Nobody can deny that the past 10 years have been huge for change in the business. From technology to converging economies, is there one change to rule them all?
In 2005 Mariah Carey ruled the pop charts, the Nokia 1110 and N70 ruled the mobile phone sales charts and the world’s population was 6.5 billion rather than today’s 7.3 billion. The business environment has also changed in the past decade – but what were the least predictable changes?
Melbourne Business School
The most surprising feature of the global economy in the past decade has been that most global economies, and especially Asian economies, have decoupled from the US.
Prior to the past decade the US led most of the world into recessions, and Australia, Singapore, and other open economies in Asia were especially prone to “catching a cold” when the US sneezed.
While the global financial crisis showed clearly the interconnectedness of global economies, the deep recession in the US and many other advanced economies was not matched by such a deep and prolonged recession in our region. Moreover, in the past few years regional economies have increasingly been driven by intra-Asian economic forces, rather than advanced economy growth.
Looking forward 10 years I would expect that consumption growth in China and India especially, but also from the growing middle class in South-East Asia, will be the strongest driver of Australian and regional growth. For Australian businesses, understanding and dealing with businesses from our region will become more and more critical to business success.
“Most global economies, and especially Asian economies, have decoupled from the US.” Mark Crosby
Tim Ebbeck FCPA
Technology consumption models are now very different to what they’ve ever been in the past. Buying behaviour has been transformed beyond recognition in the internet age and the pace of this change has only increased thanks to mobile and social trends.
Another major change is that users from different functions are buying products and services directly instead of relying on what’s provided by the internal IT department. These different departments don’t understand, or even care, about the technology underlying business processes. They just want access to a service that helps them achieve desired outcomes quickly.
The traditional CIO role, as a centralised gatekeeper of information and resources, is being further eroded as a result of cloud computing and, particularly, software-as-a-service. Built around specific business functions, they are driving the move for the HR director to become the chief buyer of human resources solutions; it’s the same with the chief marketing officer or sales director.
However, at some point, all of these disparate solutions being bought by different departments will need to be brought back together and integrated. As the dust settles, CIOs need to reassert themselves as a strategic force.
Unfortunately, many organisations are still focused on cost reduction. Converting a larger proportion of your IT budget away from operational management towards innovation is a much more worthwhile issue to address. Organisations that are able to move more of their technology spend across to innovation are the ones that will be most successful. No organisation has ever cut its way to great success.
“Technology consumption models are now very different to what they’ve ever been in the past.” Tim Ebbeck
Peter Munro and Nigel Andrade
The past decade, indeed the past two decades, have been an amazing success story for Australia. In our book ?Australia 2034: Luckier by Design, we look back at the last decade and beyond. We were delighted and surprised by three key observations: the size of the Australian economy, the prosperity of the Australian people, and the profitability of Australian businesses.
The Australian economy is bigger, wealthier and more relevant than we may have predicted back in 2005. GDP has increased by an amazing 85 per cent over the past 20 years.
Australians are more prosperous and better connected than we would have dared imagine. Twenty years ago the average Australian earned A$58,000; today that figure is A$80,000 in 1994 terms. They’re better connected; the average Australian has a mobile phone with 33 apps, has two computers and broadband internet at home.
There are now, almost unbelievably, more than 2 million businesses in Australia; margins have improved from 8.3 per cent in 1994 to 11 per cent today. Australian businesses have clearly been at the heart of our prosperity as a nation and a people.
While these changes have undoubtedly driven a larger, more complex and mature business environment, the key question is how we continue that trajectory into the future. We will face different challenges – for example, Asia rising, the digital tsunami, increased imbalance of wealth and a maturing Australia.
We will not be surprised to see Australian businesses tackle it with the same energy as they have in the past – with an expansive mindset able to recognise value beyond traditional sources and the agility to target and capture it.
“Australians are more prosperous and better connected than we would have dared imagine.” Peter Munro and Nigel Andrade
Mark Crosby is an associate professor in economics at Melbourne Business School. In the past decade, his research has focused on the economies of the Asian region, with a particular interest in the Chinese economy. He has taught subjects including global economics, international finance, and doing business in Asia.
He has also been dean of the Global MBA and Bachelor of Business Administration programs at the S P Jain School of Global Management in Singapore, and has been a regular consultant to the Hong Kong Monetary Authority.
Tim Ebbeck FCPA
Tim Ebbeck is managing director, Australia and New Zealand, at technology provider Oracle. Before joining Oracle in 2013 he was chief commercial officer at NBN Co, and CEO, Australia and New Zealand, at SAP. He has more than 30 years’ experience in commerce in a range of industries and roles, and his thought leadership focus includes many public speaking engagements. He is a director of CPA Australia.
Peter Munro is a partner in global management consulting firm A.T. Kearney, based in the Sydney office. He has more than 20 years of management consulting experience, specialising in the areas of corporate strategy, strategy implementation and operations transformation. Munro also spent nine years with the Boston Consulting Group in Germany, Australia and Asia.
Nigel Andrade is an A.T. Kearney partner in the Sydney office and a member of the firm’s Financial Institutions practice in Asia-Pacific. With more than 15 years of management consulting experience, Andrade specialises in customer-led innovation, working across Australia, South-East Asia, India, Europe and North America. With Peter Munro he wrote Australia 2034: Luckier by Design (LID Publishing, London, 2014).
This article is from the September issue of INTHEBLACK