Reading the future

Australia’s recovery and job creation, especially in Victoria, has been ahead of the rest of the world, generating concerns that the economy will grow too fast if we follow other nation’s retention of stimulus packages.

In the first half of this year, firms will be cautious about taking on full-time staff, attempting to stop the poachers pinching their best performers, extending their social networking and coping with the bank’s demands for more and more paperwork before considering extending loans.

The inherent pattern of the past year reflects decisions to casualise labour, cut back from full-time to part-time staffing and to increase productivity by getting more from less more often.

As Australia moves into the recovery phase that justifies Lindsay Tanner’s halt on the spending urges of his cabinet colleagues, we need to identify the steps to be taken to achieve small business expansion, rather than dampen the sense of renewal that emerges with business and consumer confidence.

In an address to this week’s International Women’s Federation of Commerce and Industry (IWFCI) forum on the future for small and medium enterprises, this blogger suggested that the restoration of the equities market to more normal levels represents a challenge to smart companies in the face of political and economic pressures. While the US is still adding to the jobless at a rate of 90,000 jobs a month and the Europeans are bailing out the Greeks, the Opposition benches demands a halt to our rate of growth.

This week’s ABS unemployment figures showing unemployment falling 0.2% to 5.3% are taken by the Government to confirm the is trend back to normal, including a potential return to 5% interest rates before the elections this year. Westpac Economics says that six out of 10 households expect interest rates to rise more than one percentage point this year as their consumer sentiment index recorded a fall (compared to no change in the Morgan index).

The Morgan poll shows their consumer confidence rating is now 34pts higher than a year ago, February 7/8, 2009 (94.1). In terms of personal finances, now 44% (up 1%) of Australians expect their family to be ‘better off financially’ this time next year compared to 11% (down 3% – and the lowest since October 17/18, 2009) of Australians that expect their family to be ‘worse off financially’.

More than half of Australians recognise that the stimulus package has worked and that ‘now is a good time to buy’ major household items, compared to only 13% (down 5% – and the lowest for nearly four years, since March 2006) that say ‘now is a bad time to buy’ major household items. In the last year, to the end of the September quarter, real household income rose by 7.3%, with consumer spending rising by only 1.7% as savings increased by 5.5% of income over the year.

The RBA has stated clearly that: “if economic conditions gradually strengthen as expected, it is likely that monetary policy will need to be adjusted further over time”. The bank is much more concerned about keeping inflation within its 2-3% target over the medium-term than helping create full-time jobs.

Glenn Stevens made this clear in his statement this week that monetary policy could be more accommodative if governments show a relatively rapid return to balanced budgets as this would have the advantage of keeping down the interest bill on government debt.

As Gary Morgan points out, however, a closer look at the figures reveals a worrying drop in hours worked in the Australian economy in January — down 14.8 million aggregate hours from December 2009 to 1,518.1 million hours — which is also 18.3 million hours lower than January 2009 and 12.7 million hours lower than January 2008.

The number of hours worked by full-time workers has dropped alarmingly to 1,288.1 million hours (down 17 million hours from December 2009) while hours worked by part-time workers has increased for the ninth straight month — up 2.2 million hours to 230.1 million hours.

Under these conditions, there are a number of steps that smart companies need to take to shift from a recovery mentality into one of organisational renewal:

1. Massage the customer database to build better customer relationships with your long-term and loyal customers.
2. Make contact with business angels and venture capital
suppliers seeking growth enterprises.
3. Establish cross-cultural and cross-border networks that
extend your business into emerging markets.
4. Explore opportunities to value-add on your current range
of products and services.
5. Develop rapid response capacity to new marketing efforts of your competitors (eg. the current liquor store campaigns).
6. Go beyond your circle, especially if it is family and friends, to find new customers.
7. Create an opportunities register out of customer queries.
8. Use the new social marketing media to build brand presence.
9. Join industry and business alliances that extend your reach.
10. Build your emotional resilience and watch out for pressures and stress fractures in the OH&S environment.

Now is the time for the very tough second half of this year as the RBA raises rates, the government cuts its budget and stimulus packages and the rest of the world becomes protectionist for awhile.

For more Futurist blogs, click here.

Dr Colin Benjamin is an entrepreneurship and strategic thinking sonsultant at Marshall Place Associates which offers a range of strategic thinking tools that open up a universe of new possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship.

Email dr.colinbenjamin@marshallplace.com.au
Contact: CEO Dr Jane Shelton, Phone +61 3 9640 0099