Proposed changes to the Electronic Transactions Acts – what does it mean for your business?

We have posted an e-update to our website on the proposed changes to Australia's electronic transaction laws and what they may mean for businesses.

The update looks at:

• the existing laws and how they may change
• signatures
• automated message systems
• invitations to make offers
• correcting input errors
• location of parties
• time and place

It also includes a summary of practical tips businesses can follow.

Michelle Vazquez

Judy Estrin on the innovation gap

In a recent interview with the McKinsey Quarterly, author and Silicon Valley technology executive Judy Estrin discusses her views on innovation (or the lack of innovation) in the 21st century.

Estrin’s proposition is that while we are currently enjoying the fruits of innovation planted 30 years ago, we are failing to seed innovation at equal rates today. That is, while there appears to be an abundance of "incremental innovation", there is a lack of "sustainable innovation".

An example is the telephone. Since its invention in the 1800s by Alexander Bell, it has evolved to the cordless, mobile and VoIP solutions of today which are technologically and functionally different from their original and comparatively humble iteration. Estrin’s argument is that such developments do not represent fresh innovation in themselves, but evolutionary and incremental developments on previous innovations.

Estrin suggests that this kind of incremental innovation is the natural result of a short-term focus; that a very rapid rate of change created by technology and globalisation encourages a mindset of keeping up with changes, as opposed to considering how to stay ahead of the next change.

It is an interesting observation and (depending on whether one subscribes to the argument) one which might have an illustration in relatively recent experience.

Intel is the world’s largest supplier of microprocessors, with the second largest being Advanced Micro Devices (AMD). From the 1990s, both companies became focused on increasing the performance of their processors by increasing their clock speed. In 2005, AMD redesigned its processors and released a new processor that contained 2 cores instead of 1 (a core is the brain of the processor). It was a radical change. While the new AMD processors operated at a lower clock speed compared to Intel processors, they performed better. Suddenly, consumers wanted processors with 2 cores. Intel’s response was to shoe-horn 2 of its existing processors into one package without any major redesign - however, the result was an overheated processor that performed worse than its AMD counterpart. One could argue that in focusing on keeping pace with AMD’s improvements, Intel’s solution was compromised (until it invented a new design).

So how can we be innovative? Estrin suggests that people need to think outside their mainstream business towards future growth. She emphasises that this is something that cannot necessarily be learnt from customers, because customers often don’t know their own future needs. Listening to customers, while important, will only drive incremental innovation.

Practically, Estrin suggests that business should have small groups of people that are only loosely connected to the business and isolated from its corporate mission. This will allow those groups to nurture and think of ideas, come up with surprises and - intriguingly - do so independently of prescriptive goals.

This is something not everybody can easily accept. Conventional logic dictates that innovators must understand their business, their customers and have a set goal (and time limit) to create products that are suitable for their selected market. However, the flip side is to ensure that creative and innovative people are not subjected to unnecessary constrains. That is, let them do what they want, at their own pace. And you shouldn’t teach them how to "innovate". If you do, it’s not innovation.

Watch the interview here.

Winson Chan

What innovation means to Google: Schmidt

Google has to be considered one of the world’s most successful organisations in identifying real and practical business applications for new ideas and successfully introducing them to an eager market.

Following the McKinsey Global Survey on how different companies approach innovation, the McKinsey Quarterly has posted a video interview with Eric Schmidt, CEO of Google. Schmidt discusses Google’s 20% time policy, its open attitude to the acquisition of small and innovative companies and its desire to be a systematic innovator of scale – that is, not just getting creatively lucky, but systemising and replicating its approach to developing, in Schmidt’s words, ‘things that make you go, “Wow” ’.

Watch it here.

Andrew De Celis

Technology innovation and the digital age

Beyond the laboratory

I vividly recall sitting in a negotiation room a few years ago, representing a corporate client in the middle stages of large technology outsourcing negotiations.

Like a hangover from an old legal drama in which mere numbers instantly intimated power, the room had been stereotypically (but rather unproductively) stacked. On my side of the table sat two commercial managers, three engineers and one in-house legal counsel. They were all well-practised at looking appropriately stern and influential, as though competing tenderers were poised to burst through the doors on cue.

Valiantly, the supplier had responded in kind, offering two project directors, one engineer and a sales manager. For the last three months, it had also insisted on fielding a ‘deal co-ordinator’. I never did work out what he actually did.

The more meetings we had the less productive they were, as topics seemed to expand eternally to fill the time available. For my clients, an intensive schedule of negotiations was a way of demonstrating heroic persistence to their broader procurement team and chief information officer. Negotiations represented engagement and activity. Unfortunately, I was the only one who had become acutely conscious that activity didn’t necessarily mean progress. I began to suspect both teams had simply found a brilliant way of avoiding any real work and were now loath to stray from a good thing.

The topic set for that morning was technology innovation. It had originally been listed in my client’s request for proposal as a ‘critical requirement’ and a bland placeholder had hence ridden along furtively in the draft services contract for some 6 months now. It had happily survived numerous exchanges of the draft without much regard. Today, we were forced to look at – and perhaps for the first time think intelligently about – the unhelpful pointer staring up at us. It simply read:

“[Innovation: The customer would like to discuss this critical requirement in detail further with the supplier]”.

In keeping with the practice we had adopted for all other negotiation sessions, I welcomed the supplier team to the table and invited our client’s lead commercial manager to begin with a general statement of the customer’s requirements. He began talking, emphasising the importance of “all forms of technology and non-technology innovation” to his company, stressing the rapid development of IT infrastructure in Australia and relaying some research pointing to an exponential increase in clients’ technology expectations.

He had spoken passionately for a good ten minutes when the room began to realise he hadn’t actually said anything particularly meaningful. He realised it too. When he finally wrapped up, the question from the other side of the table was painfully predictable (and slightly patronising):

“Look, we sound like we’re on the same page. I don’t think we can disagree with anything you’ve said. But with all due respect, I’m still no clearer as to what you actually expect from us in terms of innovation – or how you propose to measure us in relation to it.”

Trapped like a nervous rabbit, my client immediately glanced towards me, not missing a beat.

“Yes, I was getting to that. At the end of the day we figure that defining the supplier’s obligations is really a legal matter, so I’ll leave it to our lawyer to explain what we mean.”

Needless to say, we went nowhere that day.

As interesting as philosophical debates about business and commercial innovation may be from a theoretical perspective, they are susceptible to being fairly existential. Talk of innovation for its own sake is of limited utility, if unsupported by a clear definition of how or in what form it is intended to manifest. There is arguably no single definition of business innovation – it takes its meaning from the context of the very services in respect of which that innovation is sought.

It is vital that we try to enliven seemingly intriguing theories through intelligent applications. Truly successful commercial technology innovations should have a clear business or service outcome – for example, they may measurably enhance the consumer experience, improve the quality of a supplier’s products and services, give birth to new and more efficient forms of communication or contribute to a collective sum of knowledge that others can build upon in a discernible and synergistic way.

Today, the advent and acceptance of digital media and communications, new forms of content distribution and convergent technologies afford businesses a fascinating range of opportunities which, only a decade ago, was pure fantasy. For many, the digital age has now become synonymous with the intersection between science and commerce. While there are few industries that have not been impacted by the digital phenomenon, to fully and successfully exploit it demands intelligence and creativity, combined with a strong sense of the practical – what will work, versus what won’t; and what is interesting versus what is useful.

As we think increasingly deeply about innovation, the ultimate goal should always be kept in mind. Traditionally, creativity has been the mark of the dreamer and application the skill of the pragmatist. Assuming the two can be aligned – or at least develop some measure of co-operation – business will have finally identified a powerful combination.