Feb 20, 2023 | Change, Culture, Governance
Lifelong employment is a thing of the past, casualisation, remote work, and the gig economy have consigned that idea to the dustbin of history.
It seems to me that there should be a revision to the way we seek to employ people, on whatever basis that employment occurs.
When recruiting for my clients as I do from time to time, I use a checklist that has a number of elements not usually obvious in most recruiting processes I have seen, or indeed been subjected to. The checklist assumes that anyone you are speaking to has the required domain qualifications and experience to in theory, get the job done. After that I look for ‘the 3 C’s and E’
Curiosity. To my mind curiosity is essential to be able to see alternatives and options from outside the domain. A wide span of interests, hobbies, reading, and an apparent ‘let’s just see’ attitude are signposts.
Critical thinking. To be able to subject opinions, data, and so-called facts to a process that strips away the inbuilt bias, self-interest, ‘short- termism’ and just bullshit, to reveal the foundation assumptions and facts. ‘How would you approach……..’ Type questions and resulting conversation surfaces this ability quite quickly, as does asking about times they have failed to reach an objective, and what they learnt as a result.
Collaborative capacity. Collaboration has unfortunately been turned into a cliché. However, the reality is that we are in a knowledge world, and most of the valuable knowledge is elsewhere, so you better figure out a way to get access to it. Generally, those who demonstrate they take responsibility for problems in their area of responsibility, while passing on praise for good work by others will find themselves as a ‘node’ in communication networks, rather than being just a receiver or originator of input. The number and distribution of ‘Nodes’ drives collaborative outcomes.
Education, in its broadest sense. STEM education is vital, from cutting-edge technology to basic trade skills. These technical skills drive productivity. Just as important are the ‘soft skills’, the capacity to see through the eyes of others, engage in constructive debate, and accommodate conflicting ideas in your brain at the same time. Education powers the three ‘C’s above
The recent changes have been profound, and the train has not stopped. One of my concerns for the world my grandchildren will inherit is what we are going to do with those who are displaced by technology? The argument that they will find new jobs created by the changes as has always happened in the past, may not happen as smoothly this time. The chances are in my view, that we will see increased levels of pain and anxiety.
We have an emerging social disruption over the next 20 years we have no idea how to manage, and really are not even considering the challenges in any meaningful way.
Header cartoon courtesy Tom Gauld. Originally published in New Scientist magazine.
Feb 8, 2023 | Governance, retail, Strategy
We all need to eat, but we seem to take for granted the access to processed and fresh food and groceries. To consider the ‘food industry’ as one entity ignores the entirely different strategic drivers of the three main components: Raw material production or ‘farming’, Manufacturing, and retail.
They should be treated separately as while interdependent, they are driven by entirely different forces.
In addition to food products in the FMCG basket, you have many non-food items from cleaning and homewares to health, beauty, and personal and pet care categories. Go into any supermarket, and these non-food categories take up somewhere around 20% of shelf space.
Farming.
The ‘family farm’ used to dominate the farming sector, but that is diminishing as scale enabled by capital takes the place of family intergenerational ownership. Costs come down with corporate ownership, but you are most likely to see agricultural monocultures emerge, as short-term financial returns creep up the priority list.
The register of foreign ownership, flawed as it is, records in the latest report June 2021, that 14.1% of agricultural land is in foreign hands, up from 10.9% the previous year. The National Farmers Federation estimates that 99% of farm enterprises are owned by Australians. Clearly the big are getting bigger at the expense of the small.
The infrastructure necessary for the management of farm production requires substantial investment, the rail networks have broken down, and the roads are a mess. This is a long-term problem, and the logistic costs of farming will increase faster than the inflation rate.
Manufacturing.
A report from the AFGC concludes that profitability is declining, due largely to the concentration of retail, and that imports will gain ground as a result. Currently the food & beverage manufacturing industry employs 276,000 people, 40% of them in regional areas, and has an output value of 127 billion, 32% of total Australian manufacturing output. In other words, it is big and diverse both geographically and demographically, and therefore should hold a significant place in the thinking about how we educate and groom future leaders.
The gross figures for the industry indicate that there is almost 30% of production value exported. Problem is that the vast majority of this is raw or minimally processed meat and grain, employing few people, anywhere in their supply chains, and competing in commodity markets.
Of The 8 directors of the Australian Food and Grocery Council, the industry’s ‘representative’ body, one is the CEO of an Australian beverage company, the other 9 are all the chief executives of multinationals. This is not a bad thing beyond the obvious fact that it perpetuates the lobbying and resulting policy positions of government in favour of MNC’s vs the locally owned industry.
As a young bloke coming into FMCG in the late 70’s after a few years as a nomad, there were many businesses of a whole range of sizes and types to work for. Over time, the number and diversity has been radically reduced. Significant industries like dairy are now almost complete branch offices of multinationals. The exception is produce, where there are still many farming suppliers, although there are now a few very big consolidators, like Costas, who dominate the supply chain into retail. There are no proprietary produce brands in retail, beyond a couple of minor organic brands. Retailers have ensured that they absorb all the proprietary margin in produce.
If there is a light in the tunnel starting to be seen evolving as a result of the disruption of supply chains, and the low profitability of FMCG manufacturing, it may be Bega. Bega Cheese, which was rescued from the clutches of the receiver by now foreign owned Dairy Farmers Ltd way back in (about) 1991, has been able to expand by buying the Port Melbourne site of Kraft, as it was taken over by Mondelez, and ending up being able to buy the Vegemite brand, and more recently the rebranded peanut butter business. Perhaps this is the beginning of a resurgence?
Retail.
Grocery market size and share in Australia is debateable depending on what is included. By most analyses, Woolworths has around 37% share, Coles 28%, and Aldi, now the real third force 11%, and the wholesaler supplied groups around 7%. The remaining 17% is made up of a patchwork of fresh and farmers markets, direct from farm delivery, small independent retailers, and convenience outlets.
In addition to grocery, there is the huge food service market, varying from the local owner operated restaurant and takeaway, to fast food chains and five-star dining. This sector consumes a large amount of product and employs thousands of people.
The power wielded by this bloc of 76% of grocery sales is immense. As they have scaled out of the ruck that was the retail playing field in the 70’s and 80’s, taking over or leaving to the receiver less robust competitors. They have squeezed manufacturer margins by a range of strategic weapons that are a classic case study of Michael Porters 5 forces. In response, manufacturers have similarly scaled by using regional manufacturing hubs, most often in Asia. The impact on domestically owned manufacturing has been dramatic, accelerated during the period where the $A was above parity with the $US, which encouraged wider adoption of house brands manufactured overseas, wiping out what remained of locally owned manufacturing. With a couple of notable exceptions, (San Remo, and now Bega, and Sanitarium who do not pay tax, for example) Australian owned food manufacturing is down to sub scale cottage manufacturers relying on the fragmented but still difficult 24% not controlled by the three retail gorillas.
It is fair to acknowledge the strategic failure of local management, while throwing rocks at the retailers. There used to be major FMCG brands owned by domestic businesses, built up over extended periods that failed to recognise the long-term strategic importance of maintaining their brands. Instead, they surrendered to the tactical demands of retailers for short term promotional dollars that assisted retail margins while keeping prices low. Short term, consumers may have benefitted from the price competition while having significantly less choice. Long term, they face the impact of an economy that has only a tiny proportion of its biggest manufacturing industry being able to make strategic choices driven by domestic priorities.
A few thoughts about the future.
Technology cannot do anything but increasingly impose itself on the industry, in all its components. Australia is already a world leader in the development and deployment of Agricultural technology. Failure to accelerate the rate of innovation will find Australian agriculture losing the current productivity edge we have, as while we are really good farmers, the soils of the continent are old and poor, subject to significant climatic risks Therefore to keep our position, we must continue to be smarter.
Innovations in retail are happening elsewhere. ‘Amazon Go’ type technology will transform the shopping experience, and home delivery will not be going away. Meanwhile Australian retailers are wedded to optimising the business model that has made them successful in the past. This will open up opportunities for alternative retail formats and processes.
Retailers are good at retailing, but have been proven to be lousy at product innovation. In the past, product and category innovation has come from businesses tapped into the consumer psyche. Unfortunately, those businesses are virtually gone, so where is the next innovation going to spring form? Certainly not from the office of a buyer whose KPI’s are all about margin today
The logistic infrastructure so vital in a country as large and diverse as Australia is in poor shape. Rail networks are broken, roads are going the same way, a trend recently accelerated by flooding, and you cannot get drivers of heavy and long-haul equipment easily. The median age of all transport drivers is approaching 50, and long-haul semi drivers is now 55, and they are not being replaced. When considering specialised driving jobs like picking up cattle from farms, the situation is already dire.
In summary, the Australian food industry is faced with a series of significant challenges that have evolved over a long period. They will not be effectively addressed by industry or public authorities that think in terms of only a four or five year strategic horizon.
Note: this post was first published in the auManufacturing Linkedin group in December last year.
Feb 1, 2023 | Analytics, Governance, Strategy
Mark Zuckerburg has a lot to answer for, disrupting as he has the lives of my children. However, he is also very smart and rich, so being annoying must have something going for it.
When pitching the $5 billion Facebook float in 2012, Zuckerburg wrote to prospective shareholders via the prospectus, a letter that outlined his vision of what Facebook had become, and would continue to be.
This is to my mind the crucial paragraph, buried in the body of the letter.
“The Hacker Way is an approach to building that involves continuous improvement and iteration. Hackers believe that something can always be better, and that nothing is ever complete. They just have to go fix it — often in the face of people who say it’s impossible or are content with the status quo”
It now seems he has taken that perspective of his obsession to the world of virtual reality. He has invested billions of shareholder funds in his personal vision, triggering a loss of billions from the market value of Facebook, now Meta. He does not seem to care, but many other shareholders do. They must be getting very annoyed about now, the value of their shares dropping 70% from its peak 15 months ago.
At some point, businesses must develop stable, repeatable processes that just gets the mundane stuff done.
Facebook did that with remarkable efficiency for a long time, creating a river of cash. However, ‘hacking’ has taken hold.
Hacking to improve mundane processes should be part of the culture, so long as the experimentation is part of a managed process. The alternative to that discipline is chaos.
Mixing the cultures that accommodate the disciplined repeatable processes that get the bills paid, and the sometimes chaotic, creative environment of “hacking” is a function of the leadership of the enterprise.
Management needs to be “Loose” to accommodate the creativity and experimentation necessary for process improvement, while being “tight” to enable the learning that comes from experimentation to be incorporated into standard procedures when they prove to be an improvement.
Loose/tight management, is the environment in which “Hacking” Kaizen, or whatever you choose to call it thrives.
‘The Zuk’ has imposed his single minded obsession with hacking on the culturally poisonous monolith he created, because he can. If his VR vision becomes a reality, Meta share price will not only recover, but break all records. I do not expect that at any time soon, particularly if as rumoured, Apple comes out with their version. Meta now faces a governance challenge that could be a real game-changer.
Addendum February 4, 2023.
This article from the Statista website details the progression of losses Meta has booked on Zuks metaverse bet. $US13.7 Billion in 2022, on an increasing trend. While the share price has dropped dramatically, if you look at the PE ratios before and after the drop, it seems to me that the price is settling back to where an old fashioned investor, one who expected a return from dividends rather than capital growth on the basis of a never ending share price increase, might expect it to be. The same comment can be applied to many other digital pletform stock price drops over the last year or so. Fundamentals kicking in??
Addendum 2 February 5, 2023.
They are coming thick and fast!. I read this ‘Wired’ article by the brilliant Cory Doctorow this morning. It explicitly defines the life cycle of social platforms, something we all ‘sort of’ knew but dismissed in favour of the value for early adopters, progressively locking in users, at the same time they squeezed the algorithms to generate ad revenue. Doctorow calls it ‘Enshittification’, a lovely word. Towards the end of the article is a quote from a very young Zuckerberg ”I don’t know why tney trust me, Dumb fucks’. Here is the news Zuk, we don’t!!
Jan 30, 2023 | Governance, Small business, Strategy
The Federal Government committed to a $15 Billion National Reconstruction Fund’ in the October 2022 budget. While the 7 priority areas have been articulated, and there is a better than average website full of glossy photos and optimistic copy, we are waiting on the details.
Of the $15 billion, 8 billion has been earmarked as follows:
- Up to $3 billion for renewables and low emission technology. (I wonder how much the fossil fuel industry has earmarked in their political diaries for carbon capture projects that double as subsidies)
- $1.5 billion for medical manufacturing. Moderna has already committed to completing an mRNA manufacturing facility by the end of 2024 in partnership with the Feds, which must chew up a chunk of that money. They have also just tripled their price/dose in the US for a technology that greatly benefited from public funding during the pandemic. I wonder how the PBS will address that one?
- $1 billion for value adding resources. Presumably, this is to start to cover some previously fumbled bets on Lithium, and rare earth mining and processing. We have roughly 50% of the global production of Lithium, 25% of known global reserves, but capture virtually none of the value of the stuff as it goes into battery production.
- $1 billion for advanced manufacturing. The facility set up by Flinders University in Tonsley Park in SA in collaboration with several defence suppliers, and the Manufacturing Institute of Scotland, one of the UK’s successful Catapult programs has a run up start. It is envisaged that defence accredited SME’s will be able to access funding and mentoring from the arrangements. This seems to be a very sensible bet, hopefully just the start of many experiments, but I am not holding my breath.
- $500 million for agricultural value adding covering food, fibre, fisheries and forestry. For an industry sector where Australia has consistently demonstrated a capability to innovate as a response to the poor average quality of our soils, this seems parsimonious.
The balance remains unallocated, waiting on the detailed guidelines.
Where the demarcation between this fund, the funds allocated to the CRC program, which recently announced $148 million to 6 CRC’s (from a final submission list of 26) is a bit unclear to me. However, what is clear by the thrust of all the programs and press releases, is that the emphasis is on high tech, however you choose to define it. The normal, run of the mill SME manufacturer, those not engaged in technology, struggling to pay the bills, employ and train people in the absence of TAFE, keep up with bigger domestic competitors funded from overseas, are left out in the cold.
It is easy to draw the conclusion we do not need them, and individually we do not. However, collectively they are a huge part of the economy, employ hundreds of thousands, and generally pay their taxes when lucky enough to make a profit, without engaging the services of accountants in Bermuda.
Most innovation comes from SME’s. Not just the technical innovation that drives the defence, electronics, and space industries, but the more mundane process and customer innovation that drives an SME to see a market opportunity that others do not, or choose not to see. Such innovations are sometimes potentially disruptive to an established group of big players who would rather stomp on the SME than change the business or product model that had made them successful. Often, these incumbents are protected by so called ‘industry standards’ written by those same incumbents, further expanding their hold on the status quo.
For that latter group of SME’s, they have a problem evolving from the deindustrialisation of the Australian economy over the last 30 years. This is graphically illustrated by Australia’s drop to 91 from 60 just 20 years ago on the latest Harvard Economic Complexity model. This puts us just behind powerhouses like Kenya (90) Laos (89) Uganda (87), and a host of others we would dismiss as ‘third world’ economies.
This lowly position is compounded by the currently disrupted industrial supply chains: they cannot get their hands on the equipment necessary to move quickly to fill the market gap. This assumes they can access the equity and/or loan funds necessary for the commercialisation, and the skills to run the gear.
There are also various programs run by the states, for all sorts of reasons, chief amongst them seemingly the opportunity for a press release and flurry of PR activity before an election. Printers (those that remain in business) are expecting a mini-boom in NSW over the next few months.
Being one who has seen this problem from both sides, I do not underestimate the challenges. Nevertheless, effectively ignoring a very substantial group that provides many day to day goods and services, employing and training thousands, and generally making an irreplaceable contribution does not seem sensible.
It seems to me that the answer of the question in the headline is ‘you can’t’
Is there anything I have not seen that assists these enterprises?
Feel free to disagree, or indeed, provide advice I can pass on to those struggling enterprises.
Jan 26, 2023 | Change, Governance, Leadership
January 26 again, how quickly it comes around. It seems only yesterday I was scratching my brain to put together the 2022 missive without being too rude, utterly distracted by the stink coming from the then government and its tin ear. My distrust of the body politic has not gone away, but the new crowd in Canberra seem to be going about the job in a sensible and disciplined way. That allows me to be a bit broader in this commentary, and there will be no snarky comments on the looming election in NSW where the choice is, well, between a couple of groups, neither of which should be allowed anywhere near a decision-making apparatus more complex than a bathroom tap.
Industry policy
I wonder if we have any focus sufficiently long term to rate as an industry policy. We do have a plethora of disconnected grant programs that suit the political stance of whoever is in government today, but we do not have a national investment focus that is above petty politics. Maybe it is time, so where should we be heading? Following are a few pointers from your scribbler:
Quantum.
Australia is a leader in quantum research, conducted by a consortium of universities, led by the University of NSW. In some form, Quantum technology will change just about everything over the next 100 years, and we need to keep our lead, so the capex comes our way in time. Just for example, researchers at the University of Adelaide recently demonstrated the charging advantages of a Quantum battery leveraging the characteristics of Quantum entanglement. (I do not understand it either) The result is that theoretically a car battery can be recharged almost instantaneously, possibly while not even stopping, just driving through a recharge station. While I will certainly not see this in my lifetime, who would not like the lead in that technology?
Sovereign supply chains.
Covid brutally brought home the message that resilience in supply chains was a necessity, and Australia’s were inadequate in some critical areas. Some sensible steps have been taken to plug the obvious holes, but a wider awareness of the need to be self-sufficient in critical items needs to be high on the national agenda.
We must break our dependence on imported fuels. Having a ‘strategic reserve’ several weeks away by ship in the US would be laughable, if it were not so stupid.
There is significant investment going into the area around Whyalla SA, with its over-supply of sun and wind. A deepwater port at nearby Port Bonython is easily adapted for export of ammonia, there is a world-wide tender for construction of a Green Hydrogen facility to leverage that wind and sun, and the existing steelworks undergoing a massive upgrade to facilitate so called ‘green steel’. This will use the renewables powered ‘green hydrogen’ production and nearby quality Magnetite iron ore held in the Middleback ranges just to the North. The area is also connected to the east west rail line, ready-made logistics.
The result of this investment will be competitive sustainable steel manufacture for domestic use and export, power to the national grid via the multibillion dollar electricity interconnector to connect NSW and Victoria to deliver power to the east states.
The current argument about supply of gas in the eastern states defies logic. There is plenty of supply, it is just that the companies who have drilling rights, who pay no income tax, can sell the gas for more overseas than they can get for it domestically. The management of the facts in this immoral argument makes my blood boil. I have no objection to companies maximising their profits, but doing so at the expense of the communities that deliver those profits to them is immoral in the extreme, and they should be penalised, not slapped on the hand with a feather, as is happening. If nothing else, it is a clear demonstration of the power of money to get your own way via lobbying, and threats of massive politically damaging advertising, and to hell with transparency and truth
Critical minerals.
Australia is blessed with an abundance of the many minerals most of us have never heard of until recently, that have come to the fore in new technology, particularly renewables. We are at risk of, again, being the worlds quarry, while doing little of the second and third level processing ourselves , the stages where the value is really created and captured. If you just take Lithium for example, Australia currently supplies more than 50% of the worlds lithium, but 90% of that goes to China for processing. Australia does have deposits of the 17 rare earth minerals, but not a lot of them, and no processing. China has a stranglehold on both mining and production based on significant deposits, and a forward looking plan to leverage those assets. Like it or not, the world needs China more than China needs the world as technology advances.
Semiconductors.
The Australian Manufacturing forum in Linkedin did a terrific series during 2022 on the history and current shape of the semiconductor industry in Australia. We had one, in some areas leading the world, but the opportunity was fumbled badly, and we are now just another customer of overseas manufacturing. Given the importance of semi-conductors in just about every manufacturing application, not having a domestic manufacturing capability is a huge black mark. We have little hope of being a supplier at the leading edge of chip technology, but that does not rule us out of innovative use of more commonly available technology, the sort of innovation we used to do well.
Tax reform.
There is little argument that over the last 20 years, the rich have become richer, at the expense of the rest. This is not just an Australian challenge, it is global, and many are much further down the track than us.
Tax reform has two sides, domestic and international. Clearly the domestic tax regime is in a mess, the only debate about that statement is from those who have the most to lose by change. We are demanding more of our governments; at the same time, we are motivated at the ballot box by tax cuts. This is unsustainable, all we are doing is building a compounding hurdle for our grandchildren.
The second side is international. It is easy to get emotional about multinational corporations taking advantage of differing rules in jurisdictions, and paying no, or little tax as a result. The problem is what to do about an international problem that occurs in national boundaries. To date, all that has happened is that jurisdictions compete for business residency for tax purposes on low rates. The UK and several states in the US are amongst the worst offenders, along with the island nations typically known as tax havens.
In October 2019 136 countries signed up to an OECD plan to implement a global minimum tax rate of 15% starting in 2023, this year. Predictably, the implementation timeline is being pushed back by a combination of lobbying, and national jurisdictions simply not getting their shit together, but it is happening. Do not expect big results quickly, but any improvement is both worthwhile and will compound.
The recent decision to allow Santos to rape the Pilliga Forest around Narrabri for gas is just another example of how deeply the fossil fuel companies are embedded for their benefit in the Australian political system. I have no argument about the profit motive driving investment decisions. However, when the Cost of Goods Sold after the capital invested is effectively zero, at the long term expense of the community, and no tax is paid on profits I do have a problem. Businesses have a responsibility to make a contribution to the social and economic infrastructure of the community that owns the resources they use. In this case, Santos is avoiding that responsibility, as well as risking irreputable damage to fragile eco and hydro environments, so I do have a real problem on behalf of my grandchildren.
Science and research.
We underspend in aggregate, and what we do spend is uncoordinated across universities, states, research organisations and private investment. We have not yet figured out how to align the expenditure in such a way that there is a cumulative benefit from the whole investment. Australia is slipping downthe various lists of innovative countries is the outcome at least partly of this decline in the importance placed on science, and general research. As a marker, CSIRO in the 40 years I have been actively observing the breadth and depth of its activities, has shrunk to a shadow of its former self.
Education.
As with the point above, it seems we are falling behind what is required to at least maintain our relative position in the world, while standards are falling behind our major competitors. This is particularly evident in the work I do in advanced trade skills necessary to manufacture complex products. It is not a matter of pay, the trained personnel you need are simply not there, and with the difficulties of international movement, and the idiotic complexity and cost of the visa systems, we are missing opportunities. Perhaps it is for the better, as it removes from consideration the moral question of our right to plunder the educational outcomes from economies usually less able to educate their own people, and more in need of them than us.
Evolving over a long period has been a shift of education, from pre-school, to post tertiary, to advanced trade skills and back, from being a publicly funded foundation of a prosperous society, to a for profit industry. This is to my mind a hugely damaging erosion of a core principle of a successful economy.
Climate policy
The new government has, in my view, started well on climate change policy. After 20 years of unforgiveable hubris, we now have a direction. Not as specific or aggressive as many would like, but nevertheless a huge improvement from the previous lot, whose antidote to a thrashing at the ballot box is to move further to the right. How insensitive to public opinion, scientific reality, and just plain stupid must they be?
After several years of fires then floods, during the chaos of the pandemic, we have come out of it OK, unless you are one of those directly affected, in which case, you have been whacked. A mate has a house near Lismore, well above previously seen flood levels. He will no longer be able to insure it, so the future of Lismore must be in question, along with a number of other areas in NSW. However, we do need to remember that many areas in the state are called ‘flood plains’ for a reason, and stop development in those areas, rather than allowing short-term focussed development to build, only to find an unwanted swimming pool in the kitchen at some point in the future. This is a political web of influence that goes to the heart of the ingrained ‘gravitational’ pull of politics in this country.
Technology commercialisation
Commercialisation of technology is accelerating at an unprecedented rate. With that comes both benefits and costs. It seems the benefits will be accrued by a few, while the costs spread widely, socialised if you like. This can only accelerate the rate at which the wealth of the community migrates to the top and bottom, at the expense of the middle. The equitable distribution of the benefits of technology is a question tangled up in our education, infrastructure, and social priorities, and presents a Gordian problem to legislators who would much rather kick the can down the street than try untangling it. This is a short-term strategy that will haunt us in the long term.
Cyber security
Cyber security has been an emerging issue since the birth of the net in 1993, when Tim Berners-Lee released the first version of HTML. The breeches of Optus and Medibank last year brought it into public focus in a way that it had not been before. On November 30 last year ChatGPT was released. Like many, I have played with this and been blown away by the capabilities, and when added to the graphic capabilities of Dall-E2 released by the same research group, it is I believe an inflection point in our relationships with automated creative and intellectual work. Suddenly digital tools can create value, rather than just regurgitating what they have been given. We have yet to see the uses that crims will find for the emerging technologies and capabilities. At the very least, ChatGPT will correct the scam give-away spelling and grammatical errors that are often present in mass scamming emails and messages.
Fit for purpose
In ‘Venture Capital land’ there is a core idea that there must be a product/market fit for success.
Product/market fit in a commercial context assumes there is a strong demand for the product being considered, and assumes the ‘Purpose’ has been defined.
It seems the purpose of politics has devolved to a fight every three years for the trappings of power and incumbency, and while I cannot get into the heads of those writing the constitution, I am pretty sure that was not their intention. Rather, they intended for there to be a system that governed behaviour and the allocation of resources for the best long term interest of the country.
Given the constitution was drafted over the 7 years between 1891 and 1898, and was fit for purpose at that time, it would be a brave person to suggest that the environment in which we live has not changed dramatically over the following 125 years, and perhaps the degree of ‘fit for purpose’ has been depreciated substantially.
The coming referendum ‘debate’ on a ‘voice to parliament’ will test that proposition. The political heat is being wound up currently. The PM has been roundly criticised for a combative performance on Sydney radio 2GB, where the host sought more and more detail on the manner of implementation of the voice to parliament, and held the view that in its absence, the vote should be ‘No’.
Common sense says that if the detail is included in the referendum, then passed, it becomes part of the constitution, changeable only with another referendum. To address the complex challenges we face with the equality of first nations people, the notion that we cannot experiment to progressively improve the social and economic position they hold is absurd. We need to acknowledge their right to a voice in the constitution, then leave it to parliament over time to evolve the best ways of delivering on that constitutional responsibility, and hold parliamentarians accountable.
SME funding.
While we acknowledge that SME’s are the backbone of the economy, employing and training thousands, and spawning innovation, sourcing funding if you are an SME has never been harder.
Borrowing is difficult, as institutions require security which many SME’s and almost all start-ups do not have. Finding equity funding is a full time job, one that cannot easily be done while building and scalinga successful SME. The grant programs that are around can be a lifesaver, but the time and effort necessary to secure one is significant, and the chances of missing out for reasons that are often opaque is high. Even when you are successful, there are often limitations that are onerous. Rarely can grant funds be used for Capex which is often the tipping point for success, variations to the plan funded can be difficult to have agreed as is required, and in most instances, the grant funds must be matched, and then the funds are counted as revenue for tax purposes. Somehow, we have to do better.
VAD laws
All states now have Voluntary Assisted Dying laws on their books, although the details do differ.
These VAD laws have had a difficult road to walk to confirmation, cutting across as they do a range of deeply ingrained practices. Our life expectancy has gone up substantially in the last 50 years, driven by a better understanding of what is healthy, and medical science. Sometimes, a life is driven beyond what can be deemed as worth living, the hugely emotional challenge being, who is doing the deeming.
Our collective retirement funds.
Over the year the stock market fell 5%, affecting the retirement incomes of most Australians. Our compulsory super system relies on the contributions we make through our working lives to fund retirement, and there are not enough of our children coming through to do it for us. The demographic changes are slow, long term, and utterly inconsistent with our short election cycles, and temptation to spend money as it arrives in our pockets. The compulsory nature of the super regime, for all its flaws, is saving us from ourselves.
Our global impact.
We remain somewhat insulated from world affairs. The war in Ukraine, fuelling economic stagnation in most countries as fuel prices rise, the lunacy of Brexit, and the revolving British political door that makes ours look stable and sensible, the pressure being generated by China’s political re-engagement with the world after spending 25 years pulling hundreds of millions out of poverty, an extraordinary feat. We feel the winds of these changes, but are not as directly driven by them as most OECD countries.
Despite the problems we have, the economy is strong, amongst the best around on the back of the exports of iron and coal to China. When, rather than if, the China bubble bursts, we will be deeply in the poo if we do nothing, which makes the thawing of relations with China that the new government has undertaken so crucial.
On a brighter note
I continue to be encouraged by the reports of innovative manufacturing across many sectors that seems to be popping up, despite the best efforts of the status quo to keep them from happening.
On January 1, we had another annual windfall as the copyright on many major works came to an end. Copyright in most developed countries is conferred on the creator at the point of creation, and lasts for the life of the creator plus 70 years. We can reasonably expect a host of adaptations and newly ‘freed’ works to appear this year.
In addition, to the joy of the few supporters left, the Wallabies performance shortfall over the past few years has been fixed. We brought back a coach we fired 17 years ago. For an old Rugby tragic like me, despite my cynical response to the phoenix like re-appearance of Eddie Jones, he will at the very least liven up the back page of the dailies.
Finally I ask you, where would you rather be?
Living with the political chaos and divisions of the US, in Europe, where the economies have been going sideways for years, despite being the centre of culture and the ‘good life’, England, a basket case hung by the balls in a basket of their own making, China, where any sort of criticism, whoever you are, (Jack Ma, are you listening) can land you in quicksand, and vulnerable to the tsunami of Covid about to hit them?
I would pick to be exactly where I am, despite the shortcomings.
Go and put another chop on the barbie, open a coldie, hug your loved ones and get ready to do it all again in 2023.
Have a great day.
Header photo credit: ABC.
Jan 17, 2023 | Governance, Strategy
Eddie Jones is back as the Wallabies coach, a week after being sacked by England rugby, despite a contract that took him past the world cup in France starting in September. Under Jones, England did very well from 2015 to 2021, having a 73% win record. A dismal 2022 season blew that number away. The English team failed to perform in 2022, so the coach must go.
Meanwhile, back in Rugby Australia headquarters, coach bingo was starting again. Incumbent Dave Rennie failed to call ‘Bingo’ last week, being edged out by none other than Jones, who had snuck back in through the side door.
Jones previously coached the Wallabies from 2001 to 2005, with considerable success on the field. However, it seems he lost the game in the boardroom, which is the one that really matters to the nincompoops who run the game, so he had to go. Then came a conga line: John Connolly, Robbie Deans, Ewen McKenzie, Michael Cheika, and finally, Dave Rennie. If we had the broken contract payouts of that lot, we could build a stadium!
By vivid contrast, we have the current Australian Open draw. It is full of Canadians. Who would have guessed 20 years ago, as Jones was being sacked for the first time, that snowbound Canada, a country with so few tennis courts most would not have recognised them as such, would emerge as a tennis powerhouse. In just 20 years they would have gone from a tennis-less country to one others are looking towards for inspiration.
Canada has several real chances at a win in Melbourne, the ranks include a winner of a grand slam (Bianca Andreescu US Open 2019) several slam runners-up, and more semi and quarter finalists than so called tennis powerhouses like Australia have in the draw, and are the current holders of the Davis Cup.
It is instructive to look at the differences.
The fact that they are entirely different sports is irrelevant. What is absolutely relevant is that Tennis Canada developed a strategy that they stuck to, adjusting tactically as necessary. The absolute objective was, and is, to be a top performing nation in the tennis competitions that matter, the Slams, Masters, Davis and Federation (now Billie Jean King) Cups.
Coaching has been a key part of the Canadian strategy, as has been the early identification of talent, and the focussing of very limited resources on nurturing that talent, commitment, and patience, all heading towards that shared and unambiguous objective.
Meanwhile, Australian rugby bounces from coach to coach, without any evident strategy. Talent identification is left to the few schools that still play rugby, there is little pathway from park rugby to the elite level, star players are not encouraged to play domestically as their value is not recognised in the pay packets, and we even dismiss Israel Folau, the greatest crowd puller since David Campese because he has an invisible friend who makes him say stupid things.
Failure of the Wallabies to perform consistently on the field is the outcome, not the cause of the current malaise, and will not be fixed by more of the same. We have changed coaches almost as often as my grandson has his diapers changed, and for the same reason. Surely it should have sunk in by now that the performance problems are not just coaching, they hide elsewhere?
It is the total lack of a strategy, thoughtfully implemented over an extended period that is to blame, not the coaches.
Rugby Australia could learn a lot from Tennis Canada.
Header photo courtesy Rugby World magazine. (it looks like Eddie is watching his back).
