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Digital disruption year: 2014
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A DIGITAL business researcher is tipping 2014 will play out as a landmark year in disruption – and the recent industry closures and job losses appear to bear out his analysis.
Digital Business insights (DBi) CEO, John Sheridan, is using his 13 years of research and 50,000 in-depth surveys of Australian businesses to develop systems and digital tool sets to assist business leaders in developing capability within their organisations.
Mr Sheridan and his team at DBi use the evidence of those surveys to help shape knowledge delivery to business leaders, based upon their individual business profiles, and encourage new collaboration. 
But the research also often throws up accelerative trends, blockages and opportunities that are not following the conventional business, government or educational wisdom.
For example, Mr Sheridan’s research has been predicting a long-term and lasting hit to Australia’s commercial property market, largely because of mobility and the almost universal practice of business teleworking. Online retail has critically disrupted ‘high street’ retailing forever, he believes, and many ‘mum and dad’ retailers will leave the industry forever.
One of the biggest worries for CEOs is where the next challenge will come from. Most now acknowledge that the toughest competition may be yet to come – but some entrepreneur and start-up is likely to arrive out-of-the-blue and gain critical market share with lightning speed.
Australia may not have time to get used to it, but it has no choice but to adapt to it.
“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,” Mr Sheridan said.
“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.”
He said all indications were that, between 2014 and 2017, Australia will “haemorrhage thousands of full time, well paid jobs”.
“They will disappear forever,” Mr Sheridan said.
It was plain from the research that the future for Australia rested in start-up businesses that were fleet of foot, highly adaptable, innovative and ready to employ to sustain their high trajectory growth. He said US research showed clearly that established firms tend to shed jobs over time, when challenges strike, but new companies were always where the high job growth actions was.
“And yet, it is the least understood sector and the least supported, especially by government and the banks,” he said.
“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.
“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?” Mr Sheridan asked.
“No,” he said. “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. Job security? Forget it.”
Mr Sheridan warned 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”.
“The baby boomers are now starting to retire in droves, conserving their resources, downsizing and only spending where it suits them,” Mr Sheridan said. “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.”
Mr Sheridan is living out his own deductions that the digital world offers the best solutions to combatting and working past its own disruption.
“How can we use the internet and web based services in a more intelligent manner to support individuals in this new environment?” he said. “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.”
He said the organisations and business leaders who got their heads around this core issue would thrive in the new digital economy.
“The only room for real job growth is in startups. And value adding,” Mr Sheridan said.
“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,” Mr Sheridan said.
“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.
“The old way doesn’t work.”
- Turn to Business Acumen’s Digital Disruption feature, pages 18-25.
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POSTED MAY 2014
