The end of get-rich-quick schemes (for now)

The last 20 years has been pretty unusual.  There has been a lot of opportunities to get rich quick (or get poor if you messed up). There was the Internet boom and bust, a few stock market booms, rising house prices, rising commodities prices, low unemployment, a housing boom and huge wages for mining workers.

Source: Reserve Bank of Australia

So, whether you were white collar or blue collar, there have been plenty of ways to get rich if you took a few risks.

It's over!

Back to the old days - do things that people want

What is going to happen now is simple. If you offer products or services that people want, they will be bought, at a fair price. If you are a healthcare worker, there is a lot of demand for your services - you will be able to get work and charge a fair price for it. If you are a manufacturing worker in Australia, there is less demand for your services.  You will need to be one of the best manufacturing workers, or reskill, or do something different.

More importantly, as a society, we need to think about what people want, and create those products and services.  Before mobile phones, few people thought that having a mobile phone would be a necessity. They were a luxury item.  In hindsight, we can see how useful they are, and mobile phone companies have done very well.

Before the washing machine, the idea of having a mechanical way to do laundry wasn't obvious. But once the washing machine was invented, every washing person (mainly, women) wanted one. (Watch Hans Rosling's great talk for more on this). And increasingly, we are happy to pay for the services of others to do other cleaning for us.

What happens next?

Now, it is up to us, to identify what the next washing machine is.

Ask yourself, what do I want? What does my neighbour want?

Ask yourself, how can I do what I already do better, faster, more effectively?

Ask yourself, how can I "sell" my great services better.  I know that what I offer to my firm, or my customers is valuable.  I need to communicate that value better.

Every transaction has to offer value to both sides.

Ask yourself, am I doing something that nobody wants or needs any more? If you are handwashing clothes, while everyone else is using a washing machine, sooner or later, your customers will politely stop paying for your services.  Make sure that you keep up with the times.

We will get wealthier as we continue to be more productive

By doing all of these "normal" things, we will get a little more effective every day.  Our incomes will grow a little every day, and our standard of living will grow a little every day.  It won't be a get-rich-quick scheme.  The improvements will often be so small that you won't notice it - much like healthy eating - one day you look back and realise that you have taken off weight.

So, in 2013, let's all get rich moderately quickly.  Let's all try to do just a little bit better in what we do, or change what we do and choose something different. When we all do that, we all benefit.

In 2013, let's be innovative, productive, and creative.  By the end of the year, you will notice the difference.

Let me know what you think

Mark S

Australian success will come from tall poppies

Source: abraham-maslow.com

Back in 1943, Abraham Maslow developed the theory we know as "Maslow's hierarchy of needs".  Simply, humans will ensure that they satisfy more basic needs first, before they satisfy more advanced needs that are higher up the hierarchy.

First we need food, water, shelter and sex.  Next we need to be physically and emotionally safe. Then we need love and belonging, relationships followed by self-esteem.  Finally, we want to be the best we can be, to self actualise.

Don't chop down the tall poppies

Australians have a habit of being critical of people who strive to achieve, unless it is in sport.  So, let's think about what this means we are doing.  Once an individual has achieved their more basic needs, they will naturally strive to achieve greater self esteem.  Among young children, we advocate this very strongly - they must feel good about themselves.

Yet, among adults, when they strive and succeed, we feel entitled to criticise. We are saying to them - you are higher up the ladder than I am, so I'm feeling uncomfortable about that.  Comparatively, that's hurting my self esteem.  So, I'm going to chop you down.

We don't do it to our sportspeople, because we are all on the same team.  When Cadel Evans won the Tour de France, we all won. Our self esteem rose together.

By denying others the basic human motivation to achieve more self esteem, we are denying it to ourselves.  We must stop chopping down tall poppies.

It's about being better in everything we do

Should I only strive for a mediocre meal?

When we deny others the right to succeed and better themselves, we are denying that to ourselves as well.  Tonight, I cooked salmon, mushrooms and asparagus for dinner.  If I cook a good meal, I'll likely get thanked (as I did). My self esteem gets an uptick.

Is that enough? Well no.  If I don't seek to do better, and exceed those standards, soon I won't be getting thanks, I won't be satisfied with my own performance and I won't be happy with myself.  If I do better, the salmon will be perfect every time.  The presentation will improve more and more, the asparagus tender and not woody, and so forth. 

If I did really, really well, who knows - I could finish up on Masterchef! Is that the moment when Australia would start to chop me down, just as I am reaching the very limit of my potential?

To improve productivity we must champion our successful citizens

The same applies in all walks of life.  The more successful that individuals are, the more of their potential that they are achieving, the more visible success (often money) that they gain.  It is these people who are successful (and generally wealthy) who are improving our productivity.  It is these people, who are improving our productivity, who are improving the quality of life for all Australians.

No, it's not the same as Ronald Reagan's rhetoric that a "rising tide lifts all ships".  That was just an excuse not to ask wealthy citizens to pay their fair share of taxes.  It's about creating a culture of success, just like Cadel Evans' team does with him.

When we notice an individual achieving more, we must applaud it - regardless of what field of endeavour it is in.  Let's all promote each other's self esteem and increase our productivity and success.

Let me know what you think

Mark S

Business models change. Industries must adapt or die.

Although we are now well into the 21st century, I'm still surprised at how often there are calls to protect certain dying industries in Australia. Protectionism is simply bad economic policy. All it does is delays the inevitable.

The foreign competition argument for protectionism is growing from Bob Katter

Most arguments in favor of protectionism focus on the threats of foreign competition. Bob Katter and his new Australian Party are now leading the charge to "protect" Australia from China, Thailand, Philippines and Singapore. Of course, Bob is just pandering to those who see themselves as under attack from foreigners.  He is drawing on a potentially potent mix of short-term self interest and misguided patriotism, verging on xenophobia.

The Australian Party is committed to providing support and protection to Australian industries and reversing this madness - Bob Katter

Technological change is more important than foreign imports

Horse & buggy, Port Melbourne c.1900

The most important argument against protectionism is actually about technology change. Technology is not new and it will continue forever.

Let's take transport as an example. At the turn of the 20th century, the horse was the most common form of urban transport. But when the motor car was invented, jobs for blacksmiths and farriers declined sharply.  Yes, it was an economic problem for those employed in the horse-related industries.  On the flipside, the motor car created a whole new range of employment opportunities.

The same is happening in the early part of the 21st century.  Technological change from improved manufacturing processes have reduced items that were highly technical to mere commodities, and made them unprofitable.  That's the reason some forward thinking companies such as GE have moved on from manufacturing appliances to focus on higher value products such as medical equipment.

It's (the appliances business) a low-margin low-growth company being attacked by foreign competition

Those appliances are still being made - but by lower cost labor in emerging economies.

Technology change from the Internet is more dramatic

Over the next few years, the Internet will accelerate the pace of change of existing industries.  For example, already the development of Google Maps has rendered the old map making business model obsolete.  And this is just the start.

The big change is that services which used to be provided by experts will now be accessed by individuals themselves.  Instructions and systems are popping up all over the Internet, to do it yourself:

• Do it yourself wedding stationery - is fast making printers obsolete
• Do it yourself will kits - reducing the role of the family solicitor
• Digital photography and Facebook - cutting deeply into the professional photography market.
• A Google search - reduces the need for the average computer technician
• ETrade - means most shareholders no longer need a stock broker

If you are a wedding stationery printer, family solicitor, stockbroker or professional photography there is a natural desire to call for some protection for your industry.  Yet, that will only delay the inevitable.  Your industry is changing - you need to change with it.

Create the infrastructure for the layman.  The democracy of Google.

Industries that are currently serviced by experts will slowly become the realm of the layman.  One by one, professional services will be simplified, codified and made accessible to everyone.  It's democratisation by Google.

In 1985 when I was first trading shares, I never thought I'd be able to transact myself.
In 1990 when I was audio taping focus groups, I never thought it would be possible to video tape and edit them on a laptop computer.
In 1991 when I published a book via a publisher, I never thought I'd be able to self publish online.
In 1996 when we built our first website, I never thought I'd be able to create a website.

Instead of each of these services providers being paid for the labor, now we are happier that their knowledge has been transferred into infrastructure that we can tap into as we want.

Consultants and professional services are like manufacturers - be ready for the change

In 2011, there are a lot of things that I still need an expert for, but that won't be the case in 2020.  Consultants and professional services will become more and more accessible.  The change will be towards more and more automation, and online access.  I'm one of those consultants, and I'm enthusiastic about the change.  If you are a manufacturer, you should embrace it too.

If you are in an industry facing change, embrace it.  Specialise, innovate, develop infrastructure.  Just don't ask for protection.

Let me know what you think

Mark S