In just about every industry we can think of businesses are now being digitally disrupted and transformed by digitisation in one way or another, writes the Australian Industry Group CEO Innes Willox.
While the productivity benefits of digitalisation may be clear, concern remains about what digital disruption will mean to businesses and jobs, and how Australia can be globally competitive.
Manufacturing is one of the major sectors that Ai Group represents. As manufacturers become more advanced, the traditional delineation between manufacturing and services is becoming more blurred through servitisation of manufacturing and further accelerated by digitalisation.
This presents manufacturers with a challenge and opportunity to re-examine their value proposition, discover where they create additional value for their customers and find new customers. They will also need to become more agile to respond to rapid changes in technology, customer demand and expectations, and global and local competitive threats.
The emerging disruptive technologies currently being discussed in the industry (although early in development, adoption or implementation) that will likely influence business models and strategies in the future include IoT, 3D printing, robotics and autonomous machines, AI and machine learning, and blockchain.
While these technologies present increased business productivity, they also create new attack vectors for cyber security threats. In the immediate term, the new data breach notification scheme (commencing towards the end of February) may also lead businesses to generally review their cyber security posture and digital investment decisions.
In terms of the workforce, there seems to be a mixture of anticipation, fear and scepticism around automation, AI and killer robots.
CEDA predicts that 40 per cent of current jobs (particularly those requiring only low-level skills) have a high probability of being replaced by automation within 10 to 15 years. AlphaBeta considers most jobs will change as a result of technology, not disappear; however, it will be critical for workers who lose their jobs as a result of automation to maximise automation’s economic benefits.
There is also an unaccounted individual and social benefit of non-work time as a result of automation. Whether people devote freed-up time to more work or non-work activities, the digital transformation of work would be a significant boost.
Ai Group believes that Australia should aim for steady and sustained improvements in benchmarks for global competitiveness and productivity. But our current state of play leaves much to be desired.
Productivity improvement is the long-standing Achilles Heel of the Australian economy. Emerging technologies and the way we use them (or do not) are a key part of our productivity story and will remain central to our policy solutions.
Our inability to successfully adopt and adapt digital and other new technologies has affected our global competitiveness as well as our own productivity. The World Economic Forum currently ranks Australia 21st out of 137 countries – we have been outside the top 20 since 2012-13.
To increase our global competitiveness, an aspiration could be for Australia to reach the top 10 in the World Economic Forum’s global competitiveness rankings, by addressing in part the technological indicators that impact on our overall rankings.
This includes improving government procurement of advanced technology; internet bandwidth; R&D university-industry collaboration; availability of latest technologies for businesses; business absorption of technology; and business capacity to innovate.
Another outcome should be for more businesses to thrive through digitalisation rather than fold – a shift from the global negative trend since the turn of this century. Other aspirations should also be for more businesses to leverage global supply chains and have a domestic environment that encourages more businesses to operate in Australia.
Central to how these impacts play out will be workforce and management skills, the extent of familiarity with the technologies involved, and the extent of collaboration and preparedness in grasping opportunities and combatting evolving threats.
There are a handful of areas in which both Government and industry should set as policy priorities to build a globally competitive digital economy strategy:
- Education, skills and workforce development – Ensuring our youth has the necessary skills is fundamental to industry success for our future workforce. Our current workforce is also a crucial contributor to industry’s success and will need help to transition including re-skilling Australia’s existing workers to possess the digital skills needed for today’s jobs. In schools, more coordination needs to be built around STEM activity, with greater industry participation. At the higher education level, we need to see improved practices around work-integrated learning, to improve workplace readiness and industry-university collaboration. At the VET sector level, having VET included as part of government agendas around innovation, STEM and higher order skills.
- Technological infrastructure investment – Infrastructure investment in a mixture of communication platforms will enable the growth of the digitally enabled economy (including the NBN, 5G and other IoT communications platforms). Greater attention needs to be paid both to the delivery of technology and to maximising benefits flowing from that.
- Digital leadership and culture – Leadership in investment in and use of digital technologies can drive growth directly and inspire others. Leaders need to take charge and maximise their benefits both through strategic choices and innovative opportunities in their day-to-day operating environment.
- Reliable, secure and safe environment (including cyber security) – Businesses require a digital environment that is sufficiently reliable, secure and safe to maintain the confidence of all types of users. As digital technologies continue to evolve, businesses and governments need to work together to manage cyber security, resilience and safety.
- Innovation and collaboration – Digital technologies are an enabler to innovation, which is itself essential for sustained growth in individual businesses, broader sectors and Australia as a whole. We need to harness a wider range of capabilities through better collaboration between businesses, researchers and governments, and put this in service to a clear strategic agenda. Public policy support for innovation should be stable and informed by strategy, and should address all parts of the innovation system.
- Legal, regulatory and standards (interoperability) framework – Our regulatory and standards framework is fundamental to promoting investment in, and use of, digital technology. This framework needs to be sufficiently flexible to accommodate rapid changes in technologies that lead to new types of business models and competition, while also protecting consumers’ interests.
- Global integration – The deep international connectedness of a digitally enabled economy means that no one country or industry can develop policies in isolation. Australia needs a global outlook on digitally enabled economy issues – some of which can best be addressed in a collective manner across the world.
As a nation and industry, we need to work together to ensure we are doing all we should to lift capability across the economy and seize the digital opportunity, but most importantly help Australia be sustainable and competitive.