The Shift Index was created as a tool to help us understand if the rapid pace and increasing uncertainty we feel in the business and social spheres is real, or if it is just an illusion created by the always-on environment we live. (This is a bit like how nationalised news brings us stories of shootings in other regions leading us to think that crime has increased, when in actual fact crime has been decreasing.) As we say in the report: The world is changing faster than ever. However, we can only respond to and manage a change if we can measure and understand it. If we want to respond as a community, then we need to find a way to quantify the change. We need to ask ourselves whether the perceived change is real, and if it is, how we can capitalise on it. The short answer is that the world is definitely changing and that Australia, Australians and Australian businesses are successfully adapting to the changes. We can’t, however, rest on our laurels as the drivers of change are still present and it doesn’t look like they will dissipate for some time.

1. Setting aside the burdens
of the past
The possibilities of
technology-driven
change in Australia
Centre for the Edge
February 2014

2. Copyright © 2014 Deloitte. All rights reserved.1
What is the Shift Index
The driver for the Shift Index
To determine if the incredible pace of
change and the turmoil in the market
today is real, or simply a perception
brought on by our hyper-connected,
always-on environment.
The Hypothesis
• Relentless improvement in technology
is slashing the cost of communication
and data processing.
• This is creating knowledge flows that
are changing the balance of power in
the market.
• Astute individuals and firms are using
these knowledge flows to improve
their performance.
• The result is the creation of new
winners, and the elimination of firms
that are unable to adapt.
The Method
The Shift Index is constructed from from
three sub-indices:
• The Foundation Index, the lead
indicator, which measures the
improvement, penetration and
regulation of computing and mobile
technology.
• The Flow Index, which measures the
resulting increase in knowledge flows.
• The Impact Index, the lagging
indicator, which measures that the
impact on the people, firms, and the
market as a whole.
This approach is based on the
framework developed for the US Shift
Index.

3. Copyright © 2014 Deloitte. All rights reserved.2
Key Findings
Business is more intense
The Shift Index shows that the change
in the Australian market has been
measurable and significant.
• Competitive Intensity of the
Australian market has increased 34%
since 2000
• Stock Price Volatility has increased
an average of 1.1% per year over the
last 23 years
The development of ubiquitous mobile
and global communications networks
has driven the Australian market to
become both measurably more
competitive and measurably more
turbulent than ever before.
The balance of power is changing
The change is driven by one of the
highest adoption rates for networked
and mobile telecommunications, and
social media, in the world.
• Local consumers’ rapid adoption of
social media and mobile technology is
tipping the balance of power in
their favour
• Improvements in global
communications and logistics
networks, that allow anyone from
anywhere to compete for
everything
Adapt or die
The change is creating new winners and
losers.
• The gap in financial performance
between the top and bottom firms is
increasing
• The gap in salaries between creative
individuals (engineers, designers…)
and others is increasing
Companies that cannot adapt are
being eliminated from the market at an
increasing rate.

4. Copyright © 2014 Deloitte. All rights reserved.3
For more information…
Peter Williams
Chief Edge Officer,
Deloitte Center for the Edge
Tel : +61 3 9671 7629
pewilliams@deloitte.com.au
The full report Contact us
Robert Hillard
National Leader, Technology Consulting
Tel : +61 3 9671 7971
rhillard@deloitte.com.au
Peter Evans-Greenwood
Fellow, Centre for the Edge
Tel : +61 439 327 793
pevansgreenwood@deloitte.com.au
View the report at bit.ly/1mudcKc

5. The evidence

6. Copyright © 2014 Deloitte. All rights reserved.5
The Shift Index
0
50
100
150
200
250
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Foundation Index Flow Index
Impact Index Linear (Foundation Index)
Linear (Flow Index) Linear (Impact Index)
Australia’s digital infrastructure has seen rapid development,
increasing the flow of information and capital, and changing the
structure of our economy as a result.

7. Copyright © 2014 Deloitte. All rights reserved.6
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
0.45
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Australia US
Competitive Intensity
Herfindahl–Hirschman Index (HHI) for Australia and the US
(down is more competitive). Australia continues to trend toward
the same level of competitive intensity as the US,
as the Australian market grows.

8. Copyright © 2014 Deloitte. All rights reserved.7
0
0.2
0.4
0.6
0.8
1
1.2
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Australia
Stock Price Volatility
Short-term stock price volatility (standard deviation in stock
prices over the year) is increasing as firms find it more
challenging to maintain a competitive advantage.

9. Copyright © 2014 Deloitte. All rights reserved.8
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1987 1990 1993 1996 1999 2002 2005 2008 2011
MobilesubscriptionsperindividualMobile penetration
Australian consumers’ tendency to have multiple accounts per capita (one person
owning a phone and a 3G-connected tablet, for example) and use mobiles to
communicate with devices (such as drinks machines that send an SMS to the
supplier when they need to be refilled) accounts for the adoption rate of over 100%.

10. Copyright © 2014 Deloitte. All rights reserved.9
Wireless Activity
0
20
40
60
80
100
120
140
160
2000 2002 2004 2006 2008 2010
MinutesofUse
Captures the increasing flow of information between
individuals (rather than between locations) via the total
number of wireless minutes used in Australia per year.

11. Copyright © 2014 Deloitte. All rights reserved.10
Social Media Activity
0
5
10
15
20
25
30
35
40
1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
The number of minutes Internet users spend on
social media websites relative to the total minutes
they spend on the Internet generally.

12. Copyright © 2014 Deloitte. All rights reserved.11
Net-Bohemian Score
-40
-35
-30
-25
-20
-15
-10
-5
0
1971 1981 1991 2001 2011
Shows that the relative proportion (% creative population -
% industrial population) of Australian’s with creative
professions (engineers, designers…) has steadily
increased over time.

13. Copyright © 2014 Deloitte. All rights reserved.12
ROA Performance Gap
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Australia US Linear (Australia) Linear (US)
Other than for the period from 1997–2000, covering the dot-com
crash and the investment bubble leading up to it, Australia has
had consistently larger ROA performance gap than the US. The
gap between winners and losers is increasing.

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ROA Performance
Top & Bottom Quartile
-50%
-40%
-30%
-20%
-10%
0%
10%
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Australia Top Quartile Australia Bottom Quartile
Linear (Australia Top Quartile) Linear (Australia Bottom Quartile)
The gap in ROA performance between the top and bottom
quartile is increasing. The top performing companies in
Australia are consistently delivering ~10% return on assets,
while the bottom performing companies are being cleared
from the market.

15. Copyright © 2014 Deloitte. All rights reserved.14
Returns to Talent
0
5000
10000
15000
20000
25000
1996 1998 2000 2002 2004 2006 2008 2010 2012
Australia Linear (Australia)
We are seeing increased returns to the creative professionals
who are best positioned to leverage increased knowledge flows
and create additional value in the gap in compensation between
creative professions and other professions.