Apr 11, 2025 | AI, Governance, Management
Anyone who has engaged with any bureaucracy at multiple levels will tell you that what is said at the top often does not get down to the operational levels.
It seems not to matter whether the bureaucracy is private or public, multiple levels result in an increasingly dense set of rules and regulations that should be followed and are often a default excuse for not thinking.
However, it does seem also that public bureaucracies are less able to accommodate any sort of flexibility in the absence of instructions from on high, and even then, it is difficult.
AI has invaded and won significant ground in private domains and will be rapidly deployed as businesses seek the potential productivity gains as a source of competitive advantage.
What of government?
There is no competition in the public bureaucracies, their political masters come and go, policies change, as do some senior people, but largely, they remain intact. How will they adapt to the new world of AI?
In a word, very slowly indeed.
Regulations, behavioural rules, and protocols set at the top level, are filtered down through organisations. At each level, they are imposed with the addition of seemingly necessary additions in order to stop those who seek to find ways around the rules, and in the eyes of the bureaucrats subvert the intent of the rule.
This imposition of rules compounds to the point at the operational end that navigating the imposed landscape becomes incomprehensible to normal people.
I spent time recently navigating the minefield surrounding the simple transition of my mother from her own home to an aged care facility.
The process required two apparently warring bureaucracies to simply recognise the assets Mum had, combined with the aged pension through Centrelink, and the War widows’ allowances due to Dads military service in New Guinea. My sister who did most of the work required, is an intelligent educated woman, but was driven almost to despair. The nonsensical overlapping and duplicated requirements of both departments, where it seems a comma in a different place in similar lodgements to each department necessitated we start from scratch with both after the applications were deferred or judged void.
The operational individuals were largely helpful but completely restricted by rules to which no variation was allowed. Yet, the policies stated from the top are designed to make the lives of aged Australians, particularly those who have given much to the country as have war widows as comfortable as possible.
What happens in between these levels.
Regulation begets regulation upon regulation as the rules are cascaded down through the organisations. As each level sets about ensuring they are not accountable for any misdirection of funds, and therefore difficult questions, the mess becomes ‘Gordian’.
All this does is catch and frustrate those trying to do the right thing, while the ‘smarties will always find a way through,
Into this maelstrom walks AI.
In theory AI should ease the logjam, making most of the necessary form-filling and translation of details from one point to another automatic and easy.
In practice, the flexibility and agility that AI platforms are capable of will be adopted very slowly by public bureaucracies. They require changes in culture, operating processes, and inter-departmental collaboration in more than just words and press releases.
Those changes seem unlikely despite the urgent need.
Apr 7, 2025 | AI, Governance
As we come to rely more and more on the output of machines, we tend to forget that they are intrinsically binary operations.
The output is either black or white.
One little mistake or variation in the output that can be driven by something as simple as the placement of a punctuation mark in your prompt, can deliver very different outcomes.
When you string a series of tasks together even simple ones that rely on the output of the previous output, any error that is not picked up will be compounded.
Therefore, my contention is the greatest problem with AI is not technical but our belief in the output and that any error anywhere in the system compounds.
The danger of compounding errors is obvious. One simple O-ring worth a couple of dollars that was not malleable enough to accommodate the cold weather on that January morning in 1986 led to the end of the Challenger space shuttle. The unusually low temperature that morning was not anticipated, and so not included in the variables that determined the specifications of every piece in that multi-billion dollar vehicle.
Boom.
The only antidote to this misleading, erroneous and potentially nasty outcome is human scrutiny. We may have been released from the repetitive and mundane parts of all our jobs, but that release comes with a price: we simply must be highly sceptical of the outputs, and subject them to vigorous scrutiny starting with first principles.
Apr 3, 2025 | Branding, Marketing
I should define ‘Lousy’.
A lousy ad is one that fails to build on what has gone before. In the absence of anything before, it fails to leave a positive impression in the mind of current and any potential buyer who falls within the profile of the ideal customer.
When a lousy ad is recognised, it is usually dropped, but often against much corporate bleating.
The accountants will bleat that the ad cost x to make, the media cost y, and the other costs such as POS material, money flung at ‘influencers’ digital agency costs, and so on, cost Z, giving a total cost to the marketing budget as X + Y + Z = big sunk cost.
The product manager in charge will bleat that the ad did not have time to work, or that it has been misunderstood, and the initial reaction of the intended audience misleading.
The operations people will bleat that they have stacked inventory to the roof in expectation of an increase in demand.
Everyone has a reason.
Brand advertising, as distinct from the ‘get it now for a give-away price’ advertising is all about influencing behaviour in your favour, now, and into the future.
The greatest outcome is that a ‘purchase habit’ is formed. This is to my mind different to the standard definitions of ‘brand loyalty’ which usually include a set of trade-offs in the consumers mind that settle on the brand to which they are loyal most often.
Habit is different.
Habit does not include that internal conversation. It is the autopilot that lifts the product from the shelf, and simply does not consider alternatives.
When you materially change a product, even in a superficial way, you force those habits to be questioned. Elsewhere I have recounted the greatest marketing mistake I ever made by disregarding this truth, which I did not at the time consider.
Publishing an ad, or any sort of media or marketing collateral that is inconsistent with that basic assumption of the habit, will risk the volumes and margin of those most habitual customers.
There are sometimes good reasons to update.
Times and the world change, so brands must also evolve to continue to reflect the worlds in which customers live. When that strategic choice is made, the astute marketer will ensure there is a highly visible ‘line of crumbs’ between the old and the new to minimise the potential disruption to normal service.
Failure to define that line will result in nothing good.
Consider the recent advertising for Jaguar, trumpeting a rebirth of the brand.
Pity the cars will not be on the market for some time, although I suspect even if they were, the sales register would not notice.
Elsewhere I have panned it, but to continue, it breaks any connection anyone, potential Jaguar buyer had with the brand. This ‘New jaguar’ nonsense means they must start from scratch, if not behind the starting line, to establish a set of behavioural drivers that result in the choice to buy a Jag instead of one of the many alternatives.
Are you building your brand, or giving money away?
Mar 31, 2025 | Marketing, Strategy
Most businesses confuse price with pricing.
Price is just the number you slap on the tag. Pricing is the process that gets you to the right number, the one that optimises today’s profit while building tomorrow’s success.
Unfortunately, most businesses treat pricing as an inclusive way to do cost-plus calculations. The finance team sets a target margin, the sales team references the market leader, and the final number is more wishful thinking than strategy.
That is not pricing. That is strategic abdication.
Real pricing is deliberate. Strategic. Ruthlessly focused on outcomes.
You see strategic pricing in odd places.
That wine list at your favourite restaurant with the most expensive bottle first on the list. It is not an accident, done alphabetically, or random. That $500 wine is not there to sell, although occasionally it might. It is there to make the $70 bottle that costs $30 in the grog shop next door, look like a bargain.
Rolls-Royce does not put their cars into motor shows anymore. Why park next to a $30k Toyota and look ridiculously expensive when you can park next to a $10 million jet and look like a ‘pocket change’ purchase by comparison.
It’s called context, and it matters. Dan Ariely nailed this in a classic experiment using subscription costs to the Economist, and his MIT graduate students as the research fodder.
First version:
- Web only: $59
- Print only: $125.
- Web + Print: $125
Result? Almost everyone picked the combo. The web + print option made it look like they were getting a version for free.
Second version:
- Web only: $59
- Web + Print: $125
This time, far fewer picked the combo. Why? No dummy option to anchor the deal.
That’s the decoy effect in action. It works because humans do not make rational decisions. We make comparative ones. Smart pricing taps into that.
Great pricing is not about squeezing the lemon. It is about understanding your customer, your position, and your objective.
Most small businesses leave money on the table by setting their prices too low, hoping never to lose a sale. However, you need to lose a lot of sales to make up for the positive bottom line impact of even a very small increase in the average price.
Want to prove that to yourself?
Track the impact of a 1% price increase through your P&L. Assuming you are using actual costs instead of some sort of confected percentage calculations, the whole amount of the increase will drop to the bottom line as increased profit.
You will never just slap a price on a label again.
Mar 26, 2025 | Governance, Leadership
A question I always ask my clients is “what would a VC firm do if they took over management today?”
It always leads to deep and challenging conversations. It enables discussion that recognises the complexity of the strategic and tactical environment in which we all compete to live.
In a world changing as rapidly as the one we now inhabit, there is no such thing as a safe haven based on previous success. Nothing will remain unchanged over the coming decade.
The lessons we can learn from 30 years of VC activity can be used as a trigger for existing management to realign and regenerate for the future.
The question should be asked from two perspectives, as the answers will be different.
What changes would a VC firm make to the business?
Would I survive such an invasion?
Venture capital (VC) firms evaluate businesses through a rigorous lens, and when assessing a previously successful business facing headwinds, they focus on key indicators to determine whether it’s worth investing in, restructuring, or passing on entirely. Following are 14 of the obvious questions a VC would ask.
- What are the revenue, gross margin, cash flow, and profitability trends?
- What is the competitive position you hold? Is it differentiated and competitively sustainable?
- How would the culture be described?
- What is the picture of your current customer base, and prospecting success?
- What are the current driving forces in the market, and are they likely to persist?
- How does your business model work? Is it resilient and/or ‘pivotable’?
- What does the long term past look like? Is it smooth and cyclically predictable or erratic?
- Are business processes defined, consistently applied, and subject to continuous improvement?
- What is the quality of existing and future leadership and management?
- Are there any regulatory or legal risks?
- Does the business have potential for strategic development via M&A, takeover (taker or takee) or alliances?
- What is the ‘risk profile’ of the business? Ie is it an innovator, follower, or stuck in time?
- Are there valuable personal relationships in play?
- Exit potential for investors?
There is no reason to limit that conversation to a business, why not apply it to yourself?
‘If a gun young engineer/marketer/salesperson, (whatever you do) walked in today, and sat in your chair, what would they do?”
