Business as Unusual

At the time of writing, the Victorian Government has decided to defer the easing of Covid-19 restrictions, in the wake of a sudden spike in community transmissions. There was always a risk that opening up too much, too soon, would result in a second wave of coronavirus infections, as people returned to work, as shops, restaurants and bars started to re-open, and as people began socializing on a larger scale. There is even talk of more drastic local restrictions in so-called hot-spot areas.

Meanwhile, the deferment (and the extended State of Emergency) is creating further uncertainty for businesses in an already fragile economy. In recent weeks, I have been attending a number of on-line seminars on the broad theme of business in the post-pandemic era. Variously described as the “new normal”, the “new new normal”, and even the “next normal”, things are unlikely ever to be the same, and not many punters are willing to bet on the resumption of business as usual.

Here are some of the challenges and opportunities that lay ahead:

Future of Work

As employees head back to the workplace, employers will need to balance the need for productivity and business continuity with the obligation to provide a safe working environment. Some staff can’t wait to get back to the office, some will prefer to continue working from home (if they can), while a large number would probably welcome a mix between the two. This has prompted debate on introducing a 4-day working week, the introduction of team rostering (e.g., alternating one week in, one week out), and possibly the end of hot-desking.

Overall, new work practices will necessitate a re-think on office space, workplace location and employee facilities. Some commentators have predicted that companies will need to extend their current premises (to allow for adequate space per employee); while others suggest CBD workplaces may need to decentralize towards more suburban or regional hubs (to reduce commuting times, to relieve congestion on public transport and to allow people to work closer to home). The latter may also stimulate local economies as people reallocate their commuting costs and daily expenses into local shops, cafes and services.

Innovation

Change and uncertainty should drive companies to innovate – in fact, former Prime Minister Malcolm Turnbull recently spoke about innovation in light of the pandemic. His view is that current technological trends will only accelerate, and industries facing disruption will be displaced even faster. So no time for complacency, and no point waiting for normal service to resume.

Necessity has driven many retail and restaurant businesses towards more online engagement with their customers, and those that have been shown to be creative, resilient and agile appear to have found a way through the lock-down. Equally, many businesses used to delivering their services in person have had to find ways to embrace digital solutions – no doubt enhancing their digital transformation in the process.

Self-sufficiency

We’ve heard about the need for food and fuel security – especially when supply chains are disrupted, and when countries pursue “domestic first” policies in relation to essential goods and commodities.

While Australia is a net food exporter, we still have to import many daily staples. Primary producers have come to rely on lucrative export markets, so in the light of trade wars and import bans, local farmers and consumers alike will need to adjust their expectations – on choice, price, seasonal availability and market volumes.

Australia is also in the enviable position of being potentially self-sufficient in energy – but although we are rich in renewables, we are still reliant on fossil fuels, and recent events revealed our vulnerability to volatility in the oil markets. It suggests the current environmental and economic debates around weaning ourselves off coal, oil and gas are only going to become more critical.

There has also been a call for a larger domestic manufacturing base – not only to enhance workforce skills and productivity, but also to ward off supply chain disruption. Some have called for a return to domestic car production. Even if that were desirable, let alone a realistic option, I don’t imagine that anyone would welcome the bad old days of churning out Australian-made gas guzzlers that nobody wants to buy. We would need to advocate for smarter cars, energy efficient and non-fossil fuel vehicles, environmentally sustainable materials and manufacturing process, and possibly different car ownership models (in line with the trend for ride share businesses and smart city solutions) and more creative financial incentives to the industry than wholesale subsidies.

Other manufacturing sectors that are getting attention include medicines and medical supplies (surely there must be a market for domestically-produced PPE made from bio-degradable materials?), clothing (again, an opportunity for environmentally sustainable materials and manufacturing processes), processed goods (after all, we already have much of the raw material), domestic appliances and technology.

One area where Australia has also proven vulnerable is in recycling. China and the Indian Sub-continent are pushing back at taking and processing our exported waste. So we have to get smarter at recycling household waste (paper, plastic, glass and metal) especially if in a post-pandemic world we see a return to single-use items and additional sterile and protective packaging for foodstuffs and personal products. We also need to look at e-waste, and find ways to extract more recycling value from obsolete devices.

The lock-down during the pandemic has also highlighted an opportunity to re-connect with the “make do and mend” mentality of our parents and grandparents. Again, if supply chains are disrupted, buying a replacement item might not be an option. But often, nor is it possible to buy replacement parts – either they rely on the same supply chains, or there are no user-serviceable parts available. What if manufacturers and distributors had more of an obligation to take back and recycle their products, or to include more interchangeable parts in their designs, and enable consumers to become more self-sufficient in repairing and maintaining their electronic and electrical goods?

Federal, state and local governments have a huge role to play here – from mandating the use of more recycled and recyclable materials, to incentivizing recycling schemes, from supporting local repair workshops and “maker” projects, to creating more common and open standards around components and replaceable parts.

Finance and Digital Money

At a time when many people are on reduced income and/or or relying on government welfare, the pandemic has also demonstrated a need to rethink our relationship with money in general, and cash in particular.

The latest round of QE by governments and central banks to offset the financial impact of the pandemic has highlighted once again the fragility of current monetary policies, including fractional reserves and treasury buy-backs. The decision to print money on demand will only increase public appetite for crypto currencies as a legitimate store of value – including stable coins and (ironically) central bank digital currencies – and paradoxically, accelerate the removal of physical cash from the economy.

In times of crisis, digital currencies can also transfer money to remote recipients faster and cheaper than traditional means (i.e., incumbent remittance businesses, bank transfers, payment gateways), and actually increase transparency and traceability.

The lock-down also revealed that many people did not have a sufficient financial buffer to withstand job losses, especially in the casual workforce and the so-called gig economy. This suggests a new approach is required for how people are remunerated for their labour and services, taxed on their income, and incentivized to save for the future. Current systems cannot address these issues because they are over complex, far too rigid, and totally dis-empowering of the people they are designed to serve and support.

Digital currencies (along with the benefits of Blockchain technology, and the new economic models represented by digital assets and tokenization) will enhance trends such as decentralization, peer-to-peer networks, trust-less systems, fractional ownership and more sophisticated barter structures.

Bitcoin was created in response to the GFC, it has now come of age in the post-COVID-19 era.

Next week: Antler Demo Day – Rewired

 

 

 

 

 

The Maker Culture

London’s newly re-opened Design Museum welcomes visitors with a bold defining statement of intent. According to the curators, there are only designers, makers and users. To me, this speaks volumes about how the “makers” are now at the forefront of economic activity, and how they are challenging key post-industrial notions of mass-production, mass-consumption and even mass-employment. Above all, as users, we are becoming far more engaged with why, how and where something is designed, made and distributed. And as consumers we are being encouraged to think about and take some responsibility for our choices in terms of environmental impact and sustainability.

Design Museum, London (Photo: Rory Manchee)

Design Museum, London (Photo: Rory Manchee)

There are several social, economic, technological and environmental movements that have helped to define “maker culture”, so there isn’t really a single, neat theory sitting behind it all. Here is a (highly selective) list of the key elements that have directly or indirectly contributed to this trend:

Hacking – this is not about cracking network security systems, but about learning how to make fixes when things that don’t work the way that we want them to, or for creating new solutions to existing problems – see also “life hacks”, hackathons or something like BBC’s Big Life Fix. Sort of “necessity is the mother of invention”.

Open source – providing easier access to coding tools, software programs, computing components and data sources has helped to reduce setup costs for new businesses and tech startups, and deconstructed/demystified traditional development processes. Encompasses everything from Linux to Arduino; from Github to public APIs; from AI bots to widget libraries; from Touch Board to F.A.T. Lab; from SaaS to small-scale 3-D printers.

Getting Sh*t Done – from the Fitzroy Academy, to Andrea de Chirico’s SUPERLOCAL projects, maker culture can be characterised by those who want: to make things happen; to make a difference; to create (social) impact; to get their hands dirty; to connect with the materials, people, communities and cultures they work with; to disrupt the status quo; to embrace DIY solutions; to learn by doing.

The Etsy Effect – just part of the response to a widespread consumer demand for personalised, customised, hand-made, individual, artisan, crafted, unique and bespoke products. In turn, platforms like the Etsy and Craftsy market places have sparked a whole raft of self-help video guides and online tutorials, where people can not only learn new skills to make things, they can also learn how to patch, repair, re-use, recycle and re-purpose. Also loosely linked to the recent publishing phenomena for new magazines that combine lifestyle, new age culture, philosophy, sustainability, mindfulness, and entrepreneurism with a social conscience.

Startups, Meetups and Co-working Spaces – if the data is to be believed, more and more people want to start their own ventures rather than find employment with an existing organisation. (Under the gig economy, around 40% of the workforce will be self-employed, freelance or contractors within 5 years, so naturally people are having to consider their employment options more carefully.) While starting your own business is not for everyone, the expanding ecosystem of meetups and co-working spaces is enabling would-be entrepreneurs to experiment and explore what’s possible, and to network with like-minded people.

Maker Spaces – also known as fabrication labs (“FabLabs”), they offer direct access to tools and equipment, mostly for things like 3-D printing, laser-cutting and circuit-board assembly, but some commercial facilities have the capacity to support new product prototyping, test manufacturing processes or short-run production lines. (I see this  interface between “cottage industry” digital studios and full-blown production plants as being critical to the development of high-end, niche and specialist engineering and manufacturing services to replace the declining, traditional manufacturing sectors.) Some of the activity is formed around local communities of independent makers, some offer shared workshop spaces and resources. Elsewhere, they are also run as innovation hubs and learning labs.

Analogue Warmth – I’ve written before about my appreciation for all things analogue, and the increased sales of vinyl records and even music cassettes demonstrate that among audiophiles, digital is not always better, that there is something to be said for the tangible format. This preference for analogue, combined with a love of tactile objects and a spirit of DIY has probably reached its apotheosis (in photography at least) through Kelli Anderson’s “This Book Is A Camera”.

Finally, a positive knock-on effect of maker culture is the growing number of educational resources for learning coding, computing, maths and robotics: Raspberry PI, Kano and Tech Will Save Us; KidsLogic, Creative Coding HK and Machinam; Robogals, Techcamp and robokids. We can all understand the importance of learning these skills as part of a well-rounded education, because as Mark Pascall, founder of 3months.com, recently commented:

“I’m not going to advise my kids to embark on careers that have long expensive training programs (e.g. doctors/lawyer etc). AI is already starting to give better results.”

Better to learn how things work, how to design and make them, how to repair them etc., so that we have core skills that can adapt as technology changes.

Next week: Life Lessons from the Techstars founders

 

What are the true costs of our car culture?

The recent Australian federal election campaign renewed discussion about financial support for the domestic car industry. The political debate on government subsidies is usually couched in terms of job creation, productivity and industry efficiencies, along with the wider social, economic and technological benefits of having a domestic car manufacturing capability. However, these arguments tend to overlook some of the other costs of our car culture.

HoldenHist 1960To begin with, here are the some of the “key facts” that are usually trotted out:

1. The government subsidy currently costs about $1bn per annum – but the industry is far from alone in receiving direct or indirect government subsidies, and on a per capita basis, the subsidy is somewhere between comparable support for the US and German car industries.

2. Manufacturing as a whole contributes 7.4% of GDP, and 8.3% of employment. (In comparison, mining is 9.6% and 2.4%, while services account for 66% and 86% respectively.)

3. The industry employs 50,000 people in vehicle and parts manufacture, but this is only 5.4% of total manufacturing employment. However, vehicle servicing and repairs, and wholesale and retail activities account for a further 280,000 jobs.

4. There are now only three domestic car manufacturers (Ford, Toyota and General Motors Holden), all of which are foreign-owned; despite ongoing government subsidies, Ford has already decided to cease local manufacturing within a few years – so there are some voices that say we need to protect what we have left.

5. The car industry generates significant benefits through R&D – the sector contributes about 15% of total manufacturing R&D investment. This allegedly has benefits for other sectors, such as delivering improved production processes, and developing new technologies.

Australians have a hard-wired love affair with the car – some would say it’s an inalienable right to own a vehicle, and to drive it wherever and whenever one chooses. Certainly, the development of Holden as a domestic car manufacturer (subsequent to its acquisition by General Motors in the 1930s) is as much a part of the Australian psyche as Federation was in 1901. Cultural and iconic references to the car can be found everywhere – from Peter Carey’s short story (and film) “The Cars That Ate Paris”, to the apocalyptic images of “Mad Max”; from The Triffid’s song “Wide Open Road” to the ABC’s TV documentary of the same name. Cars denote freedom and independence, and are as much a geographic necessity as they are a symbol of economic success. But now that over 80% of the population live in the major cities or in major regional centres, the level of urbanisation would suggest that the car is not the most efficient form of transportation, especially given the increasing road congestion and accompanying levels of road rage.

In his recent book, “End of the road”, Gideon Haigh seems to argue that the only choice for the local car industry lies between subsidies and/or protectionism on the one hand, and a demoralised and unemployed workforce on the other. But regardless of which side of the policy divide you sit, the true cost of our car culture should be measured by a broader set of indicators such as health, infrastructure and energy consumption.

First, few people would argue against the social and economic benefits of meaningful and gainful employment; and domestic car manufacturing has, until its accelerating decline over the past decade or more, provided regular, stable training and employment opportunities. But where and how else could this talent be deployed, and probably to the greater good of the community and the economy? Instead of trying to hold on to a declining sector, should we be encouraging people with design, production, engineering and manufacturing expertise to apply their skills in more high-tech and high-value industries?

Second, despite all the talk about the R&D contribution made by the domestic car industry, I don’t know that we are actually seeing the benefits. For example, average car fuel efficiency has not improved over the past 50 years – because even as engines get more efficient, they become more powerful, and the cars themselves are heavier, leading to higher overall fuel consumption. Australia is the 6th biggest consumer of petrol in the world – and our car emission levels are way above Europe, mainly because we favour larger vehicles with automatic transmissions over smaller, manual models. Cars in Australia are generally marketed on the basis of size, power and price. Thanks to higher average wages and relatively low fuel costs, Australians have a very high petrol purchasing power, so fuel efficiency is less about reducing consumption and emissions, and more about getting the maximum bang for your buck.

Third, despite private sector funding, a number of major Australian toll road projects – e.g., Sydney’s Cross-City and Lane Cove Tunnels, and Brisbane’s Airport Link – have struggled because the developers always over-estimate projected traffic volumes and under-estimate motorists’ willingness to pay tolls. Could that private capital be put to better use by being invested in more integrated transport solutions? The public bus system in Santiago, London’s programme of road-pricing and public transport reinvestment , and the Velib public bicycle service in Paris each suggest there are more imaginative solutions to alleviating vehicle congestion than simply building more roads. Favouring private cars above all other forms of transport is a short-sighted strategy, because either the new roads quickly fill up or toll revenues fail to meet their expected targets. (In London, 25% of all rush-hour vehicles are bikes.)

Finally, increased levels of obesity and diabetes cannot be unrelated to our car culture – a higher concentration of household car ownership has led to more car usage, but for shorter average journeys (47% being less than 2.5km), with each trip conveying fewer people. Could we encourage people to use their cars for fewer short trips (in favour of walking, cycling or taking public transport), and back this up with better urban infrastructure for pedestrians, rail passengers and cyclists?

Unfortunately, our political leaders continue to frame the debate on transport policy around the following mantras:

  • we just need to build more roads to ease car congestion (implying that “only losers take the bus”)
  • we need more toll systems to pay for the new roads (since such projects gain public support because of the anticipated job creation and knock-on economic benefits)
  • we don’t need more trains and especially not high-speed inter-city trains because nobody will use them (even though they would also create jobs and have even greater economic benefits…)
  • meanwhile, we need to keep subsidising the car industry to fill the new roads we are going to build….

Declaration of interest: although I hold a driver’s license, I do not own (and have never owned) a car. If I need to, I hire one. Personally, I’d rather walk or take public transport.

Further declaration of interest: our family had an FB Holden, like the one in this picture, in the early 1970s. I became very familiar with its engine, transmission, differential and brake system as I helped my father rebuild or replace most of the mechanics during that time. For a 3-speed manual vehicle powered by a straight 6 cylinder engine, it drove like a tank and cornered atrociously. But the door windows were ideal for holding the speakers at the drive-in cinema, and it could climb most hills in 2nd gear.