What do Goldilocks and the 3 bears have to do with digital disruption and jobs?

The 3 bears have something to teach us about digital disruption and jobs.

If you remember, the story has examples of things that Goldilocks tried and tested until she made the right choice – too hot, too cold, too hard, too soft, too big, too small and then just right. All in the house of a Daddy bear, Mummy bear and Baby bear.

Should government be putting taxpayer money into big businesses (Daddy bear), startups (Baby bear) or scaleups (Mummy bear) to create jobs?

The government is planning to invest money in big businesses through tax cuts.

Big businesses don’t employ new people. The people are already there. Big businesses already grew. During the growth phase they employed new people. Sometimes lots of them. But that phase is finished.

And once a big business has been a big business for a few years, everything is about sustainability and maintenance…maintaining everything that allowed the business to get big in the first place. No innovation. Just more of the same.

Somebody leaves. They are replaced. New technology comes in that makes the business more efficient. People are made redundant.

In Australia, our big four banks are in the process of making 15,000 people redundant. They don’t need them any more. Online banking plus improved databases and CRM systems have delivered efficiencies that allow the banks to keep making huge profits with fewer people.

The same is true of all big businesses. Once they have grown big, it is all about maintenance and increasing efficiency. Big businesses don’t need tax breaks to employ people. They already have the money and people they need.

Give them tax breaks and the money saved will go into dividends for shareholders (most of whom don’t live in Australia anyway) and bonuses for CEOs. Australian “taxpayer funded” international aid, but to the wrong people.

That’s Daddy bear.

What about Baby bear? Startups.

Startups don’t employ people. 80% of startups will fail. Startups in incubators and accelerators have even worse statistics. According to an article in The Sunday Times on June 10, only 2% of companies graduating from the top US accelerators have achieved meaningful exits.

There are more than 1600 incubators in the US and 150 in the UK. And we have quite a few in Australia as well.

In theory incubators should help entrepreneurs flourish. In practice they don’t. According to Carl Schramm’s book – Burn the Business Plan, entrepreneurs housed in an incubator are no more likely to start a company than one outside.

So will startups make a major contribution to the creation of jobs? No. They might make a minor contribution if we are lucky. But only if they survive the first 3 years in the real world.

Scaleups however are different.

Scaleups are just right. Mummy bear.

Scaleups are the critical 5% of businesses that the government should be focusing on. According to a NESTA report, high growth companies (scaleups) represent roughly 5% of all businesses but generate 50% of the new jobs. And they come from all sectors not exclusively the ICT sector.

These high growth companies are 50% high-tech companies and 50% low-tech companies. And the majority of them are at least 5 years old.

These scaleup companies are disproportionately innovative and the innovation appears to cause growth. Innovative companies grow twice as fast in employment and in sales.

These companies also affect the surrounding business environment in which they operate. A 5% rise in employment from high growth firms leads to a 1% increase in the surrounding region.

So what can Mummy bear teach us?

She can teach us to invest our taxpayer dollars in the right place. To offer scaleup companies “low doc, no interest” loans to help them scale even faster.

To turn those loans into bonuses for scaleup CEOs if a target number of new jobs are created.

These companies are where our scarce dollars and resources should be invested, not in big businesses that don’t need any help, or even startups that only need a kick start.

The RED Toolbox has a showcase of over 5,000 scaleups in productive industries in Australia. View https://theredtoolbox.org/index.php/showcase-fp

The showcase is a shop window to the world of what Australia can offer from its productive industries in agriculture, creative industry, defence, ICT, manufacturing, medical and health, mining services, smart trades and tourism.

We need to give the tax cuts to productive industries – the “makers”, not banks – the “takers”.

And the other focus for investment, help and support should be schools. We have to start building pathways to employment in high schools and universities right across Australia.

Ribit is a great example of connecting university graduates with corporate opportunity – https://www.ribit.net

But we need to start much sooner by promoting entrepreneurship projects and competitions in high schools.

In the US, research shows that 20% of students in entrepreneurship programs will later start their own business – 5 times the general population.

So there are two obvious places to put time, energy and dollars – scaleups and high schools.

Australia is a big country with a small population and we need to become much better at collaboration, between our businesses, universities, regions, states and communities.

The RED Toolbox is a “think tank” with a Collaboration groups and Insights and a “do tank” (Projects and Export) enabling organisations of all kinds to connect, discuss, share, collaborate, plan and act effectively, to address issues and build capacity across all productive industries in Australia.

Historically our regions, sectors, issues, projects and export activities have existed and operated independently with only occasional connection and collaboration when and where appropriate.

Our society is largely structured in a manner that still reflects the industrial revolution, with a focus on specialty, departments and silos, and organisations operating independently with little consideration for “gaps”, outsiders or the big picture.

We can’t afford this approach. We need teamwork. Connection. Collaboration.

Many “wicked” problems in our society exist between departments, between silos, are holistic, hide in the “gaps” and are generalist in nature.

And yet in a digital world of ever increasing connection and integration, information resources are now readily accessible across multiple devices, networks and channels. But most of the data is still structured for the old segmented world not the new connected world.

So we need collaborative frameworks and networks to leverage the new connectivity.

The RED Toolbox is one such framework. Based on the results of over 50,000 surveys of SME and NFP business processes and activities, the RED Toolbox can connect regions, sectors, issues and export opportunities together in a way that leverages the impacts of digital disruption, reducing threat and maximising opportunity.

The toolbox has 10 high-level, “umbrella” groups enabling strategic discussion and collaboration on big picture issues – advanced manufacturing, agricultural and food, energy, water & environment, ICT, medical and health, mining and METS, security and protection, smart city infrastructure, sport development and tourism development.

These high-level groups can support discussions on big ideas. Over time they will become knowledge centres, which councils and RDAS can access to support their local projects and developments.

For a small fee, businesses and not-for-profits can become partners in the RED Toolbox and create a group or groups. They can also join any of the high-level “umbrella’ groups most appropriate to their business activity.

So a pollution control manufacturer could join Mining and METS, Energy, Water and Environment, Security and Protection and even Medical and Health. A Cybersecurity company could join Security and Protection, ICT and Smart City Infrastructure and so on.

A pollution control manufacturer could also become a business partner and create a group to showcase business solutions, present brochures, videos, events, manage commercial discussions and connect the group to the larger networks.

The RED Toolbox is designed to connect organisations across silos, to build bridges between sectors and regions, between countries, and to support the sharing of ideas.

Why? Because we need to collaborate if we are going to manage the impact of digital disruption on jobs and work. We are facing a virtual tsunami of disruptive change that we can manage successfully, but only if we collaborate.

In the next three to five years we will see the first 1.5 million Australian jobs under threat, in financial services, retail, wholesale, rental and real estate, administration and support. As well as jobs in some categories in professional services and health.

And in the next ten to fifteen years, another 4.5 million jobs will be threatened as AI really takes hold.

Which for our children and grandchildren in Australian schools is going to be a challenge.

As a student, “what should I study in the short term and longer term?” And “how will the work environment I expect to enter change?”

We need to focus on a wider spectrum of Australian productive industries to diversify and spread risk in a country far too reliant on dirt, meat and wheat, and invest more of our money, brains and creativity into a broad suite of value-added products and services. Then offer them to the world.

We have to move beyond commodity “cargo cult” thinking. We are very fortunate to have a productive mining sector and a farming sector, but we need to broaden our vision for the future.

Threatened industries can be protected for a while. But only to offer time to migrate, translate, pivot and evolve into something else. Or be disintermediated.

Because the new threats are coming from everywhere and the investment in new technologies in other countries is enormous.

Each business category has its own story. And each category is at different stages of readiness, willingness and ability to deal with disruptive change.

And each category has a different set of vested interests in play. And these factors can offer regions, sectors and business categories time to move to safe ground. We need to leverage this fact, with eyes wide open. Strategically.

Jobs will disappear. Lots of them.

But by using a little wisdom and understanding, we can help organisations and individuals to migrate, train, learn new skills, avoid the categories under most threat and generally turn threat into opportunity whenever possible. It won’t always be easy and it won’t always be possible.

But we have to face up to the facts now. Not ignore them. Or hope they will go away.

We are working on the ED Toolbox, designed to help students and parents better consider and understand the impacts of twenty three disruptive technologies on 400 business categories across 19 industry sectors, to grasp how those business categories will be affected and when. And what that might mean to work and jobs.

Because students and parents need help in understanding that the world of tomorrow is not the world of today or yesterday. And tomorrow is coming quicker than expected and disrupting the world of work and jobs, not just here but everywhere.

So as we are now engaging with teachers, schools, consultants, training organisations and others on this project, we are inviting help and input.

First stage: Ed Toolbox for Students and Parents

This is a relatively simple tool that allows a student and parents to consider the impact of over twenty disruptive technologies on 400 business categories across 19 industry sectors.

Second Stage: Ed Toolbox for Schools

This will be an extended version of the ED Toolbox, incorporating a social platform to allow discussion between students, parents and teachers, plus offering the potential to connect to and engage with a range of local and regional businesses already responding to the impacts of digital change in their workplaces.

A “virtual cluster” with each secondary school as the hub.

Anybody with productive ideas on the project can sign up to the RED Toolbox for free and join the discussion.

And anybody with a practical contribution to make – networks, channel to market or content can become a partner for a small fee (see About – https://theredtoolbox.org/index.php/about) and become an active participant in the development of the platform.

The project offers a practical way for the major ICT companies in Australia to contribute content and support.

Microsoft for AI. IBM and ConsenSys for blockchain. Facebook and Samsung for VR. Microsoft and Google for AR. Bosch, Google, Liquid Robotics, Accuray etc for robotics. Aconex and Autodesk for BIM. DJI and Yuneec for Drones, Infosys for systems integration and training and so on.

Disruptive change is now a fact of life. But we can do something about it, if we act collaboratively, positively and with commitment. We are not helpless.

It is now time to push back and manage digital disruption to our advantage.

According to a Roy Morgan press release on unemployment (June 1, 2018), 1,316,000 Australians are unemployed (9.8% of the workforce) and 1,251,000 Australians are underemployed (9.3% of the workforce).

The Roy Morgan poll is a more accurate reflection of reality – visit the Roy Morgan site for an explanation of methodology and why the ABS stats are incorrect.

We can’t even begin to address the jobs issue effectively if we don’t start with 20-20 vision. And we need clarity so that we can manage the pending impact of disruptive technologies on jobs that do exist – because many of those jobs won’t exist in the coming future.

An honest appraisal allows us to manage change.

Obfuscation and delusion create a false sense of security and likelihood of waking to reality too late to respond effectively. We need to address this NOW.

No more talking. Here is a real opportunity to make a difference.


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