Setting aside the burdens of the past

The first report from the Australian Centre for the Edge on the Australian Shift Index, Setting aside the burdens of the past: The possibilities of technology-driven change in Australia, has just been published. (Press release here.)

We’ve worked hard on this over the last six months or so and I’m very happy with this report as an introduction to what we’ve done. If you’re interested in how technology is driving change both in business and in society in general, then I highly recommend that you head over and grab yourself a copy. (And if we’re in something like the same neighbourhood I’d love to catch up for a coffee to discuss. Or feel free to leave a comment below.)

The Shift Index was created as a tool to help us understand if the rapid pace and increasing uncertainty we feel in the business and social spheres is real, or if it is just an illusion created by the always-on environment we live. (This is a bit like how nationalised news brings us stories of shootings in other regions leading us to think that crime has increased, when in actual fact crime has been decreasing.)

As we say in the report:

The world is changing faster than ever. However, we can only respond to and manage a change if we can measure and understand it. If we want to respond as a community, then we need to find a way to quantify the change. We need to ask ourselves whether the perceived change is real, and if it is, how we can capitalise on it.

The short answer is that the world is definitely changing and that Australia, Australians and Australian businesses are successfully adapting to the changes. We can’t, however, rest on our laurels as the drivers of change are still present and it doesn’t look like they will dissipate for some time.

The concept behind the Shift Index is that developments in digital infrastructure (computing, storage and networks) is driving increases in information flows, and that these information flows are reconfiguring society by tipping the balance of power from the merchant to the consumer.

The framework we used as our starting point was developed by the US Center for the Edge, founded by John Hagel and John Seely Brown. The US Shift Index was developed in 2009 and has been updated each year since then.

Our goal with the Australian Shift Index was to take the US framework and build a comparable index for Australia, allowing us to take the lessons learned from the US index and translate them to our local context. At the same time, we tailored the index – tweaking or changing some of the metrics used – to create a version that is uniquely Australian and which can provide us with insight into the particular challenges we face here.

The methodology defines three groups of metrics:

• The Foundation Index measures the price-performance of computing, storage and network technologies, the penetration of these technologies into society, and change in regulation to support the adoption of these technologies. This is the lead indicator in the Shift Index.
• The Flow Index measures the resulting increase in information flows in terms of virtual flows (mobile phone and internet usage), physical follows (attendance at conferences, business travel, and money transfers) and flow amplifiers (social media and the like).
• The Impact Index measures the impact of these changes across the Australian market (competitive intensity, labour productivity and stock price volatility), firms (asset profitability and the like) and people (consumer power, brand disloyally, returns to talent, and increased in executive turnover). This is the lag indicator for the Shift Index.

The result is three high-level metrics that quantify the the drivers for the change, the change itself, and it’s impact.

Image source: Centre for the Edge

There’s ten major findings in the report:

• Fast adopters: Australians have a good track record for adopting new technology. Our challenge is to continue adapting, and to find opportunities to leverage these technologies within our institutions.
• Tech-driven change: The permeation of cheap, powerful computing, communications and storage technologies is driving change and will continue to do so into the foreseeable future.
• Knowledge flows: New technology has resulted in new flows of information at unprecedented volumes.
• Higher competition: The Australian market has become more competitive as a result of new technology and knowledge flows.
• Capital over labour: Australia’s focus has shifted away from labour and towards investment in new technologies for more efficient workflows.
• Knowledge economy: Australia has shifted from an industrial and agricultural economy to a creative, service-based economy.
• Unrealised potential: There is a big gap between our technological capabilities and the way we currently use technology to solve problems.
• Economic strength: Australia’s economy is strong and demonstrates better asset profitability than the US.
• Recession-proof: The global downturn in 2008 was only a pause in our progress and has not halted Australia’s transformation.
• Future success: Our continued prosperity depends on how well our knowledge workers can find new ways of using technology to solve problems.

These ten findings are only the tip of the iceberg though. While the report answers some interesting questions, or raises even more questions, questions that we intend to delve into further.

Image source: macinate.