Tag Archives: United States

It’s time to make the hard decision

Toyota, as you’ve probably heard, is shutting down operations in Australia. This has triggered the expected wave of commentary claiming that this is the end of manufacturing in Australia and that unless the government does something about this industrial relations problem then the entire car manufacturing supply chain (i.e. everything from final assembly back) will collapse with disastrous consequences for the Australian economy.

This point of view is both disingenuous and unhelpful as it ignores the fact that the viability of car manufacturing in Australia is strongly influenced by both economic trends outside our borders and by systemic challenges within the car industry itself. Australia might be an island, but that does not mean that events outside our borders will not affect us. Industrial relations might be part of the challenge, but it’s not the whole story.

Pouring more money into the domestic car manufacturing supply chain may provide short term relief, but it does not address the root cause of the problem.

We need to make the hard decision.

If car manufacturing is to be part of our industrial mix in the longer term then we need to transform the domestic industry, creating a new operating model that enables a stable manufacturing industry in Australia within the global context.

If we cannot create a sustainable car manufacturing industry in Australia, then we should immediately start to transition the resources (people and assets) to new industries that do have a future here.

Simply propping up an industry who time has come will only ever be a short term solution, and one which is a disservice to the generation just entering the workforce.

Capital has won over labour

The global car industry is in trouble. There’s too many factories and not enough people buying cars.

Similar situations are not uncommon in other capital intensive industries. Decades spent automating and streamlining processes has transferred costs from labour to capital. This has been great for customers as it lowers the unit cost of the goods manufactured. The manufacturers, on the other hand, find that their business, or even their entire industry, can all too easily be pushed into a never ending cycle of boom-and-bust. We only need to look to containerisation and the development of the global container network to see these forces in action.

Containerisation transformed the old, manual, approach to shipping into a highly automated and efficient global logistics network. Goods were packed into large metal containers and craned onto and off ships, rather than relying on stevedores to manhandle individual barrels. This resulted in a dramatic reduction in shipping costs and time (somewhere between 60% and 80%), since the majority of the work was in the manual loading and unloading.

However, building a container network required a huge investment. New ships were commissioned, larger ships with complex racks to hold the containers. Fleets of containers were required to carry the goods. Docks also need to be changed from the fingers sticking out of a bank that was suitable for manual loading, to the large container terminals that host huge cranes.

These investments allow shipping companies to slash the cost of shipping. It also made these businesses very inflexible. Previously shipping companies could trim costs when demand dropped off, parking ships and laying off their crews. Now, with huge investments in container infrastructure, the shipping companies were forced to keep the boats moving during the down turn, as the revenue was needed to service loans or pay dividends to investors.

Times were good when demand was high, with the low shipping rates helping to drive volume up. When times were bad when demand was low, as the boats needed to keep moving even if it meant that they were losing money.

Car Manufacturing in Australia

Australia finds itself wanting to protect its traditional car manufacturing industry when the dynamics of the global car industry and economy conspire against us.

Car manufacturers need to improve factory utilisation if they are to remain profitable. Shutting factories down for a few weeks is not enough, nor is trimming labour rates, as the majority of their costs are in the plant and equipment contained within these factories, and not in the labour required to operate and management.

With too many (expensive) factories and not enough people buying cars, car companies are looking to consolidate their operations. Ideally the final resting place for these factories will be adjacent to major markets in a comparatively low cost geography. (Despite the balance of costs being in equipment, moving from a high to a low cost geography can still shave 10% off the total cost of manufacturing.)

Similarly, reducing the time from final assembly to delivery to the customer by placing the factory as close as practical to the customer, helps to reduce costs by reducing the time it takes for product to flow through the supply chain. This cuts the amount of working capital required as well as cutting the time required to push product updates through the supply chain.

Ideally, given current manufacturing technology, one of these manufacturing centres will be right in the middle of South-East Asia, enabling quick and convenient access to the the fastest growing car markets in the world. Thailand looks good. Another would be somewhere in the centre of the Americas, allowing it to service both North and South America. Perhaps Mexico or the southern states of the US? Eastern Europe might get a look in for a third manufacturing hub, but then it might just be easier to service Europe out of S.E. Asia or the Americas. (Note that niche plays such as BMW are the exception to this rule, as they are not selling into the mass market.)

So what does this mean for car manufacturing in Australia? Australia fairs rather badly on both the dimensions we just considered.

As a high cost country we can expect cars manufactured domestically to cost roughly 10% more than those manufactured in a low-cost hub. Unfortunately wage bargaining will be little help unless we’re willing to slash wages to the same levels as Mexico and Thailand, which is something that the Australian public is unlikely to find palatable.

Our position below S.E. Asia and a long way from the US and Europe also puts us at a disadvantage. While shipping a car from Australia to S.E. Asia, the Americas or Europe will not significantly affect the final price, the delay pushes up working capital requirements while the longer supply chain is more challenging to manage.

We can’t expect our domestic car industry to export its way out of this problem. Nor is the domestic market large enough to sustain it when cheaper imports are flowing in from overseas manufacturing hubs. The car industry is, after all, a global industry.

Pouring money into the industry might support it in the short term, but at what cost? If it cannot complete globally then it will eventually succumb to the pressure. And given the perilous state of the global and domestic car industries, that time will probably be sooner than later.

In the mean time we’re encouraging a generation of eager and talented young adults to build their lives around a career and an industry that we know will no be able to support them. They deserve better.

Can technology save us?

One solution to our dilemma is to find a model for the industry that can work for Australia.

Consider, for a moment, the replicator from Star Trek. Or, if you’re less inclined to science fiction, the recent explosion of 3D printing and the maker movement.

If we can slash the investment required to manufacture cars by slashing the investment required to build a factory, then the decision on where to locate that factory might tip in our favour. If a rather large 3D printer costing AU$10,000 could print a car, then every dealer would have one. Why ship a finished car from one of the manufacturing hubs when you can pick the model and options you want, have it printed, and pick it up in a day or two.

3D printing might be some way off, but there are people out there looking at this problem. iStream, for example, is the result of looking at the manufacturing process to see if there is a better, faster and cheaper way to manufacture cars. The result is a manufacturing plant that is 20% the size of a conventional factory, and which reduces the typical capital investment by up to 80%.

If we can use technology such as iStream, or one of its descendants, to reduce the factory footprint then we might be able to arrive a solution that can be sustained by our domestic market.

Taking this path would require an investment at the national level. The major car manufacturers are struggling with their older, more capital intensive, operating model and have no interest in a new approach. If we are to take this route then we cannot rely on the existing brands.

Should we cut out losses?

If technology cannot save us, if the consensus is that it is not possible to build a sustainable, mass market, car industry in Australia, then we need to consider our options.

Should we copy a page from Germany’s playbook, and invest in building a high-value, niche industry? An Australian equivalent to BMW or Mercedes?

Or are there other manufacturing industries that can absorb the work force? Should we, for example, invest in becoming the leading manufacture of pre-build housing? (We already have some form in this area.) What industries can we excel in? As others have pointed out, ending car production is not the end of the world.

It’s time to make the hard decision

Pointing out the key role the car industry has historically played in our economy, and focusing on how we might keep the industry alive, is ignoring that fact that the domestic troubles are part of a larger global trend, a trend that we can do little about.

Regardless of the path we each, as individuals, prefer, the debate we need to having is on how will we choose between the the options available too us.

Who gets the credit: the innovator or the implementer?

Who should get the credit? The person to came up with the idea? Or the person to did something with it?

I’m with the implementers. Thomas Edison might be remembered for the lightbulb, but Samuel Insull‘s hard work enabled everyone to have one in their homes. We also forget that it wasn’t even Edison who invented electric light (though you could argue that he perfected it). Edison was one of many who happened to have the same good idea. Insull changed society forever.

With cloud computing, the world is not flat

Does location matter? Or, put another way, is the world no longer flat? Many cloud and SaaS providers work under the assumption that where we store data where it is most efficient from an application performance point of view, ignoring political considerations. This runs counter to many company and governments who care greatly where their data is stored. Have we entered a time where location does matter, not for technical reasons, but for political reasons? Is globalisation (as a political thing) finally starting to impact IT architecture and strategy?

Just who is taking your order?
Just who is taking your order?

Thomas Friedman‘s book, The World is Flat, contained a number of stories which where real eye openers. The one I remember the most was the McDonald’s drive through. The idea was simple: once you’ve removed direct physical contact from the ordering process, then it’s more efficient to accept orders from a contact centre than from within the restaurant itself. We could event locate that contact centre in a cheaper geography such as another state, or even another country.

Telecommunications made the world flat, as cheap telecommunications allows us to locate work wherever it is cheapest. The opportunity for labour arbitrage this created drove offshoring through the late nineties and into the new millenium. Everything from call centres to tax returns and medical image diagnosis started to migrate to cheaper geographies. Competition to be the cheapest and most efficient service provider, rather than location, determines who does the work. The entire world would compete on a level playing field.

In the background, whilst this was happening, enterprise applications went from common to ubiquitous. Adoption was driven by the productivity benefits the applications brought, which started of as a source of differentiation, but has now become one of the many requirements of being in business. SaaS and cloud are the most recent step in this evolution, leveraging the global market to create solutions operating at such a massive scale that they can provide price points and service levels which are hard, if not impossible, for most companies to achieve internally.

The growth of the U.S. enterprise application market
The growth of the U.S. enterprise application market (via INPUT)

Despite the world being laser levelled within an inch of its life, many companies are finding it difficult to move their operations to the cost-effective nirvana that is cloud and SaaS services. Location matters, it seems. Not for technical reasons, but for political ones.

Where we store our assets is important. Organisations want to put their assets somewhere safe, because without assets these the organisations don’t amount to much. Companies want to keep their information — their confidential trade secrets — hidden from prying eyes. Governments need to ensure they have the trust of their citizens by respecting their privacy. (Not to mention the skullduggery this is international relations.) While communications technology has made it incredibly easy to move this information around and keep it secure, it has yet to solve the political problem of ensuring that we can trust the people responsible for safeguarding our assets. And all these applications we have created — both the traditional on-premesis, hosted or SaaS and cloud versions — are really just asset management tools.

We’re reached a point where one of the a larger hidden assumptions of enterprise applications has been exposed. Each application was designed to live and operate within a single organisation. This organisation might be a company, or it might be a country, or it might be some combination of the two. The application you select to manage your data determines the political boundary it lives within. If you use any U.S. SaaS or cloud solution provider to manage your data, then your data falls under U.S. judicial discovery laws, irregardless of where you yourself are located. If your data transits through the U.S., then assume that the U.S. government has a copy. The world might be flat, but where you store your assets and where you send them still matters.

Country-specific regulations governing privacy and data protection vary greatly.
Global data protection heat map (via Forrester)

We can already see some moves by the vendors to address this problem. Microsoft, for example, has developed a dedicated cloud for the U.S. government, known as BPOS Federal, which is designed to meet the government’s stringent security and privacy standards. Amazon has also taken a portion of the cloud it runs and dedicated it to, and located it in, the EU, for similar reasons.

If we consider enterprise applications to be asset management tools rather than productivity tools, then ideas like private clouds start to make a lot of sense. Cloud technology reifies a lot of the knowledge required to configure and manage a virtualised environment in software, eliminating the data centre voodoo and empowering the development teams to manage the solutions themselves. This makes cloud technology simply a better asset management tool, but we need to freedom to locate the data (and therefore the application) where it makes the most sense from an asset management point of view. Sometimes this might imply a large, location agnostic, public cloud. Other times it might require a much smaller private cloud located within a specific political boundary. (And the need to prevent some data even transiting through a few specific geographies – requiring us to move the code to the data, rather than the data to the code – might be the killer application that mobile agents have been waiting for.)

What we really need are meta-clouds: clouds created by aggregating a number of different clouds, just as the Internet is a network of separate networks. While the clouds would all be technically similar, each would be located in a different political geography. This might be inside vs. outside the organisation, or in different states, or even different countries. The data would be stored and maintained where it made the most sense from an asset management point of view, with few technical considerations, the meta-cloud providing a consistent approach to locating and moving our assets within and across individual clouds as we see fit.

The changing role of Government

Is Government 2.0 (whichever definition you choose) the ultimate aim of government? Government for the people and by the people. Or are we missing the point? We’re not a collection of individuals but a society where the whole is greater than the parts. Should government’s ultimate aim to be the trusted arbiter, bringing together society so that we can govern together? Rather than be disinterested and governed on, as seems to be the current fashion. In an age when everything is fragmented and we’re all responsible for our own destiny, government is in a unique position to be the body that binds together the life events that bring our society together.

Government 2.0 started with lofty goals: make government more collaborative. As with all definitions though, it seems that the custodians of definitions are swapping goals for means. Pundits are pushing for technology driven definitions, as Government 2.0 would not be possible without technology (but then, neither would my morning up of coffee).

Unfortunately Government 2.0 seems to be in danger of becoming “government as a platform”: GaaP or even GaaS (as it were). Entrepreneurs are calling on the government to open up government data, allowing start-ups to remix data to create new services. FixMyStreet might be interesting, and might even tick many of the right technology boxes, but it’s only a small fragment of what is possible.


This approach has resulted in some interesting and worthwhile experiments like GovHack, but it seems to position much of government as a boat anchor to be yanked up with top-down directives rather than as valued members of society who are trying to do what they think is the right thing. You don’t create peace by starting a war, and nor do you create open and collaborative government through top down directives. We can do better.

The history of government has been a progression from government by and for the big man, through to today’s push for government for and by the people. Kings and Queens practiced stand-over tactics, going bust every four to seven years from running too many wars that they could not afford, and then leaning on the population to refill their coffers. The various socialist revolutions pushed the big man (or woman) out and replaced them with a bureaucracy intended to provide the population with the services they need. Each of us contributing in line with ability, and taking in line with need. The challenge (and possibly the unsolvable problem) was finding a way to do this in an economically sustainable fashion.

The start of the modern era saw government as border security and global conglomerate. The government was responsible for negotiating your relationship with the rest of the world, and service provision was out-sourced (selling power stations and rail lines). Passports went from a convenient way of identifying yourself when overseas, to become the tool of choice for governments to control border movements.

Government 2.0 is just the most recent iteration in this ongoing evolution of government. The initial promise: government for the little man, enabled by Web 2.0.

As with Enterprise 2.0, what we’re getting from the application of Web 2.0 to an organisation is not what we expected. For example, Enterprise 2.0 was seen as a way to empower knowledge workers but instead, seems to be resulting in a generation of hollowed out companies where the C-level and task workers at the coal face remain, but knowledge workers have been eliminated. Government 2.0 seems to have devolved into “government as a platform” for similar reasons, driven by a general distrust of government (or, at least, the current government which the other people elected) and a desire to have more influence on how government operates.

Government, The State, has come to be defined as the enemy of the little man. The giant organisation which we are largely powerless against (even though we elected them). Government 2.0 is seen as the can opener which can be used to cut the lid off government. Open up government data for consumption and remixing by entrepreneurs. Provide APIs to make this easy. Let us solve your citizen’s problems.

We’re already seeing problems with trust in on-line commerce due to this sort of fine-grained approach. The rise of online credit card purchases has pull the credit card fraud rate up with it resulting in a raft of counter-measures, from fraud detection through to providing consumers with access to their credit reports. Credit reports which, in the U.S., some providers are using as the basis for questionable tactics which scam and extort money from the public.

Has the pendulum swung too far? Or is it The Quiet American all over again?

Gone are the days where we can claim that “The State” is something that doesn’t involve the citizens. Someone to blame when things go wrong. We need to accept that now, more than ever, we always elect the government we deserve.

Technology has created a level of transparency and accountablility—exhemplified by Obama’s campaign—that are breeding a new generation of public servants. Rather than government for, by or of the people, we getting government with the people.

This is driving a the next generation of government: government as the arbitrator of life events. Helping citizens collaborate together. Making us take responsibility for our own futures. Supporting us when facing challenges.

Business-technology, a term coined by Forrester, is a trend for companies to exploit the synergies between business and technology and create new solutions to old problems. Technology is also enabling a new approach to government. Rather than deliver IT Government alignment to support an old model of government, the current generation of technologies make available a new model which harks back to the platonic ideals.

We’ve come along way from the medieval days when government was (generally) something to be ignored:

  • Government for the man (the kings and queens)
  • Government by the man (we’ll tell you what you need) (each according to their need, each …)
  • Government as a conglomerate (everything you need)
  • Government as a corporation (everything you can afford)

The big idea behind Government 2.0 is, at its nub, government together. Erasing the barriers between citizens, between citizens and the government, helping us to take responsibility for our future, and work together to make our world a better place.

Government 2.0 should not be a platform for entrepreneurs to exploit, but a shared framework to help us live together. Transparent development of policy. Provision (though not necessirly ownership) of shared infrastructure. Support when you need it (helping you find the services you need). Involvement in line with the Greek/Roman ideal (though more inclusive, without exclusions such as women or slaves).

Childhood readers and the art of random

Note: This post is part of larger series on innovation, going under the collective name of Innovation and Art of Random.

Innovation can seem random. We’re dealing with so much change in our daily lives that we miss the long and tortuous journey an innovation takes from it’s first conception through to the delivered solution, causing the innovation to seemingly appear from nowhere. We’re distracted as we’re trying to cope with the huge volume of work our changing environment creates, adjusting to the new normal, while trying to find time to sift through the idea fire hose for that one good idea. However ideas are common, commoditized even, and our real challenge is to make connections.

As Peter Drucker pointed out: insight, the tacit application of knowledge is not a transferable good. The value we derive from innovation comes from synthesis, the tacit application of knowledge to create a new solution. The challenge is to find time to pull apart the tools available to us, recombining them to synthesis new (and hopefully innovative) solutions to the problems we’re confronting today.

While ideas may be cheap, the time and space needed to create insight are not. We need to understand our problem from multiple contexts, teasing out the important elements, bringing together ideas to address each element in the synthesis of an original solution. This process takes time, often more time than we can spare, and so we need to invest our time wisely. Which steps in this processes are the most valuable (or the least transferable), the steps we need to own? Which can we outsource, passing responsibility to partners, or even our social network? And is it possible to create time? Using technology to take some of the load and create the breathing room we need.

Dr. Khee Pang
Dr. Khee Pang

One of the best pieces of advice I picked up at university was from Dr. K. K. Pang, who unfortunately passed away in March 2009. Dr Pang taught circuit theory, which can be quite a frustrating subject. It’s common to encounter a problem in circuit theory which you just can’t find a way into, making it seemingly impossible to solve. Dr. Pang’s brilliant, yet simple, advice was “If you don’t like the problem, then change it to one you do like.”. Just start messing with the problem, transforming bits of the circuit at random until you find a problem that you can solve.

Fast forward to my current work, far removed from circuit theory, and I still find myself using this piece of advice at least once a week. It’s not uncommon to come across a problem, a problem with little direct connection to technology, that needs to be approached from a very different angle. When stuck, take a different angle, make it a different problem, and you might find this new problem more to you liking.

You often bump into the same problem in different contexts as you work across industries and geographies. Different contexts can necessitate a different point of view, making the problem look slightly different. This highlights other aspects of the problem that you might not have been aware of before, highlighting previously hidden assumptions or connections to other problems. However, while this cross industry and geography insight is a valuable tool, the time required to go spelunking for insight is prohibitive. We find ourselves spend too much decoding the new context, and too little teasing out the important elements.

Learning to read, something I expect we all did in our childhood, is a struggle for fluency. We work from the identification of letters and words, through struggling to decode the text, to a level of fluency that enables us to focus on the meaning behind the text. Being fluent means being good enough at identification and decoding that we have the time and space for comprehension.

The ability to change the problem in front of you is really a question of being fluent in a range of environments; understanding a number of doctrines. These might be different industries (finance, public sector, utilities …) domains (logistics, risk management, military tactics, rhetoric …) or even geographies (APAC, EU, US …) as each has its own approach. We need enough experience in an environment to be able to decode it easily. Generally this means in the trenches experience, focused on applying knowledge, allowing us to weed out the common place and find the interesting and new. But building fluency takes time though; we can’t afford to immerse ourselves in every possible environment that might be of interest.

For quite a few years (from back in the day when my email address had a .oz at the end) I’ve been collecting a network of colleagues. Each is inquisitive in our own way, each with our own area of interest or theme, covering a huge, overlapping range of doctrines, while always looking for another idea too add to our toolbox. With the world being small, or even flat, this network of like minds has often been the source of a different point of view, one which solves the problem I’m working on. More recently this network has been migrating to Twitter, making the shared conversation more dynamic and immediate. It’s small networks of like-minds like this which can provide us the ability to effectively outsource the majority of our analysis, spreading the effort amongst out peers and creating the time and space to focus on synthesis.

Which brings us to the crux of the problem: innovation relies on the synthesis, and the key to synthesis is in finding interesting problems to solve. An idea, no matter how brilliant, will not go far unless it results in a product or service the people want. Innovation exists out at the surface of our organisations, or at the production coal face. Just as with the breath strips example, interesting problems pop up in the most unexpected places. Our challenge is prepare ourselves so that we can capitalise on the the opportunity a problem represents. As a famous golfer once said:

Gary Player
Gary Player

The more I practice, the luckier I get.
Gary Player

The world around us changes so rapidly that innovation can seem random. The snowmobile was obvious to the people who invented it, as they worked via trial-and-error from the original problem they wanted to solve through to the completed solution; it didn’t leap from their brow as a fully formed concept. Develop your interests, become fluent in a wide range of relevant topics and environments, use your network to extend your reach even further, and look for interesting problems to solve. In a world awash with good ideas, when innovation relies on your ability synthesis new solutions by finding an new angle from which to approach old problems (possibly problems so old that people forgot that they had them), the key to success is to find our own focus and then use your own own interests to drive yourself forward while effectively leveraging your network and resources around you to take as much of the load as possible. Innovation is rarely the result of a brilliant idea, but a patient process of finding problems to solve and then solving them, and sometimes we’re surprised by how innovative our solutions can be.

Innovation [2009-11-16]

Another week and another collection of interesting ideas from around the internet.

As always, thoughts and/or comments are greatly appreciated.

  • Warren Buffett’s bet against innovation [BusinessWeek: Innovate]
    In proclaiming an “all-in wager on the economic future of the United States, Warren Buffett just paid $44 billion for a 19th century technology platform, a railroad, that carries 20th century goods—coal, agriculture, imports from Asia, petroleum. This is a vision of an America mired in the past and in economic and political decline. And Buffett just might be right. He has a great track record betting against innovation.
  • Embracing Innovation: a new methodology for feature film production in Australia [Centre for Screen Business]
    Do too many Australian films fall into a budgetary ‘no-man’s land’ – not big enough to compete with the US studios, yet too big to stand a chance of commercial viability in a market flooded with independent films? Robert Connolly’s recommendations provide us with valuable grist for the mill as we, in the IT industry, work our way through the current evolutionary phase our industry is going through, driven by the shift from large, on premises applications to a future increasingly dominated by cloud solutions. His approach to the problem is also an excellent model of how to engage with the wholesale transformation of an industry.
  • 10 examples of minimum viable products [Venture Hacks]
    Brilliant products are rarely the result of brilliant ideas. Most products start small, as minimum viable products, and then grow as the customers and developers work together to learn what the product should be.
  • What do the crowds know about innovation? [Innovate on Purpose]
    Companies use different strategies and techniques for crowdsourcing ideas. All of these approaches help gather ideas from the crowd, but they also serve as trend spotting and public relations opportunities as well, and some companies might be more interested in these secondary effects. As Henry Ford pointed out, “If I had asked my customers what they wanted, they would have said a faster horse.”

Innovation [2009-10-18]

Another week and another collection of interesting ideas from around the internet.

As always, thoughts and/or comments are greatly appreciated.

Are we wasting our time searching for the next brilliant idea? That idea that’s going to drive a disruptive innovation. The race for the new-new thing. The innovation silver bullet. Or is innovation the result of combining many small, commoditised ideas? With the real challenge being the identification of interesting problems and synthesis of a new solution from the sea of good ideas we’re swimming in, in today’s hyper-connected world.

  • The good enough revolution: when cheap and simple is just fine [Wired]
    Jonathan Kaplan and Ariel Braunstein made a cheap, feature poor video camera, the Flip. Two years later, the Flip Ultra and its revisions are the best-selling video cameras in the US, commanding 17 percent of the camcorder market. Sony and Canon are now scrambling to catch up.
  • Cheap IVF offers hope to childless millions [New Scientist]
    By leveraging good enough, low tech tools and techniques, the Low Cost IVF Foundation (LCIF) has transformed IVF from a luxury of the rich western countries, into a tool for alleviating the public ridicule, accusations of witchcraft, loss of financial support, abandonment and divorce, not to speak of their own shame and depression associated with being childless in the third world. “If you are not able to conceive, you are not [considered] normal,” says gynaecologist Abdelrahim Obaid Fadl Allah of the University of Khartoum clinic.
  • Forget lawn mowers, bring in the goats [TreeHugger]
    Sometimes the old school solution is the best solution. They chose the goats because they’re a non-polluting alternative that’ll eat up just about anything. “They [goats] can clear vegetation from hard-to-reach places, and they’ll eat the seeds that pesticides and mowing leave behind, preventing vegetation from coming back next year.”
  • Conservative innovation [Nicholas G Carr]
    Many of the of the innovations which drive the corporate world forward are the result small, incremental steps and not large, bold strides based on brilliant, game changing ideas. Toyota’s hybrid is a good example of this incremental, conservative approach.

The NBN wants to be free

There’s been a lot of discussion on what Austalia’s national broadband network (NBN) will cost when it’s finally delivered to consumers. How much will we need to stump up to take part in today’s knowledge economy? Most cost recovery models have ISPs charging monthly fees of over $200, which is a lot more than the $50 per month most of us are used to paying. Who’s gonna pay that? A lot of folk have been pointing out the folly of forcing through a broadband network that few of us can afford, let alone be bothered to pay for.

Is this missing the point though? What if the government’s intention is to make the NBN free (or close enough to as to make no difference)? Much like most other public infrastructure such as roads. There’s precedents for this, from the New Deal though the recent government report on supporting innovation and the fact that the government is sitting on a large pile of money that they intend to spend.

The global financial crunch has had a dramatic impact on everyone’s lives, though Australia has been in the lucky position of avoiding the worst of the down turn. Australia is even the first large, rich country to raise interest rates on the back of the world recovery. Discussion has now turned to the nature of this recovery: will it be V or W shaped? Most of the smart money (including the RBA’s) seems to be settling on W shaped, with the potential for unemployment to rise in the short to mid term. The war chest the government accumulated to fight recession is still quite full, and the government has stated that it plans to stick to the large stimulus plan announced earlier in the year.

Recessions often to bring governments to think about major infrastructure projects. The U.S. went down this route mid century, with Congress having a few attempts at chartering a “National System of Interstate Highways” before Eisenhower made it a reality. I haven’t seen a figure for the investment required, but I expect it to be scary. The impact, though, was profound on the U.S. in general, and the economy in particular. Through the years, various estimates have been made of the contribution of the interstate highway system to the economy, generally finding that the interstate highway system has more than paid for itself in improved commercial productivity, with each dollar of investment in highways producing an annual reduction in product costs of 23.4 cents. It is estimated that the interstate highway system is now producing approximately $14 billion. All this from something you can use for free.

Fast forward to the future, and we can find an interesting report, Powering Ideas, recently published by the Australian government, outlining how what Australia might do to support innovation domestically. The report is quite long but at its nub, it points to a strategy of funding the infrastructure required by innovators it make it easy (and cheap) for them to innovate. This doesn’t mean that the government is getting out of the grant business, but it is an admission that the government doesn’t have a great track record of picking winners in this space. Cheap (if not free) infrastructure helps those grant dollars go further, while at the same time helping every innovator in Australia who wasn’t lucky enough to receive a grant.

Put the two of these together and it makes you wonder: what if they Australian government makes the the NBN free? Back in the 30’s the U.S. economy was driven by interstate commerce. Reducing the cost of trucking goods across the country (reducing the transaction costs) helped drive the economy forward. Today, in Australia, knowledge and collaboration are the back bone of the commerce. Reducing the cost of sharing information and collaborating has the potential to have a similar impact .

Like free and efficient roads, very cheap broadband access would help the entrepreneurs and innovators thrive. This would provide Australian’s with powerful platform to build businesses in a today’s knowledge economy. We could capitalise on the current trend for software-as-a-service (SaaS) startups replacing business process outsources (BPO), replacing a human labour driven solution is a software driven solution, servicing the world’s needs from our home base Research driven startups would have cheap and efficient access to the massive data sets which drive modern research, having the world at their fingertips.

You would probably still need to pay for the last mile, connecting your abode to the NBN backbone, but this is similar to the current energy delivery commitment from the government: they get the power lines to the property boundary, and then you pay someone to connect it into the house. Local ISPs could provide (or organises) the connection service, along with sorting out the home network and providing support. The NBN would also probably need to expand to include the link overseas, complimenting (or replacing) the network of links funded and managed by the existing telcos and ISPs.

And finally: where do the major Australian telcos fit in this? Interesting question. One probably better left to them to answer.

Innovation [2009-10-05]

Another week and another collection of interesting ideas from around the internet.

As always, thoughts and/or comments are greatly appreciated.

This issue:

Innovation [2009-08-10]

Another week and another collection of interesting ideas from around the internet.

As always, thoughts and/or comments are greatly appreciated.

This issue: