May 1, 2025 | Governance, Leadership
By Sunday morning we will know the outcome of this visionless, spineless, idea and leadership-free zone that has passed for an election campaign.
Whatever the outcome, we can look forward to more of the same. Sadly.
It is unreasonable to compare the governance of a country to that of a major corporation, they are apples and pears. The objectives are so substantially different it’s absurd to pretend they’re the same.
However, at a macro level, there are striking similarities in the systems, structures and disciplines that should underpin both. Many of the principles that drive successful corporate governance are desperately needed in government.
Long-term financial sustainability
Corporations must generate enough cash flow to sustain their operations. Shareholders, lenders, and customers all have options: they can walk if they don’t see value. That pressure forces financial discipline.
Governments by contrast levy taxes to raise their revenue without the taxed having choice. In addition, they can ‘create’ money by borrowing from the central bank via the issuing of government backed bonds. Short term this acts as a cushion for cycles in the economy, but long term, just like a corporation, there must be an ability to both pay the interest and on maturity, retire some of the debt. Failure to do so will result in economic erosion and eventual ‘banana republic’ status.
The long term rules of ‘financial gravity’ apply equally to corporations and governments.
Development and deployment of human and physical assets
Corporations invest in leadership and capability because returns depend on it. Governments have a deeper responsibility. Their role is to shape the society’s capacity to think, build, and adapt. Education is the backbone of economic and social growth. It is more than teaching the necessary practical skills needed by the economy, it is also the intellectual and emotional development of the country. We chase the sugar hit and skip the slow burn by treating education as a cost centre, rather than an investment with a long term payoff in wider ways than just financial. The price of misunderstanding the role of education is paid in wasted potential and stalled progress.
Building strategic moats
Warren Buffett nailed it: build moats or die trying. Moats defend your competitive edge.
In national terms, it’s about sovereign capability. Countries that do not invest in strategic domains: energy, food, defence, Intellectual Capital, lose control of their future. Sovereign capability is leverage, and without it, we drift.
Compounding and patience
Einstein called compounding the most powerful force in the universe. Most companies struggle with it. Governments are even worse.
The three-year electoral cycle kills patience. Most policies are Band-Aids with media-friendly headlines. Real compounding needs time and resolve, both of which require leadership.
A handful of exceptions stand out in our history: floating the dollar, Medicare, GST reform. Rare moments of a recognition that the long-term always arrives, sometimes all of a sudden.
Seeing the trends and riding them
Both corporations and governments need to play the trend game. Spot it, bet on it, build around it.
But here’s the catch: governments should do what companies cannot. They must back the long-term, risky bets that create public good. They must build the infrastructure: physical, intellectual, scientific, and social that will serve future generations. This requires an agile mind that can take in new information, process it and arrive at a different point, then execute a long term pivot. This governance characteristic is totally absent from our politics, where the focus is on predicting and planning an answer to the ‘gotcha’ question at the next press conference.
Transparency and trust
Trust is oxygen. Lose it and nothing else matters. Great organisations know this. They operate with clarity, keep promises, and hold people accountable.
Governments? Far too often, the reverse. Opaque processes, spin over substance, accountability dodged. When transparency dies, trust doesn’t just die with it—it rots.
Has anyone seen a trace of any of these six characteristics in this election campaign?
Anyone?
Apr 28, 2025 | AI, Change, Governance
American Roy Amara first coined what has become known as Amara’s law.
‘We tend to overestimate the effects of technology in the short term, and underestimate the effects in the long run’.
‘It was put more simply by (I think) Reid Hoffman who said: ‘the future is like a windscreen coming at a moth at 100mph.’
The initial excitement, hype, enthusiasm for the idea is followed by a period of underperformance, and disillusionment, before the real impact of the technology kicks in and changes the way we do things. Gartner’s well thumbed ‘Hype cycle’ is a better known version of Amara’s law.
Time and again over the last 30 years we have seen this effect on vivid display.
The internet, smartphones, AI, electric vehicles, Hydrogen as an energy source, (just entering the disillusionment stage) and many others.
It can also be applied to wider contexts, we just need to look for it.
Advertising.
No new TV ad campaign was ever released into the world without exalted expectations about the sales that would result coming from the ad agencies and those often clueless advertisers paying the freight. Then, unexpectantly, the ad is shown to be a dog, and is quietly euthanised.
Climate change.
Remember the hype and enthusiasm for ‘doing something’ that accompanied Al Gore’s influential doco ‘An Inconvenient Truth’ back in 2006. Nothing happened, the hype and enthusiasm was drowned by hubris and short term individual, corporate and political self-interest. While it seems unlikely at the moment, I remain confident that realisation will hit soon that we must take remedial action now in order to mitigate the long term becoming worse. Meanwhile. continuing to do nothing more than provide lip service ensures the moth will hit the windscreen in my grandchildren’s lifetime.
Business.
There are cycles of ‘fashionable’ management frameworks that seem to come, become the next great management breakthrough, undergoes the hype, then is shown to be np more than an emperor dressed in some transparent new clobber. Sometimes they re-emerge rebranded to go through the process again. Michael Hammers 1993 book ‘Re-engineering the corporation’ was such a fashion. I recall sitting around a board table listening to a very slick but hollow (even obvious to me at that time) presentation by a high priced consultant making promises of easily won great profit improvements from an aggressive ‘re-engineering’ of my then employer. That business hit the windscreen several years later, having cherry-picked the easy bits of the process, while ignoring those that actually made the long term difference because they were too hard. A few years later, Al ‘Chainsaw’ Dunlap had another run at it which made him a fortune, but left chaos in his wake. There are many more examples, the fall of GE from the largest corporation in the world to being virtually broke being one.
Politics.
Governments are relentlessly hyping the impact of their latest policy, more intensely than usual around election time. They whip up enthusiasm, at least amongst their acolytes, then falling into the trough of hubris. Usually, there is a renewal under a different name at a later time, often the next election. Remember the ‘Gonski reforms’ to education hyped by the then government, and supported in principle at least by the then opposition? Swept under the carpet of hubris and self-interest, again. Similarly, the 2010 Henry tax review was received by a grateful government who then shelved it. We may now have reached a point where the dust will be partially removed by necessity.
Americans are in the midst of waking up, again, to the reality of a second Trump administration. My contacts over there indicate dismay bordering on horror, and most of the working class Trump voters are about to learn the cost of the hype to them. The US moth seems likely to be splattered over the windscreen by the 2026 mid-term elections.
Artificial Intelligence.
Occasionally, the outcomes go way beyond what was originally envisaged. AI has been evolving for decades, but it exploded into the wider public awareness when ChatGPT was launched in November 2022. We are still experiencing the upswing in the hype cycle; I am certainly playing my small part. However, at some point I suspect soon, the tsunami of tools emerging, the sheer complexity of choice being forced on us will overwhelm all but the few, and we will collectively throw our hands in the air when the robot that does our washing does not appear. This collective action, if that is the way it occurs, will just let the first movers race away with the lollies.
The hype cycle remains around us, daily impacting on our lives. Its greatest risk is that we let it drive our decision making by making short term choices that are strategically flawed.
Apr 24, 2025 | AI, Marketing, Strategy
‘Lean thinking’ is a mindset and toolbox to drive optimisation. Little more, beyond the use of common sense and humanity.
Prominent amongst the tools, and the one I probably use the most is ‘5 why’.
AI has given us an entirely new use case that leverages the insights that a 5 why process when done thoughtfully can deliver.
Prompt development.
There are now hundreds of prompt templates and mnemonics emerging from the woodwork, many claiming to be ‘the one’.
All I have seen use a variation of the Lean ‘5 why’ tool.
Most AI users look at the first output of a prompt into any of the LLM tools, and it is sub-par. Generic recitations of what the trained information base reflects as best practice. The beauty of these data driven assistants is that you can push back as much as you like without them taking it personally.
You can point out areas of failure, misinformation, gobbledy-gook, or imagined fairy tales. You can ask for specifics, deeper analysis, sources, or give it examples. The output then improves with each iteration.
You can also ask it what you might have forgotten to ask, or has been missed for some reason, and ask for suggestions. This interrogation of the tool can reveal things you would not have thought of under normal circumstances.
Go through that process 5 times, and in all likelihood, you will not only have something entirely different to the first response, but it will also be infinitely better, and tailored to the need. You will have cleared away the unnecessary, banal, insignificant, and generic, leaving a response that equates to a first principle response to your evolved prompting.
Continuous improvement by AI driven lean thinking.
What a boon!
Apr 17, 2025 | Governance, Leadership
Like most, I have watched the videos of President Trump and his Vice President deliberately undoing the fabric of European security that has served us well since 1945.
The Marshall Plan after WWII saw the US invest hugely in former enemies, Germany and Japan, to rebuild their shattered economies. The belief was that helping them also helped the rest of us, and history proved that belief to be right.
Now, in just a few months since November 5 last year, Trump has flipped that post-war consensus on its head.
Change requires a catalyst, something or someone that triggers a shift and galvanizes others to follow. But change also always triggers resistance. Most initiatives fail when the resistance is greater than the momentum for change. However, when resistance is weak, change can run rampant.
That seems to be what we’re seeing now, and it presents a three-cornered problem.
First, the US empire is crumbling. Not just because of Trump’s antics or his disdain for democratic norms. It’s deeper. It’s the rot of internal decay: a crumbling infrastructure, rising inequality, a broken political culture, and a staggering $2 trillion deficit on top of $30 trillion in debt. Interest payments alone are chewing up 27% of government spending. If the US were a company, the receivers would have been called in long ago. But it’s not a company. It is still the world’s largest economy, tightly intertwined with everyone else.
Second, Europe. With a combined GDP larger than China’s, Europe is the US’s biggest trading and investment partner. But it has become complacent under the American security umbrella, protected and prosperous without paying the full cost of its own defence. That may be about to change.
Third, China. In 40 years, China has leapt from an agrarian backwater to a global power. It now demands a louder voice in world affairs, and if it’s not given freely, it will be taken. Their strategy is long-term. Ours is tomorrow’s news cycle.
The post-war world order is being forcefully reshaped by the new US administration.
Like it or not, Trump won. The question now is: what happens next?
Smart people everywhere are asking that question. So far, the answers are foggy. But from where I sit, a few likely outcomes are coming into view.
- US tariffs will be met with reciprocal tariffs. Global trade will shrink. As trade shrinks, the capacity for mutual cooperation goes with it. When mutual benefit disappears, self-interest takes over, and we risk an accelerating downward spiral.
- The US will enter recession. The wealth gap will widen, especially if Trump follows through on further tax cuts for the wealthy. Social unrest will follow. The 2025 mid-terms might bring some course correction, but the real hope lies in November 2028. The clock is ticking.
- Europe will be forced to step up support for Ukraine. This will mean massive increases in defence spending, much of it still sourced from the US, which will create tensions. Either taxes rise or social services get gutted. EU nations will also scramble to build defence capacity independent of the unreliable US.
- China will double down on its global push. Diplomatic soft power and military posturing will both increase. Their lens is generational. Short-term pain is an accepted cost for long-term strategic gain.
- Russia is likely to become a failed state. Its economy, barely larger than Australia’s, cannot survive prolonged isolation and war. China’s quiet support may prolong its agony. India will continue to play both sides, enjoying cheap commodities to fuel its own rise.
- And Australia? We’re caught in the middle. A commodity exporter with little pricing power and few alternatives, we rely heavily on China, especially for coal and iron ore exports. If China gets a cold from clashing with the US, we’ll catch pneumonia. The Morrison-era trade troubles will look like a stubbed toe by comparison.
The old order is breaking down. The new one is not yet clear, and the immediate outlook is global financial chaos on an unprecedented scale.
Apr 14, 2025 | Change, Communication, Governance, Leadership, Marketing, Strategy
When you look you see Hofstadter’s law around you everywhere, every day.
We all understand Murphy’s law, which accurately states that is something can go wrong it will, probably at the worst time. Murphy has a sibling, articulated by Douglas Hofstadter which states: ‘A task always takes longer than you expect, even when you take into account Hofstadter’s law’.
Planning is a part of our lives. Some things are easy to plan, the consistent characteristic of these is that there are very few variables over which you do not have control. For example planning a trip to the supermarket, you can check what you need you control the time, the choice of supermarket, where you park, how you work the store, the choices you make between brands. Very few uncontrolled variables.
By contrast strategy is an exercise not just in predicting the future, but then making choices how best to deploy your resources in a way that enables you to shape the future to your benefit by exerting some influence over the range of variables over which you have no control.
Entirely different challenge, as there is never an explicit ‘right’ answer.
When we talk about strategic planning we are effectively mixing two incompatible factors. The uncertainty of the future and the forces over which we have no control, and the certainty of the resources we have to deploy, with uncertain outcomes.
Currently in this country we have a huge black hole called defence planning into which billions of taxpayers dollars are being poured, in the mistaken view that we are able to predict the future and therefore plan as if we could control the variables.
The better way is to have a robust strategy which enables flexibility in the way assets are deployed short term.
Projects tend to expand to fill a time available, while at the same time we habitually underestimate the time that is required to complete any given task, no matter how rigorous we are in the planning.