Digital Business Insights: 2014 – the year of disruption

BETWEEN 2014 and 2017, Australia will haemorrhage thousands of full time, well paid jobs. They will disappear forever.

The car industry shut down with its related supply chain closures in the motor vehicle parts and accessories sector will push tens of thousands of skilled and semi skilled people out into the job market.

The end of the construction phase of mining industry projects in 2014 will result in thousands of project managers, engineers and construction workers chasing a diminishing number of jobs in other sectors.

Government cut backs and redundancies in Canberra and in other state governments will result in thousands of white collar workers moving into early retirement or possibly starting new business ventures.

High street retail closures will continue, caused by the growth of online retail and the related inability of smaller retailers to manage the new disruptive and highly competitive business environment. It is all too hard for many mum and dad small retailers and they will leave retail forever.

Full time, well-paid jobs will disappear forever in manufacturing, mining, retail, real estate, construction and government only to be partially replaced by a range of government sponsored infrastructure developments.

Digital disruption will continue to pummel all industry sectors. Sixty percent (up from 40 percent last year) of US CEOs worry about competition from new market entrants. And competition can come from anywhere.

Teleworking will increase steadily promoted by government and office lease vacancies will grow further. They will move from the teens to the 20s in Brisbane, Perth, Melbourne and even Sydney. Retail vacancies will follow the same trend.

Retraining for the new business environment will be critical.  But what are the new skills required and do the traditional vocational training facilities have the knowledge, vision and capability to train people to be successful in this new world?

No.

They can spend government money helping people create resumes and strategies for job hunting but their responsibility stops there. Tick the box and take the money from government, but push them out the door with the wrong skills, no hope and no ongoing support.

The real skills necessary to survive and thrive can’t be picked up quickly, and chasing permanent jobs in a new part time, contracting and self-employed world requires a major shift in attitude (herd animal to hunter) – too hard and too far for individuals used to 9-5 full time jobs.

Competition for full time jobs of any kind will become fierce. Even in the traditional full time space, contracts are becoming the new norm.

Job security? Forget it.

The biggest impact on Australia will be the drop in income levels as newly redundant workers move from high paying jobs to low paying jobs, if they can get any jobs at all.

Students moving from university into the workforce will face even greater competition. No experience competing with huge experience. Many will return to study for higher degrees but only postpone the problem.

The middle class will start to shrink. Australia will begin to mimic the USA with its 1 percent of super rich and the remaining 99 percent low paid.

The baby boomers are now starting to retire in droves, conserving their resources, downsizing and only spending where it suits them. Retired people save money and don’t spend as much.

Less money to spend will impact retail, personal and business services even further.

As interest rates slowly rise again, the housing market will be hit hard. Mortgage defaults will increase. The overall number of people able to buy property will fall further and the price of housing will drop. There aren’t enough Chinese investors to go around.

Independent contracting will grow. No job security or little job security means less borrowing and spending, and more saving where possible. Banks and other finance providers will wrestle with how to rate this new 'worker' and manage risk.

The nature of a job will shift from full time to permanently part time or ongoing contracts.

Unions will lose more members and become even less relevant. There is no role in confrontation with management when the result is company closure and layoffs. Unions will have to shift towards partnership with private and public companies, with the key focus on overall business success, for everyone involved.

Unions will retain a role with government and in academia but even there the emphasis must shift. Collectively employers and unions have to look at the big picture and the sustainable future.

Where is all this change and disruption heading? What is a job? What does employment mean? What skills do the new workforce need in the 21st century? How can people quickly gain new skills and accreditation? What role do TAFES, universities and RTOs have in this new world?

What are industry associations for? They don’t understand what is happening and look behind wistfully rather than forwards with 20-20 vision.

How can we use the internet and web based services in a more intelligent manner to support individuals in this new environment? Not based on the presentation of old world 20th century resources and information but really tailored to the new condition – starting with the customer and working back.

Employment growth will happen in aged care services (low paid), disability services (low paid), tourism (low paid), catering (low paid), infrastructure building (medium well paid), logistics (low paid), creative industries (medium well paid), ICT (medium well paid), agriculture (low paid) and health services (low paid).

The only room for real job growth is in startups. And value adding.

And for them to have any hope of success they will need support. Net job growth (full time, part time, contract, self employed) will come from startups.

We have to provide the right resources for startups to have more chance of success – the business intelligence, the mentorship and support, the connections and introductions, the export resources and support, the networks – both real world and virtual world.

The new disruptive condition and business environment is upon us. It isn’t going away. 2014 will be a shocking year. Shocks, but also huge opportunities. The two go hand in glove.

It will hit many people and industries hard. Government alone can’t manage this problem.

It requires cooperation, collaboration and sharing. It requires the putting down of political dogma and the acceptance that the only viable strategy is shared value.

Response has to start at the grass roots and it already has. Government’s role is to recognise and support any sign of fertility in this new arid and very challenging business environment.

Government must take the role of gardener. It can’t lead. But it must observe, recognise, identify and support success.

Then modify the conditions that it can control to support the new economic garden. Apply water, fertiliser and prune appropriately.

Government is too slow to lead and too clumsy. It has to get out the way of creativity, innovation and fertility but once firm and productive roots are down, support the growth.

It has to get out of the way, but not stay out of the picture.

And become more agile. A big ask, but not impossible.

Time to put down – “this is the way we have always done it” – and think anew.

The old way doesn’t work.

Vision. Long-term strategy. Action.

It should be an interesting year.

- John Sheridan, February 2014.

 

John Sheridan is CEO of Digital Business insights, an organisation based in Brisbane, Australia, which focuses on helping organisations and communities adapt to, and flourish in, the new digital world. He is the author of Connecting the Dots and getting more out of the digital revolution. Digital Business insights has been researching and analysing the digital revolution for more than 12 years and has surveyed more than 50,000 businesses, conducting in-depth case study analysis on more than 350 organisations and digital entrepreneurs.

http://www.db-insights.com/

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