The Productivity Exchange

Rationale

Probably the greatest challenge in starting and running a business, is finding customers and raising funds. This presents a huge barrier to lots of people. They may have the ideas, the domain knowledge and the operational/management capability to run the business, however marketing and fund raising can be a completely different skill. Typically this requires an outgoing and extrovert personality with people networking skills. Many, probably most, people wishing to start a business do not have this skill set.

So how can a company founders get access to these skills? If they are lucky, they have a partner with these skills. For everyone else, getting access to these services is difficult as most institutions, such as banks, consider dealing with start-ups and small companies too risky. So the founders need to pay for these services - either with cash or equity; they are not cheap and there is no guarantee of results.

What really is needed, is a platform to disintermediate the delivery of these services and provide them at low cost to all start-ups and small companies.

What is it?

The exchange’s primary customers and main focus are its listed companies (bottom of diagram). The aim is to provide them with the services to issue and trade shares which will greatly assist their capabilities to gain funding and provide their investors with liquidity.

We differ from other securities exchanges in that we aim to provide this service at a price affordable to ALL companies. The listing fees will in a similar range as online platform accounting fees, and compliance will be simple enough for directors of start-up companies to manage within their busy workloads. Fund raising will not be subject to proportional fees. This is a volume business and our planning is for 100,000+ listed companies. We already have the necessary registry and share trading technology for such a volume business and we are developing the listing rules and compliance automation necessary to support this volume.

The “Industry Productivity Network” will be of even greater benefit to Listed Companies. This network will connect listed companies to potential (productivity) customers based on productivity improvements (innovations) they can supply that will be of benefit. In addition to creating connections based on known uses of productivity improvements, advanced algorithms and machine learning, will suggest connections based on unrealised uses of productivity improvements and associated innovations.

A good analogy is the “Industry Capability Network”, except instead of creating connections based on capability, it creates connections based on productivity improvements. Like the ICN, the productivity network will make if far easier for the Listed Companies and Customers to find each other and greatly reduce the companies need to purchase or develop in-house networking skills. Once a listed company has found a potential customer, it can use its share holdings to assist with the sales process. For example, instead of providing discounts to first adopters which disrupts pricing schedules, companies can issue shares instead. Now start-ups and small companies can utilise their capital to network and win new business as larger firms can do today.

Innovation Diffusion

Innovation diffusion, rather than new innovation, is the key to productivity growth in our economy. Less than 2% of Australian firms innovate with new knowledge. Productivity improvement in the other 98% of firms is largely a result of adopting existing innovations - including dated technologies and ideas. This adoption of innovation is called diffusion.

The Australian Productivity Commission’s 2023 5-year Productivity Inquiry Report (Vol 5) laments that diffusion in Australia is slowing and that this is contributing to our poor productivity performance. Stimulating diffusion is very different from increasing novel innovation as there are many channels through which innovation diffusion can occur and it is affected by broad policies such as education and regulation.

By integrating a security exchange and a productivity network into a seamless operation, we aim to develop a powerful innovation diffusion channel which:

Allows the (98%) innovation adopting companies (Productivity Customers) easily find and access productivity improvement innovations being used by their industry peers,
Allows Listed Companies to build business models around the diffusion of productivity improvement innovations,
Reduce Customers’ concerns about productivity improvement technology being supplied by companies with small balance sheets (they are listed and have better access to funding),
Establishes a new paradigm for regulators as to how markets can be established to assist the economy.

Looking for help

There is a cohort of people who see opportunities to improve productivity in their domain, and have the drive to start a business to supply these improvements, but are stymied by the barriers of networking, marketing and fund raising. The size of this cohort will only grow with increased automation and further influx of AI. This is not just an untapped latent source of productivity improvements in our economy, it also prevents people from reaching their potential and can internally manifest in frustration and resentment.

Conversely, there are organisations and companies who have the potential to become far more productive, but do not have access to any straight forward diffusion channel which can be used to see what improvements are available, and are being used by their peers.

The Productivity Exchange is a digital platform using markets to address the above productivity problems. It is a volume business with huge scaling potential both domestically and international. It already has world class security trading technology from our partners Motif Markets and is in the process of developing the productivity network.

However we need further resourcing to reduce our time to market and assist with regulatory and marketing activities. We are looking for partners, funders and government authorities who are interested in productivity and wish to assist and participate in this venture. If you are interested, please reach out to us.

Paul Klink
Founder/CEO

paul.klink@prodxchg.com
+61 418 378 501 (Melbourne, Australia)