A MAD Budget

In disruptive environments everything is prone to MAD. Organisations, communities, economies and countries – even jobs and skills – can all have an element of MADness about them. Think of the boiling frog analogy. A frog is placed into water and gradually the heat is raised. The frog continually adapts until it realises it has adapted to a point where it is in danger. At that point it has also lost the capability to get out of danger thus becoming the architect of its own demise. That is MADness.

So when I see a budget like that presented last night by the Federal Treasurer my first question is: is this just more MAD? Or, is it a genuine strategic attempt to transition a mid-stage MAD economy from reliance on mining to a more diversified platform that will deliver worthwhile jobs, better productivity, successful organisations and overall wealth creation?

I think the intent is there, but I don’t see the required substance. This is especially evident when considering the Australian economy is still enjoying the fruits of the past, has no industries comparable to mining or resources to drive growth and does not take the disruptive nature of the immediate future into account.

Tax relief is welcomed by business,
but when in history has reducing costs
generated sustainable growth?

Making it cheaper to do business through tax cuts, incentives and easing regulation does provide a much needed measure of support. But no business has ever produced a sustainable profit through reducing costs, and no economy has transitioned by government stimulus alone. It takes technological, product and business model innovation by individual organisations to do that. That is the real stimulus that drives sustainable organisations and economies.

So that obviously leads us to the current ‘Ideas Boom’ policy for business that the government launched last year. How far does it go to address Australia’s state of MADness?

Well I think there are some areas in which the Federal Government could do much better.

We need quick wins.

A focus on start-ups is important and needs to be a part of the long-term strategy. Unfortunately, we need to transition the economy now and don’t have the time required to nurture not only the maturation of start-ups but also the entrepreneurial ecosystem needed to drive robust deals, decent deal flow and funding at a scale to realise economic benefit. We need quick wins.

Pairing industry with research institutions is another great idea. Again, this is one that Australia has been trying for years with few real outcomes at scale other than supporting our mainstay mining economy. Once again, the maturation of these relationships will take precious time.

The “helping business to take advantage of the digital world” element falls way short of what is needed if it merely “establishes an industry-led Cyber Security Growth Centre to create business opportunities for Australia’s cyber security industry”. The truth of the matter is that too many of our business leaders are not up to speed with digital disruption and will require immense support in that area if digital technology is to be a mainstay of our economic future. We need tech-savvy boards and execs who can immediately grasp new thinking and technology and innovate new business models that can compete and win against the likes of AirBNB, Uber, Tesla, SpaceEx, Apple and Alphabet.

Target our ‘sweet spot’ –
mid-sized private companies.

We do need to target organisational innovation in our SMEs, start-ups and large Australian owned corporates. But the ‘sweet spot’ is our mid-size, privately owned companies turning over between $100 million and $300 million. While this range is semi-arbitrary, it indicates a level of resource and professional management capability that can be repurposed to take on rapid and innovative change.

What can we do to get these type of organisations to drive 21st century innovation that will drive sustainable economic growth? That is the question on my mind.

Also, what is in it for two of the fastest emerging industries – alternative energy and micro-manufacturing. Where are the initiatives to not only transition and grow our move to low-cost, sustainable energy sources, but to develop a robust alternative energy sector of global capability? And, given the death of our large scale 20th century manufacturing industry why don’t we transition that immense competency we already have to the emerging micro-manufacturing sector – at a very low cost? Aren’t they two quick wins?

We need to lead the way.

I also think, that at this stage in the maturity of the Australian economy, we cannot rely on government to lead this change. Hard as they try, they are plagued by their own political nightmares and suffer from the lack of agility of any large bureaucracy. Individual organisations and industry has to do it themselves and hope that the government will either support them, or get out of the way.

If this doesn’t happen we are all exposed to the insidious and chronic disease of MADness.

What do you think?