Readying for a CEO mind-shift

Global competition is permeating beyond manufacturing into Australia's accounting, retail, education and IT sectors and not all CEOs will survive the resulting revolution.

While the European sharemarket was falling last night I was witnessing Australia's own version of a Greek tragedy.

The IBM CEO Pulse survey dinner I attended brought together chief executives from both our largest and medium sized companies. It was a fascinating exchange of views that really enlightened me about what is ahead for our nation and a large number of our companies.

In a great many industries Australians are going to have to produce services and goods that match the best value for money available anywhere in the world because international competition is here to stay.

We have become used to global competition in manufacturing and we are now going to get it in services like accounting, retail, education and increasingly in computer technology. If you can’t cut the mustard in this environment then the outlook for your enterprise is bleak.

The entrepreneurs in the room were just overjoyed at the opportunities they are seeing and were an inspiration. Their opinion of the remarks of Wayne Swan are not printable.

But in contrast the CEOs of many large companies which have big labour forces sag at the chin. They know that to survive and prosper they must lift the output of their employees and they know that technology can help them do this. But many are faced with a workforce that has a culture of entitlement and that culture of entitlement has been multiplied many times by the current industrial relations laws.

And this global competitiveness is taking place when Australian interest rates are high in relation to the world and our dollar is seen as a safe haven for global slush money. The high dollar environment is not likely to change in the foreseeable future. In addition you can add the carbon tax to the weight in the corporate saddle bag

The new Fair Work Act added some 120 union powers, all of which were directed at lessening the flexibility of the labour force and making it impossible to achieve the flexibility required for enterprise prosperity or in some cases flexibility required to survive.

We are also in grave danger of further substantial falls in government productivity. Nowhere is this danger greater than in the Victorian nurses dispute where the nurses are conducting an enormous campaign to gain nurse to patient ratios which will substantially boost the cost of hospitalisation and therefore force much fewer operations or, over time, virtually bankrupt the state.

The cost of private medical insurance would skyrocket dramatically, making it unaffordable to all but those who are rich. Paradoxically the use of the iPad has the potential of substantially reducing the cost of hospitalisation and improving the service. So if Victoria leads Australia down the health gurgle hole more and more Australians will be forced to go overseas for their hospitalisation. That is of course an extreme example of how dangerous the IR laws have become.

In the private sector a lot of the problem is about management. All too often industrial relations and tax laws are blamed when the real problem is that the CEOs do not understand the potential of new technology.

Unfortunately their counterparts around the world do understand and therefore a great many Australian enterprises will need to change their CEOs or be taken over. But of course masking this revolution we are about to see in non-mining Australia will be the benefits of the mining boom .