Internet, cloud computing and big data is changing the way all businesses run. Australia needs to regard these global changes as a direct threat and a great opportunity for employment.
Australian services industries employ about 85 per cent of the population and contribute around 70 per cent of gross domestic product says a Blue Sky Mining report written by ex-Advance president Adrian Turner. Yet services industries are the employers most likely to be disrupted by technology and the industrial restructuring that comes with it. Ask yourself, when was the last time you saw someone at the checkout of a parking station.
At the same time, entrepreneurship and innovation are the most effective ways to create new jobs and wealth. Economies are reacting differently to this dual threat and opportunity, but let’s look at Silicon Valley.
The Kauffman Foundation in the US found striking evidence of the importance of new venture creation. In 2010 they released a study which revealed that “both on average and for all years (other than seven years between 1977 and 2005), existing firms are net job destroyers, losing 1 million jobs net combined a year. By contrast, in their first year, new firms add an average of 3 million jobs.” The Kauffman report concluded that when it comes to job growth in the US, start-ups “aren’t everything, they are the only thing”.
Silicon Valley, at its heart, is the world’s most productive business creation ecosystem. It is built on networks of relationships, fuelled by trust, energised by collaboration, made powerful through shared failure and success and made viable with financial resources.
Experiences in failure and success, fund-raising, pivoting and restarting are essential to building management skills in chaotic disrupted industries. These experiences build relationships and people networks, essential to the growth of entrepreneurship. These people networks are the fuel for entrepreneurial start-ups – the growth engine for new employment – and are taking root in the UK, India, Singapore, China, Israel and other places.
Australia has a very healthy technology sector with deep technical domain expertise but too often career choices are limited to being a local employee of a global technology business. Foreign companies are building and Australians are selling and supporting.
Australians are accepting short-term employment gain while courting mid-term trouble because people who might have become entrepreneurs are far away from the critical mass of creators, funders, investors and innovators. and business builders as well as serial entrepreneurs
So while the Australian tech start-up sector is busier than ever, Australia has a long way to go to reverse the future employment gap. We need more effective networks, a more constructive response to failure and more accessible networks of skill and money. We need to develop a better answer to the question, “Where would you go to build a business – San Francisco or Surry Hills?”