Archive for Kate Carruthers

Business plan – ultimate waste of time or absolute necessity? #startups

Map Achaemenid Empire

There is an enormous amount of information and advice about creating a business plan for one’s startup.

The advice ranges from the necessity to prepare a traditional narrative form business plan document, to preparing a business model canvas, or using a business planning tool or app.

There are even notions like the idea-less startup, where the team is formed before the startup idea comes together.

No business plan at all is not a good idea

While the consensus nowadays seems to be that shorter business plans are better, some folks even argue that preparing a business plan is a complete waste of time. Others who argue that business plans are a waste of time suggest:

“Throw your business plan in the recycling bin. Instead, focus on your team and on getting to market as quickly as you can.”

What a business needs to think about

That notion of no business plan is all very well. But a new business does need to consider things that are traditionally covered in a business plan, such as:

  • Business purpose – the purpose for which the business exists (some like to include mission and/or vision); what makes the business and its products special or different
  • Markets in which the business will operate – including competitors, geography, since these inform operational matters such as logistics and distribution
  • Sales – how the business will make money, as Guy Kawasaki said recently during his visit to Canva in Sydney: “Sales fix everything“, also need to consider pricing and distribution
  • Business finances – funding sources, financial projections including operating costs and revenue; how the business will make money
  • Business structure – incorporation, board and directors
  • Management and ownership – who will manage the business operations, who owns what and what obligations are to be fulfilled
  • Key personnel – people required to run the business, either contract or staff positions
  • Products or services, innovation, and intellectual property – including how the product will be developed and brought to market
  • Insurance and risk management
  • Legal considerations
  • Business operations – how the business will manage production, logistics, distribution, customer service, sales, accounting, bookkeeping, statutory requirements, etc

If these types of information are not written down it is hard to ensure that all participants share a common understanding.

Quick approaches to business planning

My approach to business planning is to do it in stages, with each stage focused on checking the team’s current understanding of key issues, risks, and obtaining agreement as to sensible next steps.

Lean business model canvas

A good way to start the planning process is to use a lean business model canvas to get the team thinking about the key issues for the business. If the team cannot answer the questions posed in this document then it is a clear risk signifier for the project.

Once agreement is reached on the high level information in the lean business canvas it is a good checkpoint for the team. The canvas also provides a helpful artefact for sharing with potential collaborators and investors. It is a useful way to assess the viability of the business idea.

More detailed planning

For the preparation of the next level of detailed business plan I had traditionally used the narrative form document with charts and tables. However, recently Avis Mulhall put me onto a business planning tool called Live Plan. I’m now a total convert to this approach (please note that I have no affiliation with Live Plan, just find it a very handy tool).

This kind of tool asks the right questions and enables the team to prepare a good looking presentation document that includes sensible categories of information.

This more detailed plan provides another useful artefact for sharing with potential collaborators and investors.

Quick business planning

For a few startups I’m working with, the teams went through the entire planning process outlined above – including lean canvas and detailed business plan – in a single day.

The business planning process does not have to be onerous.

Business planning at its best

At its best, business planning is about the team asking sensible questions about:

  • how the business will work,
  • how it will find and keep happy customers,
  • how it will make money,
  • how the risks will be mitigated,
  • and how the rewards for success will be shared among the founders and investors.
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Predicting success #startups

Un bonobo mâle du parc Lola ya bonobo

“The only major personality trait that consistently leads to success is conscientiousness.” via Business Insider

In large companies personality tests and similar instruments are often deployed to provide people with better insight into their own and team performance.

Over the years I have participated in many of these – for example, Myers Briggs, DISC, Belbin Team Roles, Hermann Brain Dominance, 16PF, Big Five Inventory, etc.

Many people debate the efficacy of any or all of these instruments. However, the primary importance of these kind of instruments is the opportunity they provide for people to reflect upon their personal and work preferences. They also provide an opportunity for people to consider how best to participate in teams and to collaborate with others in a work context. These personal reflections and insights are the true value of these personality profile tools in the workplace.

Startups rarely have the luxury of investing time or money into administering these kind of instruments for their teams. This means that personal traits and interpersonal skills are not explicitly considered as part of the setup of a startup.

For co-founders and investors due diligence on the business is typically about the ‘hard’ data – budgets, sales targets, capital – rather than on ‘soft’ skills of the startup team.

Success, focus, and startups

In recent times I have been pondering how to assess the soft skills of startup teams. The one trait that keeps coming up is conscientiousness.

In the long run, brilliance and inventiveness are less important than the ability to focus and persist in the everyday tasks that accrete to make a successful business.

As Thomas Edison said:

“Genius is one percent inspiration, ninety nine percent perspiration.

Related research on the Big Five

How Universal Is the Big Five? Testing the Five-Factor
Model of Personality Variation Among Forager–Farmers
in the Bolivian Amazon

 

Startup, stay in business.

luck or hard work?

The biggest hurdle facing most startups is to stay in business long enough to be successful. If they accomplish this then they have the chance to turn into an ‘overnight success’ after many years of hard work.

The numbers are against most new businesses. Many new businesses fail within the first three to five years. Even inside well-resourced large companies the challenges of bringing new products to market see many fail to make it.

This means that every startup sets out on a journey with the odds stacked against it. Every new startup is a triumph of optimism over evidence of other startup failures.

The real challenge for each startup is to stay in business. And sometimes hard questions must be asked to help the business survive.

The important factors in small business survival are:

  1. Focus – ability to say no to interesting opportunities that do not support the strategy
  2. Revenue – realistic sales targets with concrete and realistic plans to achieve them
  3. Cost control – ability to resist non-focused expenditure
  4. Customer focus – understand the specific market or markets and deliver what they will pay for; be ruthless with products that they don’t want
  5. Competitor analysis – know what competitors are doing and how to respond (if at all)

Focus

As Mick Liubinskas is well-known for telling entrepreneurs, startups must “focus or fail“. It is easy for a new business to find many things that it could possibly do. Often it is more important to identify the things that the business will not do (or will not do now).

One of the most important things to know is what things the business will absolutely not do. Out of scope items are more critical than in scope items, since they determine the boundaries within which the business will operate.

Survival

Everyday that the business survives and makes money is a good day. Many startups have big dreams. But if the business cannot survive to realise them then those big dreams will be crushed.

Cashflow and sales are nourishment for the business. There is a temptation to say “more capital will solve our problems”. However, this is not always the best course of action. The more investors a business has, then the more obligations one has to deliver for the investors.

Substance over style

There is a temptation for many startups to focus on external impressions and public relations at the expense of doing the hard work. That is, the hard work of setting up proper business management systems and processes to support the enterprise. While marketing and public relations are important, if the substance of the business is not well formed, the business will likely struggle to scale (or even to survive).

Leadership and management

Typically people startup a new business due to passion, and very often they do not have previous experience in leadership and management.

Business leaders undertake serious roles with obligations to shareholders, investors, customers, and staff. The fiduciary duties associated with business leadership are often not common knowledge.

Some things to do…

  • Set up sound management and operational processes and systems to support the business
  • Clearly define roles and responsibilities within the business
  • Have a clearly documented business plan together with key performance indicators to track progress
  • Set up a business support or mentor network – get advice from people with experience (and be willing to act on that advice)
  • Read up on why other businesses failed and work out how to avoid the same pitfalls
  • If in doubt, seek professional advice, and be smart enough to take it

Some useful links from the Australian Securities and Investment Commission (ASIC) about running a company:

Articles on business failures

 

 

Jobs free future: Machines v Lawyers

Law books

 

“As information technology advances, the legal profession faces a great disruption.”
Along with this disruption come serious questions for the future of legal education, legal careers, and the nature of legal business models.

In Machines v. Lawyers Professor John O. McGinnis outlines the five key areas of legal practice that are under threat of disruption by ‘machine intelligence’:

  1. discovery
  2. legal search
  3. legal forms
  4. legal memos or briefs
  5. legal analytics (to displace lawyers’ hunches)

These are the basic areas of work that have built up the skills of young lawyers for generations, and which have provided law firms with a steady income. As these tasks become automated, the real question arises: do we need so many lawyers? And, if we do need them, then how do we build up their legal skills post-law degree? How can a law firm ensure good revenue?

It also raises some interesting questions about legal expertise for computer programmers – lots of changes ahead in the jobs free future.

Certainly it is food for thought for the legal community.

Professor McGinnis ends his article on an optimistic note for layers though:

So long as there is law, however, we will need lawyers to offer interpretations of difficult texts and to smooth legal difficulties in the most important transactions.

 

Professor John O. McGinnis is the George C. Dix Professor in Constitutional Law at Northwestern University School of Law

Turf wars on the frontiers of the sharing economy

it's the future stupid

The sharing economy is turning into big business now, with companies perceiving a potential advantage: Looking to save money, big business dives into the sharing economy.

And, as this new economy grows, there will be turf wars between the old and the new world. A recent headline on Mashable read “New York Goes to War Against Airbnb for Disrupting Hotel Business“.

I’ve been expecting to see headlines like this for a while, as governments and old economy businesses realise that their revenue models are being disrupted by new businesses in the so-called sharing economy.

Sharing economy?

It is ‘so-called’ because what is termed the sharing economy really seems, for the most part, to consist in increasing the utilisation of existing assets already held in private hands.

Thus Airbnb enables owners to capitalise upon their existing excess housing capacity to earn revenue, while UberX enables car owners to use their existing asset to earn revenue.

This new economic activity is powered by the maturing of mobile technology and the development of clever peer-to-peer applications. This phenomenon builds upon the foundations of social media and the Web 2.0 revolution of the mid-2000s. In the sharing economy we see the unlocking of earning potential from people’s existing assets.

It is interesting that this phenomenon emerged after the global financial crisis, when consumers sought additional revenue sources as traditional work remained scarce for many in the US.

Organisations like Airbnb and Uber are on the frontier of the sharing economy. And this frontier is a place where intermediary businesses are being displaced by the democratisation of economic activity.

Governments are just now beginning to perceive the potential for this kind of economic activity to disrupt their existing revenue collection model. Apart from traditional corporate taxation, the economic activities of these new kinds of businesses do not fall within existing tax raising processes.

Taxation and Government relations

Yet, now that these companies are reaching sufficient scale, they are coming to the attention of various governments around the world. This is requiring these companies to rethink their relation to taxation and local regulation.

For example, Airbnb, which has always resisted hotel taxes being applied to its business, recently indicated a more positive view to hotel taxes being applied to their business: Airbnb Is Suddenly Begging New York City to Tax Its Hosts $21 Million.

Airbnb has even pointed out that New York city is not setup to receive hotel tax payments from Airbnb on behalf of people letting their apartments.

Governments are not really setup for collecting business taxes from the multitudes. This increases the need for governments to explore e-government and electronic delivery of services. It also means that governments need to start rethinking the boundaries of their various constituent groups – since companies, individuals, and collectives now start to have fuzzy boundaries.

The boundaries between personal and business activity are already starting to blur with the emergence of the sharing economy.

Regulation

This highlights some issues for the sharing economy. How do these organisations fit into the social and economic structures of government? How do these sharing economy organisations, which are often loose networks of individuals, comply with things like health and safety standards, insurance, and contribution to taxation systems?

Over many years western society has created a safer lifestyle for people by regulating certain industries to protect health and wellbeing. And, while some might argue that the nanny-state has gone too far, when disaster strikes the populace often seek regulation for their protection. This is why fire codes have made modern buildings so safe in comparison to the past.

Democratisation of economic activity

With the emergence of the sharing economy there is a growing tension between traditional corporate modes of organisation, such as government and large corporations, with new kinds of collectivist modes of organisation that are looser and more fluid.

These new models of organisation provide an umbrella for individuals to participate in economic activity in ways that were previously impossible. It is a kind of democratisation of economic activity for individuals, enabling them to scale their operations using web and API driven solutions.

This unlocking of the excess economic capacity of assets that are in the hands of ordinary private individuals is the next wave of economic activity.

How the tension plays out, between the traditional corporate organisations and the emerging collectivist organisations, will be very interesting.


Inspiring millennials

Enactus UNSW Pitch Fest

Millennials or Generation Y have been getting a hard time in the media for a while now. They are alleged to be entitled, they don’t buy cars (which will apparently destroy the economy), and they are said to be extraordinarily optimistic in spite of the economic circumstances into which the emerge as adults.

Enactus UNSW

But that is not my experience of millennials. It was inspiring to meet the young people at Enactus UNSW earlier in the week at their pitching competition.

There I found committed and engaged people who are working to make the world a better place. They were pitching projects to help with youth mental health issues, recycle computers and get them to community groups, provide business support to social enterprises.

The diversity of ideas was remarkable, the passion and enthusiasm encouraging. The university students who participate in these projects are getting valuable experience for their post university lives. And they are also gaining valuable experience in working to create sustainable business solutions. It is what I like to call a win-win.

More information about Enactus UNSW here

Enactus UNSW Australia

 Quiz

Why not try the Pew Institute’s How Millennial Are You quiz?

Trade unions and the jobs free future

Image: Eight-hour day banner, Melbourne, 1856 (Wikimedia Commons / Creative Commons).

Background to the jobs free future and trade unions

Recently I wrote about the jobs free future, where the traditional model of a job for life is dead and industries that were familiar employers during the twentieth century are significantly reducing their need for labour. The jobs free future represents a major structural change to the global economy.

Venture capitalist, Steve Schlafman noted in a recent post that we are seeing the Uberification of the US Service Economy, and the same is likely to occur in Australia. Australian industry is being hollowed out now, with new job losses announced regularly. In recent times we’ve seen the car industry in Australia close down, Qantas reduce local jobs further, BP close their Brisbane refinery, and CSIRO announce job cuts.

And, while Ross Gittins assures that all of these job losses do not mean that we’re all doomed, it does demonstrate the future trajectory of traditional work in this country. The future of low skilled and manual work is not promising, and the new jobs will likely be in services, skilled, and digital work. Callam Pickering reported, in relation to Reserve Bank Governor Glenn Stevens’ speech on Economic Conditions and Prospects, that:

“Our economy will lose some manufacturing jobs but we will gain jobs in mining and services, in health and professional services, and in industries that we do not currently understand or haven’t been invented yet.”

Source: Callam Pickering, Why she’ll be right in the long run

What is not made clear here is that the jobs of the future are not likely to be stable full time jobs. They are more likely to be portmanteau jobs, where lots of little jobs are undertaken. And life in the world of a task based worker is not an easy one, as recounted by Brad Stone in My Life as a Task Rabbit.

Nor can every worker from old industries be retrained and redeployed into the emerging industries, as Michael Bloomberg commented:

“You’re not going to teach a coal miner to code. Mark Zuckerberg says you teach them [people] to code and everything will be great. I don’t know how to break it to you . . . but no.”

Trade unions as businesses

In this context it is interesting to consider unions as a business. And, like most other businesses, unions face challenges from the jobs free future.

Trade unions have served their members (a.k.a. customers) well to date by providing collective bargaining in relation to workplace terms and conditions . During the past century or so Australian unions have lobbied to achieve key employment and workplace reforms, from which most Australians benefit today, including:

Basic Wage Annual Leave Award wages
Penalty Rates Maternity leave Superannuation
Equal Pay for Women Health and Safety and Workers’ Compensation Sick leave
Long service leave Redundancy pay Meal Breaks, rest breaks
Unfair Dismissal Protection [Source: Australian Unions]

The benefits of these reforms to workers are undeniable. However, they are predicated upon a world in which work is regular, predictable, and at least semi-permanent. The future of work is not like that; it is more likely to be disjointed, irregular, and impermanent for many workers. Further this model was predicated upon large employers of mass labour within an industry with which to bargain, and it was also reliant upon the notion that threats of labour withdrawal could force change. This is increasingly untrue, and employers have many options with which to respond to threats to withdraw labour.

The question is how unions will shift their business model to support customers who are not part of the regular routine world of work. What kind of collective model can support workers who move away from permanent or semi-permanent work within a single industry to task based and piece work across industry boundaries? And, what will this kind of shift mean for union funding models?

Further, how will unions manage in a world where the government is actively seeking to reduce union access to workplaces, remove the right to boycott, reduce or remove penalty rates and other conditions?

Core business

Historically, the funds held by unions are derived from a broad based union membership among the working population. However, the Australian unions have already experienced a substantial drop in membership over the past few decades, as noted by the Australian Bureau of Statistics (ABS) late in 2013:

“The proportion of employees who were trade union members in their main job has been steady at 18 per cent for the last three years, according to the Australian Bureau of Statistics (ABS). There were 1.8 million people in August 2012 who were trade union members in their main job.”

It is worth bearing in mind that the number of employed persons in Australia as at February 2014 was approximately 11 million. The following ABS chart from 2011 shows the problematic position of unions even before one considers the digital revolution and the jobs free future. Source(s): Employee Earnings, Benefits and Trade Union Membership, Australia

Further, the Brotherhood of St Laurence reports that youth unemployment is reaching a crisis point, with Tony Nicholson noting:

“What it means for all these young people is that they’re at risk of never being able to get a foothold in the world of work,” he said. “And in our modern economy that means that they’re really being sentenced to a lifetime of poverty.”

With a declining membership, and consequent reduction in funding, the unions were already facing an uncertain future. Now we can add to their woes the disappearance of traditional industries and jobs. This also means that unions face increased funding constraints for future business growth strategies. The real question for unions is can they survive as the jobs they seek to protect disappear in increasing numbers?

Governance and management

In addition to the decline in membership, trade unions face other challenges. For example, the recent and ongoing scandals of the Health Services Union (HSU) with Craig Thomson and Michael Williamson; and the Construction, Forestry, Mining and Energy Union (CFMEU) bribes scandal that is now widening to other building unions.

The Abbott government recently announced a  Royal Commission into trade union governance and corruption and this is likely to further destabilise public faith in the union movement and it close associate the ALP. The stories emerging to date have indicated substantial organisational, management, governance, and cultural issues within the union movement.

Some trade unionists are starting to ponder the future of their business, such as Dustin Halse in 2012: Is there a place for trade unions?

The Australian Council of Trade Unions (ACTU) has released a number of papers exploring the future of unions in Australia, for example,  Urgency & Opportunity: union membership trends and observations 2012.

The chief response seems to be an ACTU campaign called Secure Jobs, Better Future, which fails to address the structural causes of job ‘insecurity’.

“Secure Jobs. Better Future is a national campaign to improve the rights and working lives of the 40% of the Australian workforce employed in insecure work.”

Source: Secure jobs, Better Future campaign – ACTU

However, there appear to be few concrete proposals for halting the decline in union membership. Nor does their appear to be any notion of how to approach the looming structural shift due to the jobs free future.

The future

Considering unions as businesses, the issues they face include a declining customer base, declining revenue, lack of customer focus, and problematic external conditions. The lack of customer focus is especially problematic. It is always fatal for a business to lose sight of the customer. Rarely can a business recover easily from a loss of customer focus – just look at Qantas and its current junk bond status. Further, the governance and management issues that have already come to light in some unions are likely to be reinforced by additional information from the Royal Commission.

Some unions are already seeking to address the skills gap in their management teams by accessing the National Workforce Development Fund to provide management training to their staff, for example Certificate IV in Frontline Management.  However, unions were only required to educate their personnel on union governance practices commencing in 2013:

“Changes to the Fair Work (Registered Organisations) Amendment Act 2012 on Financial Governance required all union officers with financial decision-making responsibilities (including elected officials, finance staff and members of management committee) to do FWC Approved training within six months of June 29th, 2013. In some circumstances, Unions now have until mid-2014 to comply. “

This means that the unions are now working to professionalise their management and governance practice in a hostile environment. They are doing so while fighting a rearguard action with the Abbott government about working conditions (for example attempts to roll back penalty rates and conditions), and while a Royal Commission is investigating the union movement.

If ever there was a time that workers needed organisations to represent their interests, that time is now. As Halse notes:

“In a political economy governed increasingly by the market-oriented doctrine of neo-liberalism, trade unions should not so easily be dismissed.”

However, it is hard to see how unions will survive the combined onslaught of poor management and governance, declining membership, and the decline of key industries that they have relied upon for the past century.

If the unions are not up to the challenge, then how will we protect rights and working conditions from deteriorating? How will we ensure that people participating in new forms of work are not exploited?

These are very real challenges that the union movement must ponder. They must step away from their internecine struggles within the unions and the ALP factions to focus on their real business and their real customers. Otherwise the union movement will continue to dwindle into irrelevance, and workers will lose their hard won collective bargaining capability.

Perhaps Alex White is right to think that the real future of unions is crowdfunded and crowdsourced:

“…decentralised, leaderless, temporary movements, empowered by online organising platforms like MoveOn, Change.org, Avaaz, Twitter and Facebook.”

What is the future of work? Zero hours, surveillance, robots and the jobs free future

The future of work has been on my mind a lot over the past few years. It seems  that the future of jobs is bleak in a number of ways. For example, zero hours, surveillance, and robots are on the horizon for many workers. This is all part of what I’ve come to call the ‘jobs free future’.

This post about the future of work was originally inspired by Marissa Mayer’s pronouncement in early 2013 banning work from home at Yahoo!. The ever-present drives for efficiency and lower costs mean that businesses are changing the way we work, and they are also changing the way that we are contracted to work.

Digital Panopticon

Increasingly we live in a digital panopticon and technologies like CCTV, drones and the internet of things are emerging and merging to provide mechanisms for better and more omnipresent surveillance of  people in all aspects of their daily life. When we add this growth in surveillance to other factors, such as a shift  to lower economic growth rates and changes in the traditional twentieth century employment contract, for example the introduction of zero hours contracts, then things are really becoming quite different for workers.

Higher Skilled Jobs Disappearing

Headlines like “Cisco to cut 4,000 jobs” have become a regular sight and it is clear that it is no longer only low skilled or manufacturing jobs that are disappearing. The jobs that are going are increasingly higher skilled and middle class roles. Thus while “Robot Serves up 360 Hamburgers per Hour” is an example of the disappearance of low skilled jobs, we can also see automation impacting other industries. The young woman who used to hand back my dry cleaning is gone now, replaced by a large red machine that dispenses my laundry with nary a snide remark, and it gives a 20% discount too.

the future of workLaw is one good example of an industry that is beginning to be disrupted. The first phase is shipping expensive western jobs to lower cost geographic regions, thus legal process work is being outsourced to places like India or the Philippines. This is removing the entry level jobs that law school graduates once used to get a step up on the rungs of their new career. The next phase is automation of other legal processes within law offices, for instance adoption of legal decision support systems. Thus firms will require fewer more senior personnel and hardly any of the para-legal personnel they once required. All of this will be framed as ‘efficiency’ gains for the business. But what it really translates into is a substantial reduction workers required in the legal industry. A consistent pattern across all industries is the implementation of solutions that take human workers out of the business process and replace them with machines.

This automation trend started with the early days of computers and has gathered pace as artificial intelligence technology became a commodity and internet connectivity became ubiquitous. Typically, if a business cannot remove the human workers by means of technology, then they will shift the jobs to the lowest cost region. Thus, at best, we are seeing a downward pressure on wages and salaries, and at worst complete removal of jobs from the global economy.

Casualization of the Workforce

Many new businesses or startups rely upon outsourcing to reduce costs. This means that where once a new business would create a number of jobs at various levels they now use platforms like Air Tasker or Task Rabbit. With the adoption of these tactics by businesses there is increased casualization of the workforce. This casualization of the workforce removes the notion of job security that enables workers to plan effectively for their future by getting a mortgage or affording health insurance. Casualization of the workforce shifts the buying power of workers from the current pattern, where they are good risks for lending by banks due to their regular pay cheques, to poor risks. These shifts in spending power of the workforce will have impact on industries like retail and telecommunications.

In the US the Wall Street Journal (WSJ) reported that “A Jobless Recovery Is a Phony [sic] Recovery. More people have left the workforce than got a new job during the recovery—by a factor of nearly three”. Further WSJ noted that “Long-Term Jobless Left Out of the Recovery. Despite Improving Economy, Prospects Are Bleak for Millions of Unemployed”.

Real Jobs for Real People?

In Australia, according to the Australian Bureau of Statistics (ABS), there are approximately 140,000 job vacancies as at November 2013. And in December 2013 the ABS reported that unemployment increased to 716,000 while the unemployment rate remained steady at 5.8%. Given these numbers it is unlikely that getting the unemployed into education or training is going to help very much unless the job supply is increased substantially. Perhaps they can all become entrepreneurs and start micro-businesses?

If this is where Australia sits regarding unemployment when coming out of a mining boom, with a Triple A credit rating and having successfully negotiated the global financial crisis,  then is does not presage well for the future. The mining boom is winding down and jobs will disappear in that industry anyway due to automation (as reported by the University of Queensland).

Australia is on the cusp of a dilemma. We face an ageing population that is about to put substantial pressure on the welfare budget, reduced traditional employment opportunities for both low and higher skilled workers, and the end of a jobs-rich mining boom. Heavy industrial manufacturing is all but dead in Australia, and the car industry  is dying too. This is clearly demonstrated by the recent exit of Holden leaving Toyota as the last remaining Australian car manufacturer (and even Toyota is likely to exit the market over the next few years). Then there will likely follow the demise of car component manufacturing in Australia too, unless the component manufacturers can find other markets.

Traditionally construction and retail picked up the slack in the Australian economy during lulls in mining booms. However,  the continuing weak performance of Australian retail makes it an unlikely contender for jobs saviour.  And while we are seeing construction increase as the mining boom eases, neither industry is likely to have the capacity to fill the increasingly large gap between the number of available workers and suitable jobs. This issue is reflected by the markets in lower currency rates based on weak jobs data. And a lowering of the currency, while helpful for export driven sectors, reduces consumer purchasing power to support the retail and housing markets.

The Future of Work?

There are no obvious replacement industries to fill the gap left in the traditional jobs market in any of the western countries. We are facing enormous structural change,  and there is an emerging crisis. What is to be done about a post-jobs future? I wonder who in the Government and Opposition is thinking about these issues? It seems kind of important.

Disclosure: For a considerable part of my career I worked on large scale operational efficiency and innovation projects that removed workers from business processes and implemented process automation; where that was not possible work was typically outsourced to lower cost regions.

A new year and a new theme: balance

Yoga Porn in Swamp - Tree Pose via catwommn

Photo courtesy of catwommn

I don’t do new year’s resolutions since they’re usually a flop by early in the new year. Instead, I pick a theme that will inform my thinking and behaviour (hopefully in positive ways) for the year.

I’ve been thinking a lot about balance over the past few months. And as we start a new year it seems appropriate to adopt balance as my theme for 2014.

Perhaps this is inspired by focusing on balance during the recovery from a nasty ankle sprain in late 2012? Or perhaps it is all the discussion, that still continues, of work-life balance?

The notion of work-life balance has always been problematic for me.  This is mainly because it puts work before life, and also because I don’t seem to be able to find a way to do it. Many interpretations of work-life balance seem to assume equal time for each. And this seems like an impossible task.

While rehabilitating my ankle it became clear that balance is not necessarily standing still,  perfectly balanced like in the yoga tree pose (or vriksasana). But rather balance consists of making constant adjustments, some very tiny and others large, to maintain that balance.

Of course, the initial step is working out what balance looks and feels like.

This is year is going to be the time for identifying what adjustments need to be made for balance in my life. To make space for living a meaningful and productive life with good relationships and space to enjoy the world.

It seems that to achieve those goals the first thing that needs to go is anxiety, and the second thing that needs to go is the phrase “I have to”.

I suspect that other words and unconscious thought-patterns that currently shape my thinking and behaviour will also have to go. It will be interesting to work out what they are.

 

 

Future of Banking

it's the future stupid

The future of banking is interesting to consider in the light of the digital revolution. Retail banking as we have known it stands at a crossroads, with new competitors and new technology driving change at an enormous pace. It is worth looking into the history and present of banking to ponder some possible futures for banking.

My first job was at Westpac in their Wales House building at 66 Pitt Street in Sydney. In those more genteel times we had a tea lady who brought around morning and afternoon tea along with iced vovo biscuits. The banks were open between 10 am and 3 pm Monday to Friday and customers deferentially doffed their hats to the powerful branch managers. There was little competition and folks tended to stay with one bank from cradle to grave. In those days banking had a both a physical presence and a deep connection to a local place that is lost now.

But now, as Brett King, the banking guru says

“… banking is no longer somewhere you go, but something you do…”

Now technology is driving consumer behaviour and expectations for all businesses, and banking is no different to any other industry.

Some of the key technology trends that are having a big impact on banking include:

  • Mobile
  • Ubiquitous wifi
  • Realtime
  • Personalisation
  • Peer-to-peer
  • App ecosystems

The other technology trend that is influencing consumer attitudes and behaviours is the broad ability to obtain digital access to media. Platforms like iTunes, Bit Torrent and on demand television are creating a culture that is unwilling to wait. We don’t wait long for music or books now with Amazon Kindle and iTunes.

We are seeing new behaviours from consumers. Applications like Facebook have trained ordinary people to collaborate and share online in realtime.

This shift in expectations means that consumers are ripe for disruption by new entrants that can adapt to these new expectations.

Due to these shifts in user expectations banks are being forced to move from “when we can” to “realtime” service and transactions.

Banks in Australia have dragged their feet on realtime interbank payments and settlements for years (killing off the Mambo project a few years ago).

Enormous growth in online retail commerce, mobile peer-to-peer payments and near-field chips that convert mobile phones into credit cards and digital wallets means that realtime processing is coming even if the industry doesn’t want it.

This means that we will see increased pressure on financial services organisations to deliver realtime services – this ups the ante on 24×7 operations for smaller players.

These trends towards realtime and mobile banking are made made possible by the vast penetration of smart phones and mobile devices in Australia, with penetration rates of almost  90% in 2013.

Reinforcing the technology trends is generations of people who have only been part of this highly inter-connected and realtime world. They do not recall a time before the device in your hand could access most human desires.

“We call them Generation C — connected, communicating, content-centric, computerized, community-oriented, always clicking. ”

New Entrants and Disruptors

The financial services world has not been subject to many new entrants and disruptors. This is mainly due to regulation and barriers to entry such as capital adequacy requirements. However, this is changing and technology enabled competitors are now entering the market. Some disruptors are not even financial services organisations. But their business models offer challenges to traditional ones.

  • Non bank organisations
  • Typically playing in NCP or peer-to-peer space
  • Front end intermediaries
  • Using technology to deliver customer service
  • Differentiating on service

Non-traditional competitors are emerging and they are bypassing traditional banking systems

The emergence of new entrants over the past 5-10 years has seen non-financial services organisations moving into offering financial services. We have seen retailers like Tesco, Walmart, Coles and Woolworths leveraging their existing distribution networks and strong retail brands to diversity into financial services. Some are white-labeling products, using companies like GE as their backends, and others are building their own.
non-bank-emerging-competitors

The other thing to note is that several new entrants are major technology organisations, like Apple, Google, and Facebook. They are focused on expanding monetisation opportunities into financial products.

A common way for these new entrants is to start with credit cards or other non-cash payment facilities and then extend into other products.

Distribution is key and new entrants either leverage existing relationship for distribution or use social platforms to grow distribution networks. Organisations with established relationships have an advantage over newcomers, yet we are seeing few of them leverage their advantage.

Key factors enabling disruptors

Agile methods
Nimble – no legacy systems to slow them down
Connecting users but using existing back-ends
Experimental – fail fast, then pivot

Opportunities

Adopt agile approaches – lean startup
Partner with organisations that have nimble technology
Ignore legacy technology – go around it
Develop digital partnerships
Don’t try to do it all
Focus on building foundations then expand