May 24, 2024 | AI, Management
Management is all over the place, scrambling to ‘get AI’.
A common failure of that scramble is a reality: rubbish in — rubbish out.
Outcome quality depends on two factors:
- Data quality. The quality of the data that is used to generate that outcome. The quality, depth and breadth of the data is dictated by the databases on which the system was trained,
- Instructions given. The instructions you give the machine will drive the type and weight it gives to the available data in response to your instructions.
AI is a ‘machine’, an electronic warehouse of information it makes available on request.
They are machines, not people. They cannot ‘think, they do as instructed, using predetermined ‘training’ to prepare an answer.
Most people are radically unprepared for the changes coming.
The best known problem solving metaphor has always been Einstein’s.
He observed that if he had an hour to solve a life defining problem, the 1st 50 minutes would be spent defining the problem, the rest is just maths.
It is identical in the deployment of AI.
It seems to me that when a system ‘hallucinates’ it is a sign that it has been inadequately briefed. Think about the briefing as you would explaining something to any intelligent 10-year-old!
Keep it simple.
Explicitly define what information is to be used.
Explicitly define the objective to which the information will be directed.
Explicitly give any contextual information that may be helpful.
Explicitly define the range of outcomes you might be looking for.
The key to leveraging the speed and depth of data made available by AI systems is in the preparation of the data and the matching of that data to the problem being addressed.
If you use this simple process, the one you should have practised on your children, you can dodge the expensive and largely useless ‘prompt engineering’ courses, books, and gurus that have sprung up like mushrooms after rain. They are there to drain your pockets by offering seemingly easy solutions to difficult challenges.
There is no such thing as an easy solution that negates the necessity to ‘do the work’.
Header credit: DALL-E.
May 21, 2024 | Change, Strategy
A short time ago I sat in a workshop where one of the featured speakers continued to conflate strategy and execution into the one process. Those who know me watched with amusement is I tried to maintain a philosophical silence. Rather than jumping up and pronouncing that such conflation is muddle headed at best, destructive at worst, I managed to maintain my seat.
This general lack of understanding that strategy and execution are separate processes has evolved from a number of sources.
Communication. Poor communication of the strategy, and separately, the role each function and individual have in the execution of the strategy via budgets and other means of resource allocation is unclear. Is unreasonable to expect those further down in an organisation to execute on a strategy they do not clearly understand, and even if they do, their role in the execution is unclear.
Size does matter. Organisations as they grow become more complex. As those complexities grow the difficulty of translating strategies into actual tasks that compound to deliver the strategic objective also compounds. Aggressive simplicity is the only antidote, and a huge challenge for management.
Technology overload. Technology often complicates clear communication, despite its ability quickly and efficiently to reach people. The fragmentation and complexity of communication channels serves to dilute the power of a simple message. In the absence of a clear articulation of the problem to be solved, job to be done, and recognition of existing conditions, people determine independently what a message means to them.
Turf wars. Unfortunately, in all organisations beyond about 30 people, politics and turf wars are common. In many large organisations, perhaps most, advancement and the trappings of that advancement go to the most effective political operatives. Merit in getting the job done often runs a long second. Turf wars by their nature work against a coherent collaborative strategic resource deployment.
Resources. In almost no organisation I have ever seen is there sufficient effort made to ensure aligned and consistent understanding of the strategies. That effort to communicate clearly is critical to enabling the allocation of necessary resources, at the optimum time, to deliver the envisaged outcome. Most often the communication morphs to resemble hyperbole.
These factors contribute to the general notion that strategy by itself is an exercise in obscure articulation, while execution is left to the ‘quants’ among us.
Effective strategic deployment requires that the causes of the mismatch noted above are reversed. This requires a culture that insurers feedback loops, flexibility, excellent and consistent communication, all of which come from a single source: leadership.
May 16, 2024 | Change, Governance, Innovation, Leadership, retail, Strategy
The recent declaration of “A Future Made in Australia” by the Prime Minister has put the future shape of the nation’s manufacturing sector back on the agenda.
There was however, nothing specific on the importance of agricultural innovation and value adding through the manufacturing sector, or the strategic value of food security.
The decline in Australian owned manufacturing in the food industry has been close to total. The FMCG manufacturing industry has seen input prices increase by 49% over the decade to 2020, while the wholesale prices received have increased by only 24% over the same period (Source: AFGC Sustaining Australia Food and Grocery manufacturing 2030 report) This downturn, and the 20 years prior which display similar trends has seen locally owned businesses either go bankrupt, or become subsidiaries of foreign conglomerates, relegating them to mere outposts.
From an era where medium-sized businesses thrived across various product categories, employing significant numbers in quality, engineering, the trades, and R&D, today these businesses have largely disappeared. This transition has been marked by a shift towards centralisation of product development and scientific research abroad, leaving Australian operations with minimal operational and decision-making authority.
This trend raises critical questions of how we feed ourselves, and make a useful contribution to the global food supply.
Notwithstanding the international ownership of most of food and beverage manufacturing, it contributes 6.5% of GDP, 32% of total manufacturing output, and employs 240,000 people, 40% of which are in regional areas. (source AFGC)
By any measure, the food manufacturing sector is profoundly important to Australians. Its future resilience and growth of sovereign capability should be paramount.
The lack of sovereign control of the resources and capital needs to generate growth is disturbing.
Central to an innovative and resilient manufacturing industry is the capacity to generate intellectual capital that translates into manufactured product. The progressive ‘internationalisation’ of company R&D noted above, has been matched by a progressive emasculation of the sovereign capability to generate the Intellectual capital necessary for long term growth. There is a significant number of SME’s in the sector, but collectively they contribute very little to the total of manufactured product. They are typically mixing often imported ingredients in low tech environments with a few employees and casuals. Distribution is largely through secondary channels like farmers markets, and local retailers and food service. They do not have the resources to compete with the R&D capability of multinationals, and the previously available intellectual assistance from federal and state institutions has been removed.
Take for example the CSIRO that in the past worked closely with business. Often this was in an informal and personal collaboration between individuals that enabled a thriving environment for problem solving and innovation. CSIRO’s sites in North Ryde, Werribee, and Canon Hill have either been downsized or sold off, and skilled, experienced employees made redundant. Contributing to this erosion of the collaboration that in the past generated much of the ‘ideation’ that sets the stage for innovation, has been the demands of successive governments for a ‘productivity dividend’. This was typically 2% annually which compounds quickly to a killer blow to capability. It is code for removing those informal but fundamental creative collaborations with domestic companies, and encouraging the multinationals to centralise R&D elsewhere.
The power of the supermarket chains, currently under scrutiny has also played a key role in this process. SME’s simply do not have the deep pockets required to generate and maintain traction through the retail FMCG oligopoly.
To be successful, SME’s need to be able to absorb the reality of this gross power imbalance with retailers. Financial capital is necessary to enable the generation of the Intellectual Capital that underpins genuine innovation. Further investment is required to design, build and install the equipment to produce the innovative product. Deep pockets are then required to meet the retail trading term and promotional demands, as well as investment in the advertising necessary to attract consumers to a new product. As the power of the retailers has overwhelmed the diminishing group of domestic suppliers, we have been left with multinational suppliers and retailer house-brands, themselves often manufactured offshore.
The focus of government policies remains short-term, driven by electoral cycles rather than the decades required to bridge the gap between science and commercial success. Differing jurisdictions follow their own nose, resulting in a siloed and fragmented effort across the country, rather than a coherent and coordinated effort. The outcome is a mix of differing priorities, investment plans and initiatives around the country, sometimes used as incentives for business location. The commercial equivalent would be if a conglomerate allowed divisions and locations to compete for resources with declining levels of investment in the total absence of a coherent strategy. No sensible commercial board of directors would put up with such a self-defeating arrangement.
Grant programs send the wrong message and encourage behaviour that rarely delivers the outcomes touted in the press releases.
Culturally and politically risk is toxic to the body politic. However, the acknowledgement and management of risk is a fundamental element in successful innovation.
Successful risk management becomes a function of the extent to which a whole range of data, combined with qualitative assessment of what the future will look like is considered. Removing the capacity to make those assessments severely compromises the value of any conclusion reached.
The only potential solution to those institutional blockages to innovation in manufacturing industries generally is a confronting one.
Government needs to ‘upskill’ itself to be in a position to substitute early equity funding for grant funding.
Such a change requires a cohort of skills and experience not currently available within government and bureaucracies, but selectively available in industry. The early equity would be recoverable by those that are successful at a pre-agreed point, at a pre-agreed rate. This removes the inertia and rent seeking evident in grant funding, replacing it with a modified form of Venture Capital.
In addition, FIRB needs to adjust the guidelines that currently rely on an intense focus on the economics of ‘Comparative advantage’. These rely on projections of current and past quantitative models of industries that usually bear little resemblance to what ultimately evolves. They never reflect the strategic value of sovereign manufacturing.
In the absence of meaningful strategic change, what remains of the domestically owned food manufacturing industry of any scale will disappear, and current and new SME’s will have no hope of replacing them.
Notes.
- The budget delivered on Tuesday night included a number of measures that should serve to give manufacturers some confidence that the government has recognised there is a problem, and that action was long overdue.
- A slightly edited (and improved) version of this post was published on Wednesday morning on the AuManufacturing website and Linkedin group.
May 14, 2024 | Collaboration, Leadership
Special purpose teams are generally formed to solve a problem.
However, it seems that ‘collaboration’ has become so integral to many corporate cultures, that every problem becomes an opportunity to ‘collaborate’. Teams are often formed without sufficient reference to the experience and capabilities required to define and address the problem.
When you want a problem assessed, and a resulting action to remove it, you must hold somebody accountable for the outcome.
A process or task that is not attached to a person’s name will rarely be optimised.
Often when an ad hoc team is formed in response to a perceived problem, the performance of that team becomes marginal, simply because it is always somebody else’s job to be accountable for all or part of the solution.
The task of a team is to:
- Define a problem by looking at the blockage from many perspectives provided by the individuals in the team. This is why the choice of personnel is critical. Do not make the common mistake of allocating personnel who seem to have the time to a team. Allocate personnel by expertise and leadership styles.
- Generate possible solutions, and then:
- Pick one possible solution, perhaps after some initial experimentation, and then:
- Allocate an individual to be accountable for the execution of the chosen course of action.
- Rinse and repeat.
Do that, and the team will deliver results when members have been selected by the capabilities necessary, assuming you also give them the resources needed to do the job being asked of them.
Failure to assemble a team carefully, which requires leadership, will ensure little more than a gabfest.
Header cartoon credit: Tom Fishburne at www.Marketoonist.com.
May 11, 2024 | Governance, Leadership
Our current politics is an intensely adversarial, short-term, zero-sum game.
Is this what is best for the country?
The federal budget is due in a few days.
Based on the selective leaking and conversations happening, the budget will be focused, or at least the political narrative will be focused, on cost of living, housing, male violence against females, and the build-up of national security assets, military and technology.
All worthy topics, demanding attention, understanding, and investment.
However, if anybody in Canberra chose to take a helicopter view of the strategy of Australia Inc, as it would be in a business, there are only two questions that should be the framework that drives the tactical choices that are made every year in the budget.
- What are we building that will deliver long term capacity, resilience, and innovation to the economy?
- What are we doing now to optimise the way we invest resource is against those long-term priorities, and the shorter-term tactical investments necessary to achieve them?
The first is a drag on current expenditure that is designed to deliver a long-term outcome.
The second is an imposition on the long-term outcome to deliver in the short term.
At the best of times this is a delicate balance, and you never have all the right answers.
However, in the absence of asking the question, there will be no answers other than a knee jerk response to whatever happens to be in the headlines today.
Let’s not worry about our children and grandchildren, they will find a way to recover the can we have so solidly kicked down the road.
On that can are the words: we have a revenue problem.
This means tax, as that is the only way governments have the resources to deliver to the country.
Unfortunately, Tax is a noxious three letter word, and no politician who desires to remain one, (they almost all do) will touch, unless accompanied by the word ‘Cut’. Besides, no politician is short of a bob, superannuation entitlement, negatively geared investments, and the largess of party donors. They live comfortably on the teat, while often complaining about how hard the job is, which is no doubt true for those few who are trying, easy for those who are just seat warmers.
The header is courtesy of DALL-E, my artful helper.
