08/08/2013 - 14:59

Worlds collide as cuts change the game

08/08/2013 - 14:59


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Leaders come in many guises, and despite external differences they have more similarities than may be immediately apparent.

BENCHMARK: Aboriginal leader Noel Pearson believes the indigenous business growth in WA sets an example for the rest of the nation.

Leaders come in many guises, and despite external differences they have more similarities than may be immediately apparent.

What does a tech whiz from Silicon Valley have in common with an Aboriginal leader from Cape York?

On the surface not much, but they are both thought leaders and they were both in Perth on the same morning, speaking at events I attended.

It might be a stretch to draw parallels between these two but there was a moment, for me, when these two worlds collided, providing me with the opportunity to indulge my thoughts and dwell on what I had learned.

Firstly, at breakfast on Tuesday, there was technology consultant JB Wood, author of Consumption Economics, who was the keynote speaker at conference organised by listed IT firm Amcom. Mr Wood, like many Americans, doesn’t appear to have a first name, just initials.

Later that morning Noel Pearson, outspoken chairman of the Cape York Group, was a distinguished guest speaker at a Fortescue Metals Group function to celebrate the milestone of $1 billion contracts awarded to Aboriginal businesses.

One was from the cutting edge of America’s entrepreneurial new money heartland, while the other represents the progressive fringe of one of the world’s most disadvantaged groups of people.

Yet there was a common thread.

Mr Wood specifically addressed the changes going on in his sector – with IT firms increasingly shifting away from big front-end contracts that provide systems or software with huge complexity to customers who often have to wait years for the benefits, often never quite getting to grips with the capability they are paying for.

He suggests that model is changing rapidly as cloud computing allows software and systems to be housed externally and for customers to pay for services as they use them.

His analogy was a homeowner wanting a tree for their front garden. The contractor typically supplied a sapling, dug the hole and planted it, leaving the homeowner to care and nurture the tree. The risk lies with the purchaser to produce the outcome they expected when they bought the tree.

Consumptive economics changes that proposition to an ongoing relationship where the contractor not only plants the tree, but also is involved in its growth from sapling to mature tree. The contractor takes on some of the risk but ensures an ongoing income stream.

They shift from providing a product to a service.

And a tree is not that far away, as analogies go, from the world of mining in Western Australia, which is a large and important employer of Aboriginal people and user of the businesses they own.

While many indigenous contractors are already in the service end of the business, the reality is that most of the work these contractors have done to date has been the front-end, one-off work linked to construction – planting the tree.

Certainly they have won waste management, landscaping and catering contracts, but many of these have revolved around construction camps with far more finite lives than the mines they are constructing. The next phase is operations, and that is where they will need to adopt their newfound skills and be prepared for fierce competition as the construction boom shifts to the lower spending, long-term job of extracting minerals.

The sector, of course, has plenty of services firms already, including serious contract miners who, arguably, already nurture the tree as much as plant it. Indigenous businesses just have to make sure they are competitive in this next part of the Pilbara story, but at least they are involved first hand with real economic development and playing their part in the consumption economy.

Mr Pearson told a big audience on Tuesday he was surprised by what he had seen recently in terms of Aboriginal business development in the Pilbara.

Having been outspoken in his desire to see such change, Mr Pearson admitted that he had missed it due, presumably, to his location and focus on the other side of the continent, most notably far north Queensland.

“I was out of the loop about what you have been doing here,” said Mr Pearson, describing the scale of contracts awarded to indigenous businesses as a new benchmark for Aboriginal Australians to enter the mainstream economy.

“WA is turning philosophy into action.”

The mining sector’s indigenous contractors and the IT industry are not worlds apart by any means.

Amcom has Mr Wood out here because it knows that the next phase of industrial change will come with a heavy IT component. In WA, resources companies are already turning to technology to lower costs and become more efficient after the growth binge and spending spree of recent years.

Many predict the indigenous business sector could suffer as mining companies cut back and, in many cases, are no longer able to afford the luxury of having a conscience.

Yet Aboriginal businesses, once equipped with know-how and experience for contracts already won, may well be better placed to compete for the more sparse operational contracts that will be the longer term norm, especially if they are less reliant on expensive fly-in, fly-out workers to provide the skills and labour.


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