Australia: Taking Bigger Steps
Australia:Taking Bigger Steps
Are Australia’s best days over?Or ahead of us?Australia may be theenvy of the world, butthe country needs todo more to prepare forthe imminent wave oftechnology disruptions.
Australia: Taking Bigger Steps
Australia: Taking Bigger StepsG
eopo
litic
al c
ohes
ion
Hig
hLo
w
Low HighEconomic growth
Regional trade agreements
CommonisationAddressing climate change
Rise of knowledge economy
Automation and 3D printing
Growth in sharing economy
Globalisation 3.0 Increased prosperity
Dramatic improvements in ICT
Low commodity prices
Polarisation
Risinginequality
IslandisationPersistent macroeconomic uncertainty
Heightened nationalism and protectionism
Return of geopolitics
Four economic scenarios could play out on theworld stage
Note: ICT is information and communication technologies.Source: "From Globalization to Islandization," Global Business Policy Council Perspective, January 2016
Australia: Taking Bigger Steps
Which scenario is most likely to unfold?
Trade flow
Capital flow
Globalisation 3.0
Economicgrowth
Unemployment
Inequality
Low
Moderate
High
High
High
Internationalmigration
High
Regulatory convergence
High
Polarisation
Moderate
Moderate
Moderate
Moderate
Moderate
Moderate
Moderate
Islandisation
Moderate
High
Low
Low
Low
Low
Low
Commonisation
Low
Low
Moderate
Low
Low
Low
Low
Source: "From Globalization to Islandization," Global Business Policy Council Perspective, January 2016
Since 2014, increasing evidencepoints to “Islandisation” as themost likely scenario for Australia:• Global trade is falling and protectionism is rising
• Many traditional fiscal and monetary policy instruments are no longer relevant
• Fringe and populist political movements are on the rise
• Geopolitics has returned
• The international system is under serious strain
Australia: Taking Bigger Steps
The lucky countryAustralia ranks second afterSwitzerland on The Economist’s where-to-be-born index, o�ering the best futureto its newly born citizens. Can Australia maintain this position?
Australia: Taking Bigger Steps
A formula for sustained prosperityThree areas stand outas critical enablers forAustralian businesses:• Productivity• Innovation• Globalisation
Australia: Taking Bigger Steps
Australia: Taking Bigger Steps
Australia’s position does not appearstrong enough to withstand thecentripetal force of Islandisation
Productivity
SingaporeAustriaFinlandAustraliaCanadaSpainItaly
11121314151617
Innovation
CanadaFranceAustraliaNorwayJapanBelgiumSpain
15161718192021
Globalization
NorwayUnited KindomFranceAustraliaItalyPolandMalaysia
12131415161718
Source: A.T. Kearney analysis
Australia: Taking Bigger Steps
12 disruptive technologies will have profound implications for Australia’s economic structure
Near term (now)1 Medium term (<5 years) Longer term (>5 years)
Mobile technology and applications
Cloud technology and applications
Data, applications, and services stored, secured, managed, and accessible remotely
Connected mobile devices and supported applications
Internet of Things
Renewableenergy
Systems that generate electricity from non-depleting natural resources
Objects transferring data to one another
Virtual reality 3D printing
Successive layers of material formed under computer control to create an object
Simulation of physical presence in a real or imagined world
Blockchain
Mechanism of storing ledgers across a network of connected computers
Advanced robotics
Machines with enhanced senses, dexterity, and intelligence
Genomics
Reading and writing the genome of organisms, including humans
Energy storage
Devices that capture energy produced at one time for use at another
Autonomous vehicles
Driverless or self-directed machines
Artificial intelligence
Computer system capable of generating its own insights
1 Timing of impact defined as when technologies have “crossed the chasm” from early adopter (technology enthusiasts) to the early majority (pragmatists), Geo�rey A. Moore, Crossing the Chasm, HarperCollins, 1991Source: A.T. Kearney analysis
Australia: Taking Bigger Steps
The industrial impactIt is not a question of if an industry willbe disrupted, but rather when it will be disrupted, how many technologies willa�ect it, and to what degree.
Australia: Taking Bigger Steps
No Australian industry is immune to technology disruption
HighImpact: Low
1 Others include construction, wholesale trade, transportation, real estate, and government2 ABS Cat. No. 5206.0, table 37, Jun 20153 ABS Cat. No. 6291.0, table 04 (seasonably adjusted), Nov 2015Source: A.T. Kearney analysis
IndustrySelect disruptiveplayers
GDP($Bn)2 D
isru
ptio
n im
pact
Mob
ile te
ch
Inte
rnet
of T
hing
s
Clo
ud te
chno
logy
Rene
wab
le e
nerg
y
Vir
tual
real
ity
Bloc
kcha
in
3D p
rint
ing
Aut
onom
ous
vehi
cles
Art
ifici
al in
telli
genc
e
Ener
gy s
tora
ge
Adv
ance
d ro
botic
s
Gen
omic
s
Number ofemployees(k)3
Medium term
Disruptors
Near term Longer term
Retail
Health
Manufacturing
Telco and tech
Utilities
Finance
Logistics
Education
Agriculture
Tourism
Others1
Total
Mining
Professional services
Kogan.com, Amazon.com
Scanadu
Stratasys
Tesla, Nest
PiggyBee, FedEx
Khan Academy
Komatsu
WhatsApp, Snapchat, Google
Bitcoin, Nest, Simple
The Climate Corporation
Xero
Airbnb
72
105
100
47
44
141
74
76
139
96
36
39
544
1,512
1,277
1,522
848
223
140
450
609
937
226
1,020
309
823
3,514
11,900
High
Med
Australia: Taking Bigger Steps
Defensive crouch
Lower risk, lower growth potential
• Double down on traditional core business
• Structurally insulate from imminent disruptions
• Limit or exit international investments
Global o�ensive
Higher risk, higher growth potential
• Focus and invest in R&D and innovation
• Take risks and embrace disruptions
• Pursue new international opportunities
2003 World Cup FinalThe Wallabies pack down against England; Newspix
1991 World CupDavid Campese, Man of the Tournament; INPHO
What will Australia choose?Defensive crouch or aggressive o�ence?
Source: A.T. Kearney analysis
Australia: Taking Bigger Steps
ProductivityDiscrete, businessunit-led programs
Whole-of-companymega transformation
InnovationAustralia-focusedinnovation
Innovationfor the world
Growth andglobalisation
Smaller, low-risk bets,proximal markets
Bigger, long-terminvestments
Companies must rise to the challengeand take bigger steps in three key areas
Source: A.T. Kearney analysis
Australia: Taking Bigger Steps
Carpe diem, AustraliaIn the face of future adversity, how will AustralianCEOs and boards respond?“If we want to change, the change begins with us.””If not you, then who? If not now, then when?”
For more information about Australia: Taking Bigger Steps,please visit: www.atkearney.com.au/strategy/australia-taking-bigger-steps
Australia: Taking Bigger Steps