John Sheridan

John is CEO of Digital Business insights!

Which way to the future?

The latest ABS job figures are interesting. And also misleading.

According to the ABS, unemployment is down to 5.7%. Yet, according to the Roy Morgan poll, unemployment sits at 11%. And 18.8% of the workforce is either unemployed or under-employed.

ABS figures are under question and it is worth visiting the Roy Morgan site to understand why. As it says on the website, “Roy Morgan measures real unemployment in Australia, not the perception of unemployment.”

So why is this important?

Because 5.7% unemployment doesn’t sound too bad. And even suggests the country could be heading in the right direction.

But 18.8% sounds like a big problem. And suggests that we are heading in the wrong direction. Because 18.9% means less tax, less discretionary spending, less confidence, less opportunity and we need to do something about it.

Add the ongoing affects of the digital revolution to that picture and we are really in trouble.

Big trouble.

Now this is probably obvious to anyone with a finger on the pulse of business in Australia, large or small, and has been for some time. There is a lot of uncertainty out there. There are lots of odd ideas about what to do. And there’s a lot of “rabbit in the headlight” syndrome – CEOs frozen in action, decision makers postponing decisions, what should I do, which direction should I move in?

And “Rabbit in the Headlight” syndrome is the most dangerous, highly communicable disease impacting Australia at the moment, not the flu.

We have become a nation of scared rabbits.

And “waiting to see” is not a vaccine or a cure.

Action is required. And action requires direction. And direction requires clarity. And clarity requires real information and insight and vision.

ABS says one thing. Roy Morgan says another. Accept one perspective and sit on your laurels. Be a rabbit. Accept the other perspective and get to work on fixing the problem. Be a lion.

“Wait and see” might be acceptable if the rest of the world was frozen in time as well, but it’s not. Our neighbours to the north are getting on with it.

And whichever set of underemployment figures is correct doesn’t matter. Things are going to get worse. Because computerisation, automation and robotisation will destroy up to 50% of existing jobs over the next 25 years.

And that should be enough information to encourage committed action now.

This isn’t about slow evolution, like climate change, where the effects will largely be delivered sometime in the future as a nasty present to our grandchildren, long after we are dead.

This is about the fast evolving, remorseless loss of real jobs now. This is about the need for Australia to produce goods in sustainable, productive industries to buffer the impacts of revolutionary change. This is about having an economy not a lobotomy.

We are in trouble.

Now, being in trouble isn't a problem if you recognise it and move out of trouble.

It’s only a problem if you don’t. Which brings us back to the figures above. And there are plenty of other signs and indications out there to support Roy Morgan’s point of view.

The impacts of digital revolution are reaching into all sectors. For example, nearly 20% of office space in Perth and Brisbane is empty. A couple of years ago it was 14%. In a few years time it will be 25% and then 30%.

What makes anybody think this is going to change? This is a permanent change, not just because mining is in downturn for the time being and miners don’t need so much office space, but because the digital revolution frees individuals from being tied to place. That is the real change. And that is permanent.

The freedom to work from anywhere will continue to grow across many sectors (not all) and the demand for office space will continue to fall. Permanent change. It doesn’t take a genius to work that out.

The digital revolution is in full swing and is not going to slow down. The currents of more connection, more collaboration and more integration are driving the ship of state in one direction only. And we have two choices.

We can use the currents of change wisely and steer towards a destination of our choice. Or we can ignore the steering wheel and be swept to wherever the currents of change take us. And at the moment we are doing the latter.

We have abdicated choice. Talking, talking, talking. But doing nothing that reflects a real understanding of what these currents of change represent.

We have to leverage the power of digital technology to suit us. Not give up, “lay back and think of England.”

And that means using technology to generate high paying, full time jobs, which come from productive industries. And which come from productive industries where creative value has been added through design, engineering, branding and marketing.

We need to focus on productive industries and add value.

It means using the tools of the digital revolution (the technology) and applying these tools in building a strategic and productive industry base in Australia that will support us for the next 50 years.

The pieces are all on the table. Design tools. Collaboration tools, Marketing tools. 3D printing tools. AR and VR tools. Training tools. Automation tools. Information sharing tools. The tools are all there.

We just have to put the pieces together to form a joined up picture. And there’s the rub. Government has lost the lid of the jigsaw puzzle box. No picture.

We are resource rich. We have many smart, creative people with lots of good ideas. We have first class educational facilities. We have designers, engineers, imagineers. We have an innovative ICT industry.

But we don’t have a vision, a strategy, or a big “picture” that joins all these things up intelligently.

We have to plant the “smart seeds’ of imagination, design and engineering in fertile ground…the fertile ground of manufacturing, agriculture, tourism, cleantech, medtech, greentech, biotech, creative industries, ICT, design-led professional services, trades and infrastructure.

This is the fertile ground for Australia. This is where we have to mine. This is where we have to farm.

7,604,000 Australians are employed full-time – up 18,000 since March 2015 and 3,918,000 Australians (up 202,000) are part-time workers.

We can’t afford to have so many underemployed or unemployed people in Australia. Because most of them don’t want to be.

Men are losing full time work, and picking up part time positions – 83,200 part time jobs. Earning less money. Men are also dropping out of the labour force completely.

Currently, employment growth is being driven by services, child welfare, youth and family services work. Low paid jobs. Unproductive jobs. Important jobs undoubtedly, but these jobs do not generate wealth. They spend it.

We are replacing high paid permanent jobs with low paid, part time jobs and calling it a good thing. Well it isn’t. This is dumb nation thinking.

And digital disruption continues to impact the world we live in. Unless we are brutally honest and frank about these issues, we just create a bigger problem for ourselves through waffle and inaction.

The discussion should not be about spending less on government services. It should not be about “they are the high tax party, we are the low tax party”.

The discussion should be about generating more wealth. It should be about where Australia is heading. About the vision for our future.

What is Australia’s economic strategy? What we spend and how we spend it matters far less if we are generating more wealth from a broad basket of productive industries.

And that is the point. We do ourselves no favours by manipulating statistics for short-term political advantage. It is easy to understand why people have lost faith in politicians. Across the world, not just here. They focus on the wrong things.

The problem we now face is beyond politics. It is a problem we all have to face collectively and solve collaboratively.

Effectively 18% of the working population in Australia isn’t. And that percentage will grow, unless we act with purpose.

We talk about moving from the old economy to the “new economy”. What does that mean? Well, the new economy is more than writing apps and teaching coding in schools.

The new economy will rely on the creative industries that generate ideas and imagination. STEM needs to partner with art and design.

The new smart economy will result from the application of technology across the board, into every productive industry sector.

These are the industries that can generate exports beyond mining.

The industries that provide multiple opportunities to add value through design, branding and marketing. The industries that allow us to price that new value accordingly.

The industries that allow us to spread risk across 10 different overseas markets, and not put all our eggs in the one basket of China.

We do have to shift our economic thinking from extractive and service industries to productive industries. From short term to long-term thinking.

And outside of Japan, Singapore, Malaysia, Israel, Germany and China, most OECD governments don’t do this very well.

Any government that can applaud a permanent shift from full time jobs to part time jobs as some sort of success story needs its collective heads examining.

Any government that can applaud a permanent shift from high paying productive industry jobs to low paying service industry jobs in dog walking, aged care, childcare, house cleaning and gardening needs its collective heads removing.

We have to tailor and financially support an education and research system that prepares our young for these productive industries.

We need to liberate these industries from the shadows and showcase them within our nation and to the world. Tell their stories in the newspapers, not continually showcase the service and support sectors. Banks aren’t heroes. Insurance companies aren’t heroes. Property developers aren’t heroes. Casinos aren’t heroes.

We need to showcase the real heroes and innovators in Australia.

And talking about innovation isn’t innovation. The good folks in Canberra need to realise that.

Action is innovation.

Meanwhile, back in the real world we have 18% underemployment on the one hand. And tax evasion and tax havens on the other.

There is a clash of civilisations taking place. And I am not talking about IS and a clash of religions or beliefs.

I am talking about the analogue 20th century with its primary features of secrecy, win-lose, 1% privilege, and command and control clashing with the digital 21st century and its attributes of trust, agility, transparency and collaboration.

There is a clash of cultures happening right now. There is a shift of power to the customer, still largely misunderstood.

People are finally waking up to the fact of digital revolution. They can see it. They know it is happening. There is acknowledgement that disruption is happening.

That is a good start. The froth and bubble of Uber, Airbnb, Netflix and the rest capture the media headlines. The major currents of ongoing digital disruption are largely invisible until they crystalise.

What is being missed is the interconnected nature of the change. It is not about the Ubers, it is about the remorseless digital currents that produce the Ubers.

That is what is threatening to jobs, industries, regions, established power, decision-making, and control. It is threatening to curricula in schools and universities. It is threatening to policy makers and policy writers. It is threatening to CEOs and boards. It moves fast. They move slow.

Is it any wonder that these symptoms of change generate “push back”, with its attendant range of excuses? But “push back” can only postpone.

There is yet no evidence in most corporate and government strategies and actions that they really understand what the revolution is doing. If there were, we would see it. We might even applaud it. We would certainly be encouraged by it.

What we do see is a bitsy, knee jerk, small scale, departmental, defensive mixture of projects, initiatives and endeavours, but NO joined up thinking.

Because that would require ministers and departments to work together collectively, and they are not structured to do that. That would require councils to work together collectively. That could even require states to work together collectively and it just gets too hard. No vision. No champions. No budget. No permission. No support. There is too much to lose. But much more to gain.

In July 2015, I wrote a blog “Only Castles Burning”.

It outlines the strategy most governments and corporates adopt in dealing with the biggest disruptive threat (opportunity) of our time – the digital revolution.

“In the old days, cities had walls and when danger threatened, the drawbridge would go up, the gates would be shut, the soldiers would line the ramparts and the citizens would get ready for a siege.

The citizens and their leaders hoped they had enough water and food to wait out the invader. The strategy was “wait and see”.

Close the gates and agility, vision and mobility disappear for a while. In some cases this strategy worked well, but over many years invaders learned, and brought with them the tools – siege engines, cannons and mortars to defeat the people with “siege mentality” and walled cities fell out of favour.

Today we are seeing the same phenomenon repeated in response to the digital invader."

Walled cities. And the siege mentality that goes with it. Rabbits.

Once again we have surrendered manoeuvrability, agility, vision and responsibility (our ability to respond).

Inaction is not a viable option. Yet that is where Australia is stuck right now.

It is not enough to be a passive adopter of technology. We need to be creators and inventors in this revolution. There is a big opportunity here and some of our neighbours to the north are responding much faster then we are.

We have the brains, the businesses, the imagination, the inventors, the individuals, the enthusiasm and the creativity. And for a short time at least, we have a stronger list of players to call upon to create a winning team. 

We have the industries. We have the people. We have the tools. We just lack the vision and direction.

So which way to the future?

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Friday, 21 September 2018