5. Tightly Focused on "Decisive Opportunities"

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Introduction (trends)

Some global trends (keep in mind the comments made earlier about differentiation between trends and fads) that will impact on Australian organisations include

(*Refers to the megatrends that impact on the others, ie demographic changes via ageing population impacts on the war of talent, the need for more flexible workforce, increasing focus on work/life balance, sea change as retiring "baby-boomers" move to the sea-side, outsourcing, etc.)

- *globalisation

"...features 4 unprecedented trends: (1) movement of capital and other market instruments around the globe, with huge amounts speculating instantaneously each day; (2) the movement of human beings across borders; we will have more than 100 million immigrants scattered around the world at any time; (3) the movement of all matter of information through cyberspace, with megabytes of information of varying degrees of reliability available to anyone with access to a computer; (4) the movement of popular culture - such as stylish clothing, food, and melodies - readily, even seamlessly, across borders..."

Howard Gardner, 2006a

Furthermore,

"...as the world economy grows more competitive, it will become even more difficult for people without skills to keep up. Billions of people are now entering the global workforce. A recent study by Goldman Sachs suggested that 70 million people are joining the new global middle class every year. These people are talented, they are confident, and they are increasingly well educated..."

Rupert Murdoch, 2008

A negative extreme impact of globalization is "stateless terrorism"

Globalization has resulted in a world economy of multinational organisations, ie

"...there were 7,258 multinational companies in 1969. In 2000, the number had increased to more than 63,000 and the multinationals account for 80 percent of the world's industrial production......most multinationals are not big. Rather, they are mostly small to medium-sized enterprises......only a fraction of multinationals are manufacturers. Banks are"the largest single group, followed by insurance companies......financial service institutions.......wholesale distributors (especially pharmaceuticals) and retailers..."

Peter Drucker, 2006a

One of the benefits of globalisation is that it has significantly increased returns on innovation by allowing faster rollouts of innovative products and services to customers worldwide.

Globalisation means skilled labour migration and shortage; global outsourcing; low-value work, such as, manufacturing, moving to cheaper labour regions; impact of the Internet; "free trade" vs trade blocks like EU, the Latin American EU (MERCUSOR), etc; how to handle the uneven distribution of the benefits of globalisation, ie Peter Senge et al (2005) estimates that only 18% of the world's population is receiving 85% of the benefits from globalisation and has created

"...A global culture of instant communications, individualism and material acquisition that threatens traditional family, religious and social structures..."

Peter Senge et al, 2005

Furthermore, globalization has allowed Western organisations to get paid for thinking, organizing and leveraging their know-how and ideas, while subcontracting factories in developing countries to produce the goods. This loss of manufacturing income in the Western world has been more than compensated by the higher pay-off from ideas generation.

Globalisation increases outsourcing, offshoring & competition. They are cost-saving & productivity tasks best done on non-core, lower-cost, lower-skilled jobs like those in back-office (call centres, information processing, accounting, legal work, etc). It is cheaper to do these in messages!!!an outside country, eg in Philippines, it is worth more than $13 b & employs 0.75 m people; Australian firms like Suncorp, ANZ & Westpac have 8.25%, 7.45% & 6.05% of all employees off-shore; cheaper global telecommunications has encouraged this trend. Some risks/threats include supply-chain control, cross-cultural challenges, human rights issues & automation with cloud & digital, ie computers replacing people

- *changing myths (under threat is western domination as demonstrated by the financial crisis that started in the USA in 2008 and by stories or myths that form the basis of western culture, such as humans are masters of their own destinies, natural world is there for our consumption/manipulation, growth is necessary, that there is virtue in reductionist science, redemptive religion, short-term self-interest, a materialistic/technological approach, Anglo-Saxon/Christian dominance, hero leadership, etc; and with the emergence of China and India, and to a lesser extent Brazil and Russia; increasing inaccuracy of stereotyped and caricatured images)

Furthermore,

"...China, in little more than 30 years, has gone from an almost closed impoverished society to becoming the second, and shortly the largest economy in the world..."

Malcolm Turnbull, 2013

With the growth of China, there is a need to understand where it is heading, ie

"...As Xi strives to consolidate political control and restore the Communist Party's legitimacy, he must also find ways to stir growth in China's economy. Broadly speaking, objectives include transforming China from the world's manufacturing centre to its innovation hub, rebalancing the Chinese economy by prioritising consumption over investment and expanding the space for private enterprise. Xi's plans include both institutional and policy reforms. He slated the tax system...... local revenue will come from a broad range of taxes, instead of primarily from land sales, which led to corruption and social unrest. In addition, the Central government, which traditionally has received roughly half the national tax revenue while paying for just one third of the expenditures for social welfare, will increase the funding it provides for social services, relieving some of the burden on local governments. Sources of additional policy initiatives are also in trial phases, including encouraging private investment in state owned enterprises and lowering the compensation of their executives, establishing private banks to direct capital to small and medium-sized businesses, and shorten the length of time it takes the new businesses to secure administrative approvals.

Yet as the details of Xi's economic plan unfold, it has become clear that despite his emphasis on free market, the state will retain control over much of the economy. Reforming the way in which state owned enterprises are governed will not undermine the dominance of the Communist Party in these companies' decision-making; Xi has kept in place significant barriers to foreign investment and even as the government pledges a shift away from investment led growth, its stimulus efforts continue, contributing to growing levels of local debt.. The increase in the value of outstanding non-performing loans in the first six months of 2014 exceeded the value of new non-performing loans for all of 2013...just three of Xi's policy initiative successes: reducing the time it takes to register new businesses, allowing multinational corporations to use Chinese currency to expand their businesses and reforming the hukou...Xi's efforts to transform politics and economics at home have been matched by an equally dramatic move to establish China as a global power...For Xi, all roads lead to Beijing. He has revived the ancient concept of the Silk Road - which connected the Chinese Empire to Central Asia, the Middle East and even Europe - by proposing a vast network of railways, pipelines, highways and canals to follow the old route...Also he is consider building a roughly 8100-mile high-speed intercontinental railroad that would connect China to Canada, Russia and the United States through the Bering Straits.....establishing new institutions to support China's position as a regional and global leader. He has helped create a new development bank, operated by BRICS countries - Brazil, Russia, India, China and South Africa - to challenge the primacy of the International Monetary Fund and World Bank. And he has advanced the establishment of an Asian Infrastructure Investment Bank, which could enable China to become the leading financier of regional development. These two signal Xi's desire to capitalise on the frustrations with the United States' unwillingness to make international economic organisations more representative of developing countries......also promote new regional security initiatives. In addition to the already existing Shanghai Cooperative Organisation, a Chinese led Security Institute has included Russia and four Central Asian states. Xi wants to build a new Asian-Pacific security structure that would exclude the United States..."

Elizabeth Economy, 2014

Also

"...The convergence of developing countries with the developed world, supercharged by the internet's annihilation of geography, has meant more and more industries and jobs in high-waged-developed countries such as Australia are subject to competition from countries that are invariably lower wage but less often lowered skilled..."

Malcolm Turnbull, 2013

- *urbanisation (in 1820, just 5% of the American population lived in urban areas; about 1/3 of the world's population was urbanized in 1950; in 2004 it was around 45% - in OECD countries, around 80%; in 2020 it is estimated that around 60% for the world's population will live in urban areas)

- *demographic changes (in many industralised countries there is an ageing population; falling birth rate; more women in the workforce as professionals; changing social expectations; low to zero population growth; enormous migration of people, especially in Europe; more adult children staying at home.For example, in Australia, over 25% of the population will be over 65 in 2011; in 2008 the percentage of Australians aged 25 to 29 still living at home has doubled since the late 1980s to 20%. People in western nations are living longer with fewer major health problems; they are more physically robust throughout their lives, making them more productive and fuelling unprecedented affluence across all levels of society. Furthermore, more adults are returning to study; there are increasingly flexible work situations (see below); and there are fewer examples of life-time employment in one industry or organisation; an increasing number of single person households in western society, eg in USA in 2003 it was the most common living arrangement.

On the demographic front in Australia, the 55 to 64 age group is the fastest-growing ten-year age group (Lyndall Crisp, 2007a); some of their characteristics:

- more discretionary income per person than any other age group

- more spent per person on discretionary goods and services than any other group

- hold more wealth than any other group

- this cohert feels that its needs are least understood, and communicated, by consumer marketing organisations

- the proportion of all households headed by a person aged 55 and over will grow from 35 percent in 2004 to 43 percent in 2020

- people aged 45 to 64 years, who make up 1/4 of the population, hold half the nation's total household wealth

- each baby boomer has an average accumulated net wealth of $381,000 (compared with the average net wealth of $292,500 of all Australians), mostly stored in housing

- 4 out of 5 baby boomers own a house

- almost three-quarters of the people in the 45 to 64 age group carry a combined total of about $150 billion in debt (an average of $59,000 per household.)

In fact, in the Western world

"...People are marrying later, having kids later, moving out of home later and retiring later......actually, people don't retire these days, they just evolve their career to focus on more personally rewarding interests..."

Simon Rich as quoted by Neil Shoebridge, 2008a

(NB In the developing world and amongst Indigenous Australians, the demographics are the reverse of those of the industrial world, ie higher proportion of young people, increasing birth rate, die younger, more health issues, etc)

The rise of Asia, ie Asian share of global gross domestic product in the last 3 decades has increased significantly despite the "Asian Crisis (1997-98)" and GFC (starting 2007), ie 7.5% (1980), 10.5% (1990), 14.5% (2000) & 26% (2013) (Homi Kharas, 2013)

- *'technophysio evolution' has changed the way we spend our money and time (people in developed countries spend less and less of their income on pure survival, ie buying life essentials comprises less than 1/3 of American incomes, compared with more than 80% two centuries ago; increased leisure time with ordinary people able to enjoy activities once only the rich could afford, such as in USA, around 60% of the population owns a car, around 80% have a VCR or DVD player; control over people's time is becoming as important as their wages)

"...if you measure it in hours, 160 hours of labour per year will buy all the food that a typical household needs. If you put food and clothing into the mix, you're into 320 hours but we're working about 1,700 hours. So the rest of what we're working for is to buy services, including a lot of leisure services, but also including health care and education"in 1880 men had an average of 1.8 hours a day for leisure activities, they had 5.8 hours a day in 1995 and will have 7.2 hours per day by 2040..."

Robert Fogel as quoted by Luke Collins, 2005a

Furthermore, some examples of technological change are having a disturbing impact on society

i) increased TV watching

"...40 percent of American 2-year-olds watch TV for at least three hours a day - hours that are spent not interacting with people who can help them learn to get along better. The more TV they watch, the more unruly they are by school-age..."

Daniel Goleman, 2007

More recently (Brad Howarth, 2008) people are spending more time on-line than watching TV

ii) social isolation with minimal face-to-face personal interaction as shown by constant digital connectivity, eg the use of the iPod, Walkman, mobile phones, Internet (emails, web, etc), TV screens, Playstations, etc.. On the other hand, there is a trend towards herding with people looking beyond their home to connect with other people of similar interests, eg bookclubs, choirs, charity groups, etc. This gives people a sense of belonging and a connection to like-minded people. Furthermore, the Internet is encouraging the herding trend with the creation of on-line communities.

- *technology change - its pace and applications -(increasing rate of technological change, including the Internet, digitalization, e-marketing, etc; convergence and boundary-less nature of technology applications across traditionally different industries, eg IT/telecommunications/ media; this is linked with the growth of home entertainment in the developed world; the different uses and uptakes of technology by gender, different cultures, etc need to be understood: for example, American women are early adopters of wireless and mobile technology, and a majority of Americans (68%) use the Internet for religious purposes. In 2008, the Internet accounted for about 20% of Australia's media consumption; with people in their 20s it is now around 50%. People under 30 have been brought up on the Internet, ie

"...Technology allows them to make connections, have fun and find the entertainment and information they need to elevate their status among their peers. Technology also allows them to control their environment and to access the content they desire. It gives them the ability to find like-minded people, on sites, such as Facebook, for example, and form niche communities..."

Dion Appel as quoted by Neil Shoebridge, 2008a

Social networking tools, such as Facebook, Twitter, YouTube, etc plus wikis, blogs, etc are changing the way people, organisations, communities, etc communicate. It allows data collection and communication to be fast and cost-effective way. For example, surveys can be posted online to produce a quick assessment of the reactions of the customers/community to a proposal/product and/or service, etc

It is worth remembering Moore's Law that states that technology knowledge is doubling every 18 months, which is illustrated by this quote:

"...more business traded worldwide in a single day than we did in 1974......more phone calls worldwide in a single day than in all of 1984......more Emails in a single minute than in 1994..."

Craig Rispen, 2006

An example of the impact of technology on lifestyle is shown by what children can do, ie simultaneously do their homework, listen to music and send instant messages!!!!

NB Even groups that lack technological innovation can simply copy them from others that have developed them.

Increasing proportion of education will come from simulation or other virtual reality.

Remember

"...The rate of change over the past 20 years has been unstoppable"... Governments have lost power, the media has lost power, brands have lost power: power has finally come to the people" All you need now is one piece of material from Cupertine (Californian home of Apple) and YouTube and you have got a worldwide audience..."

Kevin Roberts, Saatchi and Saatchi as quoted in Dominic White, 2013

"...In 1963, you need permission from newspapers, radio stations and TV channels to reach an audience. Not any more..."

Dominic White, 2013

- *increasing commoditisation (eg, competence, iecompetitors can become as competent as you; information, ie computers and the Internet have widened the audience for information; state-of-art-technology, ietechnology can be bought, commissioned and surpassed). On the other hand, there is a counter trend for authenticity, ie hunger for something real, such as truth, beauty, freedom.

"...commodities should have natural authenticity; goods should have original authenticity; services should have exceptional authenticity; experiences should have referential authenticity and transformation should have influential authenticity..."

James H Gilmore et al, 2008

- *sustainable development (by definition is performing things in a more efficient and effective way so that these actions have minimal negative impact on society and environment; itinvolves merging concerns with corporate responsibility, especially on environmental issues, such as climate change including global warming (risks to be managed include regulatory, supply chain, product & technology, litigation, reputation, etc), use of renewable/non-renewable sources of energy and resources, such as water (includes oceans), air, land, etc, biodiversity, etc; more and more people want to support a product/brand/service/firm that supports a good cause, such as sustainability of the environment; increasing price of fossil fuels. Furthermore, the challenge is to make capitalism itself sustainable)

- *knowledge worker (by definition, knowledge is very specialised; one of the challenges of management is to integrate knowledge workers into a productive team, as most knowledge workers are soloists who desire to stay as specialists rather than become managers; knowledge is the basis for power; declining tenure and loyalty to organisations resulting in more "free agents" staff with the balance of power swinging away from large organisations)

- *information age (is linked with communicative abundance (John Keane, 2009); the new galaxy of communication media, such as Internet, tweets, iPhones, etc, is impacting on democracy. Technology has allowed everyone direct access to most of the information in the world so people power will grow as it becomes increasingly difficult for governments, etc to hide and/or control information from the general public; the challenge is to make productive use of information)

"...in an information economy, startup costs and fixed costs are so low that competitors can spring up anywhere there's an opportunity. Online banking, brokerages, and others take billions of dollars of revenue from once almighty firms. It's a similar story in online media, as the former kings of TV, radio, music, and publishing try to figure out where their advantage lies. Their vast infrastructure of transmitters and printing presses matters less every day. Today's source of advantage is above all a good idea......In today's economy, a big idea is worth more than a big market share..."

Geoff Colvin, 2007

Throughout history, communication modes have structured people's sense of time and space, and power relationships, ie who is able to control cultures, etc. The first phase of democracy in Athens was dependent upon oral communications, ie the spoken word; this was supplemented by laws written on papyrus or stone. Following this was the age of representative democracy which was linked with the printing press. The last two centuries of this saw the emergence of people power, ie universal suffrage, abolition of slavery, the vote for women, etc.

"...this was the era of the pamphlet, the novel, the first daily newspaper, telegraph messages, letters, postal systems, which all enabled the development of mass publicity and, within the framework of states, the development of "publics" and the widening of the struggle to question power..."

John Keane, 2009

Currently communications is no longer housed within a territorial state.

"...where print culture was important for developing systems of national identity and self-government, the new digital galaxy enables global publics. This idea of global public - a global interest in climate change, for example - has come about because the way we now communicate is networked and immediate. This shift directly changes the concept of democracy. How do we as global cultures continue to scrutinize power......and catch out global wrongdoing..."

John Keane, 2009

We still need to safeguard the basic principle that the means of communication should not be controlled by government nor commercial/private interests.

- *rise in fundamentalism around the world (mostly linked with religion; a backlash against trends like globalization and westernisation, impact of technological changes, etc; aims to preserve the status quo; linked with spiritual awareness)

- *security (increased terrorist activity resulting in military, emergency services, etc changing focus; concerns about security of data, information and knowledge)

- *role of State (centralise vs. decentralise decision-making, public vs. private allocation; greater transparency of decision-making owing to technology like Internet; increasing role of governmental via rules and regulations)

- increasing competition for talent (an increasing demand for talent coupled with a decreasing supply, as shown by the current shortage of skilled labour. The crisis starting in late 2008 has slowed down the "war on talent")

- more outsourcing (see globalisation above)

- changing nature of work itself with an increasingly flexible workforce (more self-employment/part-time workers, ie about 30% of the Australian work population is part-time, or contingent worker, and the majority is women. In the future it is expected that around 50% of those employed will be contract/casual/part-time workers, including those working from home; a move away from "knowledge and skill" to "attributes and competencies")

- employees' preference for "employer of choice" involves an organisation valuing its people (more than just financially), providing career opportunities, and having engaging and interesting work. It has

"...leading culture and best practices that attract, optimize and hold talent and achieve stated objectives..."

Jason Cartwright, 2004

- work/life balance (prioritising and allocating time for different activities, such as work, family, interests, hobbies, health, wellness, etc; more of a focus on happiness than material wealth)

"...repeated behaviour, three times a week for a month to change a habit. No matter what your schedule, or your personality, structure is absolutely non-negotiable......devoting time to wellness habits should be treated with as much respect as professional engagements..."

Mark McKeon as quoted by Helen Hawkes, 2015

"...changing old habits takes right planning, being true to your core beliefs and perseverance..."

Helen Hawkes, 2015

Linked with wellness is the physical environment of the office (Helen Hawkes, 2015b). Working in a toxic office is not good for your health. Conditions created poor air quality, poor building design, etc can have a detrimental effect on your health and wellness.

Symptoms of poor quality air are dizziness, nausea, discomfort (in eyes, nose and throat), itchy skin, fatigue and inability to concentrate.

Poor quality air is not helped with the pollutants like formaldehyde, volatile organic compounds (benzene and trichloroethylene), airborne biological pollutants, carbon monoxide, nitrogen oxide, pesticides, disinfectants (phenols), etc

Essential equipment should provide ergonomic benefits to improve musculo-skeletal outcomes like
- document holders
- rests for wrists and feet,
- desks with adjustable heights to reduce the risk of repetitive strain injury
- chairs which provide support for your back
- anti-glare filters on digital devices to reduce eyestrain, headaches and neck pain
- isolate printers as the toners emit volatile organic compounds

Also important are
- adequate ventilation, ie well maintained air-conditioning systems that remove carbon dioxide and other pollutants
- taking regular breaks every 30 minutes, ie the brain needs a rest; taking a short walk outdoors is beneficial. Activities like remedial massages, pilates, yoga, etc can help keep your spine in good order while building strong core muscles and increased energy reserves
- certain plants like peace lilies and rubber plants absorb pollutants and provide fresh air and humidity that makes us healthier
- phones and desks carry many thousands of germs per square centimetre, ie they harbour several hundred times more bacteria than the typical toilet seat!!!!!
The jury is still out on the impacts of electromagnetic radiation from computers
These are all additional to office politics which can be the most toxic of all on our health and well-being

- increasing competition for the consumer's money (retailers are now competing with entertainment - including sports activity - leisure, lifestyle items, etc; plus shifting interests and behaviours of consumers, such as NEOs (new economic order) who are

"...sharp thinkers and early adopters who value good design and quality, and hunger for peak experience - are exerting more spending power as the low-spending traditionalists fade. NEOs span the demographic groups, have the means, but will only buy if the message is crafted right..."

Narrelle Hooper, 2007a

- handling diversity, (discrimination against mature-age workers, Indigenous Australians, those who use English as a second language, females returning to work post-family, etc)

- continued focus on governance (probity & diligence, such as more intensive reference checking plus police checks and media searches; handling conflict of interest; accountability and responsibility for action and words)

- increasing importance of developing countries' economic miracles, such as in China and India plus Russia and Brazil

- more generational conflict in the workplace (with 3 generations in the workforce at once, ie baby boomers, generation Xs and Ys)

- more focus on corporate social responsibility (see sustainable development)

- sea-change role and the "Big Shift" (an extra 1 million Australians moving to the coast in the next 6 years)

- ICT (mobile phone and Internet are changing the way we communicate (Jenna Wortham et al, 2010). For example, most households in the developed countries use mobile phones rather than landlines. Additionally, text messages are now used more than voice on mobile phones. In addition to allowing social networking, the Internet has increased communication via VOIP (Skype, etc)

Remember: to understand the future, you need to appreciate and understand the past

There are 2 types of futurologists: those who attempt to predict the future and those who attempt to create the future!!!!!

Technology

Technology is the key to decisive opportunities

A current growth are is computer coding - this involves describing a process clearly and logically. Once you have mastered one computer language, it is relatively easy to switch to another as the core principles are the same. It holds the key to future jobs, ie it is estimated that there are around 300,000 vacant positions globally for people with this expertise in Apple's iOS (Tony Boyd, 2014a)

Elance-oDesk (online workplace) that connects more than 2 m. businesses and 8 m. freelancers over the Internet (2014). The most in-demand skills are technical ones involving websites formatting

Examples of technology is mobile

"...mobile phone technology has proliferated rapidly in countries such as India, China and Africa where people were fed up with the long wait they had for landline......some of the less developed nations have leapfrogged over us in areas such as per capita reach of high-speed broadband..."

Rupert Murdoch, 2008

Furthermore,

"...Technology is destroying the business models we have relied on for decades. This is especially true for those whose business models have been based on one-size-fits-all approach to the customers..."

Rupert Murdoch, 2008

An example of this is classified advertisements. Until recently they were a critical source of revenue for newspapers; with the classifieds being your only oppurtunity to match a buyer and seller. Recently web sites have provided a more convenient and cheaper way to buy or sell. Thus classified advertisements are in the history books!!!!!

"...History also shows that with each new advance, existing businesses are forced to become more creative and relevant to the customers. Once upon a time, the media and entertainment companies could count on huge, up-front investments to discourage contenders from entering the business. But now, in many sectors, the cost barriers to entry have never been lower - and the opportunities for the energetic and the creative have never been greater. Competition is becoming more intense everyday because technology now allows the little guy to do what once required a huge corporation. Look at the Drudge report, Max Drudge doesn't really create content. Instead, he finds material that he thinks is interesting, and puts it up on one of the Internet's simplest pages. Readers come because trust his judgment. And he is showing that good news judgment is something that can add value. In other words, with the single web page, Drudge has succeeded in challenging all the leading media companies of our day - including mine, and he has done its with minimal startup costs: a computer, a modem and some space on a server. When someone uses technology this way, consumers benefit. And it's not just the Internet that allows this to happen. Just think of all the things that you can do now because of technology - things that would have been impossible just 20 years ago..."

Rupert Murdoch, 2008

Technology is changing the way newspapers are operating. With access to analytics, publishers and editors can now measure how many people click on an article, how long they look at it, how much they read, where readers like, their likely income and interests/habits (like what they have been looking at to buy, eg a new car or maternity dress, etc). They can use this knowledge to put customised advertisements in their publications. As the media makes its money from advertising, news sites have to attract "hits" to attract the advertisers.
Unfortunately online advertising revenue cannot compensate for lost sales from print advertisements like classified ads for houses, jobs, cars, etc. Thus

"...editors are chasing more readers for less money, and the way to make money is to attract as many readers and keep them on side so they can soak up your ads........."

Nick Cohen, 2015
This can become lowest common denominator journalism
There is a trend to determine writers, pay by how many unique visitors they bring, eg trainee writers will receive $5 per 1,000 unique monthly visitors; they have 3 months to achieve their targets if they want to stay writing.

"...to get traffic, fewer and fewer news sites can afford to send out writers to find original content. So they steal from other news sites, or lift and repackage a YouTube video or Twitter exchange that may go viral..."

Nick Cohen, 2015

There is a "churn and burn" attitude to writing for newspapers with little time for checking the validity of stories.

"...Google says the company wants to look at your consumption of news, your search patterns, your mail and your posts, anticipate your intellectual and emotional wishes, and give you work which matches them, so that you never need to read anything that would tax, unsettle or surprise you..."

Nick Cohen, 2015

Technology has allowed us to do more of what we want to do in less time and at less cost; thus making us more efficient.

"...When you applied these marginal improvements across any country, profits are increased, friends are made, and......have greater access to information than at any other time in our shared history. The market encourages the spread of technology because businesses have an incentive to attract more and more customers. That's why technological breakthroughs that start out as expensive luxuries quickly become everyday necessities. In 2008, for example, in India and China alone 2 million mobile phones will be sold. But technology will do you no good unless you have the men and women who now can to take advantage of it......as technology levels the playing field, the human actor becomes more important...... that's because computers will never replace common sense and good judgment. They'll never have empathy either. To be successful, a business needs people who see the big picture, who think critically, and who have strong character......as technology advances, the premium for educated people with talent and judgment will increase. In the future, successful workers will be those who embrace a lifetime of learning..."

Rupert Murdoch, 2008

Technology, especially computer and IT (information), is making much conventional economic analysis outdated. The conventional analysis is based on the notion of scarcity or value determined by rarity. Technology means that output used by one person does not preclude its use by another.

Remember: people change slower than technology

From now on, technology is expected to have most impact in these 8 areas

i) nano-technology (moving from chemical to atomic manufacturing)

ii) Internet (including the Web, E mail, E business/commerce, ITC, apps, social media, etc)

iii) digitilisation (using mobile phones, big data, etc to break down barriers imposed by time, physical distance and delivery medium)

iv) the human genome project (including biotechnology, such as integration of computers and the body; gene mapping, etc)

v) sustainability development (includes using more renewable resources like water, sun, tidal, wind, etc; more effective use of non-renewable ones; making the "capitalistic system" sustainable; understanding climatic and environmental issues, etc)

vi) bio-mimicry (study of natural forms & systems in design, medicine & engineering, etc)

vii) nano-technology (study & application of extremely small things like individual atoms & molecules)

viii) miniaturisation (eg computers from room-size to desk-top to lap-top to net-book to tablets to mobile phones to watches/glasses, etc)

An example of miniaturisation is smart watches & glass ware as mini-computers. Samsung launched its Galaxy Wear smart watch in September 2013; in the first two months, 800,000 devices were sold. Next was iWatch from Apple; it measures all kinds of health indicators like tracking exercise, easily surpassing what a iPhone does.  While Google has Google Glass (weighing 63 g and projecting a floating 26 inch display as the interface that will be mainly run by voice); end of 2013Waze, it had 20,000 users. There are plans to reduce the Google Glass further to the size of a contact lenses.

Technical tools are becoming more complex and inter-connected, and more central to running an organisation. Thus, one of the biggest challenges of technology is to keep it simple, user-friendly. With new technology there is a need to understand the concept of "high tech/high touch", ie whenever a new technology is introduced, there must be a counterbalancing positive human response or otherwise technology will be rejected by the people.

At the same time, we are suffering from "information overload", a term which describes the gap between the volume of information and its effectiveness. It is suggested that technology will develop new sense-making tools that will help people visualise and simulate. Visualisation techniques will reduce vast and obscure pools of data into easily comprehended images. Simulation systems will become intellectual training wheels for executives, allowing them to experiment with strategies in the forgiving world of cyber space, just as the Gulf War pilots ran practice missions before flying the real thing. As Robert Kriegel et al (1999) states

"in a world changing this fast, you never know when fantasy and reality will meet..."

Remember:

"...Technical innovation requires social acceptance for behavioural change......Early stages of technology development"eg technology remains open to more than one interpretation......at latter stages a social consensus emerges from unmarked social groups on the parameters of technology..."

Patrick Dawson, 2005

Furthermore,

"...our society relies on the power that comes from technology. It is this power that has reshaped the world and continues to do so. It is this power that holds the promise of great benefit - and unprecedented destruction. It is this power that drives wealth creation and the economic incentives for research and development. And it is this power to preserve a status quo that undermines human development in ways that few of us see. No matter how exciting more integral signs might be, little is likely to change until we understand the forces that have led to our dependence on modern technology and the part we all play in maintaining these forces. It is not just the desire for power that drives modern technology. It is a fear that we cannot live without it......modern technology produces the felt need to cultivate our own sources of power. After a while, power through our own technology is all that we know. There is nothing inherently wrong with technology: advances in technology can further our understanding of the nature of the universe as well as enrich our lives.......the dangerous aspect of a growing reliance on modern technology is the way it distracts attention from more fundamental sources of progress. The growing gap between technological power and wisdom arises not from technological progress" but from the way it interacts with more integrative human development......today, we basically define progress by new developments in technology rather than by any broader notion of advancement in well-being. Thus, the ever widening gap between our wisdom and our power is not incidental nor due to bad luck.......The most insidious side-effect of our reliance on a fragmented science and technology is the increasing complexity of our social and environmental challenges......a corporate decision made on one side of the world can literally change lives on the other side..."

Peter Senge et al, 2005

In fact

"...Any sufficiently advanced technology is indistinguishable from magic..."

Arthur C. Clarke as quoted by Michael Shermer, 2002

Nano-technology

Nano-technology involves re-arranging atoms and molecules that leads to new properties. It promises to have the greatest impact with the possibility of ending scarcity.

Nanotechnology cuts across many disciplines such as engineering, physics, chemistry, biology and materials science

"...the concept is that by manipulating matter at molecular level, literally rearranging atoms and molecules, you can create new materials and products with extraordinary properties - fibres with 30 times the tensile strength of steel at a fraction of its weight, chemical detectors that can sense a single molecule, precision guided smart drugs, and computer memories 1000 times greater than we have today..."

Gardiner Morse as quoted by AFRBoss, 2004

The nanotech's worth is

"...Between 1997 and 2005, investment in nanotech research and development by governments around the world soared from $US432 million to about $US4.1 billion"By 2015, products incorporating nanotech will contribute approximately $US1 trillion to the global economy. About two million workers will be employed in nanotech industries, and three times that many will have supporting jobs..."

Mihail Roco, 2006

Some uses of nano-technology include

- L'Oreal blending nano-particles into face creams to moisturise skin

- in 2003, Intel sold $US 20 billion worth of Pentium 4 and other chips, all of which had circuit elements smaller than 100 nm; after using nanotechnology to overhaul an insulating layer

- Levis, Dockers and Gap khakis use nano-fibres which bind to the cotton fibres in the fabric to create an individual barrier that protects clothes from liquid spillages and stains, such as coffee, wine, etc

- IBM has developed for its computer hard drives a nano-component known as GMR that dramatically improves memory performance (GMR stands for giant magneto-resistive effect)

- General Motors has used nano-fillers on its vans' running boards

- Chevrolet replaced the rubber strip (molding that protects car doors from other car doors) of the Impala with a nano-composite version

- Konarka is applying nano-tech to photovoltaics (conversion of sunlight into electricity) to make nano-crystals coated with light-absorbing dye and embeds them in an electrolyte. Furthermore, they can be put it into plastics, foils, textiles and other surfaces

- Cabot uses nanotechnology to provide high-gloss coating on certain types of paper

- GM is altering the molecules of clay so that it can now adhere to previously "untouchable" oils

- GE sells plastic which includes nano-fillers that will allow paint to bind more readily to plastics in the automobile industry

- HP has devised a system for chip-making that uses infinitesimal wires in a "cross bar" pattern in such a way that molecules trapped between the wires become the equivalent of a bit of memory and/or switch into a logic circuit. This creates an architecture that can tolerate a relatively high degree of defects and still function more smoothly than the traditionally-made chips

Nicholas Varchaver, 2004

It has been suggested that nanotech is going through 4 overlapping stages of industrial prototyping and early commercialization; the 4 stages:

i) from 2000, development of passive nanostructures - materials with steady structures and functions, such as particles of zinc oxide in sunscreens, carbon nanotubes in ultra- miniaturized electronics

ii) from 2005, active nanostructures that change their size, shape, conductivity or other properties during use, such as new drug-delivery particles that could release therapeutic molecules in the body only after they reached their targeted diseased tissues, electronic components, eg transistors

iii) from about 2010, cultivate expertise with systems of nanostructures, directing large numbers of intricate components to specific ends for use in medicine (improve the tissue compatibility of implants, create scaffolds for tissue regeneration, use in artificial organs, etc)

iv) around 2020 the field will expand to include molecular nanosystems (heterogeneous networks in which molecules and supramolecular structures serve distinct devices like proteins in cells to work together this way). Examples include computers and robots which will be extraordinarily small; medical applications will include genetic therapies and anti-aging treatments; new interfaces in electronic communications

Bio-mimicry
. Nature has spent millions of years developing and evolving solutions to many problems that can help us. Some examples include
i) by studying how the huskie sledge dogs use their paws (with their many blood capillaries) to lose excess heat has resulted in developing a machine that uses a vacuum to force our blood capillaries closer to the surface of our fingers and then applies cold air to cool the capillaries. This speeds up the process of removing excess heat from our body. Remember: too much heat negatively impacts on our cognitive thinking, memory and co-ordination.
ii) by studying how an arthropod exo-skeleton can be used to increase human strength. This has resulted in the development of artificial limbs that help disabled people to walk again
iii) imitating the way cuttlefish can change colour, design, patterns, etc seem invisible has been adapted to the design of military tanks to help hid them from the human eye
iv) by borrowing the design of the different eye lens used by Kingfisher birds when catching fish, has helped us see things like animals in the sea, that we would not

Internet (see social media)

The Internet is the dominant technical, communication (such as social networking) and marketing tool of the new economy.

Some basic statistics on the Web

"...The web is less than 2,000 days old and we have 3 billion Web pages, 100 million web sites and are sending 600 billion E mails in the USA alone every year. All these numbers are doubling every year. We are just at the beginning..."

Kevin Kelly, 2001 in AFRBoss

Some statistics (late 2015)

There are around 1 b. websites in the world

Around 50% of people read e-mails on smart phone immediately when they wake up

Around 80% of online work users access the Internet via their smart phone rather than a computer

Facebook  has 1.55 b active users, 1.05 b. daily users and 894 m. mobile active users. It is the most visited place on the Internet.

Twitter has 1 b. users with around half following only, not tweeting

LinkedIn has 400 m. business users & 6 m. business listings; it has 130+ different industry users & in 200+ countries; 61+% use it as primary professional network; 49% are key decision makers

Google + has 300m. users join in the first 24 months

Short videos attract 4 b. viewers a day on YouTube; it serves up to 1b.

Google + - 300 m. regular users joined in the first 2 years

LinkedIn was originally developed by traditional job replacement firms to have a platform to attract and place job applicants. It has grown to nearly 300 m. users with a stock market valuation of around US$ 20 b (late 2015). It is regarded as the professionals' Facebook for business

Instagram launched in October 2010 and by 2016 it had 0.5 b. users (2016) who upload 16 b. photos. Many top brands use Instagram like Star Bucks, Red Bull, Burberry, etc to communicate with their customers and it is more effective than Facebook or Twitter.

Pinterest is used to show items from your store and letting users see what ís available in the catalogue

Klout measures how popular someone is on social media on a scale of 1 to 100 (the higher the score the better) ; its scoring algorithm uses 400 different factors in its measurement.

Research has shown that social media produces double believes trade shows, telemarketing and daily mail.

Comments

Initially there was Twitter, Facebook, LinkedIn and YouTubey. 2013 saw the emergence of Instagram, Google + and Pinterest.  They have a combined audience of 1+ b.;  2015 witnessed the arrival of Snapchat, Periscope & Meerkat

all these are relegating traditional forms of advertising, from print ads to Google ad words, etc to the rubbish bin

(source: Wayne Mansfield, 2016; Alex Pirouz, 2016)

Furthermore,

"...the value of a website, such as Facebook or Google, is proportionate to the number of people using it, as each user contributes to its richness..."

Anders Sorman-Nilsson, 2010

"...The rules of the social media echo chamber are clear. Those who can attract the most eyeballs, brain space and fingertips - in the form of comments, tweets and chat - will rise to the top..."

Mike Hanley, 2008

"...The fruits of the information society are easy to see, with a mobile phone in every pocket, a computer on every desk & big IT systems in back-offices everywhere...?

Victor Mayer-Schonberger et al

. The Internet added communications to computers and owing to its global connections, it has given access & voice to individuals that they never had before

. Information economy is a result of the Internet's access and means that organisations are free from physical assets like buildings, machinery, etc, enabling them to "move in and out" of business(es) at a moment's notice. Thus traditional business models are under threat

The Internet is democratizing innovation (see earlier section on Innovation) and has created a "global web of enterprises", whereby smaller organisations, irrespective of location, have the potential to be participants in virtual business units that cross national borders just as successfully as larger organisations. It is being claimed (Mark Fenton-Jones, 2009) that small businesses now take more orders online than medium-sized businesses. One of the keys to the success of small-business online is building up trust with the customer. A satisfied customer will return to buy from you again and will recommend you to other potential customers. Furthermore, Internet provides valuable, immediate marketing information, eg what is selling, who is buying, etc. This helps control and reduce inventory levels, which frees up cash, and reduces the need (and cost) of having a shop front. Also, online advertising is more effective and cheaper than the traditional avenues of radio, newspapers and magazines, etc.

Internet has changed the dynamics of the world economy of information

"...neither the postal service nor the telegraph made information public. On the contrary, they made it privileged communication. Public information - newspapers, radio, television - ran one-way only, from the publisher to the recipient. The editor rather than the reader decided what it was to print. The Internet, in sharp contrast, makes information universal and multidirectional rather than keeping it private or one-way. Anyone with a telephone and personal computer has direct access to every other human being with a phone and PC. It gives everyone practically limitless access to information......Internet customers are becoming a new and distinct market. In the early years of the 21st century, power is shifting to the ultimate customer..."

Peter Drucker, 2006a

The Internet has changed the information asymmetries equation. Prior to the Internet, an expert knew more than others; thus information asymmetries were present and gave an advantage to the expert.

"...information is the currency of the Internet. As a medium, the Internet is brilliantly efficient at shifting information from the hands of those who have it into the hands of those who do not. Often......information existed but in a woefully scattered way. (In some instances, Internet acts like a gigantic horseshoe magnet waved over an endless number of haystacks plucking the needle out of each one)......the Internet has accomplished like no other consumer advocate could: it has vastly shrunk the gulf between the expert and public. The Internet has proved particularly fruitful for situations in which a face-to-face encounter with an expert might actually exacerbate the problem of asymmetrical information - situations in which an expert uses his informational advantage to make us feel stupid or rushed or cheap or ignoble..."

Steven D Levitt et al, 2005

The Internet has allowed the development of social networking (see social media), eg Twitter, Facebook, My Space, YouTube, Bebo, etc. Facebook was invented in 2004 and by April 2009 it had 200 million registered users. These social networking sites allow communications to bypass the traditional media/communication avenues. For example, social network sites, especially Facebook and Twitter, allowed political dissent in Iran to reach the outside world after the June 2009 disputed elections (Chris Tryhorn, 2009). Other examples include the "Arab Spring" (2011) and impact of the Japanese tsunami (2011).

Generally Twitter is for the media and Facebook for the community.

The Web has resulted in a "tsunami of data" or "data overload". On the other hand, it has de-institutionalized information and challenged the foundations of hierarchical and bureaucratic systems as people no longer rely on institutions to create content, ie

"...as of 2006, there are in excess of 20 billion pages in more than 78 million web sites, forming a significant tool that is redefining power and globalisation..."

Alex Wright, 2007

By 2015 there were around 1 b. websites

It needs to be remembered that organisations can be created by technology and destroyed by technology, ie

"...technology giveth, technology taketh away..."

Chris Ruen, 2013

Linked with the Internet is information technology architecture. IT architecture has a number of layers that need to be integrated smoothly. The first layer is comprised of business goals, strategy and maxims which shape the type of architecture needed. The second layer is core business process that aids the implementation of strategy. Finally, there is the layer that includes data, applications and infrastructure. Good IT helps the organisation to have better choices.

The Internet technology is changing the way we communicate and do business with each other (Andrew Keen, 2015). It is creating the second industrial revolution with Internet monopolists like Microsoft, Google, Amazon, Apple, Airbnb, Uber, etc, increasingly resembling the multinationals of the industrial era. Like their predecessors (John Rockefeller, Andrew Carnegie, Henry Ford, JP Morgan, etc), they are hostile to trade unions, taxation and regulation. The only differences are the new monopolists employ far fewer people, enjoy higher margins and are less harassed by governments. This is creating a digital generation of masters of the universe. They are massing unbelievable wealth while exercising minimal social responsibility.

The best way of handling the dominance and monopolistic approach of big tech companies like Microsoft, Intel, Google, Apple, etc is to encourage innovation. Rapidly changing technology is more effective than laws, rules and regulations, etc in increasing competition. Also, the legal cases can take years, if not decades, of work their way through courts, appeals, etc. Some recent examples of the impact of technological change include

- both Microsoft and Intel focused on PCs. Thus they miss on the rise of tablet computers and smart phones which allowed companies like Apple, Google, Qualcomm, etc to become dominant players in mobile devices.

- for Google, mobile apps are now challenging its lucrative web search as cellphones use the likes of Amazon, Yelp, etc to search directly for products and service, etc, ie

"...Today 7 out of every 8 minutes on mobile devices is spent within apps......consumers are going to whichever website or apps serve them best. And they face no friction or costs in switching between them..."

Vindu Goel et al, 2015

- Apple's iTunes domination of the music industry is under threat by streaming, eg Spotify

Internet has changed the traditional approach to strategic thinking as no one can predict how long an advantage will last, ie a competitive advantage is not sustainable but unpredictable. Thus the need to develop a framework for handling unpredictable markets and uncertainty by seizing fleeting opportunities.

"The Internet portal space is a strategist's worst nightmare: it's characterized by intense rivalry, instant imitators, and customers who refuse to pay a cent. Worse yet, there are few barriers to entry.......Many......leaders in the new economy......rose to prominence by pursuing constantly evolving strategies in marketplaces that were considered unattractive according to traditional measures......the performance of these companies - despite unattractive industry structures, few apparent resource advantages, and constantly evolving strategies - raises critical questions. How did they succeed? More generally, what are the sources of competitive advantage in high velocity markets? What does strategy mean in a new economy?

The secret strategy of companies like Yahoo are simple rules. Managers of such companies know that the greatest opportunity for competitive advantage lies in market confusion, so they jump into chaotic markets, probe for opportunities, build on successful forays, and shift flexibly among opportunities as circumstances dictate. But they recognize the need for a few key strategic processes and a few simple rules about them through the chaos......information economics and network effects are important, the new economy's most profound strategic implication is that companies must capture unanticipated, leading opportunities in order to succeed.......reverse some prescriptions of traditional strategy. Rather than picking a position or leveraging a competence, managers should select a few key strategic processes. Rather than responding to a complicated world with elaborate strategies, they should craft a handful of simple rules. Rather than importing uncertainty, they should jump in......Managers using this strategy pick a small number of strategically significant processes and craft a few simple rules to guide them. The key strategic processes should place the company with a flow of opportunities"The processes might include product innovation, partnering, spin out creation or new market entry......Strategy, then, consists of the unique set of strategically significant processes and a handful of simple rules that guide them..."

Kathleen M. Eisenhardt, 2001

For strategy, there are 3 distinct options, ie position (build a fortress and defend it), resources (nurture and leverage unique resources), simple rules (flexibly pursue fleeting opportunities within simple rules). The simple rules are claimed to be the way of the future. This is summarised by Kathleen M. Eisenhardt et al, 2001 in the following table

 

Position

Resource

Simple rules

Strategic logic

Establish position

Leverage resources

Pursue opportunities

Strategic steps

Identify an attractive market

Locate a defensible position

Fortify and defend

Establish a vision

Build resources

Leverage across markets

Jump into the confusion

Keep moving

Seize opportunities

Finish strong

Strategic
question

Where should we be?

What should we be?

How should we proceed?

Source of
advantage

Unique, valuable position with tightly-integrated activity system

Unique, valuable, inimitable resources

Key processes and unique simple rules

Work best in

Slowly changing, well-structured markets

Moderately changing, well-structured markets

Rapidly changing, ambiguous markets

Duration of
advantage

Sustained

Sustained

Unpredictable

Risk

It will be too difficult to alter position as conditions change

Organisation will be too slow to build new resources as conditions change

Managers will be too tentative in exploiting promising opportunities

Performance

Profitability

Long-term dominance

Growth

Summary of "simple rules" approach is

"...in turbulent markets, managers should flexibly seize opportunities " but flexibility must be disciplined. Smart companies focus on key processes and simple rules. Different types of rules help executives manage different aspects of seizing opportunities..."

Kathleen M. Eisenhardt et al, 2001

There are 5 broad categories for simple rules ("how-to", boundary, priority, timing and exit), ie

Type

Purpose

Example

"How to" rules

(must leave room for innovation)

They spell out features of how a process is executed - "What makes our process unique"

Akamai's rules for customer-service process: staff must consist of technical gurus, every question must be answered on the first call or e-mail, and R&D staff must rotate through customer service

Cisco joint venture/acquisition rules: share the same vision; potential for short-term wins with current products, with follow-up product generation; geographically close to Cisco; culture close to Cisco

Boundary rules, eg customer, geography or technology

They focus managers on which opportunities can be pursued and which are not for consideration. Staff are allowed great flexibility within the rules

Cisco's early acquisition rule: companies to be acquired must have no more than 75 employees, 75% of whom are engineers

Miramax movie-making rules: every movie revolves around a central human condition, such as love; main character must be appealing but flawed; a clear storyline with a beginning, middle and end; firm cap on production costs

Lego rules: Does the proposed product have the Lego look? Will children learn while having fun? Will parents approve? Does the product maintain high quality standards? Does it stimulate creativity?

Yahoo partnership creation rules: deals can't be exclusive; basic service is always free

EBay rules: based on 2 values: egalitarianism (number of buyers and sellers and community must balance; must be transparent) and community (product ads not allowed; prices for basic services must not be raised; uphold high safety standards)

Ispat's acquisition rules: buying established, state-owned firms having problems; no geographical limitation; 2 process technologies - DRI and electric arc furnaces; potential cost savings (NB different from Cisco)

Intomi rules: never produce a hardware product; never interface directly with end-users; always develop software for applications with many users and transactions

Priority rules

They help managers rank opportunities

Intel's rules for allocating manufacturing capacity: allocation is based on a product's gross margin

Timing rules

They synchronize managers with the pace of emerging opportunities and other parts of the organisation

Nortel's rules for product development: project teams must know when a product has been delivered to the leading customer, and product development time must be less than 18 months

Exit rules

They help managers decide when to pull out of yesterday's opportunities

Oticon's rule for pulling the plug on projects in development: if a key team member - manager or not - chooses to leave the project for another within the organisation, the project is killed

(source: Kathleen M. Eisenhardt et al, 2001)

Remember: simple rules should not be

broad - should be tailored to a single process

vague - could any reasonable person argue the exact opposite of the rule?

mindless - reverse-engineer your processes to determine your implicit simple rule

stale - if your percentage of market share is falling, or if your share price is dropping relative to your competition, or if growth is slipping.

Furthermore, it is important to have the right number of rules, ie between 2 and 7. In a period of predictability and focussed opportunities, a firm should have more rules to increase efficiency. Conversely, in a less predictable an environment, fewer rules allow maximum flexibility. Generally new organisations do not have enough rules, and thus, implementation is restricted; on the other hand, established firms have too many rules which restricts flexibility

E-commerce businesses need todevelop a coherent strategic and operational framework for E-commerce. Around this framework there needs to develop a particular culture and work environment. If the culture and work environment resemble those of the traditional organisation, then the dynamic activity of E-commerce is hard to establish. For example, the annual budgeting and planning cycle of most organisations is far too long to effectively address the high levels of uncertainty and rapid change in E-commerce. Some organisations are adopting 90 day planning cycles with a scenario-based planning process. They postulate a number of scenarios for how the business could develop, pick the most likely and base their plans on that assumption. In other cases, organisations pursue several options against a single opportunity, monitoring progress at 90 day intervals. As a business environment changes, they revise their scenarios, probabilities and plan.

Furthermore, budgeting is tied to a 90 day cycle in a continuous, rolling process. After establishing an initial budget with a range of potential funding, it is adjusted on the basis of changes in the environment and in reference to a set of goal-oriented metrics such as growth, time to market, customer acquisition cost, traffic, revenue per customer, customer loyalty and success in meeting milestones. In addition, it is essential to keep close track of competitors' activities.

E-commerce is encouraging a process entitled "fail fast, fail cheap". This means that to stay competitive, organisations must learn to innovate quickly, cost effectively and in the real world. The marketplace becomes the testing and learning ground for product development and refinement. By doing this, little money is wasted if the project fails. On the other hand, if it is successful you will have to scale up and rebuild a number of times as the underlying architecture is all wrong. In other words, E-commerce initiatives are almost living creatures.

Thus, planning tends to be more strategic and less tactical, while budgeting is no longer an accounting-based control mechanism. It is a way of accelerating the growth of online business within defined economic parameters. This approach emphasizes the long-term value of the customer base and the value of the online investments over a short-term focus on profit and loss.

The Internet has reinforced that to compete in an increasingly competitive global marketplace, organisations need to move into higher-valued services (rather than products), which are less vulnerable to low-cost competitors. Technology is making it easier for suppliers to provide services and to deliver over the Internet from remote data centres (cloud computing model). Furthermore, software has moved from desktop personal computers to becoming a Web-based service, such as Google's e-mail, word processing and spreadsheets, online customer relationship management software, etc. The digitalization of all kinds of business records and documents has allowed automation of business tasks and the mining of business data for everything from customer-service problems to sales opportunities.

One of the challenges in E-commerce is to manage the myriad partnerships that are central to success and critical sources of value. These partnerships are fundamentally different from traditional partnerships as they change quickly and are very complex.

For E-commerce there are 3 main areas of value-creation:

- transaction costs

- prices

- supply change effectiveness

i) Transaction costs - current indications are that cost savings exceeding 25% are possible when fully integrated e-procurement systems (including purchasing and accounting processes) are deployed. In fact, John Kotter (2003) claims that for the US banking industry, the Internet has reduced the cost of each banking transaction from around $US 1.07 to around 1 US cent!!!!!

ii) Prices - low prices can be achieved where there are many buyers and sellers in products or services that can be adequately specified. On the other hand, prices can benefit sellers where products and services can be differentiated but are currently bought like commodities owing to a failure of marketing channels.

iii) Supply chain effectiveness - engaging all players in a supply chain with a common information architecture can enable closer alignment of production with real demand, greater customisation or responsiveness, faster quality recovery, faster product development cycles, lower inventories and transaction costs.

A good way to identify decisive opportunities is to understand and develop your supply chain. To achieve this, focus needs to get beyond relying on efficiency by cutting costs and speeding delivery to being agile, adaptable and aligned.

"...Agility is about crisis management, designing a supply chain that is robust enough to handle short-term market volatility and external disruptions. Adaptability involves redesigning the supply chain as the structure of the market shifts by monitoring customers, competitors and opportunities. Alignment is about building good relationships throughout the supply chain, sharing risks, costs and gains with customers and suppliers..."

Hau L. Lee, 2004

This involves developing a 'trusting' mindset to harness co-operation rather than the counterproductive efficiency mindset which exploits supply chain partners

The Internet is turning business principles upside down and is working its economic magic by:

- reducing the cost of getting information and increasing its availability

- reducing operating and transactional costs

- expanding potential market opportunities

Some examples:

i) On the Internet, the 98% rule applies. The old 80:20 rule stated that 80 percent of sales came from 20 percent of your sales staff; 80 percent of your problems came from 20 percent of your staff, etc. Internet and niche sales work on the 98 percent rule, ie virtually all of the products are in demand and available at some time and at some level.

"... the culture of music has been transformed in the last 10 years, from the blockbuster hit and music store to the iTunes. It has a completely fragmented audience, but a rich music world. The same with books: the notion "out of print" is out of style. You can get anything you want on Amazon..."

Chris Anderson is quoted by Sheridan Winn, 2006

As the Internet makes everything available to everyone at any time, the bottlenecks that plagued traditional supply and demand are disappearing. This is sometimes called the economics of abundance.

ii) pharmaceutical giant Eli Lilly has changed the way it handles R & D, ie

"...two years ago, Lilly had 7,500 employees in its research and development wing. Today, it has nearly tripled the number - except they don't show up on the payroll.......Lilly created an online scientific forum in mid-2001 called InnoCentive, where the company posts thorny chemical problems, such as the best way to come up with a specific molecule, and offers cash to anyone who can solve them. By making the site open to anyone and available in numerous languages, it spurs solutions to problems that have stumped its own researchers. And Lilly pays for their time and effort only if they get the right answer. These purses run up to $US100,000..."

Timothy Mullaney, 2003

iii) JetBlue

"...Take three-year-old JetBlue, which in a time of airline implosion remains solidly profitable and grew 63% in the most recent quarter. The company uses only industry standard Intel servers and Microsoft software, and it automates every aspect of its operation that it can. It sells 71% of its tickets over the Internet. That's partly how it has kept its cost per seat mile to US6.25 cents, which is far lower than American's US11.39 or even Southwest's US7.5 cents. Its market cap of $2 billion is more than twice that of American and United combined..."

David Kirkpatrick, 2003

iv) Amazon

With "...Amazon using the Internet and state-of-the-art tech tools...... its competitors are......Wal-Mart, Sears and eBay. The benefits of its system: last quarter Amazon turned over its inventory at a rate of 19 times a year, vs. Wal-Mart's 7.6...."

David Kirkpatrick, 2003

The Internet has allowed on-line learning (including gaming technology) which allows thousands of people to be trained at once and to respond very quickly to new situations. Gaming technology, such as Nintendo, Wii, etc, has many advantages as stated by7 Walder Arevolo DeAzevedo Filho et al, (2006):

- self-directing (games are goal-orientated, which keeps the students focused on the desired outcome. Real-time feedback helps people follow their progress.

- engaging (people become emotionally involved in the outcome of the game; surprises draw out creativity.

- interactivity (people learn processes by trying, failing and making corrections; collaboration with others is also encouraged)

- multi-modal (encourages combination of learning styles and intelligence that traditional training programs don't often reward)

- adaptive (games progress is tracked to continually challenge; this leads to longer attention spans, improved attentiveness and positive feelings)

- real-time feedback (players can compare efforts with previous attempts and the performance of others)

"...when students learn by experience, the understanding and retention are higher...... games can make students more proficient in skills 4 to 6 months earlier than students who took training classes, but had no way to apply the knowledge..."

Walder Arevolo DeAzevedo Filho et al, 2006

"...researchers found trainee doctors score 48 percent high on tool control and performance during virtual surgery after using the Wii game as a warmup ..."

Fiona Smith, 2008o

Social Media

Introduction

Social media is

"...global, open, transparent, non-hierarchical, interactive, and real-time..."

Soumitra Dutta, 2010

"...We work in a world that is transparent, with fewer degrees of separation, and where people want a faster response..."

Greg Savage, 2013

NB 75% of "C level" (chief executives, chief financial officer, chief information officer) are active on social media (Fleur Anderson, 2015)

The Internet has allowed the development of social media capabilities via online communities, such as social networks (Facebook, LinkedIn, Twitter, YouTube, MySpace, Skype, Blogs, Yamma, etc), blogs, wikis, web pages, etc.. These have resulted in

- establishing multi-faceted collaborative relationships, such as advanced online social network for patients with particular chronic diseases (Patientslikeme)

- enabling rapid calls to action around common interests. Hundreds of thousands of people can be mobilised in a few hours.

- create and disseminate knowledge rapidly with filtering tools able to authenticate the information

- provides valuable rapid feedback

- change of power relationship from expert to community as more information is available for the community

Many people are spending up to 1/3 of their time on social media. It is estimated that around 50% of Australians shop on-line for some of their needs (SBS News, November 2013)

In UK, people spend 128 minutes a day on their smart phones

. Business model is changing to "Clicks" from "bricks/mortar"

. The Internet

- added communications to computers

- allows for faster exchange of ideas

- provides alternative meeting places to public spaces

US Securities & Exchange Comm. allows firms to release their financial results on social media like Twitter, Facebook, etc

Some social media valuation (The Lex Colummn, 2014d)
. Snapchat (US$ 100 per user)
. Twitter (US$ 74 per user)
. Facebook (US$ 150 per user)

Amount and/or percentage of revenue spent on R&D (2014) by social media groups is
. Microsoft (US $ 12 b.)
. Facebook (18%, ie US $ 2 b.)
. Yahoo! (25%)
. Intel (21%)
. Apple (US $ 6.04 b.)
. Google (US$ 10 b.)

The % of ASX 100 Australian companies that use social media (AFRBoss, 2015a), eg

i) Twitter
- 72% have Twitter accounts
- 34% tweeted their financial results

ii) LinkedIn
- 82% have LinkedIn accounts
- 39% publish their financial results on LinkedIn
The top 11 users of social media are Wesfarmers, BHP Billiton, Rio Tinto, Lendlease, QBE insurance, Telstra Corporation, GBT Group, Aurizon Holdings, Fortescue Metals Group, Treasury Wine Estates & Downer EDI.

Social media has a mixed impact on employment. In some cases it reduces employment opportunities like

- Facebook employs only 5,800 people for its 1.2 billion users

- Twitter employs under 1,000 people

- Instragram started as a photo sharing app and was only 18 months old before Facebook purchased it for US $1 billion (2012); it employed 16 staff. Compare this with Eastman Kodak which was founded in 1880 and directly employed 145,000 people at its peak. It went bankrupt a few months before Instragram was sold. Instragram has 130 million customers

"...Kodak experienced a loss of US $10 million between 1996 and 2001 after failing to change its business and incorporate online and digital technologies..."
Fiona MacDonald, 2013

On the other hand, some of the start-ups created new jobs & endless opportunities for new products &/or services, eg

- Etsy (on-line marketplace for home-made goods - has more than 1 million stallholders)

- eLance (free-lancer contractor site - 2.3 million members)

- oDesk (free-lancer contractor site - 4.5 million members)

- Business model - with the Internet it is changing from "bricks/mortar" to "Clicks"

- The Internet added communications to computers & allows for faster exchange of ideas

"...Technology is often the catalyst for upheaval and job destruction at established companies, but it is also the secret to the success of entrepreneurs launching new companies and creating jobs..."

Tony Boyd, 2014

NB No all start-up are successful, eg in China there are more than 1,000 start-ups launching every day!!!

More on impact of internet on employment. Technological unemployment = where innovation destroys more jobs than it creates 
A McKinsey study (2011), found that over the last 15 years, the Internet had created 2.4 jobs for every job lost. Similarly, technologically-driven productivity is compatible with rising employment. In the USA more than 2/3 of the years since 1929 have seen positive gains in productivity and employment.
It is not just the routine clerical or repetitive tasks that are being automated, eg lawyers are using text-mining techniques to read thousands of documents collected during discovery.

Also, 1/3 of the new jobs created in the US over the last 25 years are new like computer programmers, computer systems analysts, fitness instructors, medical technicians, etc

On the other hand, the nature of employment is changing, eg pilots are only actively steering an aircraft for up to 7 minutes in any flight, with autopilot guiding the rest of the journey. There is an increasing trend for less full-time work and more freelance. This is demonstrated by the increasing online talent platforms like TaskRabbit and Upwork; they have created online marketplaces connecting some 4m. businesses and more than 9m. freelancers in 180 countries (2015)

It is estimated that up to 45% of work activities could be automated by using already known technology (2015). This will involve transforming entire business processes and redefining jobs performed by people like our bank tellers job has been redefined by the ATM.

The labour market has become "bifurate", ie menial low-paid jobs at one end and high skilled, high wages at the other end. This economic divide will have important socio-political consequences.

One of the challenges is preparing for future jobs (eg in idea-intense businesses such as media, pharmaceuticals, IT, finance, etc) that offers people rewarding, continuous work as industries change and adapt to external forces.

The idea-intense sectors are accounting for around 1/3 of profit generated by Western companies (2015); this is up from 17% in 2000

Some Social Media Network Sites

organisational development change management

(source: Tony White, 2012)

The market capitalisation of the social media sector is several hundred million dollars (2014). Silicon Valley (USA) is the dominant centre for this activity owing to its access to capital and large number of engineers/science graduates (including graduates from China and India). Foreign graduates have launched 1/4 of the new high-tech companies in the US during the past decade.

US venture capital has invested around US $12 b. in the last 15 years into Internet-related start-ups. Yet around 90% of the new ventures fail. There are 4 successful models:

i) Marketplace (a platform where supplies of goods or services like books, consumer goods, car rides, takeaway food, professional services, money transfers, etc, can offer to sell them and advise where consumers can acquire them. Examples include Amazon, eBay, Uber, etc. It is important to gain market place scale. Once a certain size is reached, ie community of users, it becomes self-sustaining. They are effectively middlemen, ie taking a cut on each transaction they facilitate)

ii) Advertising (examples include Facebook, Google, Twitter, etc. They need to have an incredibly vast scale to survive, eg Facebook with nearly 1 b. people around the world logging into Facebook each day. This means Facebook has an almost unlimited ad inventory, driving down advertising rates for everyone else. Also they have the ability to sell more targeted ads, owing to their accumulation of information about your preferences, etc)

iii) Software (requires a level of exceptional technical expertise, ie the ability to code)

iv) Reverse roll-up (set yourself up to be acquired by a larger competitor, investor, etc. You need to create something that is seen as a threat to a dominant player. For example, Instagram which was acquired by Facebook in 2012 for US$ 1b. with an estimated 30 million users & a dozen employees but no revenue)

Start-ups

When evaluating start-ups it is best to start by identifying the problem trying to be solved.

"...is it being sold in a unique, differentiated way or is it being sold in a way that anyone else can copy and there are very little barriers to entry..."

Paul Bassat as quoted by Anne Hyland, 2016

Then ask the following questions
- when is it going to be sold?
- have they got the timing right, ie are they too early or too late?
- who is solving the problem?
- do they have the right team to grow a business to a critical mass, eg from 20 to 500 staff, monthly revenue from $ 200,000 to 10 m.?

"...75% to 85% of any business is people; the other 15 or 20% is the business you are in, the strategy or the structure. People are the key..."

Peter Farrell as quoted by Joanna Gray 2015f

People planning is important.

More detailed questions to help "de-risk" start-up investment include
- do you have the right people to do the job, ie commercial nous?
- do you have the right internal people with the understanding of how to get it done?
- is the IP or technology protected?
- do you understand that they will be problems ahead?
Then conduct a financial analysis, ie
- where is the revenue to come from and how much?
- do you understand what to do?
- can you convince others to join you?

"...An imperfect business model with an  incredibly talented team beats an excellent business model with an average team..."

Paul Bassat as quoted by Anne Hyland, 2016

NB need to understand the mind-set that start-ups need to have, eg hunger, focus, horsepower, curiosity, etc; they need to be self-confident and have self-belief;  understand that they do not know all the answers and will need help from their team and other stakeholders. 
Most start-ups are very optimistic about their potential.
Advice to start-ups

"...Be in the moment and perhaps be a little more patient. Understand the importance of the journey and the end goal..."

Paul Bassat as quoted by Anne Hyland, 2016

Internet businesses fall into 2 broad categories, eg focus on
i) raising capital at higher and higher valuations, regardless of the underlying financial performance
ii) building real businesses

"...we are in an incredibly important time when software is leading the world and technology is eating every industry, company and job..."

Paul Bassat as quoted by Anne Hyland, 2016

Some impacts of social media include

- cheapness (once a campaign is launched, its distribution is "free"; dealing with a tweet is cheaper than a call to a customer centre)

- viral nature (uncontrollable; once information is out there, it is common knowledge; no privacy or confidentiality)

- speed (real time, eg Qantas Flight QF32, Michael Jackson's death; put a question out there and get feedback within minutes;

- data, etc (taps into a great wealth of data, information and knowledge)

- convenience (90% of consumer believe it saves them time shopping; 40% use the web for competitive shopping; home-bound people use the Internet for communications, including contact with friends & relatives, shopping, health care, etc)

Five ways to bring your staff on-side re social media
There is an increasing number of people willing to share good and bad work experience on social media; this has doubled since 2012 to 2015. Research has shown that 66% of people will share negative work experiences with friends and colleagues; 34% will post information about the bad experiences online (Timna Jacks, 2015). As a result there is a need to get staff onside t0 post online praise rather than negatives. The 5 ways:
i) encourage social media use
(this means lead by example by posting information about your organisation which staff are allowed to contribute to, share or comment on. Guide staff in the use of social media to advance the organisation's objectives plus their own work profile. 
ii) launched an internal social media platform
(start an internal platform where staff can chat, collaborate and air opinions. Management needs to respond quickly to any staff complaints)
iii) respond to output on social media
(most jobseekers agree that their perception of an organisation improves after seeing an executive respond to a review. if comments are negative, don't be defensive but respond to the issues being raised and if required follow-up when they are rectified. When reviews are positive, take the opportunity to provide deep insights to what was said and why it's important)
iv) create usable content for social media (
when launching a new service or product, upload information so that staff can use it and share it on social media; ensure that good tools are available to send out positive messages to the market; create an online culture and online feel)
v) build trust with your staff
(build a working environment that fosters trust and this will encourage your staff to portray a better image of your organisation online. Your social media policy should have clear guidelines about sharing confidential information, recommendations on how and when staff can speak on the behalf of the organisation, and legal considerations such as discrimination concerns. Never underestimate the power of staff authentically talking about their experiences within the organisation)

Social media use of the internet has caused monumental changes in industries, eg the demise of many great corporations whose influence & profitability seemed unassailable like

On the other hand some traditional players have adapted and survived like Dymocks. With more than 1/3 of Dymock's competitors like Borders, Angus and Robertson, etc have gone out of business in the last decade; retail, book sales have fallen by more than 5% a year over the last 5 years while online book sales have surged 26% a year (Sue Mitchell, 2014). Dymocks have bucked this trend by embracing

- franchising (a good franchisee can get an extra 20 to 30% more sales out of a given store as it is like an owner/operator business with their own money involved and extra work hours they willingly amazonput in)

- e-commerce (selling books on the Internet)

- using "Big Data" to analyse customers' shopping habits and to drive sales through its "Booklovers" club, ie

"...Dymocks' same-store sales rose 8% last financial year - well ahead of the 1.3% growth in the total book market - and sales in the first quarter of 2014 have risen 8.6%..."

Sue Mitchell, 2014

"...The data analysis allows us to identify customers far more individually and what they like and don't like and what turns them on. It enables us to give them the service where they require it, whether it's online click-and-collect or in-store."

John Forsyth, CEO, Dymocks as quoted by Sue Mitchell, 2014

- media (e-newsletters/TV v. print - the latter have

i) falling readership & circulation, eg for 23 quarters Australian newspaper circulation has fallen

ii) falling advertising income

iii) mass staff lay-offs, etc

- music (change from large records-making studio/labels and disc-jockey/radio controlled stations to use of lap-tops and Internet)

- finance (internet banking v. cheque where the latter cost over US 1.00 to handle as opposed to a few cents; ATMs worldwide)

- retail stores (online buying v shopping centre; with more people buying products on-line, the shopping centres are struggling)

- gambling (online gambling v traditional book-makers (horses), pubs/clubs (poker machines), etc; on-line is growing rapidly & diversifying into new areas like team sports, social gambling, etc; seen as entertainment)

- tele-medicine (virtual doctors). As early as 1924, a US doctor used a television link to consult on surgery; in 1960, NASA began monitoring astronauts in space. Despite the introduction of smart phones and tablets, most healthcare still happens face-to-face as the need for security and privacy is great. Electronic versions of sensitive documents such as x-rays or doctor's notes need to be as secure as paper ones. In August 2014, one of US's biggest hospital groups claimed the Chinese stole data on 4.5 m. patients (The Economist, 2014b).

Some countries like Israel have a health system that is fully digitalised with all doctors using electronic medical records and patients having access to their data; prescriptions and referrals are done on the Internet. Also, developing countries, like Rwanda, can use leading international specialists from USA via the Internet. Tele-medicine will only save costs if it replaces the old routines.

A further development is the use of drones to be sent to the patient with instructions how to use medical equipment and/or provide photos of patient for health professionals to be able diagnosis from. They can deliver medical equipment in 1/10th of the time it takes an ambulance to do the dame job.

Retail industry (department stores - Australia)

- shopping hasn't really changed much in the last 50 years. In Australia the supermarket chains of Woolworths and Coles dominate the $1.4b. online food and liquor market. New players like HelloFresh, based on recipe creation and ingredient curation, are challenging the supermarkets by delivering fresh and package ingredients and recipes to consumers to cook in their own kitchens.

- for decades department stores have been losing market share to specialty retailers, ie department stores' share of total retail sales has fallen from 12% in 1989, to 10% in 1999, and to under 8% by 2012. More recently,online retailers have been having a negative impact on in-store sales, ie they account for around 10% of the total department store sales. Online offers lower prices and infinite choice. Total online retail sales grew by 21% in 2012/13 while total retail sales grew only by 2.5%

- department stores are spending hundreds of millions of dollars to upgrade point-of-sale, merchandise management, supply chain systems and Internet-based platforms for online sales in an endeavour to reinvent themselves. For example, Myer's online sales doubled in 2013, reaching $50 m ; and it became profitable for the first time. Its website had 1.3 m visits in the first 9 months of 2013.

- other attempts to reinvent themselves include introducing new services such as manicures & eyebrow waxes; encouraging personal shoppers by focusing on hip, brand houses; stores within stores; celebrities, fashion parades and art shows rather than price-based promotions to encourage customers into the stores' ie make the stores at tourist destination and/or create in-store theatre.

- More on retail, department stores' demise (USA)

- in 1988, Sears (department retailer) was in Dow 30 & now not in S&P 500

- Borders (was a top book & music retailer) & Circuit City (was 2nd largest electronic retailer) gone in 2009

- Barnes & Noble (largest book retailer) reducing numbers of stores; while online Amazon earns $600,000 per sales-staff, ie 3 times retail average)

- Kmart (discount stores) closed 40% of its stores in the last decade

- Best Buy (was largest electronic retailer & named company of the year in 2004 by Forbes Magazine) is dying, ie is planning to shut around 2,400 stores

Some more on retailers

- Internet influences (2012) around 11% of total retail sales as consumers search for information before buying in stores

- Internet sales account for up to 20% of retailer's sales (2013) ); with around 80 % of shoppers having bought on-line and more are willing to pay for digital versions of newspapers, films & movies

- there is a paradox in the rise of virtual retailing, ie customers are demanding more of their traditional retail experience while "window shopping" on-line

Owing to its global connections, it has given access & voice to individuals that they never had before. Trends & attention spans can shift within seconds and produce tsumani-like impacts, eg "complete this sentence - in my house it's a crime not to buy....." was a disaster for Coles when posted on Twitter as people posted negative sentiments, eg squeezing farmers on prices, encouraging gambling addicts re poker machines.

Social media has allowed people to get involved in social media issues from the comfort of their homes. Yet on Facebook there has been a better response than from posting on Twitter. Yet the response to "kill" Mortein's "Louie the fly" on Facebook resulted in around 1/4 million users starting a successful campaign to save Louie. Unfortunately for Mortein, the campaign to kill Louie coincided with the firm closing its Australian operations

Some social media statistics include

i) Worldwide (late 2015)

- around 50% of people read e-mails on a smart phone immediately when they wake up
- around 80% of online world users access the Internet via their smart phone rather than a computer
- Facebook has 1.55 b. active users; 1.05 b. daily users; 894 m. mobile active users (late 2015). It is the most visited place on the Internet
- Twitter has 1 b.  users; with 500 m. following, not tweeting; every major traditional media outlet has a Twitter presence
- LinkedIn has 400 m. business users and 6 m. business listings; it has 130+ different industry uses and is in 200+ countries; 61+ % used it as their primary professional network; 49% are key decision-makers
- Youtube attracts 4 b. views a day; the world's second most popular search engine with up to 1b. viewers daily
- Facebook's Instagram and Pinterest has an audience of 400 m.; Instagram was launched in October 2010 with users uploading 16 b.  photos so far.
Social media produces double the combined leads generated from trade shows, telemarketing, daily mail and pay per click (Price Coopers et al, 2015)
- Google+ 300 m. regular users join in the first two years
- research has shown that social media produces double the leads of trade shows, telemarketing, daily mail & PPC combined

Initially there was Twitter, Facebook, LinkedIn and YouTube. Then
- in 2013 saw the emergence of Instagram, Google + and Pinterest (they have a combined audience 1+ b affluent consumers)
- in 2015 the video driven like Snapchat, Periscope & Meerkat.

NB All these are relegating traditional forms of advertising (including Google ad words) to the rubbish bin.

- Facebook (started in 2004)

. 1.5b. + members (including 50% of all Americans); with the number of active mobile users is 1.3+ b ; in August 2015, 1 b. people used Facebook in one day; with 1 in 7 of the world's population using Facebook to connect with other people

. 4m.+ businesses use it

. 750m.+ visit it every day (10 times what its predecessor MySpace had at its peak)

. 75% of visits from mobile phones

. Members spend up to ? hour each session

. Around 1/3 of members visiting multiple sites daily

. 10m.+ new photos every hour

. People press a "like" button around 3b. times daily (eg 34 m "like" Coke-Cola)

. Most members have 130+ direct contacts

.Instragram (part of Facebook) has 130 m customers

Growth has slowed in western economies especially amongst the young adult demographics, eg in USA, 6.5 m+ of 13 to 25 years old have left in the last 2 years, preferring Apps.

In Feb 2014, buys WhatApp (US$ 16 b+), a text-messaging service, to protect its turf. WhatApp has 450m users (fastest growing membership of any social network by a factor of 2). Potential to send 7t messages annually

Fastest increase in users is

- over 50s age group

- Asia (73% in 2 years)

- Latin America, Middle East & Africa (69% in 2 years)

The USA has 16% of Facebook's user base; it provides around 50% of the firm's revenue

. Facebook aims to provide affordable Internet access to 2/3 of the world that are unconnected

Facebook

"...it's the default way to communicate with friends across the world"a popular marketing mechanism both small and large companies, and a rallying cry and economies..."

James Hutchinson, 2014

Rapid growth in mobile devices is shown by Facebook where 85% of its users use a mobile (2014). This suggests the end of the era of desktop online advertising.
Facebook has collected and analysed a huge amount of information about individual's tastes, beliefs, interests, photos and conversation from a very wide section of the community that is worth a lot to businesses and advertisers. Thus its focus has switched from user benefits to advertising benefits, ie Facebook is changing from a company centred around Facebook.com to a portfolio of apps and digital products.

In addition to buying organisations like

- Instagram (online photo & video service)

- WhatsApp ( Mobile messaging service)

- Oculus (virtual reality), etc.,

It is developing new app-like products in their research division (Creative Labs) like Slingshot (a look-alike Snapchat - see below), Paper (a social media newspaper which curates articles and photos into categories users choose), etc. Its in-house development is having limited success

Facebook is looking to pps as to win back teenagers who have turned away from Facebook in large numbers owing to their parents' presence and the perception that Facebook is no longer cool.

Snapchat (photo messaging app where messages disappear after 10 seconds); in 2014, Facebook unsuccessfully bid US$ 3 billion for it.

- Google

. Google daily processes more than a petabyte of data (this is around 100 times the printed materail in the US Library od Congress)

. Google+ (540m.+ registered users; 300m. usrs joined in its first 2 years)

. It is the world's number 1 search engine & advertising company

. There are 1b. gmail accounts

. Google has spent US$ 21b. on its data centres (2014)

· With the changing dynamics in digital marketing - there is a swing away from desktop to mobile as the fastest growing area of digital advertising. Search is around half of mobile ad spending (2014) but these ads have less impact than targeted social media ads. As a result Google has been losing market share to the likes of Facebook, ie Google market share is falling below 40%. Facebook, which has a higher ad market share on mobiles than on desktop has seen its click-through rate triple since 2013.Also, other players are getting into mobile advertising like

i) Snapchat (a popular photo -paysharing app is launching ads that post photos with comments that disappear after 10 seconds: eliminates the risk that potential embarrassing posts will return to haunt you later in life; with no advertising, but very heavy user engagement like word-of-mouth, referrals, etc, it experienced rapid growth in a couple of years, eg from 50 m. snaps per day in December 2012 to 150 m. per day in April 2013 to 200 m. per day in June 2013 This is a quadrupling of the user base in 6 months!!!)

ii) Yahoo! is trying to boost its mobile and offerings with its acquisition of Flurry

Other activities include

i) owns YouTube which has 1/5 of US digital video ad revenue; attracts 1 b. users monthly; its music videos are very popular (2014) (see below)

ii) Android internet software (from mobile phones to tablets, home appliances, watches, automobiles, health monitoring, TV, etc). By using the android system, Google ran an open source software approach, ie anybody in the world, including smart phone manufacturers like Samsung, BlackBerry, etc, could use the android software and tailor it to their own particular needs. This was different to Apple fromwith its iOS system only operating on Apple-made hardware. The development of android and iOS destroyed Microsoft's near monopoly in operating systems in a mere 5 years, with people adopting mobile computing more than 3 times faster than they did a desktop. It took around 15 years for Microsoft to dominate the desktop market from the 1980s. 2013 marked the worst decline in global PC shipments in history, ie 7 quarters of declining revenue

iii) Google wallet (collecting customer transaction data & replacing credit cards for purchases via smart phones), etc. It creates the marketplace where consumers and merchants are brought together on a single information platform covering shopping, inventory, delivery planning and payments. Google does not own the delivery infrastructure; instead, it pays courier companies to pick up items from stores such as Target Wholefood, organise the items and deliver them. Stores pay Google a commission on each sale. For Google model is asset light but it does not have complete control over costs and execution, like Amazon has.

iv) Waze (a real time, reliable way to report and share traffic information); after a few years they have 30 m. worldwide users; have developed their own unique mapping technology; Google paid US $ 1.1 b. in 2013

v) Driverless cars

vi) Uber (on-line, non-licensed car booking services) (see more in this volume)

vii) Skybox Imaging (satellite operator & fibre-optic cabling connection including submarine cable linking Asia to the US)

viii) Robotics

ix) Cardboard viewer (device that allows viewer to see virtual reality via app)

Google's parent company (Alphabet) is worth around US $ 560 b. (late 2016)

It is obsessive about innovation. Google realises that organisations that have experienced success are at risk of losing their innovative edge, ie

"...as soon as you have something to protect, your mind starts going there, if you are not very careful, instead of continuing to imagine the future..."
Michael Smith 2016

Part of innovation is failure. Google fails frequently but prefers micro fails, not catastrophic failures. Micro fails are important as there is much learning, ie

"...we learn and we change and we optimise..."
Jason Pellegrino as quoted by Mike Smith 2016

Even though Google allows staff to work on their own projects for around 20% of their time, there are constraints like

- quarterly evaluations of an employee's work plan against the company's overall goals (these are incredibly disciplined and robust work-plan discussions to ensure that everybody is working in the right direction and is delivering; embracing failure and taking risks is acceptable to achieve these goals in (the work plans
- human resource department (called People Operation) is treated like an engineering department as it generates extraordinary amounts of data to understand how to optimise culture and the organisation's performance.

Google has had huge successes: Google maps, Google photos and Gmail, plus its search engine that made the company the world's largest advertising business.  On the other hand, Google has product failures like Google glass and Google plus.

Its products are continually evolving, like Google maps has gone from being a driving-focused tool to helping people navigate through buildings.

Google is exploring new areas like content production for its YouTube and Google News.

Additional problem facing Google is the small amount of tax it pays.

- YouTube

. It is a do-it-yourself platform for video of hobbyists: original motto was "broadcast yourself"

. The basis for success of YouTube is that people want to see other people all over the world; they want to share experiences

. It is viewed 2+ b. times per day (the preferred learning medium for people under 30 years old, ie 50% of world's population)

. It uploads an hour of video every second

. 6 b hours watched per month

. The second most popular search engine

. It now produces more programs than any Hollywood studio and aims to bridge the gap between Silicon Valley and Hollywood

. Initially the entertainment establishment thought that they could finish YouTube with copyright lawsuits; now they are scrambling to get part of the YouTube action, eg DreamWorks Animation paid US$ 33m. for AwesomenessTV, Walt Disney paid $US 500 m. the Makers Studi

. Main players on YouTube include PewDiePie & Smosh has 30+ m. followers each

. Advertising on TV is limited to a particular time, while on YouTube it is unlimited, ie whenever the video is playing.

. Developing a new product (Google Preferred) which allows companies to target the sites that have the best performing content across a variety of categories

. Willing to experiment & fail, eg invested US$200+ m. in 100 new channels that created no real breakthrough

Some challenges for YouTube include

- high percentage of ad revenue, ie 49% (claimed to be excessive)

- does little to market and promote videos and the stars developing talent that can then be cherry picked by other distributors like Netflix

- traditional TV networks like CBS and HBO are moving content online

- digital media like Facebook, Instagram and Twitter are increasing their video offerings

- video games

- many young tech-knowledgeable entrepreneurs who were raised on YouTube and think they can build something better

NB a variation of YouTube is Wattpad, ie a YouTube for stories rather than videos. Where budding writers post stories online and invite comments from readers evaluating their progress. This allows mainstream publishers to evaluate the writers and as a reault some become authors. It has 25 m. active monthly users in 2014; with around 150,000 uploads per day. It has recieved $ 46 m. in funding (International Business Times, 2014)

- LinkedIn (started in May 2003)

Mission - to connect the world's professionals to make them more productive and successful

Goal - to connect the world's 600 million knowledge workers with each other and create economic opportunities for the rest of the world's 3.3 billion workers

. By October 2004 it had 1 m members; this has increased to 160+ m. members

. It involves "re-networking"; with just-in-time professional connectivity and has been described as a glorified recruitment, resume-distribution service for professionals; with lucrative products/services.

. It is an enterprise software company that offers large employers a third-party HR and recruitment service, complemented by advertising and marketing. It allowed jobseekers to apply on LinkedIn, cutting out the traditional recruiters

. Since 2005 its premium service offers hiring posts, recommendations, business directories and paid messages to members outside one's usual network. More recently it is providing "influencer posts" for around 190 people who include the likes of Richard Branson (Virgin Group), Mohamed El-Erian (Primco's CEO), CNBC host (Becky Quick), etc. Its next step is 'sponsored posts' where ads are tailored to individual's LinkedIn profile, job history, interests, recommendations and so on

. Compared with Facebook and Twitter, it is much more reliable in "monetising" the Web

. Its shares have increased 5-fold since 2011 to more than US$ 250; valuing this values the company at around US$ 29 billion. This is more than 1,000 times 2012's reported earnings

- Twitter (started in 2006)

. Twitter is an early warning system/leading indicator/real time engagement, ie

"...As a public, real time, conversational and distributed platform, Twitter is becoming an essential service to customers, businesses, media companies and advertising, Twitter is where events, information, ideas and fads get reported, purported, distributed and exploited..."

Mark Mahaney as quoted by Paul Smith et al, 2013

. Has 215m.+ monthly users (including 34% of Americans)

. 75% of users access it on mobile devices

. Musicians are 8 of the 10 "most followed" & 50% of the top 100, eg

i) Justin Bieber (44m)

ii) Katy Perry (42m)

iii) Lady Gaga (40m)

iv) Beyonce released new album with 1.2 m "hits" (Dec. 2013)

. Generating 500m.+ tweets per day

. Important in Arab Spring movement

. Used to measure popularity of TV shows, ie instant feedback

. Growing at 200 % per year with revenue hitting US$ 317m (2012)

. Soon after listing on US stock exchange, its market capitalisation peaked at US$ 40b (Dec. 2013)

How to engage an audience on Twitter

- use your voice (let people know what's going on)

- humanise (people want to know your human side, ie share something that you are comfortable with)

- add to someone else's tweet (re-tweet and ideally add your point of view)

- say thank you

. Twitter users

i) US President Barack Obama - 36m followers

ii) Vatican (Pope Francis - 0.2m followers)

iii) Rupert Murdoch (News) - 0.3m+ followers

iv) Jack Welch (ex-CEO GE) - 1.3m+ followers

v) Warren Buffett (investment guru) - 0.1m followers within 2 hours of opening his account

vi) US Federal Reserve & Reserve Bank of Aust.

vii) ASIC

- Skype has 200+ m. users & has racked up 300 b. voice & video minutes

- Web is going mobile (global smart phones sales increased from 297 m (2010) to 472 m (2012) plus mobile cloud & apps increasing in use in early 2012; cars & domestic appliances now share a common internet-based computing platform)

"...Mobile adoption eclipsed desktop usage by a factor of three, that smart phones are in the hands of 1 billion users who are spending 20% of their waking time interacting with them, and that perhaps apps are by far the most powerful way to interact with those smart phones......how quickly a touchscreen interface, a powerful operating system, integrated sensors and an ubiquitous mobile Internet connection changed our lives..."

George Berkowski, 2014

. Paying by mobile devices. The aim is to have more transactions through payment networks as people tend to spend more when they pay with methods other than physical cash.
.
New phones have "near field communication" technology that works on contactless terminals built into the device. Some examples
- credit card companies like Visa, MasterCard and Amex are working with local banks to upgrade their systems, ie "tokenisation" of card numbers which makes electronic payments more secure by using secondary numbers generated from the digits on an individual's actual card. These tokens are tied to domains or devices rather than the original credit card number
- both Apple and Samsung use fingerprint swipes in conjunction with tokenisation. This ties an automatically-generated version of credit card numbers to a domain or device. It allows the biometric identifier to replace a pin or password, and makes credit card details more secure because they can't be used from another device.
- more and more items like cars, refrigerators, health monitoring, etc are being linked to the Internet by mobiles
. Other identification techniques (biometrics) include voice print,iris or eye blood vessel pattern, facial recognition, measurement of a person's gait, heart rhythms etc. Biometrics will improve accuracy of authentication and be easier to use

organisational development change management

In 2008 Apps started with smart phones, eg iPhone (Apple); 21b. mobile app available (Dec. 2014); with people adopting mobile computing 3X faster than desktop; using mobile app 6X more than websites.

Another example of the importance of going mobile-centre is Nintendo (Japanese electronic game creator). Until 2015, Nintendo had resisted the move to develop its games for mobile devices as it felt that this would undermine hardware sales. But this approach was failing as in the 9 months to December 2014 their hardware sales declined 1/5th. Thus in 2015, Nintendo has developed a new mobile-centric strategy.
- mobile gaming revenue to 2015 from games played on tablets or smart phones was expected to exceed US$ 30 b.(an increase of 20%) while console revenues are likely to be around $US 26 b.
- Mobile online venders, like Google and Apple, take a large commission, ie as much as 30%
- other producers of mobile hits such as Finnlands Rovio (Angry Birds) and US King (Candy Crush) have struggled to maintain momentum, ie after increasing revenues by 23 times between 2010 and 2012, Rovio's earnings in 2013 fell by 50%. They are hoping a feature length "Angry Birds" film will revitalise them in 2016
- Electronic Arts (Fifa & Madden NFL) is a role model for Nintendo as they went gone mobile in 2014 with the results of its December quarter's digital revenue rising by 1/3 to US$ 540m. (The Lex Column, 2015a)

Despite the large numbers using social media, the chances that your fans or followers will see your posts are very small, ie

- Facebook posts of top brands reach only 2% of their fans (similar rates for Twitter)
- Engagement -
percentage of fans who like, comment and share are
i) Facebook (0.073%)
ii) Twitter (0.035%)
iii) Instagram (4.21%)
Stackla
have developed a way to harvest social media chatter and turn it into something useful, ie their software scours social media sites, collecting all the information, like twits and posts, and delivers results to be used as marketing on client's web pages, etc

People wanted computers to be mobile, ie

"...China ended 2014 with 618 million Internet users, of which 500 million were mobile Internet users. 81% of Chinese are now accessing the Internet via mobile. Mobile Internet browsing as a percentage of total Internet browsing has reached 23% by January 2014 - this is an 83% increase in just one year. If the above trend continues, then mobile is going to represent the majority of all personal computing platforms by 2016. In 2015, the number of smart phone users is expected to hit 2 billion. The lower cost of mobile devices combined with the growth of mobile broadband networks will actually see the next billion people who come online bypass desktop computing entirely and go straight to mobiles..."

George Berkowski, 2014

"...A typical smart phone user looks at their phonearound 150 times per day…… In 2013, the average consumer spent anaverage of two hours and 38 min per day on their smart phone andtablet. That accounts for a whopping 17% of their waking time - that'salmost one fifth of the time we spend with their eyes open…… Thoseconsumers spend 80% of that time……using apps and only 20% on mobileWeb. Apps offer the better mobile experience - and a result holds fourtimes more of our daily attention than the mobile web…… Almost 60% ofour time on games, Facebook or entertainment-related apps..."

George Berkowski, 2014

. Facebook'sapp and Apple’s Safari dominate mobile web browsing

. Apple and Google are the middlemen (taking up to 30% of revenue); theydominate with about 90% of 102 b. apps that were downloaded in 2013.Extra income sources are

i) the transactions income from apps when you enter your credit cardinformation directly

ii) in-app purchases, ie extension of pay-before-you-download model; itmakes downloading the app free (plus encourages more people to do it)and gives the app developer the opportunity to sell other services orproducts with the app. For example, “Clash of Clans” game makes 100% ofits revenue via in-app payments, ie US $890 m. In 2013, similarly,e-commerce via mobile apps generates an estimated US $ 43.2 b. in mobilesales (2013); up from US $ 21 b. (2013).

“…This means that mobile represented around 13% of the US$ 260 billion totale-retail sales in 2013. Amazon doubled its mobile sales in 2013 to $ 8billion…”

George Berkowski, 2014

iii) advertising via app magazine

. The app stores were very popular with developers as they could

. buildup massive audiences

. made it easier for users to make purchases with credit card details, ie asingle click

. the app store owner manages everything to do with the accounts, payments andany hassles, such as fraud & chargebacks

Some mobiles stats 

. Number of mobile phones exceeding the world's population of 7.1 b. (2015);with 70% of the world's have mobile phones
. 91% of Americans have their mobile devices within reach 24/7
. Americans spend around 40% of their time on social media withFacebook and Pinerest accounting for 50+% of social media-generated commerce
. 78% of Americans Facebook users access Facebook from mobile phones
in 2012, global mobile ad spending was $US 8.7 b; this is projected to increase to $US 33b. +, ie 6% of all advertising spending and 25% of allInternet advertising in the next couple of years.
. 74% of US consumers rely on social networks to guide their purchases;Twitter users make 50%+ of their social media purchases from mobiles
(source: George Berkowski, 2014)

iii) Australian numbers

- around 11 m on Facebook

- around 1.9 m are Twitter users

- 51% penetration of total population with mobile device with 37% of Australians start a sale on a mobile device, eg

" ...you see the ad on the television, you search it on the mobile device, you like the look of the page, you e-mail it to yourself, follow it up on your desktop and complete the transaction..."

Diane Costa as quoted by Anne Fulwood, 2013

- 60%+ are Internet users

- 13 million Australians are connected to the Internet for 18 hours a day, with 3.6 of these hours spent on social media
- by 2020, 12+% of Australian workers are expected to be working from home

The use of social media needs to be combined with the use of traditional media, ie TV, print, radio, etc.

Storytelling has boomed via the Internet and social media networks (like Facebook, LinkedIn, Blogs, Twitter, Elsy, etc) because of the pervasive, affordable and instant qualities ot this new media.

The below chart explains the relationships between the 2 Australian million Twitter users. The green dots show the hubs like PM Julia Gillard and the yellow dots show the strength of their following on subject matters like news, politics, sport, investment, music, etc. For example, the hardline conservatives (left side of the map) have few connections with food, wine & beers (far top right side of the map). This does not mean that they are not interested in food, wine & beers but means that they are not formally linked on Twitter.

Map of Twittersphere (Australia)

organisational development change management

(source: Patrick Durkin, 2012)

 

Social Media - Finding the Right Presence

Personal and Private - Family and Friends

Message

I want to keep in touch with you

Goals

Brand: Show commitment to your relationship.

Engage: Strengthen your ties.

Lean: Keep abreast of changes in your social network.

Sample Social Media Tools

Facebook

Professional and Private - Work Colleagues

Message

I am a team player, and I want to collaborate with you

Goals

Brand: Enhance your image at work.

Engage: Collaborate; boost productivity and effectiveness.

Lean: Leverage your colleagues; input.

Sample Social Media Tools

Yammer and other corporate platforms

Personal and Public - Society

Message

I am passionate about ideas and want to share them with you

Goals

Brand: Become known for your ideas.

Engage: Find new outlets for your passion.

Lean: Leverage others' ideas and viewpoints.

Sample Social Media Tools

Blogs, YouTube, Twitter

Professional and Public - Professional Peers

Message

I am competent and growing professionally

Goals

Brand: Build peer recognition.

Engage: Find new opportunities; show commitment

Lean: Boost industry knowledge; develop yourself

(Source: Soumitra Dutta, 2010)

Sample Social Media Tools

LinkedIn, Twitter, and sector-specific communities

Some examples of the use of social media

Adidas has 40,000 staff and use social media for talent acquisition or recruitment. They used software (TalentSeekr) to scan social media sites for key words to help identify people it wants to hire. Then placed ads on web sites frequented by these people and directs them to Adidas's web site which has video presentations designed to appeal to them, such as sport & athletes. Of the social media sites they focused on Facebook, LinkedIn, Blogs & Twitter (aiming for 30,000 followers). The advantages were

- recruitment time reduced from months to days

- recruitment costs reduced from $1,000s to couple of $100s

- attracting better quality people, ie top of field & not necessarily looking for a new job

- don't need recruitment firms &/or use traditional advertising

Adidas claimed that one campaign costing $US 500 generated 11 top people from 450,000 who saw ads; 2 were hired

Fiji

An ICT firm initially advertised in the printed media for a web designer. It got no responses. Then it advertised on social media and got a good response

Social Advertising Business (Social Loot)

It is a concept involving assigning firms/brands, etc to be promoted to your circle of friends; with payment based on the amount of traffic generated, quality of referrals and resulting sales. They are brand advocates. Twitter has the best sales conversion rate. Celebrities with a high social media following are paid $1,000s per commercial tweet. This has been compared with spam and cash-for-comment (Paul Smith, 2012a)

Crisis management

i) In November 2010 when Qantas Airbus A380 had an emergency landing in Singapore, the Twittersphere falsely reported that a plane had crashed. Qantas shares slumped by 3% but later recovered when the true story was known.

"...With smart phones and social media energising a new breed of citizen-witnesses who keep a minute-by-minute account of customer service failings, politicians' missteps and corporate sloppiness" communications is a discipline in flux where the rules, at least as previously understood, no longer pass muster..."

Emily Parkinson, 2012a

ii) London Tube and bus bombings in July 2005. For the first 3 hours the official line was that the incidents were the result of a "power surge". Yet within the first 90 minutes, social media had identified that explosive devices were the cause. Soon afterwards traditional media outlets like BBC News were inundated with e-mails, texts, digital pictures and video files.

These 2 examples emphasize that in the digital age you have to respond to an event within a few minutes - or quicker.

Citizen journalism

Network sites are allowing citizens to break the news. Also the credibility gap between established media outlets and the network sites is narrowing. At the same time, misperceptions, mistakes, speculation, mistruths and innuendos left uncorrected become the truth.

Reputations, brands, etc can be destroyed in minutes. It is impossible for organisations to expect to keep things quiet and to disclose on their own terms. Witness the lingering public distrust for bungled crisis responses, such as BP's Gulf of Mexico incident and the partial meltdown of the Fukushima nuclear plant.

Telstra's use of social media includes the following stats

- 43% of on-line customer conversations on Twitter

- 31% of on-line customer care via micro-blogging

- 86% of tweets are responded to within 60 minute

- around 60 people based in Adelaide continually monitoring the web and responding to consumers via social media (Fiona Smith, 2012b)

Optus - has around 25 people surfing the Internet to identify comments (especially adverse) about Optus.

Australian Banks (NAB & CBA)

- NAB's "break-up" campaign started on social media sites like YouTube & Twitter, then after several months went to more traditional media outlets. This campaign has resulted in around 450,000 new NAB customers plus improved brand perceptions and lifted NAB's market share in home loans, retail & small business sectors

- NAB & CBA have dedicated teams following social media sites (Facebook, Twitter, etc) for public comments. This feedback allows more focused marketing

Financial Planning

· Computer programmers will determine individual's risk appetite and automatically match investors with independent, low-cost products.

"...Technology is a powerful force to change the finance system, potentially improving efficiencies and competition, and benefiting consumers..."

Murray interim report into Australian Financial System as quoted by James Eyers, 2014a

The final Murray report on Australia's Financial System (2014) mentioned the impact of the digitalisation of society on the banking industry. Technology-driven innovation is transforming the finance system with the emergence of new business models like crowd financing, mobile banking, cloud computing, new payment services, etc. All these are subjecting the financial system to more market forces including competition which should enhance both productivity and outcomes for consumers. To handle the maze of financial service regulations, the Australian Securities and Investment Commission (2015) has established a special unit to focus on these novel developments. They need to harvest the opportunities that the digital age is creating while mitigating the risks, ie

"...actions which promote entrepreneurship, innovation, adaptation and skill building, that reward 'real' risk-taking, while providing a stable macro economic environment and a well functioning financial system..."

Glenn Stevens (Governor, Reserve Bank of Australia) as quoted by James Eyers, 2015a

· In addition to competition resulting in reduced fees, another benefit for customers is reduced conflict of interests situations arising when financial planners, bankers, etc focus on products that return them highest commission rather than what is in the client's best interest

· In Australia it is estimated that $27b. of bank annual revenue is up for grabs by new technology, like personal loan books, eg

- SocietyOne (peer-to-peer lender that matches people needing a personal loan with investors through an Internet platform)

- CrowdfundUP (an alternative for businesses needing capital from brokers or investment bankers needing investors)

- Wealthfront (a US-based firm that uses algorithmic-based financial planning has built US$1b. in under two years)

Transactional payments for goods and services

ApplePay (people able to pay for everyday goods and services with their smart phone, ie apps are replacing cash, cheques and credit cards with fingerprint readers on recent iPhones to confirm identities, ie security. This will provide a convenient and secure mobile payment system, ie wirelessly transmitting a one-time code along with an encrypted customer data, which is claimed to be more secure than swiping traditional credit cards). It is an improvement on Google Wallet which was hamstrung by limitations on the types of phone and cellular networks' compatibility; a similar story applies to Softcard (backed by major wireless carriers) and is a challenge to PayPal (it started in 1998 and eBay purchased it for US $1.5 b. in 2002), which has dominated the digital payment system (now has 150 m. regular users with revenue of around US $6.6 b (2013); as a result, eBay is spinning off PayPal so that it has the speed and flexibility to defend its market against ApplePay. Also, PayPal brought Braintree (a competitor payment startup) in 2013

AliBaba (huge Chinese e-commerce company that forced eBay out of China) is a potential competitor with the likes of other smart phone manufacturers, eg Samsung & Microsoft

ApplePay has already won the support of Square (a prominent payment start up), Stripe (a payment processing start-up based in San Francisco); others, including McDonald's, Whole Foods and Macy's are signing to use ApplePay

Another example of Apple using disruptive innovation to upend an industry. Previous examples include

i) iPod (revolutionised how consumers buy digital music)

ii) iPhone (changed the way people use their mobile phones in daily life)

NB Only 11% of e-commerce spending happens on mobile devices (mid 2014); the rest are made on desktop computers as it is easier to enter payment information on the desktop than on a smart phone

Peer-to-peer financing, eg TransferWise (started in 2011 by ex-Skype guy & others)

- banks charge high fees for transferring money between countries, ie 5+% plus poor exchange rates and delays in payment, compared with flat fee (UK$1 per $1,000 & 0.5% over $1,000)

- users are from 200+ m expats (living, working & studying abroad) plus businesses paying suppliers, etc

- using a crowd-driven, peer-to-peer model, no money is transferred between countries; rather it is exchanged within borders. Instead of transferring the sender's money directly to the recipient, it is redirected to the recipient of an equivalent transfer going in the opposite direction. Likewise, the recipient of the transfer receives a payment not from the sender initiating the transfer, but from the sender of the equivalent transfer. This process avoids costly currency conversion and transfers crossing borders.

- so far (mid 2013)

i) UK£ 125m tranferred

ii) 20% monthly growth

iii) UK$ 5m saved for customers on fees, etc

iv) Venture capital invested UK£ 7.37 m

Virtual Currency, eg Bitcoins (decentralised virtual currency championed as a faster, cheaper alternative to existing payment systems)

- it is not backed by any central bank

- one of the key issues is security as hackers have been able to steal around half $1 billion of virtual coins

- can be used to bypass detection by government authorities like eg proceeds of crime; preferred way to pay for drugs on illegal websites like Silk Road

- becoming more acceptable like Dell began accepting bitcoin payments; bitcoin ATMs at Westfield shopping centres, etc

- volatile value, ie from US$ 617 to 1000+ per unit; collapse in Feb 2014 of Mt Gox (the world's biggest bitcoin exchange)

Fundraising (crowd fundraising websites)

- using social media to raise money for a variety of purposes like Kickstarter (geared toward funding creative projects and entrepreneurs); GoFundMe and Crowdrise (let individuals pursue personal fundraising), ScholarMatch (aims to match donors with low income and first-generation college students and verifies their eligibility), etc

"...You create a profile, including a photo and an explanation of what you're seeking money for, and then spread the word on networks like Facebook and Twitter..."

Ann Carrns, 2014

"...GoFundMe says it has raised $420 m. across all categories since 2010; education second-most-popular category, after medical treatment......the site users can change their goal whenever they want, and don't have to set a deadline for reaching. Unlike Kickstarter, which requires its users to meet a goal to get the money, GoFundMe and Crowdrise allow individuals to keep the donation whether or not the goal is met..."

Ann Carrns, 2014

- crowdrise has added an option for individuals, rather than just recognise charities, to raise funds and its educational category is growing

- GoFundMe's most successful campaign raised more than $1 m. for a child with a rare genetic disease.

- at this stage independent verification of claims made in profiles is not done

Payment revolution
(phones or other gadgets can be used to pay for goods and services, replacing cash or cards), eg Apple Pay - the banks have reportedly agreed to pay Apple a 15 to 25 basis points discount on their card fees, ie 1/10th of the total. This will hurt the banks unless the number of transactions increases with Apple's involvement. Remember: the US debit and credit card purchases were worth over $US 4.1 t. (2013); Apple has 800 m. Active iTune users; has sold ½ b iPhones. Also, Google's Android operating system powers 1 b devices. Mobile payments are just 7% of total installed transactions in the USA (2014) and banks have been unable to build a suitable technological platform. Apple has the technical expertise, brand recognition, is free of the banking regulatory system and has the devices to handle mobile payment, ie with a system that protects personal data and is expected to make mobile transactions safer than cards
(source: The Lex Column, 2014d)

Aristocrat - uses Yamma (like Twitter) as a way to solve problems and spread ideas, etc more quickly in the firm than the more formal email

Hard Rock Cafe (Florence, Italy) - via a community page on Facebook, located people interested in "Rock & Roll". It had 4,000 applicants (most passive) in 4 weeks. Then Interviewed 1,000 and hired 120. Unsuccessful applicants were invited for free drinks when venue opened. Total cost to hire was around $2,000 (compared with $25,000+ using traditional methods).

Personal contact -instead of asking staff to recommend some one for a job, allow their social networks to be electronically 'scraped' for potential applicants

Seven TV Network (Australia) - ratings used to be based on viewers keeping diaries that were summarised after weeks of viewing. Now they are determined in real time.

On-line behavioural targeting 'this involves linking a customer's buying preference history with others who have similar preferences. This allows very targeted, direct advertising, eg Amazon, Wesfarmers, etc

Changetracking - in real time, tracks the impact of change on performance indicators like empowerment, engagement, morale, etc to make modifications to change process immediately rather than waiting for surveys, etc weeks later)

Art e-fairs, eg VIP Art Fair (in 2012, 120 galleries from 32 countries & 1,200 artists; in 2011, 41,000 registered visitors from 196 countries). These online art fairs are reducing costs and increasing exposure for local galleries as they are open 24/7 to an international collector base. Traditionally, to attend an international art fair would cost an Australain gallery around $100,000 to just get to the northern hemisphere; hiring an on-line booth is between $5,000 to 20,000.

Internet, by its connectivity, is used to develop online support groups, eg geographically isolated farmers in rural Australia are able to share experiences and use e-counselling. Instead of people being brought together by proximity, people who share the same interests can form a community online that communicate regularly.

Bonds - they have close to 700,000 Facebook "friends" and are in regular contact with them as part of market research, ie can respond immediately to marketing messages via Facebook, etc

'Tweet & Share' - search for social influencers, ie a person's influence via social networks based on their messaging and interaction with others. Those that provide positive brand messages will receive preferential treatment, eg "lease" their data/information, etc in return for cash or services or goods, eg airlines giving upgrades to influencers

Social TV -TV networks actively engage with their audiences, reward loyal viewers and deliver new forms of advertising to marketers, eg ANZ sponsored "open-mike" with questions for tennis stars at Australian Open via "Fango" audience (2012)

Eastmon Group (Australia) -they have been printing photos for 50+ years. Recently changed business model by letting Facebook users create and print photo books. Now receiving as many as 1,000 orders per day

Dominos (Australia) - made order easier by introducing firm's smart phone and tablet apps. As result they are struggling to fill demand and hascreated 1,000+ new jobs

. Retailers (2012) - Internet influences around 11% of total retail sales as consumers search for information before buying in stores

. Wesfarmers is Australia's largest conglomerate expects on-line revenue from Coles (food & groceries), Kmart (retail), Target (retail), Bunnings (home improvement), Kleenheat (energy), etc to be A$ 1b+ in 2014. It uses online (including social media, information technology, etc) to

- reduce costs

- improve communications (externally & internally)

- grow sales

- make better use of infrastructure & logistics

- improve customers' analytic capabilities

(NB more than increase in site traffic)

Woolworths (Australia's largest retailer)

- In 2011 it acquired Cellarmasters (boosted Woolies' on-line and direct-to-consumer sales expertise, plus moved it further up the liquor supply chain)

- Expected online revenue to be A$ 1b+ by end of 2013 with acquisition of catalogue & on-line retailer (EziBuy Holdings - A$318m.)

- Direct-to-customer retailing is part of Woolies' multi-option marketing approach

. Launched online grocery "click & collect" in 2012 & by 2014 accounted for around 50% of its online sales

Myers (one of Australia's main retailers)

- since 2010, Myer has invested $390m in redesigning itself to handle digitalisation

- it has offered a 70,000 on-line product range; this will have hit 100,000 by Christmas 2013; at the same time it will finish a purpose-built online distribution centre

- even though the online is selling less than traditional stores, it is more profitable as costs are considerably less, ie around 1/3

Movenbank (e-banking - "no paper, no plastic, no hidden fees") launched and developed by using social media like Facebook in banking. Imagine a bank with no branches but using Facebook and Twitter will be critical to determine the quality of services. Movenbank will use hand-held devices and use latest payment technology (Near Field Communications - NFC) which allows instant payment by pointing the device at a reader at point of sale. It will work in partnership with local banks who will handle the back-office tasks, risk management & regulatory obligations. Research has shown that someone on Facebook who has in excess of 100 friends has a low identity-fraud risk; Movenbank also uses psychometric tests to study attitudes to spending and saving money. People allow the bank access to their Facebook pages, and access to services will depend on your recommendation of the bank to others. It is estimated that they will need around 50,000 members to break even.

. Peer review (science).Traditionally scientists have reviewed each other's work; with the social media & Internet (Facebook, Twitter, email, blogs, etc), anyone can make comments on papers published

Photography (mobiles & the internet replace cameras). Most mobiles have a camera function & are linked to Internet. Instagram, which was sold to Facebook (2012), replaced Kodak (started in 1880; employed 145,000 people at its peak)

Real Estate - Realestate.com.au is the most used Australian property portal, attracting more than 20 million users a month (excluding those that visit its mobile sites and apps). It dominates the Australian real estate advertising with more than 60% market share and provides 75% of all real estate search activity nationwide.

"...Net profit from continuing operations in fiscal year 2013 hits $109.7 million, a 26% increase on the year before, and 282% increase in the five financial years to 2013..."

Samantha Hutchinson, 2014a

Luxury goods' use of social media - at first glance, it would appear that social media would work against luxury as they aim for aspiration and exclusivity. But luxury brands like Burberry, Tiffany & Co. Jimmy Choo & OrotonGroup are including social media as a key plank in their strategy to engage with consumers, ie as a way to create

- authentic and real-time dialogues and conversations with potential customers, especially in emerging markets like China and Brazil where customers are technology-savy and want to display their wealth

- elite communities for their brands on the Internet

- opportunities to share your image/photo of yourself with the brand

Use of videos on Web sites, YouTube, Facebook, Twitter, etc to get consumer actively involved in the marketing process as this helps make the experience more general and starts a conversation, ie a story around the brand that connects customers to the brand/label, eg paddock-to-plate movement in the food industry. Firms are trying to build a community around their brands.

Consumers now want more content, ie intellectual stimulation

The advantage of video is that it shows the movement of clothes that a still photo cannot, eg

- Burberry launched "Art of the Trench" web site where fans could read about the iconic trench coat and up load images of themselves dressed in it. This resulted in an 85% increase in trench coat sales in the first 3 months

- Ray Kelvin's Ted Baker label engages customers online

- Rapha has built a community of interest around its speciality road-wear brand, eg they founded Rapha cycling clubs, retail space is stocked with their products and their cafe screening live racing

- Jack Wills has its young Seasonnaires to spruik its brand every summer. They are not advertising in local magazines to attract people into stores. They want their Seasonnaires to become part of the community and introduce their friends to the brand & lifestyle, ie free-spirited. It has got celebrity endorsement without trying, eg Prince Harry and the band "One Direction"

- American retailer Abercrombie & Fitch in 2011 paid reality TV star Michael 'the situation' Sorrentino not to wear its merchandise as it was concerned that this association might cause a threat to its brand, ie cool youth culture

- TOMS donates one pair of shoes to a child in need for each pair sold. Furthermore, they use social media to create a global movement that encourages people to go shoeless for a day; this helps start a conversation about their brand.

Burberry claims (Carrie Lafrenz, 2012), had a 21% increase in last quarter sales revenue in 2011 after implementing a social media strategy. According to CEO Angela Ahrendts, it helps drive customer engagement, enhance retail disciplines and improves operational effectiveness plus strengthens brand momentum. Burberry is the world's most successful fashion brand on social media as it has 11.1 million Facebook fans, 825,000+ Twitter followers and 11.8 million have viewed YouTube. They

"...create a private social network for existing clients to talk to each other or they'll create a way to customize a product".. this makes the product even more exclusive" plus allows contact with potential new customers..."

Kristen Boschma as quoted by Carrie Lafrenz, 2012

Facebook is the preferred social media forum as the user can have more control, ie you can control conversations on your page, enforce rules and delete comments.

. Politics - as politicians are in the communications & engagement business, social media is important. Social media allows politicians to better handle mainstream media (including by-passing them and going directly to the voters). Often now mainstream media is reporting what is happening on social media

in the US Presidential election (2012), social media was used to engage and organise supporters, raise funds & shape the political conversations. But social media cannot necessarily change votes.

As social media is not expected to change votes, in 2012 Obama's team focused on encouraging Democrats to vote (in USA, voting is voluntary). They used software (VoteBuilder) to locate likely Democrat voters & would contact them. Thus voting intentions can be determined by simple criteria: using data bases & weighted in an algorithms.

Some statistics for Barak Obama (2012),his Facebook fans grew from to 34 m in 2012 from 15+m in 2008; his Twitter followers to 23 m from 16+m in 2008); online money raised to $US 690 m from $US 190 m in 2008)

Of interest is who voted for Obama in 2012, ie

- 55% of women voters (more women vote than men)

- 75% of Hispanic voters

- 73% of Asian voters

- 60% of voters under 30 years

(NB the group that preferred Romney was was older, white males)

The Australian context

- around 2/3 of federal politicians have accounts on Twitter/Facebook

- about 40% have YouTube channels.

- Kevin Rudd has 1.1 m Twitter followers & spends an hour per day on Twitter.

China - despite Facebook being banned in China, there are estimated to be 63.5 m users or around 12.5% of all those connected to the Internet in China (Angus Grigg, 2012). They use a virtual private network (VPN) to circumvent the China censors, ie it allows the users to pretend that they are outside the country.

India - the digital world of social media with its technology (access to the Internet and cheapness of Internet access devices) is empowering and encouraging people to become more active and to participate in public debates, eg re domestic violence and rape, political and bureaucratic corruption, etc.

People are more connected and have access to information that was previously only available to the wealthy and powerful. Now farmers can watch weather reports, students in villages have access to online educational courses, artisans to sell their goods on-line, etc

The cell phone was the start of the communications revolution. In a decade global cell phone ownership increased from a few million to nearly 6 billion (around 90% of the world's population). India currently has around 900 million mobile phones. Now cheap tablets are being provided and allow increasing Internet access. Also villagers are being connected by optic fibre cable that provides cheap affordable Internet access

Drones (unmanned aircraft) are an example of finding more uses than the initial purpose. Drones were initially developed for military use but recently, mini drones have been developed for

- delivering parcels

- delivering medical equipment, ie they can deliver equipment in 1/10th of the time it takes for an ambulance to do the same job

- taking aerial photos, eg helping firefighters understand fires and police inspect crime scenes (source: SBS, 2014a)

Online University Model (Massive Open Online Course - MOOC).

The traditional model of teaching that came out of the 19th century industrialised world to prepare children for work in factory-like environments has limited application now. Rows of seated children who are lectured to by a teacher; then tested on how much they know isn't the most appropriate, ie
"...knowledge is increasing at an exponential rate. What we need is to give children the skills needed in the workplace today - collaboration, working together, problem-solving, teamwork..."
Vince Campbell as quoted by Michael Bleby, 2014

Universities are facing the challenges of
- increasing popularity of massive online open courses
- global competition for students
- threats to traditional sources of funding

MOOC is another way the Internet is revolutionising how we think, work and play. The Medieval-era university sector was ripe for some online disruption. MOOC started around 5 years ago and most of the courses are free and cover a great range of topics. It allows unlimited number of students to sign up, log in and drop out of expensive higher education courses. An example of its increasing popularity is one university in Australia (Melbourne University) had no online students in 2012; by 2013 it had around 300,000 enrolled online (AFR 2014). A similar story for AdelaideX (Adelaide Uni), in its first 6 months had 65,000 students enrol from 160+ countries (2015) (Alison Harvey 2015).

It involves using the latest communication technology and social networking. It allows students to study courses from the world's top universities "free" or by paying minimum fees on the Internet. This involves disaggregating in components of university learning and having them available on the Internet. It has started to provide a credible threat and alternative to traditional offers of physical-campus university courses. Of the thousands of people enrolling, around 10% are completing the courses. Some firms (with links to Universities) conducting MOOC include

- Udacity (via AT&T and Georgia Tech) is offering on-line Masters degrees in computing at less than one third of the cost of a traditional course. As long as you have access to the Internet, you can access these courses

- Harvard business School is offering an online pre-MBA for US$1,500

· Like all disruptive technology there is a need for fine tuning. For example, accreditation of courses needs to be formalized.

· It is expected that the top universities with solid reputations are expected to benefit most from MOOC; the mediocre universities could suffer the same fate as many newspapers have from the Internet, ie

"...universities' revenues would fall by more than half, employment in the industry will drop by nearly 30% and more than 700 institutions will shut their doors..."

The Economist, 2014g

· Students will benefit from MOOC as they will have access to higher education at a lower cost and a greater convenience.

.It is another way the Internet is revolutionising how we think, work and play. The Medieval-era university sector was ripe for some online disruption. MOOC started around 5 years ago and most of the courses are free and cover a great range of topics. It allows unlimited number of students to sign up, log in and drop out of expensive higher education courses. An example of its increasing popularity is one university in Australia (Melbourne University) had no online students in 2012; by 2013 it had around 300,000 enrolled online.

It involves using the latest communication technology and social networking. It allows students to study courses from the world's top universities "free" or by paying minimum fees on the Internet. This involves disaggregating in components of university learning and having them available on the Internet. It has started to provide a credible threat and alternative to traditional offers of physical-campus university courses. Of the thousands of people enrolling, around 10% are completing the courses. Some firms (with links to Universities) conducting MOOC include

- Udacity has 22 courses; mainly IT & maths (it is the pioneer of MOOC, ie founded by Sebastian Thrun (late 2011) who was the key developer of Google's self-drive car and augmented-reality glasses). As a computer science professor at Stanford University. Thrun put his course on artificial intelligence online, free of charge. This course went viral, ie attracting 160,000 enrolments and of these 20,000 finished

- Coursera (not-for-profit provider) has 314 courses; core of science & maths plus finance, economics, history, philosophy & music (62 tertiary partners including Princeton, Stanford, Caltech, John Hopkins, Penn State, Columbia, Uni. of Melbourne, etc)

- EdX (not-for-profit provider) has 26 courses; mainly science with some humanities (included initially Harvard & MIT, now its 12 partners include Berkley, Uni. of Texas, Wellesley College, Georgetown, Australian National University, Rice, McGill, etc)

- MOOC (UK) (open University channel on iTunesU which started in 2011 with more than 50m. downloads in little over a year via app. FutureLearn (2013) in its first year had more than 1 m. enrolments for its free education modules. FutureLearn has British universities supplying courses plus local institutions like the British Museum, the British library and the British film Institute

"...what students want, and are demanding actually, is that the lecture, the notes and the formative or ongoing assessments should be online......before the lecture or tutorials so that's precious time which they have with their lecturer, or their professor......They get to challenge and ask questions..."

Martin Bean as quoted by Tim Dodd, 2015
This is often called "flipped classroom" as home-work comes before the class. This is developing into a more cost-effective approach for universities as it will provide a better product/service at a lower cost (see Po for more detail).

Some variations of MOOC include

i) "freemium"- the learning material is free on-line; while you have to pay for tutorials (one-on-one or group) and/or sitting examinations.

ii) "flip-the-classroom" - it a concept is where you acquire a lot of content knowledge before you come to the classroom which encourages collaborative learning. It abolishes the lecture and textbook by allowing the students to view online material from some of the world's best academics in different fields of expertise; then they meet the lecturer(s) and tutor(s) in a classroom where the emphasis is on small-group learning around understanding the content. This is similar to some high-quality MBA courses which provide the discussion of course material in small groups and close interaction with tutors. One advantage of this is the savings re preparing and presenting lectures

iii) some universities are taking fees from organisations for placing the best MOOC graduates into jobs in those organisations

iv) licensing their courses to other universities use in place of lectures

v) offering credits for more formal ciurses to students who pass a MOOC course, ie pass a supervised exam

The key breakthrough was the user-friendly formatting of the learning material, ie videos of lectures were entered into short bursts of around 5 minutes and followed by quick multiple-choice quizzes, ie

"...If you miss the concepts, you watch the video again. Once you understood, you move on to the next segment. It is education designed for understanding..."

Tim Dodd, 2013

Rather than sitting in a crowded lecture theatre where the whole class moves at the same pace, you can get the same material in a well designed, online format where you can study when convenient, go at your own pace and review things that are not clear. Even though students never meet in person they can share and discuss subjects online.

Sometimes this is called the University of Facebook - where the normal interaction and communications is online.

More on on-line learning

Only need a computer and Internet connection

It allows for greater flexibility when compared with the on-campus courses (like studying at your convenience), don't need to attend scheduled on-campus events like lectures, tutorials, etc

Using on-line forums, virtual tutorials and one-on-one communications via Internet (like Skype, emails, etc) with lecturers and peers to counter the lack of face-to-face learning benefits of on-campus studying

Other technology predicted to help in education include

- learning analytics (data mining using analytics software to improve educational outcomes by customising on-line course platforms; suggesting resources and coaching students towards productive behaviour is based on their personal data)

- 3-D printing (used to create models and teaching aids to explain complex concepts in the arts, sciences, design and manufacturing sectors)

- wearable technology (like Google glasses which is a wearable computer with an optical head-mounted display)

- semi-experimental learning (allow first person live streams to complement lecture material, real-time translation will break down language barriers and Web browsers will keep research material instantly available)

Financial, eg Payoff (peer-to-peer lending)

· The debt consolidation market is worth around $ 500 b. as part of the $ 3 t. US consumer credit market

· Payoff aims to disrupt the traditional financial model of lending market by the banks and credit card companies by using Internet platforms and new technology to directly connect borrowers with lenders. They are aiming to capitalise on the public's lack of trust in traditional bank lending and to develop a foothold in the financial relationships with banking customers

"...A lot of lending is aimed at keeping borrowers in a perpetual state of debt. We want to help borrowers pay off their loans as soon as possible..."

Scott Saunders as quoted by Tracey Alloway, 2014

· Payoff wants to align technology with behavioural science (incorporating psychometric testing to guage borrowers' willingness to repay debt) to offer debt refinancing to customers at around 5% cheaper than traditional lenders.

· Payoff isusing the model established by eHarmony (on-line dating site) of using psychometric profiling on the Internet to make relationship matches; eHarmony is responsible for nearly 4% of the new US marriages

. The credit assessment process incorporates psychometric testing such as questionnaires about financial, social behaviour, etc to gauge borrowers willingness to repay debt. Using eHarmony (on-line dating site) model of "matching", ie using psychometric profiling on the Internet, to make relationship matches.

NB eHarmony is responsible for nearly 4% of the new US marriages

· Payoff have automated as much as possible of the underwriting process to keep costs low; they use FICO (measure of a customer's risk profile) plus online data to judge the borrower's credit worthiness, ie

"...The credit assessment process also incorporates psychometric tests such as a questionnaire about financial behaviour and the more subtle embedded assessments to help Payoff gauge borrowers' willingness to repay debt..."
Tracey Alloway, 2014

· Different from other lending platforms, Payoff helps those who are rejected to improve their credit profile by using a program called "Lift".

· Other developments in the P2P area include

- "Lending Club" (the largest P2P lender and about to float at an estimated value of $ 5 b. (2015)

- bankers have been bundling loans originating on the platforms into bonds

- years of low interest rates have encourages the entrance of professional investors like hedge funds and asset managers

- discussions are underway for partnerships with Facebook and retailers like Home Depot

- Union Bank is buying loans from "Lending Club" platform

Other examples of P2P include British P2P lenders, such as Zopa, RateSetter & Funding Circle have arranged more than £1.6 b. in 2014 (this figure is expected to double in the next 6 months) but is still a small amount of the UK's £1.2 t. in retail deposits
It matches borrowers and lenders directly through online platforms; it feeds off the public mistrust of the big banks plus low worldwide interest rates. Able to offer borrowers more competitive rates than the risk-averse banks as overhead costs are lower

"...the whole theme of P2P is investors wanting to take control of their investments. People are disenchanted with fund managers. Even people who invest in our mortgage funds are now using our platform...... they don't want to pay us to manage their investment. They want to do it themselves..."

Ian Thomas as quoted by James Chessell, 2015
Some of the advantages of P2P include increasing competition in the banking sector and supporting tech entrepreneurialship

Some negative uses of social media

Loss of privacy as everything on the internet is open, marketable & transparent, eg Google can collect data from

- Google+ (contacts, photos, etc)

- Phone (time, date & call duration, SMS details)

- YouTube (videos you watch, etc)

- Apps (documents & calendar. etc)

- Your device (browser details, unique device no., mobile network, search history, interests, etc)

- GPS (current location, etc)

- Gmail (contact list, messages, etc)

Google's response to a lawsuit against ad-targeting

"...A person has no legitimate expectation in privacy in information he voluntary turns over to third parties..."

as quoted by James Hutchinson et al, 2014

Even though Google is known as a search engine and e-mail service, 84% of its 2013 revenue (around US$ 60B) comes from advertising based on information it has about people's lives.

"... Everything you search or write in a Google service - especially the free services - is up for grabs by advertisers..."

James Hutchinson et al, 2014

An example of loss of privacy is USA's National Security Agency (NSA)

- under "Prism" (surveillance system). NSA and others are able to access private information, eg e-mails and Internet communications, from hundreds of millions of users. - this information is stored by major players in social media/Internet/telecommunications sector like Google, Facebook, Yahoo, Microsoft, Skype, Apple, AT&T, LinkedIn, Twitter, YouTube, etc
- also, NSA stole information by tapping into the undersea cables of Google and Yahoo; it implanted spying devices in a 850,000 + computer systems in around 90 countries (Snowdon, 2014)

People finding out, via Internet & social media, sensitive Government information before it is released to the general public

Phishing (spear-phishing) = when staff who have access to sensitive information are fooled into supplying it to those that shouldn't have it, eg mistakenly clicking on a fake email from your bank, etc. The weakest link is the human element

Increasing power, inter-linkages & scope of systems increases the chance of disrupting an entire organisation rather than just one system

Buying of illicit drugs on the internet, ie "deep or dark web" eg Silk Road (it is claimed that they traded $1.2 b until it was closed in Oct. 2013)

White House Twitter hoax (April 23, 2013) - a hacked Twitter account of Associated Press falsely reported 2 explosions at the White House and that Pres. Barack Obama had been injured. The Dow Jones Industrial Average fell by 150 points. This wiped US $136.5b from the US Equity market in 3 minutes

Cyber-predators like cyber-bullying, eg estimates upto 40% of Australian children suffer from this (2014)

Child abuse/pornography

Social gambling (social gambling is where people gamble on-line for no financial prizes but can be charged minimal amounts for upgrades, etc. It is feared that this is a training ground for money gambling, ie a source of future customers. In 2012, gamers spent around US$1.7 billion on online slot machines and virtual poker games. Even though this is a small % of the US$390.5 billion global gaming industry, it is expected to grow. Thus many of the traditional gaming players are becoming actively involved. For example, poker-machine manufacturer Aristocrat Leisure bought social casino game maker Product Madness in late 2012. It is estimated that 3.5+ million play Product Madness slot games like 3D Slots and Hollywood Spins on Facebook. An added concern is the easy access to these sites 24/7)

Chasing quick buck - many organisations in social media are funded by venture capitalists who are not about sustainability as they are keen to build something very quick and sell it off to someone else (Fiona Smith, 2015a)

Graphic displays of violence and/or atrocities including murders, executions, beheadings, accidents (vehicles, etc), shootings, etc. The more shocking the scene, the more interest in it, eg goes viral on the Internet. On the other hand, there is some research ( Texas A&M International University, 2008) which found that there was no evidence to suggest that exposure to media violence leads to violence in the viewer

Instant celebrity status that many people are unable to handle. In ancient times a person's role in life would be assigned at birth and only a few could escape this destiny; in recent times there is a possibility of self-advancement through innate talent. There is an abiding myth that anyone can become a star with the right combination of talent, looks and luck. The rise of social media platforms like YouTube have created a channel that via which would-be "stars" can reach a global audience instantaneously: this was previously unimaginable. The flip side of this opportunity is that sudden stardom can lead to unanticipated unhappiness and tragedy.

It is claimed that the Internet has reduced our collective attention span. For example, people used to lose themselves in a novel for hours; now, they are inclined to flick through "pages" on the Internet. This has led to a condition which has been called reading insecurity, ie a subjective experience of thinking that you are not getting as much from reading as you used to and a suspicion that the ability to concentrate and absorb has atrophied.
. Many studies (Katy Waldman, 2015) suggest that people read the Internet differently than they read print. We skim and scan for information we want on the Internet rather than starting at the beginning and ploughing through to the end. Our eyes jump around, magnetised to links - which imply authority and importance. If need be, we will scroll. We read faster and lighter engaging in skim reading and hopping from one source to another
. The difference between these modes of reading have caused a debate around "orality and literacy".
. It is much harder to concentrate when you read online, eg e-mails, social media, etc.. It has been suggested (Katy Waldman, 2015) that people's comprehension suffers when they read online because of the barrage of extraneous stimuli interrupting the transfer of information from sensory to working memory, and from working to long-term memory. People also report being more impatient when they read online
. It has been suggested that the "deep reading brain" is becoming redundant and therfore in danger of disapperaring if we don't learn how to handle online distractions.
. We are becoming more e-dependent and reading more electronically as it is more convenient, more accessibility, cost-effective, user-friendly, etc
. With traditional reading methods, we read more slowly when we like a text as our brains enter a state of arousal that resembles hypnosis, ie a trance; it is claimed that this reading requires deeper engagement.

Some research (Daniel Willingham, 2015) shows that attention span is not shrinking with the digital age. In fact, attention span is divided into 2 elements, ie

i) how much we can keep in our mind (this is measured by asking people to repeat increasingly long strings of digits in reverse order)
ii) how well we can we maintain focus
(asking people to monitor visual stimuli for occasional subtle changes)
Over a 50 year period there has been little change. On the other hand, there are 2 systems of attention and associated thought, ie
i) directed outwards
like when you are scrolling through e-mails or playing a video game
ii) directed inwards
like when you daydream, plan the future or reflect on the past
Both systems of attention cannot be working at the same time.
Most digital activities involve outwardly-directed attention
and there are some fears that we could be losing our ability to daydream. Daydreaming is associated with greater creativity.
The downsides of inwardly-directed thought are
- daydreaming can distract us when we need to be focused
- reflection can turn ugly, eg fixating on some past insult or error

It is claimed (Katy Waldman, 2015) that the younger generation have fewer problems with comprehension and recall than older generations when engaged in on-line reading

Also memories are being altered by the digital revolution, ie

"...the savage irony is that the more accurately the Internet remembers everything, the more our memories atrophy. The result is an amnesia about everything except the immediate, the instant, and now and the me..."

Jonathan Freedland as quoted by Andrew Keen, 2015

Some Australian examples

- Whitehaven Coal Press Release hoax (Jan. 7, 2013) resulted in A$ 300 m being temporarily wiped off the firm's value

- David Jones fake bid of A$ 1.6 b by penniless recluse living in a Scottish housing estate (July 2, 2012) instantly affected the share price

Some general comments

- On Facebook it is best to be positive

- Twitter is an early warning system/leading indicator/real time engagement

- YouTube is like having own cable channel

- Data on the network is doubling every year

- Use of media sectors by frequency (% who use several times per day), ie Facebook (53%), TV (44%), Radio (32%), Online news (24%) & Newspaper (5%)

- Social media is a great media for storytelling

(sources: James Hutchinson et al, 2014; Michael Rosenberg, 2014; Michael Harris, 2014)

Digitilisation (linked with Big Data)

Digital business design - using digital technologies to expand your organisation's strategic options and solve your most pressing business issues. It will shift how your organisation operates in several important ways:

- from guessing to knowing. Reliance on guesswork leads to unfortunate results such as stockpiled inventory, mark downs and blowout sales. With digital business design, the basis of your decision-making shifts to knowing exactly what customers want before having to start the wheels of manufacturing and distribution. This will improve customer satisfaction and allow real time customer information to test opportunities

- from mismatch to perfect fit. Digital business design enables organisations to offer customers a perfect fit rather than having to choose from a fixed production line.

- from lag time to real-time. There is an important need for speed in obtaining information and sharing it within the organisation. Digital business design shifts the information flow to real-time

- from supplier service to customer self-service. Increasingly, customers prefer the convenience of on-line ordering and customer service to relying on the supplier to perform tasks.

- from low value-added work to maximum talent leverage. Digital business design will shift the use of staff's time to more productive, customer-centred tasks, ie shifts staff from repetitive, costly and un-interesting tasks to customized, online training programs.

- from 10% improvement to 10 times productivity. Digital business design will result in quantum leaps in productivity rather than incremental improvements in efficiency.

To initiate digital business designs, Slywotzky and Morission (2001) asked the following questions:

- what are the most important business issues facing your organisation today? What are the smartest business designer choices for responding to them?

- how might digital (particularly on-line) technology open up whole new strategic options for your organisation? How could you take advantage of such options to become unique in the eyes of customers?

Below shows which industries are more threatened by digital disruption (source: Deloitte, 2013)

organisational development change management

Digitilisation - not for its own sake, but in support of business strategy to leap ahead of competitors in productivity and profitability - that is the critical point.

Fortune Magazine (2000) correctly anticipated that the next step with Internet and digitalisation would be broad bandwidth (high speed network able to carry video and voice). It is important to understand that wireless is different from the fixed-line Internet world.

Impact of digitisation on jobs

Digitalisation = turning analogue information into a computer-readable format. Linked with digitalisation was computerisation. This made measuringdigital measuring and storage devices more efficient and enabled mathematical analysis of data to uncover its hidden value. Digitalisation supercharged "datafication"

"...the digital revolution is destroying jobs faster than it is creating......productivity of the world's largest economy is swiftly rising, while the number of jobs is stagnating......usually when the economy rapidly grows, unemployment should decline......the cost of factory automation related to human labour has already dropped to nearly half of what they were in the 1990......the more structured the task, the more easily it can be performed by a machine......many companies are investing less and less in personnel, they are spending more on information technology......since a burgeoning number of computer applications are being transferred to the cloud, fewer skilled IT workers are needed on the ground...."

Thomas Schulz, 2013

The mantra of the digital age is "ship fast, ship early", ie don't wait for it to be perfect & bug free.

"...get something out: it might not be the best version. We try to strip back to what it is we are trying to achieve, what is the minimal set of features for that product to be viable in the market. Then we write it and we get it out the door. Because once you got it out the door, you got data. You've got a whole bunch of believers you can pull to change that product; it might be pricing levers, it might be visual, might be change how its users use the site. Once you have the data you can change things......every single industry is now waking up to the discovery is now dominated by a software business. If you are not turning your business into a software company you are going to be dead..."
Matt Barrie (CEO, freelancer.com) as quoted by Paul Smith, 2014a

Some examples

- robotics on car assembly lines

- self service check-outs replacing cashiers

- self check-in kiosks replacing airline employees

- algorithms replacing financial traders

- online travel sites replacing travel agents

- call centre staff replaced by telephone robots

- paralegals by computer programs

- tax advisers by cost-effective software

NB Not only are individuals or groups of employees now replaceable in certain sectors but entire occupational areas are disappearing

On the other hand, digitalisations is providing opportunities for millions that would not be there otherwise

Big Data

Introduction

Big Data (taps into a great wealth of data, ie digital data)

- shift focus in IT from 't' to 'I', ie how you use the "information" will be the core aspect

- by analysing data with algorithms, we are finding patterns that no-one thought existed & these are challenging orthodoxies

- It is challenging our understanding of decision-making & comprehension of reality, ie from causality to simple correlations, ie not knowing why, only what happens, eg correlation between computer time and gross domestic product. The busier the road, the stronger the economic growth

- we can now rely on correlations without prejudgments & prejudice

How we value knowledge is changing - because we previously lacked enough, or right, data, we relied on intuition & experience and/or used random, representative sampling techniques. This has changed with "digital data", ie data & its analysis is not the limitation. No longer need to use sampling & then extrapolate to population

(NB information can be lost when we use sampling)

Allows "messiness", ie approximate is close enough, eg 2 + 2 = 3.9

Statistical analyses (including standardised factual questions, algorithms, etc) can be superior to personal judgments !!

You can't imagine what you don't measure.

More and more data, information, etc is available for organisations to know about their business; that knowledge can be harnessed and translated into improved decision-making and performance, eg online retailers can track what customers bought but also what else they looked at, how they navigated through the site, influence of promotions, reviews, testimonials, pay layouts, similarities across individuals, groups, etc.

Uses algorithms to predict activities and they improve their performance every time a customer responds. It provides an opportunity for competitive advantage and decision-making not dominated by intuition.

It will change our ideas about the value of experience, nature or expertise and the practice of management. There are 3 key elements (volume, velocity & variety)

i) Volume (more data crosses the internet every second than was stored in the entire internet 20 years ago. In 2012 around 2.5 exabytes of data are created daily and that number is doubling every 40 months (Andrew McAfee, 2012); it is estimated that Walmart collects 2.5 petabytes of data per hour from customer transactions.) (A petabyte is a quadrillion bytes; an Exabyte is 1,000 times a petabyte or 1 billion gigabytes)

ii) Velocity (real-time data/information, eg number of watching a TV show; at a shopping centre by phone locations, etc). Twitter updates were as accurate as official reports on tracking the spread of cholera in Haiti after the 2010 earthquake hit 2 weeks earlier

iii) Variety (basis for data is messages, updates, images, etc posted on social media (Facebook, Twitter, etc) plus mobile phones, GPS, etc. Recent reductions in computing costs like storage, memory, processing, bandwidth, etc is allowing for data-intensive approaches to be economical.

Research has shown that firms that are data driven perform better, ie 5% more productive and 6% more profitable.

Questions that need to be asked around the data, ie

- What does the data say?

- Where did the data come from?

- What kinds of analyses were conducted?

- How confident are we in the results?

Shift focus in IT from 't' to 'I', ie how you use the information will be the core aspect. Just as by using the telescope, we understood the universe better, and with the micro-scope, we understood germs better, Big Data is opening opportunities to other previously unthinkable possibilities

By analysing data with algorithms, we are finding patterns that no-one thought existed & these are challenging orthodoxies. It is challenging our understanding of decision-making & how we comprehend reality, ie from causality to simple correlations, ie not knowing why, only what. At rthe same time, we can now rely on correlations without prejudgments & prejudice

As mobile carriers realise that their future lies in data, they have offered unlimited national calling packages to remove revenue opportunities from apps that want to compete. Voice calls are becoming integrated with broader messaging categories like SMSs, chat messages, photos, MMSs, video & audio calls, recorded voice messages, etc

How we value knowledge is changing - because we previously lacked complete, or right data, we relied on intuition & experience. This has changed with "big data", ie data is not the limitation

Signals the end of supremacy of the subject matter specialist, eg media, universities, etc. & flags the increasing status of the statistician & data analyst, ie let the data speak, eg

- tabloid press - the data reveals what people want to read better than the instincts of seasoned journalists

- Amazon does not have book reviewers; instead it uses the data revealed from algorithmic findings of clients' activities & comments to drive sales

- TV programmers now get ratings in real time

- an on-line university course (coursera) studies data on the popularity of lecture, videos, etc to feed back into the course design

- a physicist developed algorithms to predict insurance claims & identify defective used cars

- an actuary predicted biological responses from chemical compounds

- how we value knowledge is changing - as we lacked enough, or right, data previously, we relied on intuition & experience. This has changed with "big data", ie data is not the limitation

- challenging our understanding of decision-making & comprehension of reality, ie from causality to simple correlations, ie rely on correlations without prejudgments & prejudice

Some example of digitalisation and Big Data

i) The Sloan Digital Sky Survey (2000) in a couple of weeks collected more than that amassed by the entire history of astrology. By 2010 it had accumulated 140 terabytes. Yet its successor (Large Synoptic Survey Telescope - starting in 2016) will generate 140 terabytes of data every 5 days

ii) The first decoding of the human genome (2003) took a decade of work to sequence 3 billion base pairs. This can now be done in 1 day

iii) Of the 7 billion shares traded daily on US equity markets, 2/3 are traded by algorithms using computer models that go thru mountains of data to predict gains & reduce risk

iv) Retailers (like Woolworth, Country Road, Tesco, etc) are using big data and customer relationship management to study customer shopping habits and predict future buying behaviours so that they are able to offer what the customers want to buy. For example, Country Road has a 2.2 m customer data base that includes information about when customers shop and how much they spend. Some results include

- A US retailer doubling sales in 5 years on a 5% increase in customer numbers

- Country Road aims to increase sales by 50% over a 3 to 5 year period by encouraging consumers to shop across 4 brands, ie Country Road, Trenery, Mimco & Witchery. Currently, there is a 38% crossover between Witchery and Country Road and this figure could be increased considerably and provide a major impact on profit, ie by shopping over the 4 brands it is worth 10 times the value as shopping with I brand

- In UK, Tesco used its close relationship with its customers, ie 13 million loyalty cardholders, to pioneer the use of Big Data. It is claimed that Big Data helped grow the business from $8.5b. in 1992 to market leader with $50+b. in 2011. Since 2011 Tesco has lost its dominant position to Sainsbury. In April 2012, Tesco reported its first fall in earnings in 2 decades. Some explanations for the decline in Tesco include

i) the claim that they have been too caught up in the science of retailing rather than the experience, eg instead of being greeted with hello at the checkout, shoppers would be asked if they have a loyalty card!!!!

ii) better value for their money elsewhere (James Chessell, 2014a)

v) Health

- Twitter updates were as accurate as official reports on tracking the spread of cholera in Haiti after the 2010 earthquake but were available 2 weeks earlier

- use of Google Flu Trends accurately predicted surges in US hospital visits a week before official government warnings

- a digital data collection network was found to be able to detect the SARS outbreak more than 2 months before the first publications by the World Health Organisation

- using now-available digital surveillance, the 2005-06 avian influenza outbreak "Bird Flu" could have been detected between 1 & 2 weeks earlier than official surveillance reports allowed at the time

vi) using Hadoop, Visa (credit card firm) reduced processing time of some 73 billion transactions from 1 month to 13 minutes

vii) Collecting & analysing 0.5 m daily prices of products sold in the USA, MIT was able to detect changes in CPI 2 months ahead of the official government CPI figures

viii) ZestFinance

- Uses technology to determine credit worthiness of small loans to people who have poor credit ratings

- Traditionally credit scoring is based on a handful of strong indicators like history of late payments

- ZestFinance use a large number of weaker variables in a matrix format

- in 2013 its loan default rate was 1/3 of the industry average

ix) Predictive Analysis (where you take all the available information in the system and analyse it). For example, in firefighting using predictive analysis to estimate the level of risk to each property and what will happen next when a fire occurs, ie what going to happen days in advance. It enhances weather forecasts of variables like wind direction, temperature, etc by factoring in other conditions like

- how close a property is to a national park

- what vegetation surrounds it including likelihood of nearby plants to burn
- what material the property is made of
- the slope of the ground
- the history of the area, etc

It can model the relationship between resources and community risk, and provide a link between government spending and community risk, ie it will reduce the chance of over-servicing some areas and under-servicing other areas.

It has application is beyond bushfires to other emergencies

Additional tools are the use of drones and ground sensors to fight fires. They are used to capture a more accurate, earlier indication of the risks and fires than satellite images and/or human eyes on the ground. The use of ground sensors placed on trees provides the primary indicator of fire conditions; then drones are used to fly over the location to relay video and information back to decision-makers.

x) Some Australian examples

- Australian Valuation Office (started in early 1900's) - competitors use Google Maps (under 10 years old) to gather information more quickly, cheaply, efficiently & accurately, ie

"...Google maps has already contributed to the demise of the 113-year-old Australian Valuation Office, and the ABS's long-standing house price index, which has been largely obsolete by the more frequent and accurate surveys produced by RP Data and the Housing Industry Association..."

Fleur Anderson, (2014a)

- Aust. Bureau of Statistics ($300 m budget with 3000 staff) - via the Internet, the relevant data that ABS collects & supplies is readily available sooner, eg inflation rates can be supplied in real time rather than released quarterly with a 2 month lag; similarly for housing market statistics, ie

The Reserve Bank already looks to the monthly inflation indices produced by Perpetual and TD Securities while it waits for the quarterly ABS official figures which comes with a two month lag, a lifetime in real time digital economy.

"...Now the Reserve Bank economists and the private sector will put jobs surveys produced by the ANZ and NAB ahead of the official jobless rate which comes to relying on credible information..."

Fleur Anderson, (2014a)

- Australia Post - being a courier for Internet shopping purchases is more profitable than the 'snail mail' services (the latter makes a loss)

- Cancer survey - normally takes 2 years to find a suitable sample; with registration on the Internet, it took 2 weeks

Understanding the statistical phenomenon called "regression to the mean", ie an extraordinary period of poor performance will auto-correct. In sports it is related to players returning from injury, shots stop hitting the post, misses become goals, etc so that the shine of good fortune returns

Messiness

Sometimes there is a trade off between accuracy (more errors) in return for scale and identifying general direction of trends, rather than knowing the exact phenomena, ie willing to sacrifice a bit of accuracy in return for knowing the general trend

"...sometimes 2+2 can equal 3.9 and that is good enough..."

John Forrester as quoted byVictor Mayer-Schonberger et al, 2013

"...Simple models and a lot of data trumps more elaborate models based on less data..."

Peter Norvig (Google) as quoted byVictor Mayer-Schonberger et al, 2013

Big Data transforms figures into something more probabilistic than precise

Looking at significantly more data helps us handle the desire for exactitude, ie with less error from sampling, we can accept more measurement error. Until recently digital tools were premised on exactitude, ie the database engines would retrieve the records based on perfectly matching an inquiry, ie precision was important. Remember: as scale increases, so does inaccuracy. For example, a small stall can count the money in the cash registers each night at the end of business down to the last cent; however, the country' gross domestic product calculation will not have the same accuracy as the small stall!!!!

"...What we lose in accuracy at the micro level to gain insight at the macro level......We are leaning in favour of more and messy over fewer and exact..."

Victor Mayer-Schonberger et al, 2013

We do not focus on causality. Instead we discover patterns and correlations in the data that offer us novel and invaluable insight. Correlations may not tell us precisely why something is happening, but they alert us to what is happening.

"... Big Data is about what, not why......we let the data speak, we can make connections that we never thought existed. Hence some hedge funds parse Twitter to predict the performance of the stock market. Amazon and Netflix base their product recommendations on a myriad of user interaction on the sites. Twitter, LinkedIn and Facebook all map uses of 'social graph' of relationships to learn their preferences..."

Victor Mayer-Schonberger et al, 2013

Automation

Jobs that are permanent with regular hours are being replaced by clever robots. This is creating greater uncertainty and ambiguity. On the other hand, it may be the start of a more humanised, fulfilling and flexible existence.

There are predictions of extreme technological unemployment, ie a large number of an existing workforce become jobless, outclassed by increasingly sophisticated machines

"...human history is all about the automation of work. Right from the plough through to the spinning jenny through to the automobile, through to any number of other inventions..."
Ross Dawson as quoted by Rachel Nickless 2016a

Technology has created more jobs than it has destroyed. Generally automation has ended the least desirable, tedious, repetitious human jobs like manual labour, assembly-lines, etc.

The newly created jobs are better suited to our unique human capabilities like decision-making, communications, inspirational synthesis, etc.

Generally machines are no good at dealing with unpredictable situations. On the other hand, this is changing, ie
- driverless cars are doing what was once seen as an uniquely human role
- increasing use of machines in white-collar, professional industries like legal, medical, etc

Machines are becoming powerful collaborators, ie in many domains humans working with the machines are superior to machines working alone or humans working alone. For example, IBM Watson is helping doctors diagnose and treat patients suffering from cancer. Watson can scan and synthesise the medical literature and empirical evidence far better and faster than any human. Then doctors can use this information to exercise their judgement.

Defining of roles and tasks within an organisation is less needed now. This will put less constraint so that they are able to draw on the full breadth of capabilities of the people and machines inside an organisation; by seeing themselves as a network of people, ideas and capabilities they become more fluid, adaptable and participatory. 

Continuous learning is an important part of this process. also individuals must take responsibility for their learning development, with the organisation providing facilities for that development.

An example the more adaptable and flexible structure is Morning Star (the world's largest tomato processor) has been operating a holacracy for half a century. There are no job titles, hierarchy or defined roles.  When you join the organisation, who actually interviews you, works out what role is best for you and the organisation is completely fluid and negotiated between all the people in your team.

Automation is a two-edged sword as it involves handing over tasks to machines. There is an increasing focus on changing from labour-saving devices to software automation, ie doctors using computers to make diagnoses and perform surgery; bankers to research and trade finances; architects to design buildings; lawyers in document discovery, etc.

"Computers can be programmed to perform complex activities in which a succession of tightly coordinated tasks is carried out through an evaluation of many variables. Many software programs take on intellectual work - observing and sensing, analysing and judging, even making decisions - that until recently was considered the preserve of humans. This may leave the person operating the computer to play the role of a high-tech clerk - entering data, monitoring outputs and watching the failures. Rather than opening new frontiers of thought and action, software ends up focus. We trade subtle, specialised talents for more routine, less distinct ones"

Nicholas Carr, 2013

"...as computers get more sophisticated and robots increasingly adept, rising numbers of workers will be replaced by machines and algorithms..."
Jacob Greber, 2014

An example is the impact of drones (unmanned aircraft) in the increasing thier non-military usage. Drones were initially developed for military use but mini drones have been developed for
- delivering parcels
- delivering medical equipment, ie they can deliver equipment in 1/10th of the time it takes for an ambulance to do the same job
- taking aerial photos, eg helping firefighters understand fires (SBS, 2014b)

It is hoped that the new industries created by technology will generate new jobs. Unfortunately, jobs vulnerable to technology are being lost faster than new occupations appearing.

A tertiary education and/or white-collar job is not safeguard against automation. On the other hand, some research (Massachusetts Institute of Technology, 2014) found a number of non-tertiary qualified jobs are increasing. these include nursing aides, electricians, carpenters and hospitality workers

Furthermore, software is being used to carry out everyday routines, like shopping, socializing, researching, directions, etc. The exponential growth in computer power is changing the nature of work in every job and profession

There are positives and negatives to this

. Positives (improved productivity as well as convenience, speed, efficiency and effectiveness;

"...Every time we offload a job to a tool for a machine, we free ourselves to climb to a higher pursuit, one requiring greater dexterity, deeper intelligence, for a broader perspective. We may lose something with each upward step, but what we gain in the long term, is far greater..."

Nicholas Carr, 2013

As a result of more automation, it is hoped that jobs that are valued by society increase in importance, ie human resources (the importance of being human), creativity, social capital, empathy, etc (Fleur Anderson, 2015a)

. Negatives (its impact on performance can be negative as it alters how we act, how we learn and what we know; automation can both supplant human activity and change it in ways unintended and/or unanticipated; the substitution myth, ie

" ...abour-saving device does not just provide a substitute for some isolated component of a job or other activity. It also has the character of the entire task, including the roles, attitudes and skills of the people taking part..."

Nicholas Carr, 2013

In addition, machines/computers can lull us into complacency and bias that undercut our performance and lead to mistakes.

i) automation complacency occurs when a machine/computer lulls us into a false sense of security, ie confident that the machine will work flawlessly and handle any problem that occurs. We become disengaged and less aware of what is happening around us. Humans are not very good at "watching a monitor"; after 30 minutes our attention wanders!!!!

ii) automation bias occurs when we place too much faith in the accuracy of the information the machine/computer produces. We thus ignore or discount other information sources, including our own experience, eyes and ears. When a computer provides incorrect or insufficient data, we remain oblivious to the error.

Automation can weaken our awareness and attentiveness. It turns us from actors into observers. This can inhibit the development of expertise, ie generational effect. For example, people remember words much better when they actively call them to mind, ie generate them, rather than simply reading them. This has an impact on learning, ie when you are actively engaged in the task, you activate mental processes allowing you to retain more knowledge, ie you learn more and remember more; repeating the task strengthens the neural connections in the brain and to be available simultaneously. An expert can spot patterns, evaluate signals and react to changing circumstances with great speed and precision; this is called instinct. When you automate an activity, you have reduced your ability to translate data/information into knowledge. Thus the use of decision-support systems to analyse information works against your decision-making expertise involving centuries of perception, patterns recognition and conceptual knowledge. Additionally, a person's skills deteriorate when they are not used and this increases the chance of their acting ineptly. Some solutions involve shifting control back to human operators at irregular intervals and/or allowing them to perform challenging tasks - rather than just merely observing; these will promote development and maintenance of expertise. This can be achieved by sacrificing some speed, convenience and productivity.

" As automated technologies become more complex, relying on interdependencies among algorithms, databases, senses and mechanical parts, the potential source of failure multiplies. They also becomes harder to detect. All the parts may work flawlessly, but a small error in system design can still cause a major incident. And even if a perfect system could be designed, we still have to operate in an imperfect world"

Nicholas Carr, 2013

Moving from information to intelligence age with artificial intelligence, there is a challenges - can automation handle soft skills?

Human genome project

It is claimed by Robert Winston & Lori Oliwenstein (2000) that this century is going to be the century of biotechnology (human genome project) as the last century was defined by physics. Furthermore, currently

"...biological evolution operates at a snail's pace compared with technological evolution (the former is Darwinian and requires generations of differential reproductive success; the latter is Lamarkian and can be accomplished within a single generation)..."

Michael Shermer, 2002

Sustainable Development

It is interesting to note that the food and leisure industries, which have large shares of total household expenditure, are the largest contributors to economic degradation (Hens Runhaar et al, 2008).

The concept for sustainable development is based on how Nature works

"...Everything that is an output of a process is food for some other process..."

Karlson Hargroves et al, 2005

"...Earth's complex, self-regulating biosphere is, in essence, a brilliant operating system that has been operating without interruption for more than 3.5 billion years. By studying the interdependent principle.....for the planet's sustainability, managers can learn how to build ecologically friendly products that reduce manufacturing costs and prove highly attractive to customers......they can apply the biosphere's lessons to industrial technology today......the rules of the biosphere's operating systems are built upon biologic, which nature used to assemble life and structure eco-systems. In contrast to industrio-logic of human manufacturing, which assumes that largely synthetic materials should be assembled or moulded into design shapes, biologic builds things from the bottom-up, relying on sophisticated nanotechnology to assemble organisms molecule by molecule..."

Gregory Unruh, 2008

Need to understand the 4 states of natural and living systems: closed systems, steady-state systems, complex adaptive systems, and turbulence (chaos), ie

"...in human equivalents, the first three of the states all require that the system has material capital (materials), social capital (relationships, community customs and institutions), and spiritual capital (meaning, values, purpose)......closed systems just recycle their input and output and nothing really changes......the steady state has some movement, and some inward and outward flow, but it is the balance. Everything in the system is balanced and predictable......complex adaptive system......is constantly adapting..."

Danah Zohar et al, 2004

The complex adaptive system, such as an organisation, is not in a steady state and is continually influenced by both internal and external factors, including turbulence. If turbulence becomes too much, the system disintegrates.

The important question around sustainable development for the private and public sector is

"...How best can we shift from a culture of performance, both for ourselves and for the biosphere that sustains us..."

Edward O. Wilson, 2002

There are 3 important biosphere rules, ie use a parsimonious palette, cycle up - virtuously, and exploit the power of platforms.

i) use a parsimonious palette

Despite the 100 plus elements on the periodic table, the basis for almost all living things is carbon, hydrogen, oxygen and nitrogen; with a little sulphur and phosphorus. The main reason for this is it makes recycling easy.

ii) cycle up - virtuously

"...When an organism dies, the biosphere converts its material and reinserts it into its production processes. Nature reuses these materials in evolutionary growth and development, continuously cycling them up. Up-cycling maintains the value of materials between generations of recycled products without loss of quality or performance. Down-cycling, in contrast, destroys the original value, as when a plastic computer casing is melted into a speed bump......nature has used the same materials in a virtuous cycle of increasing complexity and value, allowing the biosphere to evolve towardan even more integrated and sustainable community of organisms..."

Gregory Unruh, 2008

Recycling up relies upon biological obsolescence as opposed to planned obsolescence in the manufacturing industry

iii) exploit the power of platforms

"...The design is a general-purpose-platform that has been leveraged over and over again to create the planet's astounding biodiversity. This strategy is so successful that life can adapt to exist anywhere on the planet..."

Gregory Unruh, 2008

Currently these platform strategies are used in industry. However, they mainly occur at the component level but need to go below this level.

To apply these 3 biosphere rules, that are several steps that need to occur, ie think fewer materials, rethink design, think scale economies, and rethink the buyer-supplier relationship

i) think fewer materials

Organisations need to

"...rethink their sourcing strategies and drastically simplify the number and types of materials used in the company's production.....a number of companies use toxic-material screens to weed out environmentally suspect components out of the supply chains...... though toxic-materials screens make sense, they work backwards negatively eliminating risky materials rather than positively selecting the best ones...... materials must be physically capable of being up-cycled...... recycling must also be cost-effective...... up to 75 percent of steel and more than 50 percent of aluminium are recycled, mostly because doing so uses a fraction of the energy needed to produce virgin metal..."

Gregory Unruh, 2008

ii) rethink design

Need to replace the question of "What is the best specialty material for this application ?" to "What design will make product specifications using existing materials?" or "How can we engineer a cool new product made from our limited materials?"

This involves planning at the beginning how to handle the products by cycling-up, etc and to minimize the number of materials in their products.

iii) think scale economies

"...A parsimonious palette and a virtuous recycling process can establish sustainable platforms from entire product lines...... following the biosphere rules can compound cost savings. First, simplifying the material palette for sustainable reasons reduces supply-chain complexity, shrinks the vendor count, generates volume discounts, and improves suppliers as more business is sent their way. Second, companies may discover that cost savings emerge from the virtuous recycling of materials......savings are not automatic or uniform across companies......the biosphere rules - a likely source of competitive differentiation in the future..."

Gregory Unruh, 2008

iv) rethink the buyer-supplier relationship

Organisations have to manage the transition from a product with 100% virgin material to nearly 100% virtuous recycled materials. This involves recovering products from customers' facilities (homes, offices, etc ) and putting them back into the production process. This changes the traditional buyer-supplier relationship as the customer plays a dual role, ie buyer of the organisation's products and supplier of its input materials from re-cycled product. This will require managers to rethink sourcing, marketing, sales and service.

There is a misconception that sustainability will work against economic growth. On the other hand, some factors that will allow for higher than expected economic growth from sustainable development are

"...First,......great opportunities from increased resource productivity, and large radical resource productivity gains often cost less than smaller resource productivity gains. Second, obviously many of the direct and indirect costs of large-scale environmental damage and resource depletion will be avoided at significantly less cost and the economy will be protected from environmentally induced destabilization. Third, during the transition to a fully operational, ecologically sustainable economy, which would be a period of several decades at least, the economy would have a strong structural tendency to higher levels of employment. The structural tendency to favor high employment is caused by three things: (i) the recycling of revenues from eco-taxes to reduce payroll taxes or other costs of employing labour; (ii) the greater labour intensity of new ways of doing things when the technology and the manufacturing and operational techniques are not yet highly refined; and (iii) the pump-priming effect of investments brought forward to replace scrapped capital.

Fourth, the strongly green economy will enhance the dynamics of the economy to favour the greatest source of productivity improvement in the modern economy - the information sector. To create economic wealth with significantly lower physical resource inputs and environmental impact is going to require clever development; and clever development depends on a strong information economy. Skilled labour, sophisticated machinery and technology, and lots of top-quality information will be needed. Fifth, contrary to the intuition of many economists and the ideology of many politicians, wise social spending has contributed to, rather than impeded, economic growth. This is one of the conclusions of a recently published respected historical study by Peter Lindert called Growing Public: social spending and economic growth since the 18th century. This extensive study on whether social policies that redistribute income impose constraints on economic growth concluded that, contrary to traditional beliefs, the net national cost of government social programmes are virtually zero. Sixth, corruption around the world is widely regarded as one of the biggest impediments to sustainable development. Removing corruption will not just help to create a more just and sustainable world but would also assist economic growth. The World Bank development report summed it up well in 1997 when it discussed how corruption also harmed economic growth especially in the long-term as it leads to sub-optimal decision-making by governments. Seventh, properly designed eco-taxes can be used to increase level of productivity and economic growth. Many papers including OECD reports have shown how revenues raised by eco-taxes are expected to create virtually fully offsetting output and productivity gains in other parts of the economy provided that they channel back into the economy in the most effective way......Eighth, newly designed sustainability ideas on how to build the built environment will be summarised into books such as Green Development: integrating ecology and real estate, can have remarkably positive effects on a nation's GNP, because construction and the built environment make up a very large fraction of GNP - for instance 9% in the U.S. and 18% in Japan. Therefore, even small improvements in construction techniques can have effects on the national income that are large compared with more exciting basic science discoveries. The lesson from the remarkable growth rates of Japan over a significant part of the last 40 years is clear: seemingly mundane forms of applied research, such as design work or product and process engineering, can have large cumulative benefits for the firm that undertakes them and even larger benefits for society as a whole..."

Karlson Hargroves et al, 2005

Businesses can be both competitive and achieve sustainable development (environmental and social). The assumption that business will have to relocate to the lowest environmentally regulatory cost havens is being disputed. Furthermore, there is evidence that organisations and nations who pursue best practice in sustainable development improved their productivity and competitive advantage. Stringent product standards and tough environmental rules and regulations are not a hindrance but provide an opportunity to innovate to improve products and services.

"... detailed case studies of hundreds of industries, based on dozens of countries, reveal that internationally competitive companies are not those with the cheapest inputs or the large-scale, but those with the capacity to improve and innovate continually. Competitive advantage, then, rests not on steady efficiency or on optimizing within fixed constraints, but on the capacity for innovation and improvement that shift the constraints..."

Karlson Hargroves et al, 2005

Organisations need to see beyond the short-term cost of dealing with tough standards and see the long-term benefits in terms of innovation. For example, the imposition of higher environmental standards by Germany resulted in more than 700,000 jobs in the economy and increased exports to other countries (in particular to countries that do not have such stringent controls). Furthermore, it creates more up-market jobs such as in the knowledge industry and adds value so that a premium can be charged on the goods and services

One of the fastest-growing markets is the area of sustainable solutions

"...firms can achieve further competitive advantage through greater resource productivity, the eco-design of products (reducing processing costs) and production of 'clean and green' goods and services (product differentiation)......For example, BP has exploited its marketing and technology management capabilities, developed through the fossil fuel businesses, to build a marketing leading position in renewable energy technologies, particularly solar cells..."

Michael Porter et al as quoted by Karlson Hargrove et al, 2005

On the other hand, competitors to BP in the fossil fuel industry have stayed with fossil fuels and actively resisted the adoption of effective climate change policies

The next wave of innovations is expected to be around sustainability development that involves radical resource productivity, eco-design, whole system design, bio-mimicry, spatial information, lean thinking, green chemistry, industrial ecology, renewable energy and green nanotechnology.

Bio-mimicry (study of natural forms and systems in design and engineering)

· It has been called the 3rd generation in biology (after genetic engineering and genomic sequencing that involves the convergence of biology, chemistry, physics and engineering)

"...We will be using nearly 4 billion years of biology to develop systems, receptors, machines and materials..."

Chris Elvin as quoted by Andrew Bock, 2014

"...There are at least 3 million species on Earth and all of those species are made up of hundreds of thousands of solutions to all of the problems that are facing humanity. There is really nothing that we face as a species that hasn't already been addressed by nature in countless ways......Nature's algorithms are so perfect, a single 15-centimetre PAX water impeller can mix a water storage reservoir the size of a football field and 12 m deep..."

Jay Harman as quoted by Andrew Bock, 2014

"...Animals, plants and microbes are the consummate engineers. Biological knowledge is doubling every five years..."

Janine Benyus as quoted by Andrew Bock, 2014

"...The inventive work is already being done for you when you start with by bio-mimicry. This means, as a business, you can focus on replication rather than discovery..."

Richard Caldwell as quoted by Andrew Bock, 2014

"...The two great ironies of bio-mimicry are that humans have been busy destroying species that could carry essential clues to our progress..."

Stephen Trowell as quoted by Andrew Bock, 2014

"... Instead of seeing nature as a source of raw materials, we would see nature as a source of ideas, as a mentor. This would change everything, ushering in a new era based not on what we can extract from nature, but what we can learn from nature..."

Janine Benyus as quoted by Andrew Bock, 2014

· In the past decade, 3,000+ companies have successfully adapted bio-mimicry solutions. Some examples of bio-mimicry

- the silent nose of Japan's Shonkansen (fast train) is based on a kingfisher's beak

- gecko paws used to develop chemical-free adhesive and self-cleaning medical bandages

- less painful syringe needles using the serrated edges that mimic the irregular edge of mosquito proboscises (the reason we don't feel their sting until it's too late)

- use of lotus flowers (with dirt repellent qualities on their leaf surfaces) to develop more durable and grime-resistant paints

- the rough pattern of dentacles on shark fins to develop drag-resistant paint for aircraft and ships

- a new generation of super-elastic materials by studying resilin (proteins found in the joints of bees and other insects); it is the substance that enables fleas to jump so far

- studying seashells and frozen whirlpools to develop designs for fans, impellers & water mixes that look more like lilies than traditional propellants

- using third-generation photo-voltaic technology that imitates the natural process of photosynthesis, ie captures solar energy like leads do, in chemical dyes. This will be used so that windows, building envelopes, roofs, car chassis become energy generators

- using grapheme (derived from graphite) as a new atomic, thin material

- studying the elegant efficiency of tailfin propulsion in sharks and tuna, and the way seaweed bends before waves has resulted in developing machines and harness the energy of the ocean

- the DNA sequence of the nematode worm's olfactory organs led to development of a sniffing machine for use in security checks, food industry (including beer brewing), etc

- using the way the giraffs compress their blood vessels in their next to stop blood flowing into their head when they are drinking has been used to develop a flying suits that allows pilots withstand forces of 9G; normally pilots blackout around 4G

- the hydroponic structure on butterfly wings is used to waterproof products like mobile phones, clothes, etc

(sources: Andrew Bock, 2014: Richard Hammond, 2015)

The Internet can be a way to increase sustainability. For example, the music industry's traditional way of producing CDs and selling them in shops is very wasteful in energy consumption and carbon dioxide emissions. It is claimed (John Davidson, 2009) that the traditional process can use 53 megajoules of energy and 3.2 kg of carbon dioxide to get from the recording studio to your home. This amount of energy is equivalent to around 78,000 cans of Coke. In contrast, online/digital distribution where a song is recorded, transmitted online and downloaded as a digital file is very efficient when compared to the traditional process, ie it uses around 7 megajoules of energy.

A challenge!!!!!

Get very small, very specialized and very expensive

"...I would actually count this as innovation, and of the highest caliber: you're taking a large operation and finding ways to scale it down, retarget it and remarket it, all while adding pocket loads of value to justify the higher price..."

Richard Branson, 2008

 

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