tag:theconversation.com,2011:/global/topics/economic-disruption-7768/articlesEconomic disruption – The Conversation2019-04-20T17:43:07Ztag:theconversation.com,2011:article/1157412019-04-20T17:43:07Z2019-04-20T17:43:07ZExtinction Rebellion: disruption and arrests can bring social change<p>Extinction Rebellion burst onto everybody’s screens with disruptions and mass arrests across the UK and around the world in protest against government inaction on climate change. Radical disruptions have been at the heart of Extinction Rebellion’s activism since it was founded in 2018 – from January’s disruption of <a href="https://rebellion.earth/2019/02/17/breaking-now-extinction-rebellion-disrupts-london-fashion-week-with-swarm-roadblocks-meets-british-fashion-council/">London Fashion Week</a>, to the infamous <a href="https://inews.co.uk/news/politics/extinction-rebellion-naked-protest-house-of-commons-climate-change/">naked protest in Parliament</a> at the beginning of April. But the scale of the most recent actions has finally succeeded in forcing mainstream news cycles to start giving the politics of climate change the attention it deserves.</p>
<p>One could argue that Extinction Rebellion’s week of action was fortunately timed – the extension of Article 50 <a href="https://www.theguardian.com/politics/live/2019/apr/10/brexit-eu-to-decide-on-uk-extension-live-news">to October</a> has created something of a news vacuum while everyone takes a momentary breather from Brexit. Nevertheless, activists would rightly claim that climate change is the bigger looming catastrophe. </p>
<p>In October 2018, the <a href="https://www.ipcc.ch/site/assets/uploads/2018/11/pr_181008_P48_spm_en.pdf">UN’s climate agency</a> published grave projections of the enormity of the challenge ahead if we are to limit the most catastrophic consequences of climate change. For both Extinction Rebellion and the Fridays for Future school strike movement, the <a href="https://www.theguardian.com/environment/2018/dec/16/what-was-agreed-at-cop24-in-poland-and-why-did-it-take-so-long">piecemeal response</a> of nations at the UN’s annual climate change conference in Poland in December 2018 made it clear that there is no more time to lose.</p>
<p>The aim, then, is to force the issue. Through their blockades of iconic central London sites, Extinction Rebellion is keeping climate change at the forefront of the public and politicians’ lips, making the seemingly abstract problem facing all of us feel real. And rather than just warning of this climate emergency, it offers a vision of an alternative future, where a <a href="https://rebellion.earth/the-truth/demands/">Citizens’ Assembly</a> takes the lead in reducing UK emissions to net zero.</p>
<p>Perhaps inevitably, Extinction Rebellion’s actions have been met with a familiar backlash from some political commentators – witness Adam Boulton’s <a href="https://inews.co.uk/news/extinction-rebellion-adam-boulton-robin-boardman-london-travel-sky-news/">sneering performance on Sky News</a>, and David Blunkett’s <a href="https://www.dailymail.co.uk/debate/article-6933701/DAVID-BLUNKETT-force-law-used-against-eco-anarchists.html">indignant authoritarianism in the Daily Mail</a>. But while activists say <a href="https://news.sky.com/story/police-told-to-use-full-force-of-law-against-heathrow-climate-change-protesters-11697820">they regret the disruption</a> caused to working people, they consider their actions a necessary evil in order to change the conversation.</p>
<p>Older activists will surely point to the impact and legacy of <a href="https://www.theatlantic.com/business/archive/2014/01/the-dark-side-of-globalization-why-seattles-1999-protesters-were-right/282831/">1999’s Battle of Seattle</a>, when the Global Justice Movement successfully closed down the World Trade Organisation’s annual meeting. Not only was this extremely empowering for those involved, it crucially helped make resistance to a largely abstract neoliberal governance structure seem concrete and real.</p>
<p>Much like the Occupy demonstrations seven years ago, Extinction Rebellion’s latest eye-catching protests have been friendly and open, laden with artistic performances, talks and human connection. This good-natured spirit has so far meant that the movement has gained significant traction – not only on the airwaves, but on the streets too.</p>
<p>Extinction Rebellion’s efforts are aimed at building momentum and are based in political science – their website highlights that it takes just <a href="https://www.theguardian.com/commentisfree/2017/feb/01/worried-american-democracy-study-activist-techniques">3.5% of a nation’s population</a> engaged in sustained nonviolent resistance to topple a dictatorship. In the UK, that’s less than 2.5m people.
Their clear <a href="https://rebellion.earth/the-truth/about-us/">demands and principles</a> give the movement a clarity and focus that the Occupy movement may have lacked, and they are growing week by week – Extinction Rebellion says that <a href="https://www.bbc.co.uk/news/uk-england-london-47997531">50,000 people</a> have joined the movement since the protests started.</p>
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<p>But contemporary mainstream news cycles are fast and fickle, so the movement will have to act quickly and carefully to maximise use of its new-found public platform.</p>
<h2>Danger of diminishing returns</h2>
<p>It’s extremely important that the movement’s purpose does not become overshadowed by its tactics. Extinction Rebellion has ransacked the playbook of direct action repertoires – <a href="https://www.bbc.co.uk/news/uk-england-london-47935416">blocking roads</a>, <a href="https://www.desmog.co.uk/2019/03/09/climate-change-means-real-death-real-blood-extinction-rebellion-paints-downing-st-red">using fake blood</a>, <a href="https://rebellion.earth/2018/11/24/breaking-extinction-rebellion-funeral-service-on-parl-sq-blocks-square/">recreating funeral marches</a>, and <a href="https://www.youtube.com/watch?v=OVdl6lKxG-Q">surprise nakedness</a>. While these have so far been successful in bringing the movement’s name and cause to the fore, using such tactics ad nauseum can quickly lose the public’s imagination and support. This was evident in the Global Justice Movement of the 2000s, as the desire to recreate the euphoria of Seattle resulted in tactical “summit hopping” with diminishing returns.</p>
<p>State agencies also learn quickly how to police repeated mobilisations more ruthlessly and extremely – although Extinction Rebellion’s “trademark” repertoire, the tactical use of mass arrests, so far appears to be combating this threat effectively. Police have powers to disperse protesters, but the sheer number of people now willing to be arrested shifts the balance of power between the public and the state. For example, police have so far been unable to clear any of the four sites in central London, as spates of arrests were closely followed by new wave of protesters arriving to entrench control. The city’s police stations do not have the capacity to hold hundreds of arrested protesters for long periods, and court costs will discourage officers from pursuing charges, limiting the punitive power of the state.</p>
<p>At the same time, Extinction Rebellion’s tactics risk fetishising the act of being arrested as a symbol of participants’ commitment to the cause. The movement’s co-founder, Roger Hallam, <a href="https://www.bbc.co.uk/news/science-environment-47865211">recently told the BBC</a> that in order to achieve its goal of “getting in the room with government”, it may need to create a law and order crisis on the scale of 1,000 arrests. Such an arbitrary target is problematic, as it may encourage activists to take more risk in pursuit of a goal that is by no means guaranteed.</p>
<p>Even if one is critical of the politics seemingly behind many “<a href="https://greenandblackcross.org/guides/laws/5-trespass-aggravated-trespass/">aggravated trespass</a>” charges, a criminal record can be extremely costly and cause significant problems for many younger activists – especially people of colour. This contrasts with the relative risks posed to seasoned activists whose job, lifestyle or privilege <a href="https://www.theguardian.com/commentisfree/2019/apr/15/extinction-rebellion-protesters-arrested-stansted-15">allows them to ride the consequences</a>. It is crucial that Extinction Rebellion fulfils a duty of care to support those who are prepared to put their bodies on the line but, with more than <a href="https://www.standard.co.uk/news/london/extinction-rebellion-protests-arrests-near-500-as-police-deploys-1000-officers-to-remove-eco-a4121861.html">900 arrested</a> already, its an expensive, high-risk game should multiple criminal charges be brought.</p>
<p>For now, Extinction Rebellion activists will consider recent events as a runaway success. They have gained visibility and traction – and have at least temporarily steered media attention away from Brexit. Most importantly, they have put climate change squarely in the middle of public conversation. Let’s hope it stays there.</p>
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<p class="fine-print"><em><span>Alexander Hensby does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>XR has the nation’s attention, but to build on this momentum its purpose must not become overshadowed by its tactics.Alexander Hensby, Lecturer in Sociology, University of KentLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/864302017-11-29T22:41:29Z2017-11-29T22:41:29ZTechnology will make today’s government obsolete and that’s good<p>Artificial intelligence is the hot topic of the moment. </p>
<p>The most valuable firms in the world, including Amazon, Microsoft and Google, are <a href="https://www.theguardian.com/science/2017/nov/02/big-tech-firms-google-ai-hiring-frenzy-brain-drain-uk-universities">in a race to hire leading AI researchers</a> to advance their efforts on autonomous vehicles, medical diagnostics and a range of other ventures. </p>
<p>At the same time, governments are rushing to support the technology that might drive the next economic paradigm shift with funding and incentives. </p>
<p>Prime Minister <a href="https://www.utoronto.ca/news/trudeau-gets-his-geek-u-t-talking-ai-and-canada-s-future">Justin Trudeau spoke to the promise of AI</a> at a conference recently, where he focused on the opportunity for Canada to attract investment and create jobs <a href="https://www.utoronto.ca/news/toronto-s-vector-institute-officially-launched">in the burgeoning field</a>. </p>
<p>But are governments inadvertently laying the groundwork for their own irrelevance?</p>
<p>As policy director at the University of Toronto’s Mowat Centre, I focus on the <a href="https://mowatcentre.ca/working-without-a-net/">impacts of technology</a> on the <a href="https://mowatcentre.ca/policymaking-for-the-sharing-economy/">labour market</a>, <a href="https://mowatcentre.ca/regulating-disruption/">government</a> services and <a href="https://www.brookings.edu/blog/techtank/2017/02/28/work-and-social-policy-in-the-age-of-artificial-intelligence/">social programs</a>. </p>
<h2>Industrial age government, information age world</h2>
<p>Already today, the private sector is deploying cutting-edge technology as soon as practicable while the public sector struggles to implement turn-of-the-century solutions to seemingly straightforward tasks.</p>
<p>The federal government’s ongoing travails with the Phoenix pay system upgrade, which was designed to save $70 million a year but <a href="http://www.cbc.ca/news/politics/phoenix-pay-system-pipsc-union-1.4402415">instead may cost $1 billion to fix</a>, is just the latest example of public sector challenges with large-scale information technology projects. </p>
<p>And the gap between the two worlds is likely to only get wider as technology — whether AI or <a href="https://theconversation.com/demystifying-the-blockchain-a-basic-user-guide-60226">blockchain</a> — becomes more advanced, complex and disruptive. The private sector’s capacity and ability to work with IT is already higher than the government’s. As salaries and opportunities continue to draw talent to the private sector, we’ll likely see a corresponding increase in the capability gap between the two. </p>
<p>Governments are already facing a crisis of trust. According to a <a href="https://www.edelman.com/trust2017/trust-in-canada/">survey by public relations consultancy Edelman, only 43 per cent of Canadians trust government</a>, the lowest among surveyed institutions. Just 26 per cent of Canadians surveyed view government officials and regulators as credible.</p>
<h2>Digital transformation crucial</h2>
<p>Citizens, increasingly accustomed to living and working digitally, are only going to have <a href="https://newsroom.accenture.com/news/canadian-citizens-want-to-be-consulted-by-government-to-determine-future-of-services-accenture-survey-finds.htm">higher expectations for government’s technological adeptness and capability</a> in the future. </p>
<p><a href="http://business.financialpost.com/news/fp-street/as-fintech-fears-fade-canadas-banks-look-to-next-big-thing-artificial-intelligence">Banks</a>, <a href="https://www.thestar.com/business/tech_news/2017/06/15/wave-of-automation-sweeping-canadian-retailers.html">retailers</a>, manufacturing firms and mines are all transforming themselves into digital organizations. </p>
<p>If our <a href="https://mowatcentre.ca/reprogramming-government-for-the-digital-era/">governments remain rooted in the industrial age</a>, their decline in relevance is only likely to accelerate. Most government structures and processes date back earlier than the 1950s. </p>
<p>This relevance gap won’t just be about accessing services more easily and effectively. In the near future we will likely see a debate about why public sector employees are relatively immune to job disruptions and precarious work conditions, while technology could accelerate both trends for those in the private sector.</p>
<p>As job quality continues to erode in the private sector, the public sector will appear to be apart from trends in precarious work. This will likely lead private sector workers to question why their taxes are funding well-paying, secure positions while they themselves may be struggling mightily.</p>
<h2>Labour disruption and unrest</h2>
<p>The future of work for many in the private sector will increasingly involve jumping from gig to part-time role and back again to make ends meet, with little left over to save for retirement or for “benefits” such as mental health services or prescription medications, labour market trends over the past 30 to 40 years suggest. </p>
<p>Part-time work is up 57 per cent over the past 40 years, and now accounts for nearly 20 per cent of jobs in Canada. Temporary work is also up 57 per cent over the past 20 years, and now forms 13.5 per cent of workforce. Across <a href="http://www.oecd.org/about/">OECD</a> countries, growth in non-standard work accounts for 60 per cent of job growth since the mid-1990s.</p>
<p>Those <a href="https://mowatcentre.ca/working-without-a-net/">employment trends are likely to get even worse</a> due to technology and corporate strategies. </p>
<p>In 2014, the <a href="http://www.statcan.gc.ca/pub/11-630-x/11-630-x2015005-eng.htm">public sector unionization rate was 71.3 per cent</a> — nearly five times the private-sector rate of 15.2 per cent, which raises hard questions about who will speak up for the private sector worker in an increasingly lean and fissured labour market.</p>
<h2>Mass unemployment</h2>
<p>A 2016 study by Deloitte and Oxford University found that up to <a href="https://www.theguardian.com/society/2016/oct/25/850000-public-sector-jobs-automated-2030-oxford-university-deloitte-study">850,000 jobs in the United Kingdom’s public sector could be lost as a result of automation by 2030</a>, in administrative roles as well as jobs for teachers and police officers. </p>
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<span class="caption">Government public servants such as police could be replaced by automation within 15 years. A police robot responds to a dangerous criminal incident in this still from the 2015 film <em>Chappie</em>, written and directed by Neill Blomkamp.</span>
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<p>Merely applying these same projections to the Canadian public sector would mean over 500,000 jobs at risk out of 3.6 million public sector roles. But collective agreements could impede any attempts to pivot away from employees performing routine administrative tasks and towards workers with digital skills.</p>
<p>If the economy at large continues to wring efficiencies out of human labour and substitute technological approaches where possible, it becomes hard to imagine the public sector trundling along as it always has. </p>
<p>Quite simply, the public sector will need to develop a more efficient workforce and adopt more agile structures and strategies in order to maintain relevance in a digital world.</p>
<p>So, what’s the right path forward? While it’s promising to see governments and other public sector organizations move forward with digital service agendas, we can’t expect them to simply overlay digital solutions onto existing processes and reap the real benefits of technology. </p>
<h2>Blockchain, AI, virtual government</h2>
<p>The public sector, ranging from the core civil service to health care to education, must fundamentally transform how it operates. </p>
<p>Do we need countless contribution agreements, contracts and reimbursements to be physically vetted by clerks in multiple offices when blockchain technology could instantly verify all of those same transactions? </p>
<p>Do policy units need 30 advisers to prepare advice for government ministers, or can <a href="https://www.theguardian.com/technology/2017/jan/05/japanese-company-replaces-office-workers-artificial-intelligence-ai-fukoku-mutual-life-insurance">much of their work be done automatically</a> with a select few adding high-value insights? Can we employ telepresence to reach students in remote communities with high-quality teachers? Will medical diagnostics be <a href="https://www.newyorker.com/magazine/2017/04/03/ai-versus-md">transformed by neural networks</a> that can more accurately detect cancers and other diseases?</p>
<p>Countries like <a href="https://e-estonia.com/">Estonia</a>, widely regarded as the <a href="http://www.wired.co.uk/article/estonia-e-resident">most advanced digital society in the world</a>, demonstrate that it’s possible to rethink government as a digital platform. </p>
<p>Whether and how quickly Canada’s public sector can leverage technological advancements to radically increase the efficiency and effectiveness of programs and services will be perhaps its greatest challenge in the years to come. </p>
<p>Delays and missteps will only continue to put the public service further behind mainstream business and consumer trends, and risk a continued decline in relevance for our public institutions.</p><img src="https://counter.theconversation.com/content/86430/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Sunil Johal does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Government is about to be disrupted by technology in the same manner as major industries. It’s about time.Sunil Johal, Policy Director, The Mowat Centre, University of TorontoLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/739572017-03-03T03:58:03Z2017-03-03T03:58:03ZFormer ambassador Jeffrey Bleich speaks on Trump, disruptive technology, and the role of education in a changing economy<figure><img src="https://images.theconversation.com/files/159246/original/image-20170303-31726-ru4nzy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">We need to rethink our educational model, says Jeffrey Bleich.</span> <span class="attribution"><span class="source">Alan Porritt/AAP</span></span></figcaption></figure><p><em>An edited transcript of the keynote address delivered by Jeffrey Bleich at Universities Australia’s higher education conference in Canberra on 1 March, 2017.</em></p>
<p><em>You can also listen to the full speech here:</em></p>
<p><audio preload="metadata" controls="controls" data-duration="2728" data-image="" data-title="Jeffrey Bleich's keynote address" data-size="65485955" data-source="Recording by Universities Australia" data-source-url="" data-license="" data-license-url="">
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Jeffrey Bleich’s keynote address.
<span class="attribution"><span class="source">Recording by Universities Australia</span><span class="download"><span>62.5 MB</span> <a target="_blank" href="https://cdn.theconversation.com/audio/644/speech-mixdown-mixdown.mp3">(download)</a></span></span>
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<p>While I’ve spoken at many of your universities over the years, it has always been in a non-partisan role - as either ambassador or now as chair of the Fulbright board. So, whenever I’ve been asked questions about politics or elections before, I always did what diplomats have long done. I thought very carefully, before saying …nothing.</p>
<p>But these are not ordinary times. The recent US election has evoked a profound sense of uncertainty across the political spectrum.</p>
<p>The things we had counted on, suddenly and surprisingly proved incorrect. We are not sure what we can rely on anymore, and it has shaken many people’s confidence about the path forward. It is times like these, when good friends like the US and Australia put aside conventions and get real about what we need to do together. </p>
<h2>No one saw this coming</h2>
<p>Candidly, no one saw this coming - until it came. In the US, on the morning of November 8, 2016, no trustworthy polling organisation, no responsible media outlet, no respected political pundit, no one, thought that Donald Trump would be elected the President of the United States. Even Mr Trump did not expect it. </p>
<p>He won, in part, because many people in the US did not trust the political parties to address their concerns. They did not trust government. They did not trust the media. They did not trust experts. They did not trust the international liberal order. And the fact that neither party liked Mr Trump, that the media mocked him, that experts were appalled by him, and that he seemed to have no experience in government or diplomacy or any interest in it, did not discourage them. It gave them hope. They might not have agreed with him, but they believed that at least he would shake things up. And that is what they wanted.</p>
<p>This is not a fluke. Only a few months earlier, we witnessed something similar in Europe - the stunning decision by the people of the UK to reject the recommendation of their prime minister and virtually all leaders on both sides of politics, and exit the EU. </p>
<p>We’ve witnessed the Philippines elect President Duterte - a leader who attacks all politics as usual, belittles allies, and has authorised the vigilante killings of thousands of people. </p>
<p>Here in Australia, Pauline Hanson’s One Nation party won four seats in the last election, and you’ve had five prime ministers in the past seven years (if you count Prime Minister Rudd twice). </p>
<p>Virtually every other major Western democracy these days is led by a fragile coalition government. And the world is already bracing for the rise of new nationalist, populist, and authoritarian minority movements in Europe. </p>
<p>So this populist unrest is not unique to the US.</p>
<p>The question is why, and what are the consequences for Western Democracies around the world. In the time that I have been asked to speak, I’d like to suggest we are witnessing an historic moment that requires an historic response.</p>
<p>New technologies, and global trends, are principally driving the shock and uncertainty. I’ll share my thoughts about what these are and where they are leading us. I’ll then do something that we all need to do - suggest some ways that higher education can adapt to meet these global trends and restore our sense of order and common vision.</p>
<p>But first, how we got here.</p>
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<h2>The digital revolution</h2>
<p>Every person in this room, grew up in a century defined by the Second Industrial Revolution. Today, that revolution is being eclipsed by a Digital Revolution. </p>
<p>The uncertainty that we are experiencing in every aspect of our society, including our politics, is the same disorientation that occurred between 1870 and 1910 when the first Industrial revolution ended and a second one began. </p>
<p>It eventually vaulted nations like America and Australia to the top of the world order. But it also produced a Gilded Age, labor unrest, mass migrations, a great depression, and two world wars. That era is closing, and we are now experiencing the new great disruption that Silicon Valley promised.</p>
<p>Digital technology - while solving crucial problems - is creating or compounding others. </p>
<ol>
<li><p>It has outstripped the capacity of Government to control it, and amplified the collapse of public confidence in democratic governments.</p></li>
<li><p>It has inflamed rivalries between those who benefit and those who don’t.</p></li>
</ol>
<p>3) It has undermined standards - of journalism, of altruism, and of civility - that are necessary for us to find common ground.</p>
<p>To appreciate this, we have to see where we’ve come from.</p>
<p>A hundred and fifty years ago, we went through the same thing. Changes in technology revolutionised media, global integration, and demographics. The changes were profound. </p>
<p>In 1879, during a three-month period, both the electric light and a workable internal combustion engine were invented. </p>
<p>Those two inventions alone produced over the next 40 years a dizzying number of new technologies. The telephone, phonograph, motion pictures, cars, airplanes, elevators, X-rays, electric machinery, consumer appliances, highways, suburbs, supermarkets, all created in a 40-year burst from 1875 to 1915. It fundamentally transformed how people live.</p>
<p>We’ve known for a while that the structures created by this Second Industrial Revolution were running their course, at least in advanced economies, and was being replaced by a new revolution, the digital revolution.</p>
<p>In retrospect, we should have seen all of the side effects coming. Recently the pace of these advances had started to build on each other exponentially, and the pressure has been mounting. </p>
<p>Everyone who has had to throw out their CD player for a DVD player for an iPod for an iPhone for Spotify, knows what I mean. </p>
<p>The pace at which our world is being changed just keeps accelerating. Every year there has been some massive new disruption. Every year a new massive theory of disruption: “the digital economy”, “the social network”, “the Internet of things”, “sharing economy”, “big data”. Last year “machine learning” - where machines teach themselves things we do not know - was the Buzzword. </p>
<p>The word in Silicon Valley this year is “singularity” - where our species itself is altered by technology - gene-editing, bionics, AI - creating a new hybrid species.</p>
<h2>Disruptive technology</h2>
<p>Three years ago as I was getting ready to depart Australia, I gave a talk about how driverless cars would soon transform our societies, but that this would be a hard transition and it would be several years before we saw driverless vehicles on the streets. </p>
<p>Well I was wrong about that. As I was going to the San Francisco airport to fly here, the car driving alongside me was a driverless Google car. </p>
<p>In Philadelphia driverless cars are operating as taxis. As the tech writer William Gibson wrote: </p>
<blockquote>
<p>“The future is already here, it just isn’t evenly distributed.” </p>
</blockquote>
<p>Yet.</p>
<p>Now I love driverless cars. Self-driving cars can reduce accidents, save us from needless deaths, injuries, and property damage, reduce traffic, give us more leisure time, reduce stress, and improve our quality of life.</p>
<p>Believe me, as an ex-ambassador, life is better in the backseat of the car.</p>
<p>But that’s not how you look at it if you are a 47-year-old truck driver or bus driver or cab-driver or you drive a fork lift and have a high school education, are carrying a lot of debt, and have a family to take care of. All you see is some elites in San Francisco trying to kill your job and destroy your family.</p>
<p>And driverless cars are only one disruptive technology. If you work in a small hotel or motel, you see AirBnB as an existential threat. If you work in manufacturing, 3D printing and robotics are direct threats to your job. If you are a book-keeper, artificial intelligence is an immediate threat to your job.</p>
<h2>Fear of losing control</h2>
<p>Many of us feel that we’ve lost control over the pace of it all. The technology is driving itself. </p>
<p>Breakthroughs that once took decades to develop can now be developed in a matter of months. We can test the impact of a particular set of compounds on thousands of cells simultaneously. </p>
<p>We can take the data from every mobile phone, every laptop, every modern vehicle, every refrigerator and toaster and microwave and aggregate them and analyse them as fast as the speed of the internet. </p>
<p>I was with the director of Google’s cutting edge incubator, Google X, Astro Teller, and he was asked what he feared about technology. He said, </p>
<blockquote>
<p>“it is simply going so fast now that no one can control where it is taking us.”</p>
</blockquote>
<p>Archimedes said that if you gave him a long enough lever, he could move the earth. Today, the lever of technology has extended so long that it takes very little pressure to fundamentally move the earth.</p>
<p>This dramatic acceleration of technology affects not only the workers who see their jobs disappearing and fear these new technologies. It inspires fear in retirees and dependents just as much. </p>
<p>Gene therapies may make it typical for people to live healthy active lives past the age of 100. That should be a cause for celebration. People getting to know their great grand-children, maybe even their great-great grandchildren.</p>
<p>But it’s also frightening. How will society support a generation that lives 20 years longer than they’d planned, that runs out of retirement savings? And if they live healthy lives to age 100, they will need to fill more of those years with work - their work lives may need to last 60-70 years. </p>
<p>But as technology accelerates, their training may barely be sufficient to last them 10 years. How will that work? How do we educate and re-train people for six careers over a lifetime? And what sorts of jobs will those be? How will we give people purpose when machines can do everything that is dull, dangerous, or determinable? </p>
<p>Even if you could find work for people and retrain them every 10 years, what sort of economic model can sustain this?</p>
<h2>In denial?</h2>
<p>If you aren’t feeling anxious and uncertain yet, then you are in denial. If you are a 47-year-old bus driver, or coal miner, or assembly line worker, or cashier, or toll booth operator, you might want a leader who promises to shut this all down. </p>
<p>Build a wall, bring back the old jobs; let me keep my iPhone and Facebook (I like those), but otherwise, just go back to the way it was.</p>
<p>This could have been predicted. </p>
<p>The Industrial Revolution in the last Century caused the same great anxieties, and caused politics around the world to go haywire. There were massive disruptions in labor markets, unprecedented levels of migration, and other effects of industrialisation. </p>
<p>The result may sound familiar. Popular unrest especially in Europe and East Asia, xenophobia, isolationism, violent protests, and the emergence of authoritarians and demagogues around the world.</p>
<p>In the US, William Jennings Bryan was nominated three times for president during this Gilded Age - offering a bizarre mix of populist messages. He was anti-Darwinism, pro-Isolationism, proposed a Silver Standard, favored Prohibition, and stunned the political establishment with the way he campaigned - defying all conventional logic. </p>
<p>Demagogues flourish when large sections of society feel overwhelmed and fear they will be left behind. They offer simple solutions to complex problems and play on people’s fears and prejudices.</p>
<p>But technology does not do this alone. At the turn of the last century, the US did not elect William Jennings Bryan. It elected leaders who embraced technology. It chose people who felt government had an important role in fostering technology and dealing with its unwanted effects. Healthy democracies resisted demagogues and authoritarians and fascists. But less healthy ones didn’t. </p>
<p>The 1920s and 1930s saw the rise of this throughout Europe. So this is not about technology alone. Three other trends already existed that fed public anxiety, and drew people to an authoritarian figure.</p>
<h2>The gaming of democracy</h2>
<p>The first trend is a 30-year campaign to diminish the importance of democratically elected governments. </p>
<p>For 30 years, political leaders on both sides of the aisle in the US ran for government by running against it. They secured votes by campaigning on the notion that government is a mess and couldn’t do anything right.</p>
<p>President Reagan had demonstrated the power of running for election on the claim that government was too big and bloated and ineffective. He ran on a campaign of cutting taxes and red-tape. </p>
<p>His successor George H.W. Bush did the same, to win, and then lost when he failed to keep his promise not to raise taxes. The next president, Bill Clinton, followed the same playbook, leading the charge that the era of big government was over. In all cases, the message was that we needed less and less government. George W. Bush ran almost entirely on promises to continue shrinking wasteful government.</p>
<p>Tom Friedman, the New York Times writer, had an insight about this. It came from his days when he covered the advertising war between Hungry Jacks and McDonalds. </p>
<p>He was interviewing the head of marketing for Hungry Jacks and asked him why - with the hundreds of millions of dollars Hungry Jacks was spending to win market share from McDonalds - it hadn’t actually gone after McDonalds burgers. Why didn’t they run an ad saying that McDonalds burgers were nasty frozen patties? The marketing head looked at him and said: </p>
<blockquote>
<p>“That is the very first rule of marketing. You never kill the category.”</p>
</blockquote>
<h2>Loss of confidence in governments</h2>
<p>Well, to win elections, both sides had been killing the category of government. And then in 2008, the US government seemed to vindicate their worst fears. </p>
<p>In September 2008, the country was already mired in an unpopular war in Iraq that was costing us our bravest troops and billions of dollars, and then we were hit by a recession that was directly due to the federal government easing its bank regulations. The two things that we counted on our government to do most - keep us secure, and protect our economy - it had failed to do. And both parties had supported both decisions. </p>
<p>If anyone was looking for proof that government couldn’t do anything right, that was the moment.</p>
<p>I think the Brexit vote shows that US voters aren’t the only ones losing confidence in government. </p>
<p>All of the indicators are moving in the wrong direction. </p>
<p>Voting rates have been falling in the US and many other Western democracies. Polls show that young people’s faith in democracy is plummeting. Tax protests movements have risen. America’s wealthiest people are looking for ways to avoid paying taxes through elaborate tax avoidance schemes. Recall that then-candidate Trump said that if he hadn’t paid taxes in 20 years, it was because he was “smart”.</p>
<p>Technology has exaggerated these effects. </p>
<p>For the average American, polling, data-analytics, micro-targeting voters, have turned politics into a game, and left them feeling manipulated. The political parties seemed more intent on using these tools to play the system and block each other than to deal with the real issues that we were facing.</p>
<p>While businesses were expected to innovate and do things faster, cheaper, better, governments now had less money, and were hamstrung with older technologies, and had more difficulty keeping pace. Government seemed to make the case for its detractors - moving slower or sometimes not at all. In the face of runaway technology, we have often seen walk-away government.</p>
<p>Millennials have the least patience with democratic government. </p>
<p>Having grown up at the pace of the internet, millennials aren’t afraid of technology. They love the new technologies; they trust technology to transform the workplace for the better. </p>
<p>To them, tech companies will solve their problems more than government, and so government seems irrelevant. To some, not all, government is entertainment or worse. And if you think government is entertainment, then why not elect a reality show star; and if it’s a joke, then why bother showing up to vote at all?</p>
<h2>Disrupting demographic expectations</h2>
<p>The second major trend in the US relates to demographics. Demographic effects have emerged in the past 25 years that have had a particularly pronounced effect on white males. </p>
<p>Your former countryman, Rupert Murdoch, built a news empire on the simple insight 25 years ago, that white males in America were getting angrier, and wanted someone to vindicate their anger. Even Fox & friends cannot keep up with the appetite for anger. Now they face competition from the even angrier Breitbart.</p>
<p>So where does that anger come from?</p>
<p>If you were a straight white male in the US in the first half of the last century with a high school education or less, you might lose out on jobs or opportunities to college educated white males, but that was it. You had an advantage over anyone else. You did not have to compete against women, people of colour, or people who were openly gay or lesbian. And you did not have much in the way of international competition. </p>
<p>Industries were largely protected among those countries with which we actually traded. But about half of the world’s economy was locked up in a failed economic system - Soviet-style communism - which did not compete with American jobs at all.</p>
<p>During the 1980s and 1990s, the US economy changed dramatically. Programs to enforce civil rights laws profoundly changed the workforce, introducing opportunities for women, racial and ethnic minorities, and other previously disadvantaged groups to compete for jobs.</p>
<p>At the same time, the fall of the Berlin wall was effectively a starting gun for global competition. Suddenly a talented workforce around the world that had been denied the chance to compete was unleashed. </p>
<p>Western nations saw great opportunity in trading with these countries and working them into their supply chains. And now, suddenly, a white male worker who had a built-in advantage was forced to compete with women, people of colour, and people around the globe, who were hungrier and potentially more competitive than they were.</p>
<p>Now white males may never have been entitled to that advantage, but the feeling of loss, and resentment, and unfairness that they felt is a very real emotion that most of us would probably feel in similar circumstances. Even if an advantage we have isn’t fair, we still feel pain and possibly anger when it is taken away.</p>
<p>Especially if it affects your livelihood and your place in society.</p>
<p>The truth is, that the benefits of globalisation and modernisation have not been evenly distributed. While women and minorities and people who had been subject to crippling poverty in former communist countries are better off today, the white working class in America doesn’t feel that way. </p>
<p>Unlike minorities, they didn’t grow up expecting to have to work twice as hard to get half as far, or to live in poverty. They expected that their lives would be better than their parents lives, and that their kids’ lives would be even better than theirs.</p>
<p>But that is becoming less true now. </p>
<p>Statistically, about half of the middle class is not more successful than their parents. Their fathers supported a family, had a nice house, two car garage, vacation, health care, the ability to send their kids to college, and enough for a decent retirement, working a 40 hour a week. </p>
<p>Today, wages haven’t kept up with the cost of living. To have those same things, both parents work, they work longer hours - nights and weekends - and they go deep into debt. They feel like they are working harder and not getting as far. And they are worried that their kids will do even worse.</p>
<p>So they don’t want to just turn back the clock on technology, they want to turn back the clock on civil rights and globalisation, too. Because they don’t see how it is helping them.</p>
<p>So it is no surprise that some of President Trump’s strongest supporters want him to build a wall to keep out Mexicans, or ban all refugees, or deport immigrants, or roll back the reproductive rights of women, or reduce civil rights enforcement.</p>
<p>There is some bigotry here, but about 80% of Republicans currently support Donald Trump, and the vast majority of them are not bigots. If you don’t believe the heartbreak in this group is real, consider this. </p>
<p>If you are a white male with no college education in the US you are the only demographic in the OECD, the developed countries, whose life expectancy is going down. The main reasons for this are all forms of self-harm: suicide, drug and alcohol abuse, or morbid obesity.</p>
<p>We miss the point if we think this is just prejudice or intolerance. For many, they voted for Donald Trump because he gave them hope. Everyone needs hope. </p>
<p>All of us want to believe that our lives will improve, or at least that our children’s lives will be better than ours. But for people who have lost their advantage in the market, and have to compete harder than ever just to have the same job, and who worry that their kids will have it even harder, they’ve lost hope in the current system. </p>
<p>Nearly two thirds of the counties that voted for Donald Trump in swing states voted for Barack Obama. For them, Donald Trump was the hope candidate.</p>
<p>One last thing. I have no tolerance for bigots and racists, but I also cannot abide ignoring the fundamental humanity of others, particularly people who are heartbroken. </p>
<p>Now imagine how the people who depend on these men feel, their wives and their daughters and their mothers, and you can understand how many women, too, would not really care what Donald Trump has said about women.</p>
<h2>The degrading of journalism</h2>
<p>Finally, the third global trend that we need to address is the dramatic change in how we get and interpret information.</p>
<p>This shift isn’t new either. Before the printing press was invented, written documents were drafted by scribes. </p>
<p>Those documents were trusted because - frankly - they are hard to produce. Only those with some standing in the community and reputation had the resources to produce them. It was too expensive and time-consuming for a scoundrel with a crazy idea to publish a book. And so people got used to generally trusting things that were written.</p>
<p>When the printing press dramatically reduced the cost of the printed word, all sorts of things could be published that wouldn’t have been before. </p>
<p>While this actually improved the flow of information, it also confused people who were used to trusting the things they read, and it disrupted society and politics for many years.</p>
<p>Here, we had two media revolutions at once. Until about 30 years ago, news was generally obtained from one or two newspapers, and the small number of network channels available in each country - which usually devoted up to an hour for news.<br>
While different papers might cover the same news stories differently, they generally reported the same facts and merely drew different conclusions from them.</p>
<p>With the advent of cable news programs, this changed. We created a vehicle for virtually limitless news. Instead of news organisations being forced to decide what were the most important events that happened each day, they could report on many things that were not necessarily relevant to people’s lives but would boost ratings. </p>
<p>News organisations could make news a form of entertainment and compete for viewers in ways that didn’t exist before. And, before long, news balkanized so that every viewer could pick a news service that reinforced their prejudices. </p>
<p>In this way, conservatives who did not trust liberals, could find a channel that reassured them that liberals were untrustworthy, and capable of the most irrational and diabolical acts. And vise-versa. Social media only compounded this, because its algorithms ensured that you’d be fed advertising that reinforced your biases and beliefs.</p>
<p>If this was not enough to bring down trust in government, a second wave of media disruption emerged close on its heels.</p>
<p>With the arrival of cellphones and the world-wide web, suddenly every person with an internet connection could become a journalist and publisher. </p>
<p>Before the traditional media had even heard about a story, people were blogging it, uploading images to YouTube, Facebook and Twitter, and effectively getting their story out faster than cable could. </p>
<p>In order to stay relevant, traditional media simply followed suit and began running with whatever came in across the internet - right, wrong, or horrifyingly wrong. </p>
<p>The notion was that you wouldn’t be wrong for long, but that you needed to publish quickly or risk being irrelevant.</p>
<p>And so we have the phenomenon that at one point over 40% of Americans believed that Barack Obama was born in Kenya. It did not matter that President Obama was born in Hawaii, and that his birth had been duly recorded and reported in the newspaper for all to see. Bloggers created this lie, sent it around at the speed of the internet, and news channels covered the “phenomenon” as if it were actual news. </p>
<p>If anyone on earth recognised the power of this phenomenon, it was the chief evangelist of this claim, Donald Trump; the person who would be the next president.</p>
<p>Today some substantial portion of Americans believe Michelle Obama is a man dressed as a woman. Even more believe that climate change is a hoax, that airplane vapor trails are a government conspiracy to spread chemicals to humans, that vaccinations cause autism, and that toilets in Australia flush backwards.</p>
<p>In this environment, where facts are ignored, and people choose the stories that support their world view, is it any wonder that a substantial number of voters believe even the most outlandish claims. </p>
<p>That the president can claim that it wasn’t raining when it was. That his crowds broke records when they didn’t. That millions of people cast illegal votes when they did not?</p>
<p>Over the past 30 years a perfect storm has formed to produce an election in which a large enough portion of the American public has backed ideas that have been heretofore unthinkable. </p>
<p>Our nation elected a president that was prepared to call into question not only a stunningly broad set of policies that had served the US well, but he was also prepared to question basic facts, science, and principles of our democracy.</p>
<p>And that is why the challenge for our nations, and our nations’ universities is both great and urgent.</p>
<h2>Role of universities</h2>
<p>So what is the way forward? We should not lose heart. During the Gilded Age, when a similar rapid change in technology, media, and demographics all converged to short-circuit our politics, our nations endured. In fact, our nations preserved and strengthened the values that have made America and Australia great.</p>
<p>We remained nations that ensured religious tolerance, the rule of law, free press, free minds, freedom of travel, free markets, and the free movement of capital. </p>
<p>Despite missteps along the way, over time we became fairer nations, more prosperous nations, and more secure nations not by abandoning our values, but by fighting for them.</p>
<p>So this is the challenge facing our universities as they confront their own disruption. Whatever is happening in the US will challenge every democracy and every pillar of democracy. The future is here, it just is not evenly distributed. Yet.</p>
<p>The only antidote to the impulse to divide and exclude, to isolate, to create barriers, and to resist the future is this. </p>
<p>We need to rethink education to help address the things that ail our democracies. And we must put our best minds to work to offer a vision of the future in this new economy that works for everyone.</p>
<p>The forces I’ve described challenge many assumptions about how we should learn, the lives and careers we should be prepared to perform, and how our economies should operate. </p>
<p>To successfully navigate this turn, educational institutions need to refocus on solutions that reboot our democracy, and prepare our citizens for this new economy.</p>
<p>Australia is already ahead of the US in many actions needed to restore and refresh democracy. Australia’s universal voting offers a model that the US should consider. </p>
<p>Universal voting reduces the influence of extremism and money in elections, it keeps the debate more on the issues that matter, and it forces citizens to stay more informed and engaged.</p>
<p>Australia already has a head start on educating citizens. In the US, free public education is guaranteed only until year 12, and civics education has been dropped from most curricula. </p>
<p>Today, every study shows that to be economically competitive and an effective citizen in a Western economy, you need at least 14 years of education including civics. So again, the system here in Australia is one that Western democracies need to study and adopt.</p>
<p>There are things that no one has solved where we all need to pioneer together. Both of our Second Industrial Revolution economies were originally designed to train people to work from ages 25 to 55 (after doing military service) in one career and generally not live past 65. The training they received prepared them for a single career that would last their full working life. This no longer works.<br>
If the students we are training today are going to live to be 120 years old, and their careers are likely to span 90 years, but their training will only make them competitive for 10 years, then we have a problem. </p>
<p>We need to rethink our educational model. </p>
<p>We will need to increasingly train young people not just in a skill, but in how to learn, and for skills that cut across multiple disciplines. Universities may become less a way station for youth, than a life-long subscription service, with frequent retrainings.</p>
<p>We need to restructure information systems so that facts matter, false statements are exposed, and making false claims has real consequences. The irony of the information age is that increasingly we seem to know more, but understand less. But this can be fixed. </p>
<p>Imagine a world where every article is immediately fact-checked by libraries, and reviewed for accuracy and relevance by a trusted board of editors drawing on high speed computers. Where every article has the equivalent of a yelp-rating, or is crowd-corrected wikipedia style. Where every false and digitally altered image can be exposed through blockchain technology. Universities can do this. </p>
<p>After a while, just as we know which restaurants to avoid, we would know which writers and journals and articles and politicians we can’t trust.</p>
<p>And finally, we need to devote our best minds to answering the greatest question of the digital age. </p>
<p>How will we give people purpose when machines can do everything that is dull, dangerous, or determinable? What economic model works where most of the things in life can be produced sustainably at low cost through robotics? How do we develop a bright vision of the future and give them hope.</p>
<p>Australia and America and Europe faced a similar set of questions 100 years ago. Then the vast majority of our citizens worked agriculture jobs in family owned businesses in rural communities. Over 80% of jobs were in family farms then. What would happen when all of the kids moved to the cities? How could there possibly be enough jobs for them all, and how would America feed itself? </p>
<p>Today, more people are employed than ever, they have more opportunity than ever, and America has more food to export than ever. The question for our universities is to help us see the future and prepare future generations to succeed in it.</p>
<p>No one can say for certain yet what the future holds. But the two things we know about the new economy are that people need a purpose, and that the most prized roles for human beings will be things that only human beings can do.</p>
<p>So as you begin this important work, consider this as a model for the university of the future.</p>
<p>The greatest limits on human civilisation have always been access to water, arable land for food, a source of energy, protection from the elements, and protection from each other. </p>
<p>A vast portion of our economy has been focused on producing those things. But now we have ways to turn salt water and brackish water into usable water. </p>
<p>We have the ability to produce foods that are more nutritious and last longer requiring less land. </p>
<p>We have created clean and renewable sources of energy that could make any place on earth energy self-sufficient. </p>
<p>We can create machines that do the back-breaking monotonous work involved in most jobs. </p>
<p>And, for the first time in human history, we can actually visualise a world that is liberated from dull, dangerous, and determinable work, from activities that cause us stress without producing much value, and from lives extinguished before they achieved their potential.</p>
<p>We have the potential to liberate the workforce to do the one thing that machines can’t do – improve ourselves and the emotional lives of others.</p>
<p>To date, our economic models have ignored many forms of high value work. Here’s one example that I think we can all relate to. </p>
<p>Ultimately, every family and community depends on people who raise our children, look after ageing parents, bring food and comfort to ailing neighbour. And in most cases we don’t compensate them, or reward them, or even give them a title. </p>
<p>They are untrained, unsupported, and yet they are entrusted with our most challenging problem - the human condition - a son who is an addict, a brother who is abusive, a daughter who is depressed, a mother who has lost her memory.</p>
<p>So many people need help with the emotional and mental parts of their lives. Yet, human history has been dominated by one era after another of people simply inflicting more misery on other people, while other work is rewarded. </p>
<p>Massive violence, incarceration, alienation, institutionalisation are ultimately products of emotional failings. Our economies have been driven by scarcity, and our actions by irrational fear, and prejudice, and other products of our own emotional and mental limitations.</p>
<h2>So imagine this…</h2>
<p>Imagine a world in which our technologists work to meet the most basic human needs sustainably, and our economies are freed up to do the things that society has always neglected – resolve disputes, restore mental health, nurse, teach, imagine, explore, imagine, design, create art, and provide the human touch. </p>
<p>Imagine paying people as much to do this, as we currently pay for them to mine coal, or guard a prison.</p>
<p>Done right, the moment of doubt we face today may be the beginning of something even more profound. </p>
<p>We could move from an impulse to exclude and brand people to just the opposite: an economy based on human outreach and improving the human condition.</p>
<p>We stand together at a great human inflection point. Society will be very different in the next 100 years than it has been over the past 100 years. </p>
<p>Either we need to offer a vision for something better, or we cling to the past and will be left behind.</p>
<p>I am confident that we will rise to the occasion. </p>
<p>While we struggle with the impulses and politics and challenges of today, we have to keep our eye on the future. </p>
<p>As President John F. Kennedy said, </p>
<blockquote>
<p>“Change is the law of life. And those who look only to the past or present, will miss the future.” </p>
</blockquote>
<p>I believe our best minds and universities can forge a new vision. One in which we produce an economy that is less violent, less wasteful, less stressful, and in which we live longer and better lives. The world as we have created it is merely a reflection of our thinking. </p>
<p>Change our minds, and we can change the world.</p><img src="https://counter.theconversation.com/content/73957/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jeffrey Bleich does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>We have the potential to liberate the workforce to do the one thing that machines can’t do – improve ourselves and the emotional lives of others.Jeffrey Bleich, Former US Ambassador to Australia; Chair of the Fulbright board; Visiting Professor and a member of the Council of Advisors at the US Studies Centre, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/657242016-09-21T07:01:48Z2016-09-21T07:01:48ZBusiness Briefing: we’re overusing and underestimating ‘disruption’<figure><img src="https://images.theconversation.com/files/138561/original/image-20160921-12475-1ep9yes.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Business leaders don't have a crystal ball to predict future disruption but they can have a stake in it.</span> <span class="attribution"><span class="source">www.shutterstock.com</span></span></figcaption></figure><p>“Disruption” and “disrupters” have become buzz words in the business community and are often used to describe any change or evolution in a sector.</p>
<p>However businesses shouldn’t dismiss it as a fad says the University of Sydney’s Professor Kai Riemer, who has been studying disruption for the past five years.</p>
<p>Disruption is actually a fundamental change in the way we view and use products and what we understand and take for granted about an industry, not just an improvement brought about by a new product or player.</p>
<p>Take the businesses that have recently been dubbed disrupters as examples. Uber is changing the taxi industry, but it could just be a passing phenomenon in a greater shift towards a world where driverless cars are the norm and roads and carparking as we know it won’t exist.</p>
<p>Trying to predict this sort of disruption is almost impossible with what we know, says Professor Riemer, but businesses can have a stake in creating it.</p><img src="https://counter.theconversation.com/content/65724/count.gif" alt="The Conversation" width="1" height="1" />
Disruption might be a buzz word at the moment but it shouldn't be ignored. It may be impossible to predict but businesses can have stakes in creating it.Jenni Henderson, Section Editor: Business + EconomyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/650322016-09-07T06:24:32Z2016-09-07T06:24:32ZBusiness Briefing: disrupted companies will need to think global to survive<p>Australian companies should better manage the expectations of shareholders who increasingly expect dividends and focus more on meeting the needs of global consumers, says UNSW Adjunct Professor Paul X. McCarthy.</p>
<p>That’s his advice for companies dealing with the disruption brought on by digital platforms. Aside from the price of iron ore affecting the big end of town in this year’s results, the major disrupter is the movement of advertising dollars to online global channels and marketplaces, such as multinationals like Uber, Google and Facebook.</p>
<p>He explains that sectors that were previously thought to be sheltered from the forces of digital disruption, such as legal services and real estate, are now facing the same challenges as other sectors.</p>
<hr>
<p><em>Read more analysis on the bigger picture of what is happening in Australia’s business sectors, in our <a href="https://theconversation.com/au/topics/company-results-2016-30905">company results wrap series</a>.</em></p><img src="https://counter.theconversation.com/content/65032/count.gif" alt="The Conversation" width="1" height="1" />
Australian businesses need to focus more on the global market and less on giving generous dividends to shareholders.Jenni Henderson, Section Editor: Business + EconomyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/567912016-05-04T10:11:18Z2016-05-04T10:11:18ZCan you imagine a world without Budweiser? We can<figure><img src="https://images.theconversation.com/files/121078/original/image-20160503-17469-13kpvo8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Long live the king?</span> <span class="attribution"><span class="source">Bud beer via www.shutterstock.com</span></span></figcaption></figure><p>Budweiser, the so-called King of Beers, may be on its last kegs.</p>
<p>It may seem odd to picture the demise of the flagship brand of the world’s largest beer company. But Anheuser-Busch – the U.S.-based unit of AB InBev – is following in the footsteps that led to the irrelevance of a host of other once-dominant companies – <a href="http://www.forbes.com/sites/daviddisalvo/2011/10/02/what-i-saw-as-kodak-crumbled/#6727d0e920f5">Eastman Kodak</a>, <a href="http://www.nytimes.com/1997/07/18/business/woolworth-gives-up-on-the-five-and-dime.html">Woolworth’s Department Stores</a>, <a href="http://www.innosight.com/innovation-resources/upload/Disruptive-Innovation-Primer.pdf">Bethlehem Steel</a> and <a href="https://hbr.org/2013/11/blockbuster-becomes-a-casualty-of-big-bang-disruption">Blockbuster Video</a>, to name a few. </p>
<p>While AB InBev <a href="http://fortune.com/2015/10/30/ab-inbev-earnings/">shareholders are cheering</a> each move to boost short-term profitability by snapping up other companies – <a href="http://www.bloomberg.com/news/articles/2016-01-14/ab-inbev-faces-in-depth-u-s-antitrust-review-on-sabmiller-deal">including the US$110 billion takeover</a> of rival SABMiller – CEO Carlos Brito may be unwittingly digging Anheuser-Busch’s grave by ignoring long-term trends. </p>
<p>How could the rational pursuit of profits and growth through acquisition mean the beginning of the end for Anheuser-Busch? </p>
<p>This, we would argue, is a case of <a href="https://hbr.org/2015/12/what-is-disruptive-innovation">disruption theory</a> in action. And the disruptors are the growing ranks of craft brewers that are collectively changing the industry and beer consumption habits as consumers <a href="http://www.businessinsider.com/many-millennials-havent-tried-budweiser-2014-11">increasingly shun Anheuser-Busch and its products</a> – the disrupted – for beers made locally and with a wider variety of higher-quality ingredients. </p>
<p>It’s something we’ve witnessed firsthand, in our own research and through an online community called <a href="http://craftingastrategy.com/">Crafting A Strategy</a> that two of us set up to share knowledge in the beer industry.</p>
<iframe src="https://datawrapper.dwcdn.net/ftDmm/1/" frameborder="0" allowtransparency="true" allowfullscreen="allowfullscreen" webkitallowfullscreen="webkitallowfullscreen" mozallowfullscreen="mozallowfullscreen" oallowfullscreen="oallowfullscreen" msallowfullscreen="msallowfullscreen" width="100%" height="450"></iframe>
<h2>New market disruption</h2>
<p>Harvard Business School Professor Clay Christensen coined the phrase “<a href="http://www.claytonchristensen.com/books/the-innovators-solution/">disruptive innovation</a>” in 1995 to describe how a new product or service initially takes root at the bottom of a market and then relentlessly moves upmarket, eventually displacing established competitors.</p>
<p>Eight years later he and Michael Raynor <a href="http://www.claytonchristensen.com/key-concepts/">described three criteria needed for a new market disruption</a> to occur. </p>
<p>Let’s consider each criterion in turn in the case of the beer industry. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/121091/original/image-20160504-17469-le5ax4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/121091/original/image-20160504-17469-le5ax4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=380&fit=crop&dpr=1 600w, https://images.theconversation.com/files/121091/original/image-20160504-17469-le5ax4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=380&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/121091/original/image-20160504-17469-le5ax4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=380&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/121091/original/image-20160504-17469-le5ax4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=478&fit=crop&dpr=1 754w, https://images.theconversation.com/files/121091/original/image-20160504-17469-le5ax4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=478&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/121091/original/image-20160504-17469-le5ax4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=478&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Prohibition became the law of the land in 1919.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/cizauskas/23789036064/in/photolist-Cfa2Cd-9bs2sF-obEyZU-dk3poM-ouz5H9-7DeB9p-6Xgo91-ouVAYi-oweSZp-6WUUvH-oddooH-oeYXys-nz4Qm8-ouXWRm-pUqcsJ-qbmZJ6-4ibvW3-5J7PVM-oeY8Ew-ocTPLB-oeXqP4-7DhpHQ-ouzXDg-oeYEFZ-ounf4R-owJPpn-ouyhFi-9bs2r6-oeZcwg-owqsx7-bB1VZX-wk3ubf-ou9B2A-wjPpuY-oeSB9H-9bv9i3-ouvX7n-ouTRU8-ouxyG9-odHtcH-ouAk8P-ov2BRj-osRPBu-hyBGRd-owPV1n-owTmND-ouTCaz-oeS9gf-oeYKMa-of1HHj">Flickr/Thomas Cizauskas</a></span>
</figcaption>
</figure>
<p><strong>1. Large populations of consumers who have not had the means to make the product themselves and have gone without it altogether.</strong></p>
<p>For most of the 20th century, high-quality craft beer was in short supply. </p>
<p>The bigger brewers mass-produced what one <a href="https://books.google.com/books?id=JMVSUEjTCWgC&pg=PA48&lpg=PA48&dq=We+don%E2%80%99t+make+beer;+we+make+flavored+water+for+people+who+don%E2%80%99t+like+beer&source=bl&ots=fw6q7qdsbl&sig=A5XO2jBw5MFH-9ILzTMcmRmP-ro&hl=en&sa=X&ved=0ahUKEwjTlu2p_7PMAhVBqh4KHc8XCFMQ6AEIHDAA#v=onepage&q=We%20don%E2%80%99t%20make%20beer%3B%20we%20make%20flavored%20water%20for%20people%20who%20don%E2%80%99t%20like%20beer&f=false">anonymous Midwest “braumeister” described</a> as “flavored water,” while home brewing <a href="http://www.homebrewersassociation.org/homebrewing-rights/statutes/">was illegal</a> in the U.S. until relatively recently. </p>
<p>In the <a href="http://www.sciencedirect.com/science/article/pii/S0007681304001004">words of Bill Coors, Adolph Coors chairman and CEO,</a> in 1987: </p>
<blockquote>
<p>You could make Coors from swamp water and it would be exactly the same.</p>
</blockquote>
<p>The repeal of Prohibition in 1933 didn’t include home brewing, which meant few people knew how to brew and new brewery start-ups were rare. The <a href="https://eh.net/encyclopedia/a-concise-history-of-americas-brewing-industry/">number of brewers</a> dwindled from several thousand prior to Prohibition to about 100 in the late ‘70’s.</p>
<p>That marked a turning point, as a new federal law finally made home brewing legal again. But other laws remained in force in the '80’s and '90’s that didn’t allow early craft brewers to sell directly to consumers, forcing them to first sell to a wholesaler that would then distribute the beer to a retail grocer or bar. This system meant the only way to make a reasonable profit was <a href="http://beeronomics.blogspot.com/2011/10/on-brewpubs-and-economies-of-scale.html">to go big and leverage economies of scale</a> to ensure your product was featured by distributors. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/121092/original/image-20160504-22761-1gqhpm8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/121092/original/image-20160504-22761-1gqhpm8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=458&fit=crop&dpr=1 600w, https://images.theconversation.com/files/121092/original/image-20160504-22761-1gqhpm8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=458&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/121092/original/image-20160504-22761-1gqhpm8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=458&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/121092/original/image-20160504-22761-1gqhpm8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=576&fit=crop&dpr=1 754w, https://images.theconversation.com/files/121092/original/image-20160504-22761-1gqhpm8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=576&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/121092/original/image-20160504-22761-1gqhpm8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=576&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Revelers celebrate with a pint after prohibition is repealed.</span>
<span class="attribution"><span class="source">Bar drinking via www.shutterstock.com</span></span>
</figcaption>
</figure>
<p><strong>2. Customers who use the product need to go to an inconvenient, centralized location.</strong> </p>
<p>There were <a href="https://www.brewersassociation.org/statistics/number-of-breweries/">only 89 breweries in America in the late 1970s</a>, and their distribution model meant that consumers had very few choices. In particular, they had inconvenient or no access to craft beer. They generally drank Bud, Pabst, Schlitz, Miller, Coors, etc. By 1981, these brewers <a href="https://eh.net/encyclopedia/a-concise-history-of-americas-brewing-industry/">controlled 76 percent</a> of the U.S. market. </p>
<p>In other words, you had a large population without easy access to well-crafted beer and a system that centralized production and tightly controlled distribution. This created an opportunity for disruption, in the view of <a href="https://hbr.org/2012/12/surviving-disruption">Christensen.</a> The question was, would something change that allowed a larger population to make beer and sell the product more directly to consumers?</p>
<p><strong>3. A technology/business model is developed so that a large population can begin owning and using, in a more convenient context, something that historically was available only in a centralized, inconvenient location.</strong> </p>
<p>In the beer story, that game-changing innovation was the brewpub business model. This became possible after laws began to change in the <a href="http://www.beerhistory.com/library/holdings/chronology.shtml">1980s</a> to allow over-the-counter sales of beer produced in-house. </p>
<p>Yakima Brewing and Malting Inc. opened in Washington state in 1982 and was closely followed by California’s <a href="http://www.californiacraftbeer.com/the-history-of-craft-beer-in-california/">Mendocino Brewing</a> in 1983. The advent of microbreweries coincided with <a href="https://hbr.org/2015/10/why-more-mas-is-a-sign-that-scale-is-no-longer-an-advantage">other industry trends</a> that made it easier to make a profit from small production. There was also growing <a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2620918">ideological opposition</a> to <a href="http://pubsonline.informs.org/doi/abs/10.1287/orsc.2015.1000">the incumbent sector</a>.</p>
<p>Collectively, these changes drove the craft beer revolution in the U.S.</p>
<p>Noted beer historian <a href="https://eh.net/encyclopedia/a-concise-history-of-americas-brewing-industry/">Dr. Martin Stack</a> summed up the innovation this way: </p>
<blockquote>
<p>Microbreweries represented a new strategy in the brewing industry: rather than competing on the basis of price or advertising, they attempted to compete on the basis of inherent product characteristics. </p>
</blockquote>
<p>The result? The number of new breweries has grown exponentially, <a href="http://www.bloomberg.com/news/articles/2016-03-22/i-ll-toast-to-that-u-s-brewery-count-hits-all-time-record">recently surpassing the 1873 U.S. record of 4,131 breweries</a> that now occupy every state. </p>
<h2>Why disruption works</h2>
<p>Disruption works because the initial business models or technologies of the eventual disruptors don’t perform as well as existing ones, so little attention is paid by the incumbents. N. Taylor Thompson <a href="https://hbr.org/2013/09/what-markets-do-and-dont-get-about-innovation/">succinctly summarized</a> new market disruption as: </p>
<blockquote>
<p>a cheaper, more accessible, and worse-performing (business model) that turns non-consumers into customers. </p>
</blockquote>
<p>From a financial perspective, chasing a smaller group of nonconsumers (like craft beer drinkers) who want only beer that costs a lot to make seems like a relatively foolish use of assets. Instead, executives at AB InBev, which is also known for beers including Corona, Stella Artois and Michelob, understood that making light lagers at a <a href="https://finance.yahoo.com/q/ks?s=BUD+Key+Statistics">30 percent to 33 percent operating margin</a> allowed them to earn the most money out of each dollar spent. They ignored craft for so long because craft breweries typically operate on an unattractive 2-5 percent margin. </p>
<p>While being ignored, craft beer producers learned and improved without needing to focus attention on direct competition from the large incumbents, pushing operating margins higher and getting the attention of wholesalers who were keen to the <a href="http://www.mckinseyonmarketingandsales.com/a-perfect-storm-brewing-in-the-global-beer-business">changing buying habits among beer drinkers</a>. As a result, their operating margins soared, even as their scale remained relatively small. Boston Beer Company’s operating margins, for example, <a href="https://finance.yahoo.com/q/ks?s=SAM+Key+Statistics">have crept up to 16.3 percent</a>. </p>
<p>The <a href="https://www.brewersassociation.org/statistics/national-beer-sales-production-data/">numbers say it all</a>: while overall beer sales fell 0.2 percent in 2015, sales of craft surged 12.8 percent. Bigger craft brewers <a href="http://www.npr.org/sections/thesalt/2014/05/28/316317087/big-breweries-move-into-small-beer-town-and-business-is-hopping">are building factories</a> all over the U.S., and <a href="http://jom.sagepub.com/content/40/2/483">pipelines of expertise</a> are flowing toward craft as Anheuser-Busch executives migrate over.</p>
<p>But AB InBev’s response continues to follow the “disrupted” playbook and typical strategy for mature companies: mergers and acquisitions to defend their existing space and to increase average margins through economies of scale.</p>
<p>Most recently, the company agreed to buy fellow behemoth SABMiller, maker of dozens of beers including Leinenkugel’s, Miller Lite and Peroni and another brewer chasing the same high-margin beers American consumers <a href="http://www.wsj.com/articles/budweiser-ditches-the-clydesdales-for-jay-z-1416784086%22%22">increasingly shun</a>. Even attempts by SABMiller’s American division, MillerCoors, <a href="http://www.bloomberg.com/news/articles/2013-08-08/blue-moon-vs-dot-craft-beer-rivals-millercoors-strikes-back">to create “crafty”</a> beers are increasingly dismissed by consumers.</p>
<p>Here’s the irony: this merger <a href="http://craftingastrategy.com/blog/give-me-profitability-and-give-me-death">equates to</a> chasing a 30-33 percent margin on a $2 product (about $0.62) instead of investing in craft processes to make a 16-20 percent margin on a $5 product (about $0.90) that more and more people seem to want. </p>
<p>To make things worse for AB InBev, this craft beer movement seems to be not only spreading all over the U.S. but <a href="http://beergraphs.com/bg/238-where-in-the-world-do-people-drink-craft-beers/">also the world</a>. </p>
<h2>Chasing profits to death?</h2>
<p>Wessell and Christensen suggest that by the time incumbent firms realize a new market disruption is occurring, <a href="https://hbr.org/2012/12/surviving-disruption">it is usually too late</a>. <a href="http://www.reuters.com/article/a-b-i-ma-devilsbackbone-idUSL5N17F43V">Even a recent craft beer company buying spree</a> by Carlos Brito and AB InBev likely cannot stem the tide.</p>
<p>Case in point: its courtship of <a href="http://usopenbeer.com/2015-open/">highly acclaimed Cigar City Brewing</a> fell apart after the Tampa Bay brewer rejected AB InBev’s bid and <a href="https://cigarcitybrewing.com/oskar-blues-ccb/">opted instead</a> in March to become a part of private equity backed brewer Oskar Blues for <a href="http://www.denverpost.com/business/ci_29636788/oskar-blues-buys-cigar-city-brewing-deal-valued">$60 million</a>.</p>
<p>Cigar City likely left tens (perhaps hundreds) of millions of dollars on the table when it walked away from AB InBev. Late last year, for example, wine giant <a href="http://fortune.com/2015/11/16/constellation-brands-ballast-point/">Constellation Brands paid $1 billion</a> for the slightly larger craft brewer Ballast Point from California. </p>
<p>At the time, <a href="http://www.brewbound.com/news/fireman-capital-to-purchase-cigar-city">Cigar City founder Joey Redner said</a>:</p>
<blockquote>
<p>I was almost at the altar with someone else, but it never felt 100 percent right… It was a potentially life-changing opportunity and ultimately, I thought that I wasn’t going to be happy. No amount of money was going to make me happy.</p>
</blockquote>
<p>And his customers, the ones helping drive the trends reshaping the beer industry, must be very pleased, because AB InBev’s strategies are <a href="http://www.bloomberg.com/news/articles/2012-10-25/the-plot-to-destroy-americas-beer">creating a backlash.</a> The fear is that by buying up craft breweries they’ll end up destroying what they represent. </p>
<p>Was Cigar City’s move foolish or wise? Redner opted for less money, a better corporate fit and greater control in brewing the product Cigar City’s customers expect. </p>
<p>Regardless of whether that strategy is successful, we believe this move signals a tectonic shift in the global beer industry. Specifically, craft beer has diminished big beer’s longstanding competitive advantages built on scale, distribution and laws that minimized competition from small-scale brewers.</p>
<p><a href="https://hbr.org/2002/12/the-consolidation-curve">Large breweries have now, it seems, entered a strategic decline</a>, merging and acquiring each other and <a href="http://www.bloomberg.com/news/articles/2012-10-25/the-plot-to-destroy-americas-beer">chasing profits</a> at the expense of future customers.</p>
<p>Chasing higher profitability through <a href="http://www.bloomberg.com/news/articles/2012-10-25/the-plot-to-destroy-americas-beer">lower-quality products</a> and <a href="https://theconversation.com/beer-behemoths-struggle-to-fend-off-craft-brew-craze-47908">acquisitions</a> might please shareholders, but it also fits nicely into disruption theory’s playbook where new technologies, laws, consumer awareness and business models actively work against the long-held advantages of incumbents. </p>
<p>In 20 years, will cracking open a Budweiser on a summer day still be commonplace? Or will it be a relic of times past? If AB InBev stays on its current strategic course, the latter, while tough to imagine now, is the more plausible scenario.</p><img src="https://counter.theconversation.com/content/56791/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Samuel S. Holloway owns Crafting A Strategy, an online business knowledge sharing community for the beer industry. Content from Crafting A Strategy is cited in this article. Sam is a minority percentage owner of Oakshire Brewing, a small batch craft brewery based in Eugene, OR and serves on Oakshire's board of directors as an outside director.</span></em></p><p class="fine-print"><em><span>Mark R. Meckler is co-owner of Crafting A Strategy, an online business knowledge sharing community for the beer industry. Content from Crafting A Strategy is cited in this article.</span></em></p><p class="fine-print"><em><span>Rhett Andrew Brymer does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>It may be the world’s largest beer maker, but Anheuser-Busch’s days may be numbered thanks to the rapid rise of craft brewing and a little thing called disruption.Samuel S. Holloway, Associate Professor of Strategy and Entrepreneurship, University of PortlandMark R. Meckler, Associate Professor of Management, University of PortlandRhett Andrew Brymer, Assistant Professor of Management, Miami UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/475672015-09-15T23:08:44Z2015-09-15T23:08:44ZMalcolm Turnbull wants to embrace ‘disruptive technology’ – he can start with solar power storage<p>In his <a href="http://www.businessinsider.com.au/malcolm-turnbull-disruption-is-our-friend-2015-9">media conference</a> immediately after winning the Liberal leadership, Malcolm Turnbull had some words to say on the subject of technology:</p>
<blockquote>
<p>We have to recognise that the disruption that we see driven by technology, the volatility in change is our friend if we are agile and smart enough to take advantage of it.</p>
</blockquote>
<p>In his previous job as communications minister, Turnbull would have been very familiar with the Internet’s capacity as a “disruptive” technology – one with the power to disrupt existing business models and render them obsolete. But it is in the power sector where the most disruptive potential is arguably now to be found.</p>
<p>While predecessor Tony Abbott <a href="http://www.abc.net.au/news/2014-10-13/coal-is-good-for-humanity-pm-tony-abbott-says/5810244">placed his faith in fossil fuels</a> and expressed a <a href="http://www.abc.net.au/news/2015-06-11/abbott-wants-to-reduce-wind-farms-wishes-ret-never-implemented/6539164">distaste for renewables</a>, Australia has been quietly but dramatically embracing solar energy. Our research suggests a strong future for disruptive green innovations that are being developed faster here than elsewhere, offering a new industrial option as the resources boom tails off.</p>
<h2>Solar rises in the west</h2>
<p>Its always hard to know when innovation is going to be disruptive when it is happening around you. But from our research on green innovation here in Perth, we think the chances are high that we are in the midst of some disruptive green innovations that will be globally significant. </p>
<p>The key to this is the remarkable adoption of solar energy. In just a few years more than <a href="http://www.perthnow.com.au/news/western-australia/solar-power-revolution-underway-in-wa-as-households-take-advantage-of-sunny-skies/story-fnhocxo3-1227378618597">190,000 Perth households have put solar panels on their rooftops</a> – that is one in five homes or 490 megawatts of power, making these rooftops effectively the city’s biggest power station. Nationally, more than <a href="http://grattan.edu.au/wp-content/uploads/2015/05/822-sundown-sunrise4.pdf">1.4 million households now have solar panels</a>. Few places in the world have adopted solar energy at such a rate.</p>
<p>But the uptake in solar power is set to receive another burst of acceleration, as the combination of solar panels with storage batteries becomes cost-effective and enters the mainstream. </p>
<p>As the chart below shows, solar cells, combined with lithium ion phosphate battery storage is about to become cheaper than the standard residential tariff for electricity customers on Western Australia’s main energy network. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/94762/original/image-20150915-16968-1v0qo19.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/94762/original/image-20150915-16968-1v0qo19.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/94762/original/image-20150915-16968-1v0qo19.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=295&fit=crop&dpr=1 600w, https://images.theconversation.com/files/94762/original/image-20150915-16968-1v0qo19.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=295&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/94762/original/image-20150915-16968-1v0qo19.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=295&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/94762/original/image-20150915-16968-1v0qo19.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=371&fit=crop&dpr=1 754w, https://images.theconversation.com/files/94762/original/image-20150915-16968-1v0qo19.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=371&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/94762/original/image-20150915-16968-1v0qo19.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=371&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Electricity tariffs are on the rise in Western Australia, while the cost of solar and storage drops sharply.</span>
<span class="attribution"><span class="source">Green and Newman</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>This means that we are likely to see more and more households and businesses switching to renewable energy. This is happening particularly quickly in Perth and also nationally, with <a href="http://reneweconomy.com.au/2015/morgan-stanley-sees-2-4m-australia-homes-with-battery-storage-20668">Morgan Stanley predicting</a> that 2.4 million houses on the National Electricity Market (NEM) will install batteries by 2030.</p>
<p>Such is the pace of development in Perth that the city could become a global centre for such green innovation, largely because:</p>
<ul>
<li><p>Perth has some 300 days a year without clouds, providing double the solar radiance of places like Germany. In a fossil-fuel free future, this will be a major resource.</p></li>
<li><p>Retail electricity is more expensive here than in many places, such as the United States and Europe. This means that the point at which solar-battery storage becomes viable will arrive sooner. Western Australia’s proximity to China, where the solar panels and battery systems are made, also makes them cheaper to import.</p></li>
</ul>
<h2>Double the savings</h2>
<p>According to <a href="http://www.landcorp.com.au/Documents/Corporate/Innovation%20WGV/Innovation-WGV-Factsheet-PV-Battery-September2015.pdf">our trials</a>, while a 3-kilowatt solar photovoltaic system provides a 45% reduction in the household power bill (although generating twice the amount of power consumed), when combined with battery storage this figure can climb to 97%, while still providing surplus energy to the grid for most of the year.</p>
<p>New strata housing developments <a href="http://www.landcorp.com.au/innovation/wgv/Latest/Shared-solar-power-on-trial-in-Australian-first/">are being designed with shared solar-storage systems</a>, cutting power bills for all residents.</p>
<p>Solar-storage systems can also help transform transport, as electric vehicles will no longer need to be charged only in daylight hours. Similar systems could even be used to power zero-carbon light rail, featuring battery-driven trams that can be recharged at stations through an induction system in the track. Solar panels and batteries can be built into stations and the surrounding high-density buildings, so that no other power is needed. </p>
<p>Australia’s sunshine has always been a major attraction for living here. With this disruptive new solar-storage technology, we have an opportunity to make the sun an even greater asset than it already is. Rather than continue to protect vested interests, this is exactly the kind of disruption our new prime minister should be making friends with.</p><img src="https://counter.theconversation.com/content/47567/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jemma Green receives funding from the Cooperative Research Centre for Low Carbon Living.</span></em></p><p class="fine-print"><em><span>Josh Byrne receives funding from the Cooperative Research Centre for Low Carbon Living. </span></em></p><p class="fine-print"><em><span>Peter Newman receives funding from the Cooperative Research Centre for Low Carbon Living.</span></em></p>New prime minister Malcolm Turnbull has stressed the importance of embracing ‘disruptive’ technologies that shake up existing business models. Solar power and battery storage is one of the most enticing options.Jemma Green, Research Fellow, Curtin UniversityJosh Byrne, Research Fellow, Curtin University Sustainability Policy Institute, Curtin UniversityPeter Newman, Professor of Sustainability, Curtin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/436442015-07-08T05:28:14Z2015-07-08T05:28:14ZUber and Gojek just the start of disruptive innovation in Indonesia<figure><img src="https://images.theconversation.com/files/87443/original/image-20150706-17504-6eoes1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Governments should allow flexible regulations to capture the wave of disruptive innovations. </span> <span class="attribution"><span class="source">Eskay/ Shutterstock.com</span></span></figcaption></figure><p>People in Indonesia’s capital Jakarta, where public transport is poor and the traffic horribly congested, have eagerly welcomed ride-hailing apps such as <a href="https://en.wikipedia.org/wiki/Uber_(company)">Uber</a> for car rides and <a href="https://www.techinasia.com/go-jek-indonesia/">Gojek</a> for motorcycle rides.</p>
<p>San Francisco-based <a href="https://theconversation.com/au/topics/uber">Uber</a> entered Indonesia in August last year as part of its expansion across <a href="https://www.uber.com/cities">the Asia-Pacific region</a>. Gojek, a local company that has been operating since 2011, has an average of 200 new drivers per month. </p>
<p>But these apps that connect drivers to passengers are creating competition for established taxis and corner-street <em>ojek</em> (informal motorcycle taxis). And they are not happy. </p>
<p>The Organisation of Land Transportation Owners (Organda) has <a href="http://www.ft.com/intl/cms/s/0/2e6d982c-1a62-11e5-a130-2e7db721f996.html#axzz3f4xSBiEq">questioned the legality</a> of Uber cars operating in Jakarta. Last month, Jakarta police confiscated five Uber cars following the complaint. They have since been returned.</p>
<p>Jakarta governor <a href="http://news.metrotvnews.com/read/2015/06/19/138467/disebut-ilegal-perwakilan-uber-taxi-datangi-ahok">Basuki Tjahaja Purnama</a> also considers Uber’s operations in Jakarta to be illegal. </p>
<p>Tensions between local <em>ojek</em> and Gojek drivers are also simmering. <em>Ojek</em> drivers have <a href="http://www.thejakartapost.com/news/2015/06/11/go-jek-drivers-fearing-violent-resistance-traditional-ojek.html">reportedly stopped</a> Gojek drivers, who wear flashy green jackets and helmets, from picking up their passengers. </p>
<h2>New competitors</h2>
<p>Uber and Gojek are basically referral services. The apps work with Android, iOS and Windows phones. The GPS capabilities of smartphones allow both drivers and passengers know each other’s location. This removes the question of when the ride will arrive. </p>
<p>The competition from these new technologies is disrupting the market for traditional players. Given the relatively low price and ease of access for Uber and Gojek, these apps are entering a head-to-head war with established operators. </p>
<p>Conflicts arise since these “modern operators” are creating competition for “conventional operators” within the same market. This does not apply for relatively similar apps such as <a href="https://en.wikipedia.org/wiki/GrabTaxi">GrabTaxi</a>, which utilises existing taxis.</p>
<h2>Disruptive innovations</h2>
<p>During the advent of the internet in the 1990s, Harvard Business School professor Clayton Christensen foresaw the possibilities for market disruption caused by new technologies. </p>
<p>In 1995, Christensen made a speech on technology and innovation that later evolved into his theory on <a href="http://www.claytonchristensen.com/key-concepts/">“disruptive innovation”</a>. This term is used to describe products and services that make use of new technologies and business models. These innovations disrupt the market by creating new demands and new type of consumers. Eventually these innovations will replace products and services from established business players. </p>
<p>In 2013, Christensen observed the collapse of “sustaining” companies: those that are not innovating using new technologies, but only improving their existing services. Examples of these sustaining firms are companies that produce giant mainframe computers and those that manage fixed line telephony. These companies charge the highest prices to their most demanding and sophisticated customers to achieve the greatest profits. </p>
<p>According to Christensen, these great firms are collapsing since they are reluctant in opening the door towards “disruptive innovations”.</p>
<p>Disruptive innovation allows a new population of consumers to access products or services that were historically only accessible to rich consumers. </p>
<p>The term “disruptive innovation” is rooted in the <a href="http://www.econlib.org/library/Enc/CreativeDestruction.html">“creative destruction” theory</a> by economist Joseph Schumpeter. The theory describes a:</p>
<blockquote>
<p>… process of industrial mutation that incessantly revolutionises the economic structure from within, incessantly destroying the old one, incessantly creating a new one. </p>
</blockquote>
<p>Gojek and Uber are not the typical disruptive technologies hailed by Christensen. They are not creating new markets and value chains. But these apps exist because the disruptive trend of <a href="http://www.disruptivetelephony.com/2012/07/what-is-an-over-the-top-ott-application-or-service-a-brief-explanation.html">over-the-top services</a>, where businesses provide services over the internet, bypasses traditional distribution. </p>
<h2>Making the best of technological disruptions</h2>
<p>Indonesia’s task in the coming years is to find a way to elegantly monetise this wave of disruptive technologies. </p>
<p>In my forthcoming research on disruptive innovations with Agung Trisetyarso, we found that the wave of disruptive technology has significantly contributed to the recent world economic growth. Our preliminary findings using the
<a href="http://www.unc.edu/%7Ejbhill/Solow-Growth-Model.pdf">Solow growth model</a> suggest that disruptive innovations will create significant capital accumulation, which is more than enough to accelerate global economic growth in the long run.</p>
<p>On the other hand, technological disruption can cause losses of potential revenue in the short term due to business shifting. The telecommunications industry is predicted to lose a total of <a href="http://fortune.com/2014/06/23/telecom-companies-count-386-billion-in-lost-revenue-to-skype-whatsapp-others/">US$386 billion between 2012 and 2018</a> due to over-the-top messaging services such as Skype, WhatsApp and other third-party internet voice applications.</p>
<p>Disruptive innovation follows evolution theory. The fittest survive. Capital, knowledge, and labour of disruptive innovation will remain, while capital, knowledge, and labour in mainstream technology will not. </p>
<h2>Flexible regulations</h2>
<p>Trisetyarso and I predict there will be 25 billion connected devices and about US$2 trillion of potential world market for disruptive technologies in 2015. This will grow to 50 billion connected devices and US$7 trillion by 2020. This can dramatically change the way people sell and buy products and services. </p>
<p>Governments should catch the wave of technological disruption. Regulation holds an essential role in harnessing disruptive innovations. However, regulation could also preclude quality-enhancing, lower-cost innovations from entering the market. </p>
<p>Flexible regulations should be there to cope with this trend. Indonesia’s regulations are currently too rigid to be able to adapt to the entrance of disruptive technologies.</p>
<p>For example, taxi services in Jakarta are obliged to have a licence and pay taxes to the government. The rate/tariff for taxis in Indonesia is highly regulated. The tariffs are determined by transportation ministry and it applies to all public transportation company without any exception. </p>
<p>Uber considers its business model as different to the traditional taxi service. This rigid regulation is creating a barrier for new service providers such as Uber and Gojek. </p>
<p>Rigid regulation will only create technological anarchy that is “a catalyst for change that creates a new and different world”, to quote Jeff Garzik, one of Bitcoin’s most prolific developers. In other words, disruptive innovations will always outsmart regulators eventually. </p>
<p>So the choice is, are you with us or against us? History tells us disruption always wins.</p><img src="https://counter.theconversation.com/content/43644/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Fithra Faisal Hastiadi does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Ride-hailing apps such as Uber and Gojek are disrupting the market for traditional transportation services in Jakarta.Fithra Faisal Hastiadi, Research and Community Engagement Manager at Faculty of Economics , Universitas IndonesiaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/374742015-04-08T00:41:46Z2015-04-08T00:41:46ZAustralian politics’ Kodak moment spells trouble for the major parties<p>When people talk about disruption, they mostly tell the stories of what has happened to big businesses such as Kodak, Blockbuster, Barnes and Noble, and most of the world’s newspapers.</p>
<p>Consumers have stood by and watched the near destruction of the company that created Kodak moments. As I saw as a newspaper editor, people have also increasingly stopped picking up the newspapers that once recorded their own births and marriages, instead gleaning their news from digital and social media. Jobs have vanished with the businesses that funded them; jobs have changed or been created in ways we might not have imagined.</p>
<p>Senior Australian politicians are increasingly recognising those <a href="http://www.joehockey.com/media/speeches/details.aspx?s=164">disruptive forces</a> and the need to adapt by rethinking everything from <a href="http://theconversation.com/government-calls-for-tax-rethink-but-reform-answers-abound-39436">the way we’re taxed</a> to how <a href="http://theconversation.com/harper-makes-case-for-competition-overhaul-experts-react-39582">businesses compete</a> in a fast-changing global economy.</p>
<p>The same forces of disruption that are shaking up industries and economies around the world are now having a discernible effect on another area of established power: Australia’s major political parties. That means politicians and political activists alike should be rethinking how they work too.</p>
<h2>Snapshots of change</h2>
<p>Exhibit A of the rapidly changing political landscape was January’s Queensland election. A government that had been elected with Australia’s largest majority three years ago was voted out of office. </p>
<p>Exhibit B is Tony Abbott, leading a Coalition government with a near-record majority, who is still fighting for <a href="http://www.abc.net.au/news/2015-04-06/newpoll-shows-coalition-support-dips-west-australian-stronghold/6372240">his political life</a> ahead of next month’s crucial federal budget,</p>
<p>Whether in Queensland or in Canberra, each of those governments has lost favour more quickly than the Instamatic camera and film. Their time in the sun has proven to be as fleeting as a Kodak moment.</p>
<p>Exhibit C, perhaps surprisingly to some, is the March 28 New South Wales election. While popular Premier Mike Baird and his Liberal National government were re-elected, there were some extraordinary swings across the state, particularly in regional areas. As Sydney Morning Herald columnist <a href="http://www.smh.com.au/comment/violent-mood-swings-masked-in-the-nsw-election-result-20150401-1mcq9z.html">Paul Sheehan described it</a>:</p>
<blockquote>
<p>subsumed within the relatively bland overall numbers was a wave of violent voting shifts across the electorate.</p>
</blockquote>
<p>But this political shift didn’t just begin this year.</p>
<p>For Exhibit D, take a closer look at the 2013 federal election results. As ABC election analyst <a href="http://blogs.abc.net.au/antonygreen/2013/11/record-vote-for-minor-parties-at-2013-federal-election.html#more">Antony Green has shown</a>, there was record support for minor parties and independents in both the lower and upper houses of federal parliament. More than one in five (21.1%) votes in the House of Representatives and nearly a third (32.2%) of Senate votes were directed away from the major parties.</p>
<p>Yet just like many of the business leaders who didn’t want to admit the world was shifting beneath their feet, many in the political class appear to be deluded about the disruption they’re now experiencing. </p>
<p>It’s easier to blame your problems on an inattentive media and electorate, unable to digest complex issues, than admit that perhaps it’s time to rethink the political product you’re selling. This is the same mistake the victims of business disruption have made.</p>
<h2>Lessons from business for politicians</h2>
<p>Just consider what disruption has done to business. Kodak didn’t <a href="http://www.bloomberg.com/news/articles/2012-01-19/kodak-photography-pioneer-files-for-bankruptcy-protection-1-">go bankrupt in 2012</a> and <a href="http://blogs.ft.com/the-world/2015/01/uber-and-kodak-ghosts-at-disruption-feast/">lose its place</a> as a dominant global consumer brand because people lost interest in taking photographs; there have never been more photographs taken than today. </p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/72847/original/image-20150224-32235-10o85na.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/72847/original/image-20150224-32235-10o85na.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/72847/original/image-20150224-32235-10o85na.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=778&fit=crop&dpr=1 600w, https://images.theconversation.com/files/72847/original/image-20150224-32235-10o85na.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=778&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/72847/original/image-20150224-32235-10o85na.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=778&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/72847/original/image-20150224-32235-10o85na.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=978&fit=crop&dpr=1 754w, https://images.theconversation.com/files/72847/original/image-20150224-32235-10o85na.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=978&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/72847/original/image-20150224-32235-10o85na.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=978&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">When Kodak was still king: a Kodak Instamatic camera advertisement, published in Ebony, August 1964.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/29069717@N02/14204084700/in/photolist-nDaDw5-9vwrK4-6KYxzd-9uj6kZ-yLEu3-37PXD7-4q7Ltr-mL9kLs-9j5AZz-bQeAVk-pRoRyR-cHG713-NrmAs-gmRHJ-67azCC-jQv8f-ppKWQB-nneoLi-64ndVm-e9Fmq5-9wZHrs-37Kqg2-37Q1MY-37KoyZ-37PZ7h-5NWNsc-6PTh13-56twgm-4pZ4Xz-cUaAsJ-cUaAo5-cUayFj-cUayCq-cUayyE-cUaAeL-cUaAim-bvWCG1-E8ch7-i2B3cD-fqsQLn-58ypR4-q2u74-J1krn-kmue6W-e6EBnH-jQv8h-kmrLuK-juPFMJ-dXeCKG-82mvgJ">Classic Film/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span>
</figcaption>
</figure>
<p>Instead, consumers simply moved on, adopting new technologies, brands and devices. That left Kodak as a shadow of its old self, forced to <a href="http://www.forbes.com/sites/maggiemcgrath/2013/11/01/there-and-back-again-10-companies-that-returned-to-the-market-after-bankruptcy/">reinvent itself</a> mainly in <a href="http://www.kodak.com/ek/US/en/Our_Company/History_of_Kodak/Imaging-_the_basics.htm">corporate</a> rather than consumer markets.</p>
<p>Similarly, more news is being read and talked about than ever – but the source is increasingly not a newspaper. Again, changing technology has driven a shift to new devices and brands, and sparked a revolution in consumer behaviour that has left many established media businesses struggling to find <a href="http://www.forbes.com/sites/gregsatell/2014/01/10/old-media-can-still-thrive-but-business-models-need-to-adapt/">new business models</a>.</p>
<h2>Big political brands on the wane</h2>
<p>The story of politics over recent decades has been the story of greater and greater alignment to brands in the commercial sense, and less alignment to dogmatic positions that defined politics in the cold war era. This has practical and measurable benefits for the politicians, their party organisations and the industry of market researchers and advertising agencies that hang off them.</p>
<p>It made voting a similar decision to consumer choice. While the big brands are strong, the loyalty sticks. But it’s a very different story when the brand weakens and the loyalty loosens.</p>
<p>That’s what has happened to politics. Swings of <a href="https://theconversation.com/final-queensland-election-results-labors-stunning-revival-37616">10% or more</a> between elections are now frequent, as are one-term governments and leaders who struggle to make it halfway through an elected term, as the prime minister has discovered. None of this helps the brand, which only adds to the lack of loyalty (or promiscuity) of the voter.</p>
<p>So if we follow the patterns of digital disruption in business, where could this lead us in politics?</p>
<h2>New political solutions</h2>
<p>We can be confident that the business of government and politics will continue. After all, its survival is legislated. And the public kind of likes democracy.</p>
<p>So far, the politicians and party organisations have dabbled with some of the tools of disruption to protect their positions. Most politicians tweet, share stories on Facebook and line up for selfies with their true believers. But this is at the margins rather than the core of political practice. </p>
<p>Fundamentally, politics is still built around internal loyalties and a win-at-all-costs approach to a range of complex issues. Yet most of the choices they face involve the decisions we must make to share the available resources among a growing population on a finite planet. If the tensions those choices create isn’t disruptive, I don’t know what is.</p>
<p>The changed consumer needs, aligned with technology, must change the practice of politics; the only question is how.</p>
<p>One answer might lie in the latest manifestation of disruption, the evolution of the <a href="https://theconversation.com/search?q=sharing+economy">sharing economy</a>. This involves the use of digital tools to harness unused capacity and put it to productive use: for example, <a href="http://blogs.ft.com/the-world/2015/01/uber-and-kodak-ghosts-at-disruption-feast/">Uber</a> as a ride-sharing app and <a href="http://journalistsresource.org/studies/economics/business/airbnb-lyft-uber-bike-share-sharing-economy-research-roundup">AirBnB</a> as an accommodation service.</p>
<p>What might this look like in politics? Imagine a mobile app where a third-party provider can harness support for an issue and deliver it as a bloc to a group of politicians willing to make available their legislative capacity. </p>
<p>Fanciful? Well, in effect, that’s what has already happened to the transport industry and the accommodation industry. It will take just one balance-of-power crossbencher in an Australian parliament to take up the idea to give it traction. And isn’t the basis of politics to understand what the public wants and to deliver it efficiently?</p>
<p>If politics follows the pattern of disruption, it will do just that. But the old brands risk falling by the wayside unless they face the reality that hanging on to the old ways almost certainly guarantees oblivion. Just ask Kodak.</p><img src="https://counter.theconversation.com/content/37474/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David Fagan was editor and editor-in-chief of Queensland’s major newspaper The Courier-Mail for a decade and was News Corp's editorial director in Queensland before joining QUT.</span></em></p>The same forces of disruption that are changing industries and economies around the world are now having a discernible effect on Australian politics – and that’s bad news for the major parties.David Fagan, Adjunct Professor, QUT Business School, and Director of Corporate Transition, Queensland University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/382052015-03-06T14:57:09Z2015-03-06T14:57:09ZWhy Apple and its iPhone confound disruption theorists<p>Nokia, Motorola, Sony-Ericsson and BlackBerry-maker Research in Motion were all victims of disruption. During the 1990s and 2000s, they shepherded the cell phone during its period of takeoff into ubiquity. Then in the last five years, they all lost their leadership positions and are now on the verge of irrelevance. The common culprit was the 2007 launch of Apple’s iPhone. </p>
<p>Why has the iPhone confounded both industry rivals and proponents of disruption theory alike? Because they have had a one-sided view of disruption – enough to make them blind to its true nature.</p>
<p>The main proponent of disruption theory is Clay Christensen, who invented the term. His theory is that disruption (that is, the failure of otherwise successful companies) comes when those companies miss important innovations precisely because they are unappealing to their primary customer base. That provides an opportunity for new entrants to leap onto those technologies, ride them through improvements until they actually end up competing head-to-head for the customers of established firms.</p>
<p>With regard to the iPhone, Christensen made an initial assessment that he later admitted was incorrect. He missed that the iPhone represented one of these worrisome technologies and instead saw it as a sustaining innovation: an innovation that improved upon the phones of Nokia and the like rather than appealed to a different sort of customer. </p>
<p>As it turns out, he was wrong about that. As both Nokia and RIM realized, the iPhone actually performed worse on things their customers cared about. It is hard to remember, but the initial iPhone was an awful phone, so Nokia dismissed it out of hand. Moreover, it didn’t have a physical keyboard, the primary thing that had attracted RIM’s customers to the Blackberry – and, actually, still does. What’s more, the iPhone, by making smartphones a sexier commodity, actually boosted Blackberry sales in the late 2000s. So they all could be forgiven for thinking perhaps Apple had missed the boat.</p>
<p>Obviously, Apple was on the right course, as we now know. Christensen admitted that a few years later, saying that his mistake was to consider the iPhone as disruptive to phone makers when, in fact, it was disruptive to laptops. </p>
<p>Now lots of people have recognized that the iPhone is more of a handheld computer than a phone, but when you take this notion seriously, it is clear that it wasn’t disruptive to laptops. That isn’t even clear for the iPad. Instead, the companies that were disrupted were all handset makers. So it is pretty clear that if the iPhone was disruptive to anything it was disruptive to them.</p>
<p>The Christensen-style theory of disruption cannot handle the iPhone because the iPhone did not follow the path of that theory. To be sure, it was a poor performer on traditional metrics and then improved. But the path by which that disrupts is because the poor performance leads to lower-priced products that then improve and attract away the most price sensitive of established firm customers. But that never happened with the iPhone. It was high priced from the start and remains so today. To be sure, those who adopted the iPhone-like approach to smartphones (Samsung, HTC and LG) were cheaper, but they were still more expensive than traditional handsets.</p>
<p>Some have taken this high price point to formulate a theory that the iPhone was <a href="http://stratechery.com/2013/clayton-christensen-got-wrong/">disruptive from above</a> (the high end) rather than the low end as Christensen has emphasized. Andreessen Horowitz’s <a href="http://ben-evans.com/benedictevans/2015/2/25/in-mobile-disruption-comes-from-above">Benedict Evans</a> goes further and suggests this is endemic in mobile. Now it might be that entry in mobile comes from superior, higher-priced products. But that cannot cause disruption – the failure of incumbent firms. </p>
<p>This is because it is only by having low-priced products that incumbent firms can be wiped out rather than just stung. And that is an important element of the demand-side theory of disruption. Put simply, there is no such thing as high-end disruption, only high-end entry.</p>
<p>Instead, the way to think about this disruption is not to look to the demand-side (where the customers touch the firms) but the supply-side (what goes on inside the firms). Nokia, RIM and the like were extremely good at producing well engineered, cheaper phones that did a limited range of functions but did them well. </p>
<p>The iPhone never competed on those functions and instead offered people things that weren’t otherwise available — desktop-like web pages, a large screen and an intuitive but new user interface based on touch. The iPhone was made from traditional components but put together with what might be termed a different “architecture.” That architecture was designed around a completely new way of interacting with a handheld device. Traditional handset makers either dismissed that as a power-hungry luxury people would not pay for or tried to replicate it but ended up with something decidedly clunkier and not feeling quite up to what Apple had produced.</p>
<p>Academics like Rebecca Henderson and Kim Clark long recognized that this supply-side mechanism for disruption based on new architectures could trip up otherwise successful firms. And that is really what appears to have gone on with the iPhone. It was a new architecture, and to replicate it required essentially a clean slate for innovative teams. </p>
<p>Established firms rarely want to give up development teams that have worked well. This is what leaves the room open for entrants and, in the case of smartphones, we saw disruption on a large and long-term scale. And the only way to see it is to understand that there is more than one path to disruption. To do otherwise is to often try and drive a square peg in a round hole.</p><img src="https://counter.theconversation.com/content/38205/count.gif" alt="The Conversation" width="1" height="1" />
Nokia, Motorola, Sony-Ericsson and BlackBerry-maker Research in Motion were all victims of disruption. During the 1990s and 2000s, they shepherded the cell phone during its period of takeoff into ubiquity…Joshua Gans, Professor of Strategic Management, University of TorontoLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/328742014-11-04T19:23:01Z2014-11-04T19:23:01ZG20 or G20th century? Leaders blind to the next wave of disruption<figure><img src="https://images.theconversation.com/files/62491/original/tqwwr35g-1413957098.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Lost amid the immediate G20 hoopla is a much bigger wave of incoming disruption.</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>As world leaders gather in Brisbane this month to tackle an increasingly fractious global economy, let’s cast our mind back exactly one hundred years.</p>
<p>In 1914, the world was about to plunge into a period of unprecedented disruption. The disruption, global and bloody, saw old empires torn asunder by forces outside their control.</p>
<p>Alliances of great powers with quaint names such as the Triple Entente tried to stem the tide, seeking to preserve 19th century ways of thinking and doing.</p>
<p>With the benefit of hindsight, we wonder why they bothered. Why didn’t they see the inevitability of a new order replacing the old? </p>
<p>After all, new modes of economic production as well as new social and political movements - too nimble, different and diverse to be controlled by the old, static order - were emerging for all to see.</p>
<p>Fast-forward a century and we are experiencing a similar, if not more profound disruption. And we’re witnessing a similar level of disconnect in the way the G20 - the 21st century’s version of the Triple Entente – is dealing with it.</p>
<p>Behind the G20’s external trappings of fanfare and pomp hides a deep inability to shape, or even understand, this radical transformation.</p>
<p>We’ve already had a foretaste of it.</p>
<p>Two decades of globalisation and the internet have underpinned an exponential curve of change in how economic activity is created, valued and exchanged.</p>
<p>This transformation has initially occurred in industries like publishing, communications and retail that have been more amenable to digital transformation.</p>
<h2>And the disruption is just beginning…</h2>
<p>But as digital-driven change migrates big time into other areas like manufacturing, the disruption we’ve seen to date will be nothing compared to that likely to emerge over the next 20 years and beyond.</p>
<p>The signs are already there. Drones delivering goods to our doorstep. Cars and other complex products being manufactured at home by 3D printers. Algorithms writing complicated market reports and legal briefs that prove more accurate than those penned by humans. The emergence of “localised” modes of currency exchange such as bitcoin.</p>
<p>On their own, they seem like quirks. But collectively they speak to a world that increasingly operates on the principle of “free” rather than scarcity, where iron laws of supply and demand are being upended, and barriers to market entry rapidly eroded.</p>
<p>They speak to a world where conventional production chains are rapidly fracturing, and where whole professional classes will be replaced, sooner not later, by intelligent technology.</p>
<p>Significantly these “quirks” speak to a rapid and radical power shift away from governments and corporations.</p>
<p>This relegates to little more than a hopeful dream the idea that the G20 has the capacity to steer macroeconomic policy toward desired ends, like “commanding” an extra 2% in global growth.</p>
<p>So it should be of little surprise that the G20’s agenda for Brisbane seems so “vanilla” and disconnected.</p>
<h2>Ignoring the obvious</h2>
<p>When the contours of the current economic disruption become clearer in a decade or so, historians might well ask the following:</p>
<ul>
<li><p>Why did the G20 not focus on managing this next wave of disruption, when it was obvious this posed a major risk to economic and social stability?</p></li>
<li><p>Why was tackling growing extremes of global wealth and poverty not extensively discussed when it was clear it was undermining sustained growth?</p></li>
<li><p>Why no talk of clamping down on the exotica of financial markets to cage their increasing volatility when it was obvious this could have avoided the next financial crisis and yet another prolonged period of global stagnation?</p></li>
</ul>
<p>The same historians may also note that if there ever was a sign of the G20 being tied to shibboleths of the past, it was the forum’s signature plan to kick-start global growth through infrastructure building.</p>
<p>Wasn’t this the same policy prescription deployed by governments to lift stagnant economies following the Great Depression in the 1930s? And why did the infrastructure plan proposed by G20 involve just roads, rail and so forth?</p>
<p>Certainly a good plan to stimulate growth for 19th and 20th century industrial–age economies. But for the 21st century digital age?</p>
<p>Like so many other elite forums in the 21st century trapped in the amber of old 20th century thinking and hierarchical structures, small victories at the G20 summit will be fashioned into great triumphs. </p>
<p>A lot of hype will surround persuading a handful of global corporations to pay their fair share of tax. But getting 21st century companies such as Google and Apple to obey 20th century tax structures is not a vision for the future.</p>
<p>Rather it is just a compliance measure - one likely to unravel in a few short years as digitisation increasingly frays the net of national-based tax structures.</p>
<p>In essence, the G20 meeting in 2014 will come to symbolise the death throes of 20th century capitalism.</p>
<p>It will underline the futility of employing an increasingly outmoded economic paradigm to control and corral the new, centrifugal forms of a rapidly changing economic order.</p>
<p>Very little will result from the hoopla because very little can.</p>
<p>But at least in Australia we will have a ringside seat on the fading away of what might be more aptly named the “G20th century”.</p>
<hr>
<p><em>This article has been co-published with <a href="http://g20watch.edu.au">www.G20Watch.edu.au</a></em></p><img src="https://counter.theconversation.com/content/32874/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mark Triffitt does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>As world leaders gather in Brisbane this month to tackle an increasingly fractious global economy, let’s cast our mind back exactly one hundred years. In 1914, the world was about to plunge into a period…Mark Triffitt, Lecturer, Public Policy, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/198092013-11-06T19:43:20Z2013-11-06T19:43:20ZRupert Murdoch, economic disruption and Australian values<figure><img src="https://images.theconversation.com/files/34534/original/m33g4m78-1383715673.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Australians have combined the right to “have a go” with the egalitarian capacity for the “fair go”.</span> <span class="attribution"><span class="source">AAP</span></span></figcaption></figure><p>In Rupert Murdoch’s fly-in, fly-out visit to speak at the <a href="http://www.lowyinstitute.org/lowy-lecture-2013">2013 Annual Lowy Institute Lecture</a> he paid tribute to some traditional Australian values and attributed our success to a number of factors. </p>
<p>Murdoch emphasised the importance of immigration as a reason for the success of our past and a key ingredient in our future, particularly in promoting the virtues of cultural diversity and the need to attract human capital through immigration of entrepreneurial talent from emerging markets particularly Asia.</p>
<p>In fact, Murdoch uses the classic example of Frank Lowy himself, a European Jewish refugee who came to Australia “with a single suitcase….His only real assets were his wit and his willingness to work hard. It turns out that these are the assets that matter most.” Murdoch is right about the contribution of Frank Lowy and many like him. </p>
<p>In Australia around two thirds of our entrepreneurs are born overseas, and a half of our exporters are too. Immigration has led to a great injection of human and entrepreneurial capital in Australia, in commerce and science and in many other ways. </p>
<p>And many of our best Australians from business leaders to Nobel Prize winners have been immigrants (and many have been refugees). As well as Frank Lowy, think of Max Corden and Fred Gruen in Economics, or Gustav Nossal in Science. When refugees apply for residency we could give many of them an <a href="http://www.austrade.gov.au/Export/Export-Grants/What-is-EMDG">Export Market Development Grant</a> or a post doctoral research grant.</p>
<p>Murdoch also values the importance of education, a theme closely linked to immigration and an open society. He has a strong belief that as Australians welcome immigrants to our shores our own Australian Diaspora can “have a go” on the world stage in business, science and education (like Murdoch has himself). </p>
<p>He makes strong mention of Australian success in bio sciences and reflects a theme of the Lowy Institute itself, <a href="http://www.lowyinstitute.org/files/pubfiles/Fullilove,_World_Wide_Webs.pdf">in a paper by its Executive Director, Michael Fullilove</a> that Australia’s one million strong Diaspora is an asset – an example of brain gain more than brain drain.</p>
<p>However, Murdoch draws on these themes to describe Australian aspirations in the 21st century as being “an egalitarian meritocracy with a touch of libertarianism.” He believes that in a century of “economic disruption ”(drawn from Joseph Schumpeter’s thesis that <a href="http://www.econlib.org/library/Enc/CreativeDestruction.html">“creative destruction</a>” was essential to capitalism) will suit Australia provided we embrace our egalitarian meritocratic libertarian values.</p>
<p>In his example, Murdoch talks about the famous film Spotswood, where a Melbourne factory in 1966, resisted the management consultant character played by Anthony Hopkins and saved everyone’s job. This was in 1966 when Geoffrey Blainey wrote The Tyranny of Distance, and Japan took over from the UK as Australia’s most important trading partner. </p>
<figure>
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<p>Murdoch uses this example to show that Australia has moved on from a “sentimental economy” to one that embraces disruption with vigour and the good Aussie tradition of “having a go.” But when I look at 1966 and the “Tyranny of Distance”, before Australia embraced Asia, and compare it to 2013 and ‘<a href="http://www.smh.com.au/business/australias-tyranny-of-distance-gives-way-to-the-power-of-proximity-20111124-1nwxt.html">The Power of Proximity</a>’ - how our ties to Asia enable us to achieve new levels of prosperity - it occurs to me that Australia has been able to succeed because we absorbed disruption and adjusted thanks to a combination of our economic and social institutions.</p>
<p>We combined the right for entrepreneurs to “have a go” with the traditional Australian egalitarian capacity for the “fair go”.</p>
<p>So while Murdoch talked about Spotswood and the “happy ending that’s only possible in the world of film” what he has missed is that Australia, on the macroeconomic level, facing the biggest economic disruption since the Great Depression in the global financial crisis, was able to adjust its economic institutions to ensure that unemployment did not rise, and jobs were saved in contrast to what was occurring in the Northern Hemisphere. </p>
<p>In fact, 960,000 jobs were created in Australia before the financial crisis of 2008-2009, which is the macroeconomic equivalent of what happened in mythical Spotswood where Anthony Hopkins “finds a way to save the factory without letting go a single soul”.</p>
<p>As the books <a href="http://whynationsfail.com/">Why Nations Fail</a> and <a href="http://press.princeton.edu/titles/9897.html">Why Australia Prospered</a> show, economic institutions make a big difference in how a nation develops its economy. As Murdoch points out, Australia has provided great business innovation thorough entrepreneurs such as Frank Lowy (many of whom are immigrants and refugees) but I would also add our social innovation too, votes for women, arbitration and more recently our world class superannuation and national disability insurance systems.</p>
<p>The combination of being able to “have a go” with the “fair go” has enabled Australia to absorb the forces of economic disruption like the Asian Financial Crisis, the <a href="http://dot.com/">dot.com</a> crash and most recently the global financial crisis.</p>
<p>Egalitarian meritocratic values that promote entrepreneurship along with institutions that assist social justice – rather than libertarianism – will enable Australia to continue to be the lucky country in the age of disruption.</p><img src="https://counter.theconversation.com/content/19809/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tim Harcourt does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>In Rupert Murdoch’s fly-in, fly-out visit to speak at the 2013 Annual Lowy Institute Lecture he paid tribute to some traditional Australian values and attributed our success to a number of factors. Murdoch…Tim Harcourt, J.W. Nevile Fellow in Economics, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.