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Megatrends: the world is virtually here

Welcome to The Conversation’s series on megatrends. What are the compelling economic, social, environmental, political and technological changes Australia must grapple with over the coming decades? In…

Technology has already transformed how many of us work and shop - and left unwary businesses behind. Flickr/Baddog

Welcome to The Conversation’s series on megatrends. What are the compelling economic, social, environmental, political and technological changes Australia must grapple with over the coming decades?

In the fifth article of this series, based on CSIRO’s new report Our Future World 2012, Stefan Hajkowicz discusses how technology has already changed the way we work and shop - and how easy it can be for business to be left behind.

I’ve signed an agreement with my employer that gives me the flexibility to work from home two days per week. According to data from the Australian Bureau of Statistics that makes me one of 1.1 million employees in Queensland (58%) who use a flexible workplace arrangement and one of 253,187 Queensland employees (13%) who work from home.

It’s possible because of increased connectivity. I can sit there in my pyjamas and connect to Seattle and Sydney over a crystal clear video-link. It’s just like being in the office. Well, apart from the pyjamas and play school in the background.

Currently some 6% of the Australian workforce telecommutes – that means they generate the bulk of their income by working online from home or another off-site location. As part of the national broadband network expansion the Australian Government hopes to raise this to 12% by 2020. Where might it go in the future? Will it change our city design?

There’s a good chance it will. Linda Chandler of Microsoft and Phillip Ross of Unwork.com have recently published a white paper titled the “Anywhere Working City”.

They argue that coming decades will see information technology take a driving role in reshaping cities of the 21st century. Modern information and communication technology will increasingly remove the necessity for many workers to visit a physical location.

People can increasingly work from home, cafes, parks, libraries or other public spaces. Often referred to as a “third spaces” – being neither home nor office – these facilities are receiving increased interest and investment from private companies in office property sector.

They may become popular venues for knowledge and service workers. Given these workers make up the bulk of employees within major Australian cities urban design and transportation systems may change.

The rise of the virtual world is also leading to change in the retail sector. It’s more than a short term cyclical pattern. The Productivity Commission and the Reserve Bank are saying that changing consumer preferences, shifting expenditure patterns and growing online sales are all contributing to a structural shift within the Australian economy.

Official online sales statistics are not yet widely available, however estimates suggest that online retailing accounts for approximately 6% of total Australian retail sales. It is expected that online retail will grow by between 10% and 15% per annum through to 2013.

Data from the Australian Bureau of Statistics report retail trade contributes A$59 billion to the Australian economy each year and employs 1.2 million Australians. So changes in this sector matter.

Just how much bigger can online retail and tele-working get? After the next two decades will they capture 10%, 30% and 50% of activity - or more? Nobody knows.

It’s interesting to reflect on the disruptive potential of new technology. When the digital camera came along film companies were probably wondering what share of the market it might capture. According to The Economist published in January, Kodak captured 90% of film processing and 85% of film camera sales in the United States in 1976.

In 1996 Kodak’s annual revenue reached an all time high of US$16 billion with profits of $2.5 billion. The Economist observes that in 2011 most analysts placed revenue at US$6.2 billion with a third quarter loss of US$222 million. In January 2012 Kodak filed for bankruptcy.

Many write-ups suggest the company failed to act quickly enough to benefit from these disruptive technologies. They had much information early on about the rise of digitisation. They just didn’t manage to use that information quickly enough to reset strategy.

As with digital cameras in the 1980s, the world of online retail and teleworking still represents a relatively minor share of total retail turnover and the labour market. The challenging question is how much bigger will it get in the next five to 20 years? It will be too late to respond if and when the answer is obvious.

The digital world is virtually here.

But before people, governments and businesses dive in too deeply it’s worth reading tomorrow’s megatrend – Great Expectations. One of the trends in this megatrend is about a glass ceiling for online expansion. That glass ceiling relates to human interaction. The CSIRO Futures team is wondering whether the virtual world will ever come close to the physical world. We might see online burnout and a return to those things we can see, touch, smell and hear with our own senses.

More in the megatrends series:

Preparing for a ripe old age

The Silk Highway and becoming the Switzerland of Asia

Biodiversity - going, going.. gone?

Do we really need more from less?

What the future megatrends all Australians need to know about?