The media shake-up is just the start – all companies must examine their business model: Gottliebsen

While what is happening to Australia’s two largest media companies, News and Fairfax, is capturing the headlines, it is really only part of a major revolution taking place in wide areas of Australian business.


Like it or not, countless Australian companies are being forced to re-look at the way they organise and direct their business. For some that change has yet to hit home. And in many sectors larger companies face a new threat – the new technologies, particularly cloud computing, make it easier for smaller operators to take market share if they have a new idea.

Nowhere is there greater change than in non-food retailing, where enterprises large and small must re-engineer what they do to embrace online retailing and marketing. In turn that is causing major changes in the whole supply chain.

But in the food retail sector Coles and Woolworths are forcing a revolution in the food supply chain that could not have been conceived even three years ago. Food processors that did cosy deals with the food unions are being forced to close in Australia. It’s brutal and at times very unfair.

Manufacturing has been undertaking change for years but the combination of the high dollar and the carbon tax will cause more media style revolutions.

So far the banking business is still basically structured in the old way but along with many other service businesses that is going to change.

Yesterday I explained how hospitals could slash their costs and improve their service. But unfortunately in that industry the calibre of management and the attitudes of the workforce will delay the change. But eventually politicians who are using taxpayers’ money to pay the bills, and patients who will want to enjoy better services, will wake up.

An industry that you might not think is going to be forced into change is commercial construction. Bad management and a more militant workforce have helped send Australian construction costs for mining projects through the roof. But with commodity prices softer, enormous projects that are in the planning stage will be mothballed, given the rise in construction costs.

For example, BHP Billiton has Olympic Dam, Port Hedland outer harbour and Queensland Coal among its long-term projects. At best only one of them will go ahead but it is possible all will be mothballed until the construction industry is re-engineered. And some large infrastructure projects may also have to be delayed until the industry becomes more efficient.

Victoria’s Baillieu government is trying establish rules that force construction mangers into proper procedures on government projects to slash costs but it will not be easy.

The airline business is being totally restructured and the greater use of video communications is going to reduce airline travel in the business sector. A few years ago people suggested to Qantas that they should think that they are in the business communication business and should integrate the airline with electronic conferencing. It was probably a bad idea but companies need to test new concepts.

My fear is that too many Australian managers are not trained for this sort of activity. In many cases they will need to engage their people at lower levels, who often have a better idea of what needs to be done.

We are going to see enormous differences in companies in the same industry. Those that re-engineer their business and are successful will tower over those who get it wrong.

This article first appeared on Business Spectator.


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