Month: April 2018

Banks? Boards? Corruption? Well, surprise, surprise.

We face a few issues at the moment.

They are all connected, but usually people talk about these issues separately as though they have nothing to do with each other. Which is a problem of course. Because they are all connected in some way.

We have a corrupt banking issue.

The Royal Commission has opened a can of worms. Horrible, slimy, wriggling worms with no conscience, respect or integrity. And banks used to be about integrity, trust and respect. Not any more.

Industrial banking has taken the place of integrity, trust and respect – designed to remove any suggestion of humanity from the bank-customer relationship and replace it with automated processes.

And then the banks run advertisements claiming the opposite – suggesting that banks are human too.

“The Banks belong to you”, “Your world, your way”, “You spoke, we listened”, “More than money”, “Help is who we are”

Not true. Fake news in fact.

These statements are about the banks of forty years ago, back in the good old days when bank managers managed.

And the people they do insert into the customer relationship, the financial advisors, mortgage brokers and insurance agents are all motivated with one objective – “how can I take this person for a ride?”

So what went wrong? Chairpersons and boards went wrong.

We have a board issue

Boards don’t work. Boards are stacked with the wrong people. They are stacked with people who don’t understand shareholder value, but think they do, people who are not capable of governing with real knowledge and understanding of the new operational environment.

People prepared to manipulate short-term goals, strategies and financial reports for “short term benefit” (keep up to speed with the Royal Commission on banking) and destroy long-term, shareholder value in the process (trust, integrity, brand and possibly even existence).

Is that in the best interest of shareholders? Of course not.

This has been coming a long time.

Boards across the world are stacked with people who don’t understand the world has changed. And continues to change. Boards are stacked with dinosaurs stuck in 20th century thinking, incapable of seeing or understanding the revolution happening right in front of their eyes.

There is a digital revolution going on and technology companies apart, board directors and chairpersons don’t have a clue.

Because, the digital revolution is joining everything up. Connecting people to information. Connecting people to each other and integrating functionality. Threatening the status quo.

And changing business models as it goes. Changing attitudes as it goes. Changing perception and reality.

Creating shared value. Professor Michael Porter spoke about this shift to shared value in 2011, shortly after the GFC, explaining that CEOs, boards and directors needed to understand shared value.

That shared value wasn’t corporate social responsibility. That corporate social responsibility was dead and gone.

That creating shared value was integral to competing, essential to profit maximisation and positioned a business within society and the economy as a powerful force for addressing problems, not outside of society paying lip service by “doing good”.

All board members should read what Michael Porter has to say on this issue, because it is a clear expression of the new role that businesses have to play in a digitally disrupted world. Or blockchain and AI will eat your lunch.

We have a morality issue

And the digital revolution exposes it.

The digital revolution joins everything up. Supports collaboration. Builds cooperative alliances. This suits some people. But it doesn’t suit others. So the old world pushes back against the new world.

But it isn’t the old world pushing back…it is individuals that still live in that world, full of selfishness, greed, amoral, immoral, sociopaths and psychopaths.

We have always had them. They are just more exposed to sunlight today than they ever were before.

They don’t understand the digital revolution either. It does not align with their thinking.

They see command and control, where others see collaboration and shared value and consensus.

And that is the dilemma.

The new opportunities are boundless. On the one hand, collaboration, sharing and cooperation at a worldwide level.

On the other hand, different versions of centralised command and control a la 1984.

The revolution generates a conflict of attitudes. And a conflict of choices.

But it is then about decisions. And we’ve been there before.

Cigarettes are an example we all understand. In the 1960’s and the 1970’s when the evidence become widely known, it quickly become clear that cigarette companies were going to fight to the death to protect profit over all other considerations..

Yet, even today, 50 years on, how can anybody work for a tobacco company, knowing that the product kills? It is only the separation of time and impact that allows this to happen. If the results were immediate, then cigarettes would be illegal.

But people still work in tobacco companies. And somehow separate in their minds the connection between the product and the result.

They separate the evidence from the fiction in their brains. And go home every day believing they’ve done a good job.

“Not everyone will die of emphysema or lung cancer”. “Cigarettes are legal.” “They are not addictive.”

And so it goes.

In an increasingly connected world, we can still operate with disconnected personalities and compartmentalised beliefs.

But, the digital revolution pushes constantly towards connection and community – common unity, sharing and consensus.

Who would have thought that boards and banks would join the lowest ranks of the untrustworthy – along with politicians, journalists, and estate agents, as people who can no longer be trusted?

What a topsy-turvy world we live in.

Once trust and integrity are lost, it is a long road back to respectability again. Regardless of the desperate advertising messages banks pay a lot of money to disseminate.

“The banks belong to you”, “Your world, your way”, “You spoke, we listened”, “More than money”, “Help is who we are”

Yeah, sure. Tell me that again, when the board is completely replaced with new directors and I might believe you. We can all dream.

We have a jobs issue.

Real unemployment and underemployment in Australia is near to 20% of the workforce, which is a big issue. Thank goodness that Roy Morgan is doing a good job at keeping the record straight.

Unemployment and underemployment is 18.9% or 2.5 million people looking for work or for more work.

And the continuing shift across all industry sectors from full time employment to contract, part time, freelance and occasional is just building up a problem for tomorrow, that we will have to face.

We have an education issue.

We are educating for the disappearing world. Parents are a major contributor to this problem. They haven’t yet woken up to the “changing nature of work” and continue to support school curricula based on their own historic school experience.

Traditional jobs and workplaces are seriously challenged by digital disruption. AI, robotisation, IoT, VR, AR, blockchain, remote sensing, 3D Printing, cyber-security, drones, nanotechnology, big data, cloud services, BIM, cryptocurrency, election manipulation, identity management, social media, Amazon, eBay, Alibaba, Uber, airbnb and Fake News all impact Australian businesses in different ways.

We must first clarify which workplaces will survive and what a job will become, then we may be able to create a curriculum that delivers for the new world.

We have a skills issue

Digital disruption is affecting all industries and business categories, but it particularly impacts individuals – all of whom have differing capabilities and skills. Not everybody is good at Maths and Science or English (brain). Some people have strong design skills (eye), some people have strong practical trade skills (hand). Some people have a mix of those skills. Some people have no skills. We have to support all of them.

We have an inequality issue – the 1%

Given that 8 men now own the same wealth as half the world’s population, or the top 10% of the population now own 85% of the world’s wealth, we are creating a condition that is toxic, explosive and dangerous.

And we did this. Not God. Not Mother Nature. Us. Human beings. In fact our politicians did this.

Big businesses and the super rich dodge taxes, using their power to influence politics and drive down wages. And 1 in 10 people survive on less than $2 a day. So it is up to us to fix the problem. There is a lot that can be done. We just need to do it.

We have a “response” issue

For us to be happy in hindsight (2030), we can’t just let the ”day to day” happen to us passively. We must manage this revolution sensibly starting now. It is a real revolution and its effects are broader and further reaching than we might have expected. And it’s happening everywhere, all at the same time.

We have to act with vision and purpose. Collaboratively.

At the Commonwealth Games Trade Events on the Gold Coast that I attended, there was a common theme.

Collaboration. The word was part of everyone’s presentation. It was acknowledged that collaboration was difficult, but every presenter stated that we just had to do it.

Which is why we created the RED Toolbox to help with that issue – , as a national collaboration platform for regions, sectors, export, issues and ideas.

We have to collaborate to address the jobs issue, the inequality issue, the leadership issue, the skills issue, the education issue, the corruption issue, the board issue and indeed every issue.

It is only through collective wisdom and collaborative action that we can succeed.

If we just let change happen to us, then we accept an even wilder jungle to live in. That seems to be our current strategy (if you can call it that). Manage the change with intelligence and we can establish a new “digital agriculture” – generating new wealth and farming new value.

Can we do it? Yes, we can.

We managed the shift to food security over 12,000 years ago, moving from hunter gathering to farming. With benefits for all.

We now need to do the same thing with technology, moving from “leave it to the market” to “manage it or rue the consequences”.

So here’s an idea.

Let’s work together. Collaborate.

First, those that understand what is happening (which is thousands of digital consultants, systems integrators and others) need to try even harder to inform and warn students, parents, CEOs, boards, businesses, not-for-profits and government about the big digital picture issues.

Not the technology. But what changes as a result of the technology. That is what the revolution is all about. The threat to jobs in finance, wholesale, administrative services, retail and professional services.

Soon to be followed by more job loss in rental and real estate, media and communications, manufacturing and in a few years, transport. And then the rest.

Everybody needs to be clear on the real impacts of digital disruption.

Understand why, what, where and when, and the threat becomes a challenge that can be managed. Ignore it and you don’t deserve reinsurance at the end of the year. You are gone.

Second, we have to spread risk more broadly, and build capacity and resilience through increased export and value adding.

While the digital revolution destroys jobs, we need to use the positive aspects of technology to enhance our productive industries – agriculture, creative industries, defence, ICT, manufacturing, medical and health, METS, smart trades and waste management.

Build on the one hand, while destruction happens on the other. We can’t stop digital disruption and destruction, but we can modify the impacts and use the technology to enhance productive industry.

We need to increase the volume of exports through creating more channels to markets in more countries. And we need to add value to every good and service that goes out the door – through design, branding and advertising. We have the skills and the brains to do this. We have just grown lazy, relying on exporting dirt, meat and wheat.

The export groups in the RED Toolbox are designed to support this. The India-Australia groups allow Australian and Indian businesses to engage directly – “export on trainer wheels”. With more and different countries to follow.

Third, we need to change the national conversation.

To move from fear, uncertainty and doubt (FUD) = do nothing or follow what other countries do, to leading the way with courage, curiosity and “let’s give it a go”.

Move the conversation from “me, my, mine” to collaboration.

Federal Government has created a national collaboration framework of 52 RDAs, and we have a national collaboration platform – RED Toolbox offering a way to join everything up. Businesses now just need to get actively engaged with export, training and begin to connect and collaborate with their peers.

Many businesses are frightened of the idea. “They will steal my IP.”

We have to recognise that we are in competition with the world out there, not with ourselves. Other countries are connecting and collaborating at a gazillion miles an hour – right culture, right leadership, right investment and right motivation. We cannot afford to be left behind.

And finally, we have to share example of success. Use the networks and groups we have to share, explain, inspire and copy. The world will continue to change and we have to become even more agile, responsive and collaborative to stay up with the pack.

Collectively we can manage the challenges. And if we really collaborate, we can do more than just manage, we can leverage the challenges to benefit our resource rich country regardless of politics, banks, fake news and board directors.

They are just an excuse. We have plenty of real innovation to carry us through. Let’s do it.

The good and bad sides of the digital revolution

The digital revolution continues to challenge the societies we live in. For better or worse. Connecting us to information and each other, fostering community and collaboration, but at the same time destroying jobs, and capturing personal data for manipulation, propaganda and control.

You want to win an election? Shift attention like a matador? Feed the gullible? Well, now you can.

This is where we now live. In a polarised world. Both good and bad. Brokered by Email, SMS. Google. Facebook. Instagram. Twitter and the rest.

The digital revolution is reshaping the world at a scale never seen before and everyone is involved. Spooks. Politicians. Criminals. Gangsters. Corporates. Businesses. Individuals and organisations of all kinds.

Digital disruption is remorseless and destructive, and is predicted to eliminate 50% of jobs during the next twenty years.

Over twenty technologies and vendors of various kinds ranging through 5G, Blockchain, IoT, AI, Robots, Drones, VR, AR, BIM, GPS, satellites, Digital ID, 3D printing, nanotech, cloud services, Amazon, Google, Uber, Freelancer, Airbnb and so on are causing this affect, all knocking on the front door at the same time.

Some are knocking louder than others, some are knocking together and some want to come in right now.

New jobs are being created, but the combined effect of these technologies is net job destruction and replacement, not by other jobs, but by software in various forms. Human effort replaced by software.

The signs are there. The evidence is everywhere.

Politicians don’t understand it and they don’t like this disruption happening on their watch. Job loss and disruption is bad news for politicians.

So they deny it. Deliver platitudes. Talk about something else. Manipulate the facts. They fudge the figures = standard operating practice for politicians. They worry about their short term future = the next election, and do nothing useful about the longer term implications of what is steadily becoming inevitable.

Across the planet.

In Australia, unemployment and underemployment is 20% already in 2018, with ever more people moving to contracts, self employment, part time, freelance, occasional and Centrelink.

So what can we do about this?

The technologies are here. The genies won’t go back in the bottle and they all have big teeth.

We can’t stop them. But with careful consideration, we can get them working for us not against us, soften the impacts and manage the change.

For which, we need to do two things.

One, understand what is causing the disruption, which sectors and categories are threatened by which technologies, which sectors are safer than others, why it is happening, when it is happening, what new skills may help and what the upside is, if any.

Two, act accordingly.

Clarity offers options. Options offer control of destiny. We are then able to make wiser decisions.

And we need to recognise and understand the interconnected fact of digital technology. “1”s and “0’s”. Wires and wireless.

It all joins up. Social. Economic. Environmental. Political. Ethical. Personal.

Which creates a new range of interconnections, challenging silo thinking, “frogs in wells” and the “narrow thinking”, “my job” way we view the world we live in.

In a joined up, interconnected world – which we now inhabit – we need joined up, interconnected thinking that doesn’t stop at the door, the fence or even the border and you won’t find that in any government or corporate “department”, ministerial department or any of the small cupboards we live our lives within.

“It’s more than my jobs worth”. “It’s not our core business”. “It’s none of my business.” And so on.

Of course, not everyone is blind to new interconnected opportunities.

The data generated from connection is being harvested for good and for bad as well. Cambridge Analytics are only doing what the spooks have been doing for years. Along with Google, Facebook and any large organisation with lots of data.

Blockchain may be our protection against this misuse of personal data. We’ll see.

But the digital revolution continues and the disruption rolls on.

There are roughly 2.3 million organisations in Australia, employing over 12 million people.

About 2.4 million people are currently unemployed or underemployed looking for work or more work, with a lot more destined to join them because of digital disruption and job loss.

We usefully divide businesses and other organisations into 19 different industry sectors in Australia, though not all the 500 or so ANZSIC business categories fit comfortably into those divisions

And disruptive technology affects just about every one of the 2.3 million organisations and every individual in some way.

Technologies are tools. Each technology enhances or extends existing human capabilities in some way, our senses, our brain and our body.

It’s the same in our businesses and organisations. Technology automates processes and activities within an organisation to increase efficiency, productivity and effectiveness. We are now getting particularly good at this.

As mentioned, over twenty technologies and vendors of various kinds ranging through 5G, Blockchain, IoT, AI, Robots, Drones, VR, AR, BIM, GPS, satellites, Digital ID, 3D printing, cloud services, Amazon, Google, Uber, Freelancer, Airbnb and so on are now helping to enhance or replace humans in some way.

This can be in a practical process or activity (hand), design activity (eye) or a thinking activity (brain). If it can be automated it will be.

And processes and activities that are repetitive offer the best, short-term opportunity for automation and replacement.

We have all witnessed the impacts of robotisation on manufacturing. And mining. We are now beginning to see the impact of robotisation on other sectors, such as wholesale and agriculture with different results.

Over time, the wholesale industry will lose jobs. Agriculture will gain jobs.

Wholesale can be fully automated. Box shifting. For as long as humans are cheaper than robots the transition will be postponed. And an interim step will be making humans “act like robots” with wrist controllers managing activity in the warehouse, measuring efficiency, comparing workers and replacing workers not up to target with new workers.

Cyborgs. Who can and will be fully replaced by robots once the cost benefit merits the decision. Wholesale employs just over half a million people in Australia.

Each disruptive technology affects sectors and categories in different ways.

But it is in the service industries that process and activity automation in its latest incarnation (AI) will hit hardest and soonest. Jobs in rental and real estate, administrative services, finance and insurance, professional services and public administration are all under threat.

Which adds up to about 5 million people challenged by one technology.

As a principle, “Middle person” jobs can and will be replaced by Artificial Intelligence (AI). It’s just a matter of time. Any person who sits between you and a vendor without adding significant value will be replaced with technology.

Financial advice, mortgage advice and insurance advice from AI is already far more reliable, fair, balanced and trustworthy than advice from human advisors who look after their vested interests first, not yours.

The Royal Commission into banking and insurance is providing lots of examples of vested interest, manipulation and corruption. These advisors are ripe for replacement.

The same is true in rental and real estate. Replacement.

These “middle person” jobs will be replaced by AI, better able to manage the real interests of buyers and sellers, not the interests of the agent – the “middle person”, who is only interested in listings and quick sales = commission, no matter what they might say to your face.

But the real estate industry is cushioned for now. For in Australia, the interests of News Ltd and Fairfax, who own and Domain support an industry that is effectively a “dead man walking”.  For now.

None will give up their commercial advantage willingly. But they are fighting a rearguard action that will ultimately end in defeat.

As you can appreciate there is a lot to gain and a lot to lose in this disruptive transition.

Jobs will continue to steadily disappear. The speed at which they do will be a result of the struggle between the old world and the new. Between vested interest and innovation.

Over 2 million people are employed in the three levels of public administration in Australia, paid for by taxes.

They produce nothing. All politicians talk about the need to reduce “red tape” but they never do. A wide range of existing and new technologies could reduce the size of the public service tomorrow, but this is unlikely to happen.

For obvious reasons. Campbell Newman tried in Queensland and lost the next election. Political expediency protects the public service for now. Until the money runs out and treasury can no longer cover the payroll.

Because it all joins up, and a steadily decreasing workforce generates less tax.

So it is hardly the time to be giving tax breaks to big business in Australia. We need all the tax income we can get.

Some industry sectors include a mixture of safe and threatened business categories.

Administrative services and professional services have categories in both camps.

Where creativity, experience and insight are important to a business category and the category deals with a workflow of unique challenges eg engineering, veterinary, architecture, design and surveying – the category is safe.

Where processes can be automated easily eg legal services, accounting and taxation processing, clerical services and employment services, the category is under threat.

We estimate from our 50,000 surveys across all categories and sectors, that 9 of the 19 industry sectors are seriously challenged with another 2 partially challenged. And those 11 sectors are the major employing sectors, representing about 5-6 million jobs.

Now, not all those jobs will disappear. And those jobs are not all under threat tomorrow. But threat is on the way.

This is the scale of the issue that we face. It is a big deal.

Some sectors are better off than others.

Construction is one of those. We have a huge investment in brick, stone and wooden houses in Australia, all of which need renovation, fixing and improving from time to time. And construction employs a lot of people. Over a million.

Agriculture is another interesting sector in Australia, dominated by “mum and dad farmers” (93%). And technology continues to enhance the sector not threaten it.

The main threat to “mum and dad farmers” is not appreciating the value of the data they gather on their farms. Especially if added to the data from the farm next door, and all the farms in the valley and the region.

Farmers have to collaborate to capture, own and manage data for their individual and collective interests, and not allow it to be captured, aggregated and used by a farm management system, cloud provider for its interests.

Agricultural data will become increasingly valuable as we witness the impacts of climate change on the oceans, rivers, estuaries, farms, properties and regions across the country.

Working with their industry associations, farmers need to collectively own and manage this data for themselves, their children, grandchildren and the towns and regions they live in. Then farmers will be able to manage future threats to work and jobs, and leverage new opportunities sustainably.

The retail industry in Australia is challenged from outside, by Amazon and a growing range of other online retailers.

The only safe space in retail is in “fresh” fruit and vegetables, fish and meat, convenience = local or fast delivery, big things and specialisation. The battle between commodity retailers (anything in a box) and online retailers has only just begun.

We have mapped the impacts of over 20 technologies on 484 business categories and the results vary widely in timing, the degree of protection by vested interests and existing business relationships, and room to pivot, adapt and change.

These are the business categories that we are including in the ED Toolbox for students, teachers and parents, to help them make wiser decisions about the future. “What do I want to do when I leave school or university?”

Understanding the digitally disrupted world of work and jobs makes answering that question a lot easier.

That’s the passive picture. If we just let it happen to us. If we just react as things happen.

But what if we act positively and with vision? Now.

What if we have a plan?

What if we build a wider foundation of productive industries in Australia?

What if we increase value in these productive industries? How do we add value? How do we increase exports and profitability?

Because, we don’t have to just let the digital revolution happen TO us. We can use the digital tools to make it happen FOR us.

We are blessed with a wide range of productive industries in Australia that we have barely begun to work on – agriculture, arts and recreation, information media and communications, education and manufacturing as well as medical and health, mining services, waste management, defence, smart trades and some professional services.

Each of these sectors and categories represents an opportunity to add value, through better matching of R&D with production, through design, through branding and advertising.

We have become good at shipping “dirt, meat and wheat” out the door. Now we have to get good at adding value. Matching R&D with business. Branding. Exporting.

There are always opportunities to increase exports from Australia.

We have the “brain power”. And we have plenty of resources to add value to. Manufacturers, producers and services with world class capability.

We just need the focus and the willpower.

These R&D and creative industry jobs = STEAM are what we need to invest in as a nation to create a more resilient, better paid and sustainable environment for us, our kids and grandkids to work in.

Not push them towards the lower paid, no future, replaceable jobs in retail, personal services and health and social assistance services.

Or mislead them into industry sectors and categories that are about to change forever because of digital disruption.

We have to invest in productive industries, building a range of new branded, products and services for the world.

Connect Australian businesses with others in other countries to grow trade.

The India-Australia groups for energy, water, environment, manufacturing, smart cities, agricultural and food and METS in the RED Toolbox – are places where Australian and Indian businesses, councils, states and other organisations can discuss trade and opportunity.

It can be done.

Vision. Decision. And off we go.

The tools are there for us to do it.

But not everybody is ready, willing or able to change.

This issue is beyond politics. And politicians are ill informed, slow and ill placed to do much about these issues, tied to the election cycle as they are.

Leadership will have to come from individuals, businesses, local and state government, utilities, corporates and other organisations willing to act.

Vision and decision.

Even today, access to reliable, affordable, high-speed connectivity (the foundation for a digital future) is a problem in our country. It is available in the cities and suburbs (mostly), but not across every remote, regional and rural area of our land. Through lack of vision and decision, we have created a second class.

Through lack of vision and decision, we are talking about giving the most profitable companies in our country tax breaks, when we should be investing that money in supporting productive industries.

The challenge to Australia and the world is from the disruptive technologies that will impact every industry sector.

We know what they are. We know what they are doing.

Other countries around the world are responding faster than we are.

But very few of them have the richness in assets and resources that we have to work with. So we have no excuse.

Vision and decision. Partnership and action.

Become a RED Toolbox partner and collectively, let’s see what we can do.


For more information contact Digital Business insights!



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