinvestment are a lesson for all aging and slowing economies

As the world worries about whether China is the next Japan, the Japanese themselves are getting on with life in a low growth economy.

One of the latest ideas is to convert disused golf courses into solar energy farms as manufacturing giant Kyocera proposes a solution to deal with the nation’s power shortage after the closure of the Fukushima power plants.

Japan’s golf course boom of the 1980s, which they exported around the world, was a classic case of overinvestment driven by easy money and lax lending standards. Something that China has certainly had in spades.

The aging nation isn’t doing a perfect job however with the Washington Post reporting that the country’s over 65s are convicted of more crimes than juveniles and the sad reason is seniors are shoplifting to survive.

One of the major mistakes made by Japanese governments through the 1990s was to pour money into corrupt civil projects to stimulate the economy. That money was largely wasted on bridges to nowhere and bullet trains to tiny towns which did little to add to the nation’s productivity or build a safety net for the aging population.

Japan may well be leading the way for other aging nations, we need to heed their mistakes before our societies follow them.

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Are startups like 19th Century railway companies

Today’s tech boom could be similar to the 19th Century railway boom

Are today’s tech unicorns like the 19th Century railway companies? Massive consumers of capital and ultimately transformative technologies but never in themselves particularly profitable?

In the 1840s Britain was gripped by a railway investment mania which saw 10,000km of railroads built in 1846 alone, the current network extends 18,000km.

Eventually the bubble popped after the Bank of England raised interest rates, something that should focus the minds of many of today’s investors.

The UK railway boom left a legacy of valuable infrastructure across Britain, Europe and the Americas, perhaps we’ll see a similar legacy from today’s boom.

 

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