Forward thinking company directors, senior executives, managers and workers spend considerable time and effort seeking answers to critical questions about the future of their business. These questions include:
- What competitive advantage does our business have over other businesses offering the same products and services and how do we sustain this advantage over the long term?
- How do we create further competitive advantage in a changing marketplace?
- What are the external conditions the business needs to take advantage of, or respond or react to, and does our business model need to change, to maximise the prospects of future success?
The discussion paper Building Australia’s Comparative Advantages published this week by the Business Council of Australia provides high quality data concerning the challenges and opportunities faced by Australian business which relate to these questions. It highlights fundamental changes to the labour market and in turn, the workplace. These challenges and opportunities include:
- the rapid pace of technological development, which has made almost everything tradeable on a global scale and is enabling new business models to be developed that are challenging incumbent players (think print media in Australia). One consequence of this is that the ability to use technology is now a prerequisite for employment;
- labour supply is quickly becoming global and more competitive, with workers moving freely around the world – even small businesses can now purchase a range of services (for example, bookkeeping) from around the globe; and
- emerging economies – mostly in Asia – moving up the value chain and increasingly competing with advanced economies, whose growth will remain subdued for the next several years.
The key message from the 57 page report is that the only way to guarantee success in the new global marketplace is to compete at a world standard. This applies equally to businesses selling only to a domestic market because it is only a matter of time before the business will face global competition.
At an individual level, workers need to maintain and invest in their skills more than ever. It is recognised that this presents some policy challenges for government to ensure that Australia’s workforce (which is of a relatively small scale) is well qualified and highly skilled.
Australia’s productivity report card, as analysed by McKinsey & Co., is mixed, with only three of the 12 sectors considered – agriculture, mining (including LNG) and finance – regarded as competitive in world terms. Of course, it was noted that, within any one sector, some firms will be competitive and others less so.
Predictably, the report found that Australia’s workplace relations system contains some labour market rigidities that threaten its economic interests. This is undesirable in circumstances where Australia’s businesses need more than ever to adjust quickly to changing economic circumstances, whether by changing the overall business model or making operational improvements. Unquestionably, every enterprise should establish a workplace relations framework which fosters future success. Answering the questions above will involve vision, creativity, and a willingness to make changes (those intangibles of success) even when things are working well and there seems no pressing need.