An evolving workforce means changing markets, something that businesses have to pay attention to
While the discussion of the workforce of the future focuses, quite rightly, on the role of workers how employers and businesses fit into a changed economy is important as well.
For businesses, the future of work affects not just the staff they employ but also the markets they cater for as those workers are also their customers. This is even truer for small businesses catering for local markets.
The Committee for Economic Development Australia (CEDA) report issued last week describes some of those shifts in the economy and they are as important to businesses as workers.
Where the money is
The key thing from the report is that some communities are going to be more seriously affected by automation than others. The map of Australia that accompanied the CEDA report showing the likelihood of jobs being lost in across the nation underscores that imbalance.
In those areas expecting large disclocation, business is about to get tougher as workers find their skills are no longer valuable in the face of automation.
Similarly, if local industries are becoming more automated then businesses servicing those industries are also going to need the skills to meet their customers’ more advanced needs.
Consumer facing risks
So small businesses in those districts of great disruption have to consider their markets; if they are consumer facing then their customer base could be shrinking while if they cater to other businesses then capital investment and finding skills in the new technologies are going to be required.
Even there, the picture is cloudy as upstream industries will be affected. A town that serves as an agricultural centre, for example, will see smarter farms using less labor.
In that town, those businesses servicing other businesses that serve local consumers will see their market getting thinner while those servicing the smarter farms and processors will need to buy new equipment and find workers with the skills to operate it.
This isn’t a new phenomenon, it describes what’s happened to rural communities around the developed world as farming became industrialised through the Twentieth Century and the process is continuing as combines become self driving and automation replaces a lot of tasks currently done by labourers or manually operated machines.
Challenging the commuter belt
The question though is not just for rural enterprises, it applies for businesses everywhere as the workforce changes. It may well be the areas affected the most are commuter belt suburbs where white collar workers are displaced by artificial intelligence and algorithms creating problems for the local economy that’s based on services the needs of those middle class households.
It’s difficult to say for sure and that’s why the CEDA measures are based upon probability. For business owners and managers though, they’ll need to watch shifts in their marketplaces closely and watch for the opportunities that will undoubtedly arise from a changing economy.
The future of work is going to need new classifications of workers
With the ‘sharing economy’ becoming more widespread and freelance workers possibly being the norm in the future, the question of how are they defined arises.
The simple answer is they become contractors after the California Labor Commission ruled for an Uber driver in a dispute over expenses incurred on the job. However it’s still possible that the level of control many of these services exert over workers may see many defined as employees.
For the ‘sharing economy’, the definition is important as the business model depends on shifting all the costs onto the contractors and customers. The service, like Uber and AirBnB, is only there ostensibly as a platform to match buyers and sellers.
Buzzfeed’s Caroline O’Connor suggests a third definition of worker, a ‘dependent contractor’. Under this category contractors would receive social security benefits, insurance and other features of permanent employment with the flexibility of being on call.
In many ways O’Connor’s suggestion is similar to the national insurance schemes of many European countries where workers contribute towards their eventual retirement or for the benefits they may receive should they be unfortunate to become sick or unemployed.
While the suggestion is worthwhile, it’s still not hard to see how the ‘sharing economy’ companies would want to put their contractors in whatever category reduces their costs and risks.
The discussion about workers’ protection and social security benefits needs to be had as we enter a period of economic change not dissimilar to the 1920s or late nineteenth Century where work patterns changed and there was substantial dislocation.
Technology promises to free the next generation of poverty and labor but a new social compact will be needed.
How will the future workforce look? A report by Australia’s Committee for Economic Development seeks to give a picture of how employment might look at the end of next decade.
Australia’s Future Workforce is a weighty tome covering the current structure of the nation’s economy, its trends and the factors affecting employment over the next two decades.
The report makes it clear the economy will be very different observing 40 per cent of Australia’s workforce, more than five million people, is likely be replaced by automation over the next twenty years.
In the opening chapter, Reshaping Work for the Future, Professor Lynda Gratton of the London Business School describes the share of the future workforce where roles are more specialised and automation increasingly takes over less complex jobs.
An important aspect Professor Gratton also flags is the aging population which in a rapidly changing economy will require frequent retraining.
From a technology perspective Professor Hugh Bradlow, the Chief Scientist of Telstra, suggests the workforce will be more mobile and employed in fields less amenable to computerisation involving skills like social intelligence, creative talents and social intelligence.
Those without those skills are deeply at risk with Bradlow being the first in the report to cite the likelihood that two fifths of the workforce are at risk of losing their jobs.
Bradlow concludes his analysis with the observation that if we work to satisfy our basic needs then machines looking after these requirements free up the workforce to address higher intellectual pursuits.
Rethinking management
Belinda Tee and Jessica Xu, both of IBM, agree with Bradlow that technologies like IBM Watson will help skilled workers like doctors and teachers deliver their services more efficiently.
Xu and Tee suggest change in the workforce will need to start at the top with managers needing to enhance collaboration within the organisations and build diverse teams working on open data.
A two speed economy
How the effects are distributed across the workforce is probably one of the most important aspects of this report with a team from the soon to be abolished National ICT Australia mapping the regions that will be most affected by automation.
The news for many of the country’s regions is not good with the survey finding workers in most areas have more than a fifty percent chance of losing their jobs to automation.
In many respects the CEDA report is disappointing, while it flags many of the issues facing today’s workforce and the forces shaping it, the survey doesn’t identify the industries and occupations likely to benefit.
Despite not stating the growth sectors, the report’s overall view of the future workplace is optimistic as Telstra’s Hugh Bradlow says: “The change could result in a new generation free of poverty and the burden of labor, thereby unleashing the next wave of human innovation and creativity in directions we can never imagine.”
This may be the case but the to achieve that will require, as the report later suggests, a new social compact.
It’s building that new social compact which could be the greatest task ahead of us.
The lean startup model is based on getting the minimum viable product into the marketplace and should users be enthusiastic seeking investor funding to develop the business further.
Guy Kawasaki described this in an interview last year where he described the minimum viable valuable product idea of getting the most basic service to market at the lowest cost and then getting users and investors on board.
However it might be that model only works where “startup entrepreneurs have full access to eager and intelligent business customers, hosts of industry angels and venture capitalists with money to burn,” reports Canada’s Financial Post.
Blank came to that conclusion on a trip to Australia where he met with sports tech startups: “Meeting with a coalition of entrepreneurs in the tech and sports space, he realized the lean startup framework didn’t account for the vagaries of local economies. Australia sports-tech entrepreneurs trying to scale their businesses would find that their major customers are in the U.S., halfway around the world. And unlike most Valley startups, the Aussies would need to source manufacturing expertise — which means budgeting for several trips to China.
The problems facing Australia’s entrepreneurs probably extend further as the nation’s investors are notorious risk averse and the high cost of doing living means the burn rates for startups are much harder.
Blank’s recommendation is any region looking at establishing a startup community should identify its own strengths and advantages then build its own playbook.
We can be sure the next Silicon Valley – be it in the US, China, Europe or anywhere else in the world – will have different strengths than the Bay Area today.
A survey on Australia’s workforce and ICT education reveals some important questions for the nation’s managers and leaders
Earlier this week Deloitte Access Economics released Australia’s Digital Pulse, an overview of how the nation is responding to the needs for the IT related jobs required in a changing global economy.
Deloitte pointed out that most of the Australian economy’s IT jobs aren’t actually in the IT industry with less than half the sector’s employment being with technology companies and the majority of software writers and engineers employed by everything from finance companies to retailers.
This ties in with results found by recruitment website Indeed.com whose Senior Vice President, Paul D’Arcy, visited Australia last month and pointed out globally three quarters work of software developers work for non-tech organisations an in the US that proportion drops to seven percent.
As technology becomes more embedded in industries the need for workers who understand the tools becomes critical. This isn’t a new thing as we saw word processing and spreadsheet software enter workplaces twenty years ago which required typists, secretaries and accountants to become far more acquainted with the workings of personal computers than they otherwise would have cared to.
Intriguingly in Australia during the twenty-five years that computers and the internet have taken over the workplace interest in IT careers and enrolments in computing subjects has risen and fallen.
Between 2000 and 2008 the number of students doing IT related courses halved as Australian businesses cut back on tech spending, offshored their work and bought in an army of 457 visa workers to replace local workers.
Coupled with an economy where renovating kitchens or driving mining trucks is better rewarded than most technical jobs, it wasn’t surprising that students chose not to study computer science related subjects. In the last few years undergraduate numbers have started to tick upwards as the resources boom has faded and coding has become cool due the successes of people like Facebook’s Mark Zuckerberg.
Interestingly, despite the dearth of entrants into the sector over the last fifteen years, Deloitte found the overall Australian ICT labour market appears to be adequately supplied at present, however the expected increase in future demand for ICT workers means that skills shortages could constrain future economic activity.
With many things Australia has been lucky for the last twenty years and our neglect of ICT training has been one of many fields we’ve been able to neglect. As we’re seeing with the internet of things, cloud computing and big data all becoming a common part of business the skills we’re going to need in our workers are going to change.
The challenge for both companies and our education system is give today’s kids the skills they, and the nation, needs to be globally competitive. We may not stay so lucky over the next two decades.
How do managers deal with the information age along with the changes bought about by technologies like the Internet of Things, 3D printing, automation and social media?
Management in the Data Age looks at some of the opportunities and risks that face those running businesses. It was originally prepared for a private corporate briefing in June 2015.
Some further background reading on the topic include the following links.
Deceased tycoon and embezzler Alan Bond’s life story provides a good parallel for Australia’s economic development
Last week convicted fraudster and one time Australian national hero Alan Bond passed away. In many respects Bond’s rise, fall and comfortable dotage tells us much about Australia today.
Originally born in England, Bond was a ‘ten pound pom’ – like this writer and two of Australia’s last three Prime Ministers – whose family took advantage of subsidised immigration programs to leave the cold climate and dismal British economy for sunnier, more prosperous parts.
Building the Australian dream
In Australia Bond prospered. On leaving school he became a sign writer and set up a business where he quickly gained a reputation for sharp practices and cutting corners. However as with much of his generation real wealth was to be made in property speculation.
As Australian cities expanded through the 1960s, developers and speculators were at the forefront of the nation’s economic growth. Perth, Bond’s home town, doubled in size between 1961 and 71 and the once dodgy sign maker made his mark as a wheeler and dealer as he traded properties and build his fortune.
As the 1980s began a cashed up Bond was ready to take advantage of the economic orthodoxy of the time that to compete internationally, Australian businesses had to consolidate domestically to gain the scale required to be global players.
Bond added to his claims in 1983 when he wrested the America’s Cup out of the cold dead hands of Long Island’s Newport Yacht Club. Suddenly businessmen were the national heroes and Australians, particularly politicians, fell over themselves to bask in the glow of the nation’s entrepreneurial summer.
Dancing on the world stage
Around the time of the America’s Cup win the newly elected Hawke Labor government deregulated the Australian banking industry providing a ready supply of hungry financiers prepared to fund the global ambitions of Bond and his contemporaries.
The rest of the decade saw Bond leading a wave of Australian entrepreneurs using easy money to build international empires. Bond himself ended up building one of Australia’s brewery duopoly, holding prime Hong Kong property, buying the nation’s most popular TV station and owning a Chilean telephone company.
Naturally much of his money ended up in Switzerland and Lichtenstein, something that would work in his favour early in the 1990s.
The larrikin streak
Bond’s disregard for the law, investors and anyone unfortunate to get between his cronies and a bag of money – politely described as a ‘larrikin streak’ by many – continued as regulators and governments indulged his behaviour.
One good example of the free pass he received from Australian regulators in the 1980s were his insider dealings with his then mistress Diana Bliss, the latter of whom exquisitely timed a purchase of a small energy exploration company stocks in 1988 a week before Bond Corporation announced a take over offer.
Regulators at the time dismissed any claim of insider trading after being assured that neither Bond nor Bliss would ever countenance such behaviour, the Sydney Morning Herald later reported.
When the luck runs out
Eventually the 1980s Australian economic miracle and the entrepreneurs leading it proved to be chimeras based upon property valuations. When the 1990 downturn hit, the rampaging Aussie business heroes all quickly fell as their overindebted empires collapsed.
Bond’s personal fortune however survived thanks to his judiciously salting away assets controlled by loyal advisors. His 1994 bankruptcy hearing ended in farce when he successfully convinced the court he was suffering dementia and couldn’t remember anything of his business dealings.
He couldn’t stay too far ahead of the courts however and ultimately Bond served two prison terms totalling four years for dishonestly pillaging companies to keep his operation afloat.
At the same time Bond was being chased through the courts, Australia’s banks were licking the financial wounds incurred from their irresponsible exposure to the nation’s entrepreneurs. The lessons they learned define modern Australia.
Bearing the brunt
The country’s small business community eventually bore the brunt of the Australian banks’ losses as lenders’ balance sheets were rebuilt through high interest rates, massively increased fees and charges and tightened lending criteria. Many of those high fees and rates continue to cripple Australian business twenty-five years later.
Adding to the Aussie small business sector’s woes, the 1998 Basel I Accords were coming into force favoring property lending over business finance. Increasingly it became harder for any Australian businessperson to raise money from local banks while property speculators were welcome.
Over the next twenty years the result was stark. One chart from the Macrobusiness website illustrates the huge growth in Australian residential property lending and the stagnation of business finance since 1991. Only at one stage, in 2008, has business lending matched the levels of the late 1990s.
That shift to an economy based upon property prices, particularly speculation on residential accommodation, has served Australia well with the nation not experiencing a recession since the 1990s downturn.
The Australian economic miracle
Australia’s success allowed Reserve Bank governor Glenn Stevens to sneer in 2010 that Microsoft founder Bill Gates’ warnings about the Australian economy lack of diversity were misguided and foolish – the mining boom coupled with never ending property price growth guaranteed the nation’s prosperity.
In this respect, all Australians have become Alan Bond. Just as the bold riders of the 1980s boom based their future on property valuations so too have Australian households and the entire economy thirty years later.
Hopefully for Australians in general it will end better than it did for Alan Bond in 1996.
One though should not weep too much for Alan Bond, after being released in 2000 he quietly rebuilt his empire and in 2008 BRW magazine estimated his wealth at $265 million and named him among the 200 wealthiest people in Australia.
Time will tell if Australians share the deceased tycoon’s luck but in a way we’ve all become little Alan Bonds now in our dependence upon the valuations of our real estate holdings and the indulgence of those financing our lifestyles.
It may well be having a few bob hidden away in Switzerland might the best way for Australia’s indebted homeowners to protect their future.
Comparing Venice to Barcelona is problematic given the Spanish city has a population of 1.6 million compared to the Italian tourist centre’s 60,000. The tourist industry has long overwhelmed Venice.
A more relevant discussion is how does a city like Barcelona avoid a decline like Venice, in my interview with the deputy mayor Antoni Vives in 2013 he described his aim to see the city develop new industries and build on its existing strengths.
The new mayor’s concerns about soaring property costs displacing residents are valid –and shared with every major city in the world.
For Barcelona though the real challenge is to stay relevant in a changing global economy. For the moment the Spanish city has a long way to go, and five hundred years, before its leaders can worry about becoming the new Venice.
The economics of cheap data change industries the same way abundant energy defined the Twentieth Century
I’m preparing a corporate talk for next week on the changing economy and one theme that sticks out is how the Twentieth Century was defined by cheap energy and physical mobility as mains electricity and the internal combustion engine became ubiquitous and affordable.
The picture accompanying this post illustrates that shift, Sydney’s Circular Quay a hundred years ago was just at the beginning of the automobile era. The previous fifty years had bought trams, the telegraph and reliable shipping but the great strides of the Twentieth Century were still to happen.
At that stage the steam engine and advances in electrical transmission had bought reliable power to the masses, although it was still expensive. What was to come over the next fifty years was that energy was about to become cheap and abundant. That drove the suburbanisation of western societies and the development of industries around the availability of cheap power and a mobile workforce.
At the time though information was still expensive, the control of broadcast networks by a few license holders and print operations by those who could afford the massive costs of producing and distributing magazines or newspapers made data difficult to get and worth paying for.
Today we’re at the start of a similar shift in information; it’s no longer expensive or difficult to obtain.
What that means for the next thirty years is what industries will develop in an economy where information is basically free and ubiquitous. Just as cheap energy created the consumerist economy, we’re going to see a very different environment in an age of cheap data.
As expected there’s a shift in the skills needed and jobs that were once assumed to be safe no longer exist. It’s worth a listen if only to understand the costs of an economy and industries in transition.
For other nations, particularly Australia, it’s time to stay paying attention to how the global economy is changing.
Singapore may not have all the answers and its government’s authoritarian tendencies may work against its ambitions to be a global tech and creative centre, but at least the government is staking a position in the new economy.
The survey wasn’t good news for the workforce with the survey predicting over two in five workers’ jobs were at risk as digital technologies changed industry.
Notable in the list were the industries PwC believed to be safe over the next twenty years; largely being the medical, health and ‘people’ businesses like public relations.
While the industries themselves might be safe, specific jobs in those sectors may not be so with roles ranging from hospital porters being replaced by robots to surgeons carrying out remote operations.
Looking at the list of relatively unaffected industries, it’s hard not to see how digital technologies aren’t going to disrupt those occupations.
Redefining public relations
PR for instance is undergoing a radical change as the media industry is being totally disrupted requiring today’s public relations professionals to have a very different set of skills to those of twenty years ago.
Those skills include a much more adept use of technology itself and having to deal with a faster, more fragmented industry.
Public relations professionals brought up in the days of boozy lunches and far off deadlines struggle in a time of bloggers, social media and data journalism.
Evolving medicine
Similarly medical practitioners, the top position on the list, have seen their jobs dramatically transformed over the past twenty years by computers and those changes are far from over as medical equipment gets smarter, personal fitness devices become pervasive and the amount of data being collected on patients grows.
Across the medical industry the roles of almost every occupation is being redefined as technology changes the tools they have, along with the nature of ailments their patients present with.
Big Data and analytics
Some professions will grow but automation in those fields will grow exponentially faster, a good example being the fifth role on the list – database administrators and ICT security professionals.
Ensuring the reliability and security of servers and networks is going to become even more essential as the economy increasingly depends upon these systems however security and IT professionals are going to rely on algorithms and Big Data to manage the massive task they have – these are the opportunities for companies like Splunk and Microsoft Dynamics.
In all of these comparatively safe industries the jobs of tomorrow are going to need different skill sets to what they require today.
For workers in these ‘safe industries’ this means further education, training and reskilling to stay employed. Just being employed in a sector that’s expected to stay static or grow isn’t enough to keep your job.
Employers in these ‘safe industries’ also face a challenge in making sure their staff have the right skill sets to use the new technologies.
The airline analogy
If you were running an airline in 1965 it would be cold comfort to look at the explosive growth ahead for the industry in the jet airline era when all your staff are trained to keep propellor aircraft in the air.
So when we talk about digital disruption, it’s not just about industries being shut down and jobs being lost but about radically changing occupations.
It would be a brave person to assume that just because their industry is safe, their own job or business is secure.
