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John Sheridan

John is CEO of Digital Business insights!

Digital climate change (or the denial of the bleedin’ obvious)

It’s the end of another year and the start of another. Hopefully not another year of prevarication, wandering in circles, navel gazing, staring at ants on the wall, while ignoring all the elephants in the room. Metaphors rule, OK?

There are some big issues in play at the moment. But the biggest issue still remains the digital revolution. The digital revolution is changing the world fundamentally. All other issues are sideshows by comparison.

And digital revolution is the thing that government just doesn’t know what to do with or about.

Digital has already disrupted governments across the world, but they didn’t really identify the cause. They concluded (incorrectly) that the disruption had something to do with brexits, trumps and hansons – the sideshows. They still haven’t understood the digital transformation behind all the citizen uncertainty.

Just like the climate the big interconnected digital picture continues to evolve and change before our eyes, but too slowly for many to really see what is happening, and far too slowly for governments to understand and manage the change to the advantage of our societies.

And digital change is remorseless.

The impacts on our societies are revolutionary. Understand the currents of digital change and you understand the implications. It all joins up.

But it’s not actually about the devices or the communication tools or the software (which is where everybody looks). The revolution is really about the changes in attitude and behaviour that result from adoption and use of digital technologies. And these take time to manifest.

The digital revolution is about the shifting of power to the customer. And that takes more thinking about than is obvious at first glance.

Most organisations don’t quite get that. To respond to that shift in power means transformation that is beyond nearly all organisations, because they are structured to maintain the status quo. So they use digital technology to impart efficiency within.

In these organisations the customer is an external function managed by a sales force, website and marketing department. So these organisations use digital to enhance what they already do.

Not to rethink what things might look like from a new customercentric perspective. In that regard it is easier to start afresh. Google, Uber, AirBnB are the results of customer focused thinking and development.

Most current digital activity still puts the vendor front and centre of everything. “How can digital help us?” Not, “How can digital deliver what our customers need?”

Vendor driven not customer driven, regardless of the words used in the digital strategies. Action is about systems integration not customer relationships.

The government’s Digital Transformation office is a case in point.

Systems integration is important. But should be focused on what a customer now is, not what a customer used to be. The customer is changing all the time.

And power has shifted.

So governments across the world continue to try to make their lives easier through digital, not their customer’s lives. And in many cases they are spending an enormous amount of money, making customer relationships worse than they were, not better.

Take Centrelink for example. The classic case of a government agency that misuses digital for its own interests, not those of its customers.

Ignoring the shift of power completely. The digital revolution is a revolution in customer behaviour, expectation and attitude catalysed by digital technologies.

That is the real change. The change that creates the elephants in the room that are then ignored. Or go unnoticed.

It’s like the “3 card trick” or the “shell game”. Distract people enough with hand movements, shiny objects and patter and you can get away with anything.

The digital revolution is not about the devices, communication tools or the software. It is about changes in attitude and behaviour that result from adoption and use.

And to understand those, you have to stand back from the surface  “froth and bubble” to get some perspective, and fix your gaze below the surface where the currents of digital change play.

Major revolutionary change in attitude and action is under way driven by more connection, more collaboration and more integration. And there is no avoiding it.

There is no sitting this one out.

First class seats or back of the plane? It doesn’t matter if the plane goes down.

Managing digital transformation successfully in your business? Doesn’t matter if the operational environment around you changes radically. And it is.

50% of jobs disappearing because of digital over the next 20 years for example…

That is massive. It is already happening. And it’s a big deal.

And you can’t judge this revolution by the industrial revolution. There are different factors in play, resulting in very different outcomes.

The industrial revolution shifted workers and their jobs from fields to factories. Robotisation, computerisation and automation eliminate jobs. It’s a very big deal.

One of the elephants in the room. With its partner, the  “universal basic income” elephant standing right behind it. Carrying the power to solve Centrelink misuse of digital in one fell swoop.

Anybody watching the elephants? Not really. Not yet.

Attention is still focused on the trivial but fascinating ants on the wall in the corner of the room. “I’m proud of what the government has achieved in 2016…”

Now you might expect that every politician in our government and most governments across the world know at least something about the digital revolution. Perhaps. But they just haven’t thought very deeply about it. About as much as they think about climate change.

A few years ago I discussed with a property developer a blog I had written on the future of commercial property development. My proposition was simple - that the digital revolution would significantly reduce the demand for office space as people continued to adopt and use connected digital devices, became more mobile and able to work from anywhere at any time. A no brainer really…

And it has nearly all come to pass.

His problem was that he had invested heavily in office development in the major cities, and wasn’t pleased with me posting such stories publicly, in direct opposition to the mainstream press lauding the advantages of commercial property investment.

I told him to cut his losses and convert as many developments as he could into apartments. Which he did.

Of course, now even that one is beginning to catch up with him as well.

Why am I telling this story?

Because it just shows how short-term, thinking can be in this country. And then how trapped and affected by long-term, bad decision-making we can all become. We need to think longer yet move faster. Which is easier said than done.

There are many revolutionary issues in play. They all require understanding. But they can all be addressed if we engage in sensible thought and action.

But moving swiftly and sensibly requires being lean and mean…hard to do with huge burdens on our backs.

Australia’s household debt in relation to GDP is now the second highest in the world. Another elephant.

What does that mean?

It means every household today is less financially flexible, is less agile, and has less room to move. And less ability to react and adjust successfully when conditions change. As they do.

It is like watching a giant chess game in slow motion, as the pieces are removed from the board one by one, and the poor king is forced steadily into a corner with fewer and fewer spaces left to play.

50% of jobs disappearing is a significant shift on the board of the Australian economy.

Very high household debt is another.

The transition from full time work to part time, contract and freelance is another.

And the continuing shift of investment into property is a risky move as well.

These factors combine to restrict all moves on the board no matter what pieces are still in play. It all joins up.

50% of jobs disappearing means less income, less tax, more debt, more defaults, no future for our kids, more hopelessness, more suicide, more forced home sales, more frustration with politicians, more frustration with banks, more depression, more people living in cars and on the streets, more pressure on social services and a big, fat mess. Check mate. Mate.

This problem isn’t going to fix itself. And the current strategy just makes things worse. “We have to balance the budget, spend less and reduce government debt”.

The strategy doesn’t impact them. They get paid regardless of their actions. With considerable benefits regardless of what they deliver. Or what the outcomes may be. Just like the banks and corporates. Dodgy leadership. No responsibility.

We actually have to change the game and strategy completely. We have to earn more. We have to use digital to our advantage not keep getting beaten up by it. We have to stop talking about innovation and actually do it.

We have to move in the opposite direction to where we are currently heading – creating and supporting jobs in productive industries, creating a business environment supporting higher incomes not lower, creating more options, promoting less personal debt, accepting more government debt (but for the right things), promoting a well defined direction for the nation (rather than the facile “jobs and growth” mantra), putting less pressure on social services (universal basic income) and delivering a fair go for Australians.

We can’t leave this problem to the market. The market hasn’t seen anything like this before. And anyway, digital is doing to the market what it has done to everything else. Disrupting it.

Digital affects everything.

Digital technology provided high frequency traders with the tools to become parasites on the share trading system – taking a cut from every trade, but adding no value to the market at the end of every day – effectively leveraging a non-legislative tax on the system.

And just like all parasites, the secrecy with which they operate protects them from interference. And regulation is years behind the reality.

What are the implications of this to superannuation companies in Australia, the funds that buy and sell stocks and shares every day?

With a casino, at least you know that every game is rigged in favour of the house. And in Australia, you even know who owns the house.

With the financial markets things are not so clear-cut, transparent, monitored or well managed.

Digital technology has provided the multinationals with the means to shift profits to low-tax or no-tax havens and still manage worldwide business operations, while cocking a snoot at every government across the planet trying to get them to pay tax where they earn the money.

Digital technology has provided smart individuals with the means to milk the system. And governments wring their hands, do nothing and just keep kicking the can down the road and hope that nothing really bad happens. It’s happening.

Just remember what happened in 2008, when derivatives and collateralised debt obligations, and their mismanagement by the ratings agencies, took us into the Global Financial Crisis, from which nothing was learned. Except in Iceland.

Most of the original players are still playing. And playing the same game.

The global derivatives bubble is now 20% bigger than it was before the GFC in 2008. When that bursts, it will be interesting to see what “too big to fail” actually means this time around.

When money is invested in businesses, ideas, research and innovation in our society, it can create jobs, pay wages, reinforce stability and build a platform for future prosperity.

But do banks invest in businesses and ideas, research and innovation? No, They invest in credit cards and mortgages. They encourage more personal debt. They buy up competition, and lobby for even less regulation.

They own or influence 70% of the financial planning market in Australia So be careful where you go for financial advice.

Because, the GFC demonstrated that Australian councils, associations, unions and academic institutions were exposed, because they took advice from banks and ratings agencies that lied to them.

Not a lot has changed. And a royal commission would probably be a good thing.

But while wishful thinking may be fun at the start of 2017, it isn’t very practical. So let’s leave the banks to the politicians for the time being and get back to business.

There are over 2 million businesses in Australia. And most are small.

Some are in productive industries, but many more are in services and support industries. We need to focus on and build our productive industries. They generate the money, the intellectual property, the new ideas, the job opportunities and exports that we need going forwards.

The key productive industry sectors are manufacturing, agriculture, tourism, biotech, greentech, creative industries, ICT, education & training and design driven professional services. Plus some METS and smart trades as well.

Productive industries can create new products and new services, sustainable jobs, high value jobs, scale up, export, create intellectual property and can afford to pay high wages and employ people.

They can and will provide the foundation for a sustainable future.

And about 100,000 productive industry businesses across all sectors have the capacity to scale and grow. Though not all want to.

Of these, 5,000 are “leaders” and 12,000 “fast followers”. We know who they are.

As a nation, this is where we should invest our time, resources and money most productively.

But they need a few things.

They need access and introduction to each other.

They need access to new ideas, innovations and R&D (matchmaking with our university researchers).

They need help with export – promotion of their goods and services to the world and support in export activities.

They need access to design and advertising skills focused on adding value to their products and services as they evolve and develop.

They need access to help and advice with management and workforce skills.

We can and should address these issues collaboratively.

The Toolboxes are designed to help - Manufacturing, Agriculture, Mining & Energy and more to come.

Visit http://manufacturing.digitaltoolbox.org

Visit http://agriculture.digitaltoolbox.org

And the Showcases are designed to promote the best Australian goods and services to the world.

The disappearing job issue is huge, and its impacts are finally starting to become obvious to most people. Mainly because they now see it in their everyday lives, no matter where they are working. Nowhere is safe any more.

We all know somebody affected by digital job disappearance, or we are that somebody.

And by now everybody has recognised the shift to part time, to contracts, the redundancies, the retirements, the restructuring, and the closures for what they are.

The new state of play.

Individual jobs disappear day by day, but it is only the bigger closures and layoffs that capture the front page, radio and television headlines.

Job figures are manipulated and under reported – see Roy Morgan for more explanation. According to the Roy Morgan poll, unemployment in Australia is now at 10.4% with underemployment at 7.1%. Which means 2.249 million Australians are now looking for work, or looking for more work.

And our politicians watch the ants on the wall.

50% of jobs will not disappear tomorrow. But they will disappear. They are disappearing already. And we have to start creating new jobs now. Today.

We have to keep encouraging startups. The more the merrier.

We need to invest in more roads, railways, runways, tunnels, bridges and dams in all the places hit hardest by the changing world. And rather than pull funding from the RDA network, with its local input and local ideas…we should increase the funding dramatically to support the regions hit hardest by digital disruption.

Same with TAFE. We must invest more money in TAFE not less.

Infrastructure building and apprenticeship training will be a good stopgap, while we get on and build a broader and more diversified economic platform.

Because sustainable job replacement has to come from a diversified and healthy business ecosystem based on productive industries. Demand has to define supply. And training and education has to be aligned accordingly.

We can’t keep educating our children for the 1950s.

And the existing employment and jobs agencies are not structured or resourced to handle this situation.

They are structured for a world that no longer exists. And helping people construct a CV is meaningless if there are no jobs available.

Administratively bullying people into job search and interviews is meaningless unless people have skills and talents that are relevant.

And we can’t all cut the lawn, walk dogs or work in aged care.

Effort must be directed into the appropriate training and skills required to support our productive industries – not the nonsense “training” delivered at the moment.

Healthy productive industries can afford to train and employ and should be given funds to train and employ even more people. If government is going to invest in jobs, they should channel the money into productive industries directly, not into employment agencies.

Invest directly into the industries that can expand and grow sustainably.

Water the roots not the leaves. Government currently pays to support the unemployed and underemployed anyway with unemployment benefits, ineffective “how to create a CV” courses and other useless endeavours.

Plus pays the increased medical costs, incarceration costs and reeducation costs, not to mention the political costs of not listening to the electorate.

So far better to spend that money on building more productive industries now.

We can do far better than 2016 in 2017.

So let’s begin now. Who wants to join in?

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Tuesday, 26 September 2017