Mar 13, 2025 | AI
A couple of weeks ago I was asked to do a presentation on the current state of AI in the world of SME’s.
I stumbled across ChatGPT a week after its original release in November 2022, and was blown away by the potential. I have become an utter convert to the utility of AI, particularly for SME’s if they can organise themselves to make the necessary investment.
The scary thing is that I seem to know more about AI than 95% of the owners of SME’s, but by my own assessment, know so little that imposter syndrome is running rampant. Add to that the pace of change, every day, is enormous.
AI is here to stay, and represents the greatest opportunity, as well as the greatest threat to the profitability of SME businesses I have seen in my commercial life.
Following is an extended version of what I set out to say in the short time allocated. I also spoke from a few dot point notes, so it is probable that much of the below stayed unsaid.
AI is rapidly becoming as widespread and essential as the smartphone. Can you imagine not having your phone, and still being able to competitively service customers? Yet, you might see AI as just another tech buzzword, promising miracles but delivering disappointment. If that is your experience, you are in good company; small businesses often waste precious resources chasing shiny tech tools. However, AI is different. Here is how and why it evolved from a curiosity to an essential tool, and how you can adopt it smartly without breaking the bank or losing sleep.
Evolution of AI: From Hype to Helper
Artificial Intelligence is not brand new. It has quietly evolved from basic customer service chatbots to powerful, accessible tools capable of streamlining your daily operations. Think of AI like digital photography replacing film cameras. Kodak thought it impossible, but now everyone carries a powerful camera in their pocket, and Kodak is a shadow of its former self.
Why bother with AI?
AI won’t replace you, but someone using AI might. It is not about replacing your expertise; it’s about enhancing it. Think of AI as your diligent, tireless, whip smart but naïve intern, handling routine, repetitive tasks so you can focus on strategic, creative, and client-facing activities.
For example, imagine running a small retail business. AI can instantly analyse sales data, pinpoint trends, and forecast customer behaviour faster and more accurately than manual methods. Or if you are a consultant overwhelmed with admin work, AI tools can handle scheduling, invoicing, much of your marketing and routine communications, freeing you to concentrate on strategic growth and client relationships. It can also act as your mentor, advisor, and ‘red team’ devils advocate helping you make optimum choices more often.
Costs & Risks of AI: facing reality
You might assume AI is expensive. Not necessarily. Many AI solutions today are affordable or even free, offering powerful capabilities without heavy upfront investments. Tools like Perplexity for research, Google’s NotebookLM for knowledge management, and 11 Labs for professional-grade voice content offer free or cost-effective plans ideal for experimentation. When you consider the costs of subscriptions against the cost of people filling those roles, and as importantly, the opportunity costs that AI enables you to squeeze out, it is as cheap as chips.
However, caution is needed. AI, like a powerful sports car, is incredibly attractive, and extremely useful when used in the right way, with careful driving and clear boundaries. The three areas I worry about most are:
- Over-reliance and hallucinations: AI can confidently produce completely wrong outputs if unchecked, like that GPS driving you into a lake. However, as the tools become more sophisticated, the chance for hallucination becomes reduced, as hallucinations are largely the function of loose, ambiguous, and context free instructions.
- Loss of critical thinking: Blind trust in AI can erode your independent evaluation skills, just as calculators reduced the need for kids to learn the times tables, and computer programs eliminated the understanding built of complex mathematical tasks when using a slide-rule to do the calculations. (for anyone under 60, look up Slide-rule on Wikipedia)
- Security threats: Risks of intellectual property theft, fraud, and data breaches are real if proper precautions are not taken. The ‘pirates’ out there are at least as good as the best ‘goodies’ at leveraging the new tools to get into your pockets, and both are light years ahead of regulators. It really is the wild west, so you need to be hyper vigilant.
Mitigating AI risks
Stay vigilant and proactive. Treat AI like your powerful sports car, exciting and capable but requiring careful driving and clear guidelines. Protect your intellectual property, adopt robust cybersecurity practices, and always critically assess AI-driven recommendations.
Getting Started: Practical Steps for SMEs
Do not bet the farm before testing the market. Start small with a clearly defined business problem:
- Identify one task: Choose a simple, repetitive task consuming valuable time.
- Experiment: Use free or low-cost tools. Learn to develop effective prompts (the instructions you give AI) to get useful results.
- Process mapping and gradual deployment: Clearly outline your processes, identify where AI can assist, and slowly integrate it into your workflows using tools like Custom GPT’s in Chat GPT, or the equivalent on other platforms. The more you use them, the more you will see opportunities to take that extra step, and it becomes an exercise in continual learning and improvement. The more you break down processes into individual sequential actions, the easier it will become to automate them. As an aside, it also significantly enhances the value of your business in exit if a potential buyer sees a highly organised set of SOP’s on file, easily accessible, and readily improved and deployed.
- Focus. There are so many tools now, and more emerging every day, that nobody can reasonably be competent at one or two at the most. So, pick one that suits your businesses use case, and focus on being competent at that one, knowing that if it is overtaken functionally by another, your choice will soon catch up, and probably improve on rivals. The boundaries of what is possible are being pushed at an astonishing rate.
Helpful tools and resources
Here’s a curated selection of easy-to-use tools:
- ChatGPT. Custom GPT, projects, Canvas tools become a personal assistant.
- Perplexity: AI-powered research and insights.
- Google NotebookLM: Organise and analyse your information seamlessly. Free.
- 11 Labs: Create affordable, professional-quality audio content quickly.
- Suno.ai: Music and lyric generator.
- Luma2: Text to video, paid service, but affordable, and impressively powerful.
- Leonardo.ai: Image generator; easy and effective.
Real-world examples
Businesses like yours successfully use AI. Podcasts like Dan Sanchez’s “AI Driven Marketer” and Michael Stelzner’s “AI Explored” showcase relatable small business tools and case studies, highlighting measurable impacts from AI implementation. Influential voices like Rick Mulready, Andy Crestodina, and Rand Fishkin also contribute enormously to the ‘eco-system’ that will assist you to Figure out how to leverage AI tools for practical insights and actions.
AI’s future: Adapt or fall behind
AI will not replace small business owners, but businesses that leverage AI effectively will outpace those who ignore it. Ignoring AI today is like bringing a knife to a gunfight. AI is quickly becoming essential for competitiveness and efficiency.
Think of AI as your newest hire. Talented, scary smart, but inexperienced and naive. With proper training, patience, and clear guidance, this new “hire” can transform your business, freeing you to do strategic work only you can do.
Why not take a small step today? Choose one aspect of your business, pick an easy-to-use AI tool, and experience firsthand how AI can become your next competitive advantage.
Header cartoon: courtesy of Tom Gauld.
Mar 10, 2025 | AI, Leadership
Ever wonder why smart groups often make poor decisions?
Businesses and institutions often slip into ‘Groupthink? From casual groups to formal teams, even when aware of their tendency toward confirmation bias, they naturally favour opinions aligning with prevailing views.
At its worst, Groupthink means ignoring opportunities to consider differing opinions and data and dismissing them when they are presented. This usually leads to choices that with the benefit of hindsight are clearly stupid. Think of it as everyone boarding the wrong train because no one dared to question the destination.
Alignment, that often used management cliche however, is essential for optimal performance. Everyone on the team should clearly understand the direction they’re heading and why that direction matters. To extend the metaphor, everyone on the train knows where it is going, what their role is, what they need to do on the journey to arrive at the declared destination.
True alignment happens when all opinions, information, and data have been carefully considered, weighed, and distilled into a clear consensus. The best choice is obvious, and everyone either fully supports it or at least understands it as the optimal route forward. The strategic challenge is ensuring the destination to which all are aligned, is the optimal choice given the strategic, competitive, and regulatory context.
Are ‘Groupthink’ and ‘Alignment’ synonyms? Or just two sides of the same coin?
Groupthink: Bad. Alignment: Good.
Both can suffer from confirmation bias, even when teams consciously try to avoid it. Alignment can become especially dangerous if unchecked confirmation bias sneaks in.
Many strategies exist to ensure the best choices emerge from challenging decisions. Employing a Devil’s Advocate is one approach to removing any pre-existing bias. It includes techniques like ‘red teaming’, or involving independent external experts for objective interrogation.
Chat GPT 4.5 recently landed in my account with its ‘Deep Research’ capability.
This marks a genuine leap forward for AI.
Earlier models like Chat 3.5 already enabled the asking reflective questions like, “What have I missed?” or “What should I be asking?” Although useful, these prompts typically delivered limited responses.
Chat 4.5 with Deep Research elevates the Devil’s Advocate approach to an entirely new level. It deeply interrogates the topic, reasoning through provided prompts and resources to deliver nuanced, sophisticated, and profoundly useful insights.
This capability changes the game for management teams, provided their commitment to a particular viewpoint doesn’t block genuine consideration of alternatives.
l remember Bill Shorten’s absurd 2012 ‘blind support’ gaffe when asked for a response to PM Julia Gillard’s removal of Peter Slipper as Speaker. He said, “I haven’t seen what she said, but I support whatever it is that she said.” While Shorten understandably wanted to avoid contradicting the PM, his words perfectly illustrate how blindly following a position without any questioning is just dumb. He was however, perfectly aligned with the PM, useful when climbing slippery leadership poles.
Mar 7, 2025 | Customers, Innovation, Marketing, Small business
I have started seven businesses, so I have some entrepreneurial form.
One I sold, one delivered profits over a 5-year period, but circumstances led to its closure, several did the dead cat bounce, and a few more struggled a bit before common sense cut in, and one, StrategyAudit has been going for 30 years. On top of my own gigs, I have been involved, engaged, and accountable for many, many more as a consultant, interim manager, and contractor.
After all that effort, sweat, broken dreams, conflict, disillusionment, and frustration, mixed in with some ‘I told you so’s’ what have I learnt?
Timing is crucial. Two of my dead cats were just timing: I was too early, and others since have done similar stuff and made a killing, proving that a good idea is rarely yours alone. Connected to this, but not in a causal way, is that it always takes longer than you think. Take your worst case time-frame, the one that cannot happen, then double it. If successful, that impossibly long time frame might be close. We never hear of this from the start-up porn inhabiting the web.
You are never too old. Ray Kroc was a 52 year old appliance salesman when he had the brainwave that led to McDonalds. In Australia, the age group most likely to start a business is 35-39 years old, comprising 19% of start-ups. The likelihood of extreme success keeps rising until the mid to late 50’s, so Ray Kroc is not an outlier. This is contrary to the common perception of the hoodie wearing entrepreneur who only needs to shave once a week. In my case, all my efforts except StrategyAudit were born before I was 40, the earliest, not counting my efforts to make a bob while still at school and University, was when I was 22. StrategyAudit was born from necessity when I was 44.
Focus and commitment are mandatory. Entrepreneurs by their nature are curious, perceptive, and usually see things from an uncommon perspective. As a result, they are easily distracted by the new shiny thing, or great idea to bolt onto their baby. Sometimes these great bolt-on ideas come from early users, whose opinions carry considerable weight because they are so important to you. The internal struggle with this fragmented attention and less than absolute commitment is often a real problem. In my case, it probably cost me at least two potentially extremely successful businesses. I have often wondered at the role of ‘necessity’ in the game of unicorn chasing.
Boot-strap or take equity partners. Every start-up is short of two things: cash and capability. It is enormously tempting to address one of both or these by taking in partners by one of the many avenues open. Often this is the right thing to do, it usually makes scaling quicker and easier. The downside is the loss of control. Most entrepreneurs have some level of ‘control-freak’ in their DNA, and struggle when they go from having the final word, and having to take on board the views of others.
Capability shortfall. No entrepreneur can cover all the capability bases required for a successful business. That leave the choice of how, when, and sometimes if, you fill the gaps. Getting this wrong causes all sorts of terminal events. Often these are around cash flow shortages, particularly when the enterprise appears to be rapidly gaining ground and being successful. However, all the other functions that must be executed by a growing business are equally vulnerable. These days it is sometimes little more than finding and keeping the right people who operate at whatever ‘coalface’ you service.
Solve a problem felt by others. Solving a problem only you have will not lead to a business unless others have the same one. Equally solving a problem you think others have, when they do not feel the impact of it, or your solution costs more than the problem costs them, is not useful.
Round pegs and square holes. In most SMEs seeking to scale, or even just survive, the choice of personnel, and the jobs they do is critical. Make a mistake and it can be terminal, as SME’s do not have the cushion of scale to absorb those mistakes. The adage of ‘hire slowly, fire fast’ is especially important for SME’s.
Too little marketing. Marketing is an investment in future cash flow. Often this is really, really hard when current cash flow is in the toilet. It is profoundly different to the conversion to a transaction, usually called sales, which is just the end point of the process. When you just have the end point, with too little or misdirected effort at the wider functions of ‘marketing’ in the revenue generation process, you will have a mix of productivity suck-holes and opportunity costs that will not show up in any standard set of accounts.
Too little attention to the numbers. The ‘numbers’ critically include the financial numbers, but they are not the only ones that should be monitored, managed, and leveraged. While I obsess about cash with those I work with, cash in the bank is an outcome of a wide range of other things that have gone as anticipated, or if the bank is empty, not as expected. The most critical ones fall into two categories:
- Internal numbers. These are the numbers over which you have direct management control. They range from the costs of manufacturing and service input, to the overheads resulting from the costs associated with keeping the doors open every day. Inventories, cash conversion cycle time, capex and the timing and quantum of expected returns, personnel productivity, and many more consume cash and importantly for an SME, time.
- External numbers. Critically, these are the numbers around the behaviour of customers. They will vary depending on the product you are selling, but customer acquisition costs, referral rates, lifetime value, and repeat purchase rates will all directly impact on the cash in your bank account. They also should include some consideration of the market context, trends, competitor assessments, and regulatory considerations.
Importantly, and often overlooked until too late is the most fundamental number of all: Sales revenue. None of the above is the slightest bit relevant un the absence of revenue. Go after it early and hard!!
There you go, 50 years of hard-won wisdom in a 5 minute read. Call me when you need more.
Mar 5, 2025 | AI, Leadership
AI is the latest corporate cure-all. Just sprinkle some over your business, and inefficiencies vanish. At least, that’s the pitch.
Everyone from academics and government bureaucrats to consultants, seasoned practitioners, casual observers, and the local conspiracy theorist has an opinion on its transformative power. Digital transformation discussions obsess over AI, treating it as a magic elixir capable of solving all operational woes.
The advice is often generic, but sound: define objectives, assemble teams, allocate resources, identify use cases, research the best tools, establish a process to scale successful experiments, and so on. Logical steps, but there’s a crucial caveat beyond the difficulty of execution: the false assumption that ‘business as usual’ can be improved with a few AI tools.
The gravitational pull of the status quo is underestimated. Many assume that AI’s elegance and utility will naturally override entrenched habits and outdated processes.
It won’t.
Change doesn’t happen because of technology; it happens because there’s an undeniable, compelling reason to shift. That reason must be powerful enough to overcome the inevitable resistance. The benefits of change are often broad and enterprise-wide, but the costs, both real and perceived, tend to be personal, creating the very resistance that stalls progress.
No matter the size or urgency of the change, the Theory of Constraints applies.
The speed of any process, including transformation, is determined by its biggest bottleneck. Identify the constraint, remove it, and then tackle the next biggest friction point. When the constraint is culture, the weight of the status quo, and the psychological safety of individuals, change demands a different approach. To be successful, it must be driven by empathy, engagement, and a keen understanding of what’s really at stake for the individuals at the ‘coalface’ of the change.
The compounding effect of small but continuous improvements is what drives real progress. Rinse and repeat, again, and again.
Used tactically, AI is enormously valuable now and will only accelerate in importance.
I have a three-part mantra for tackling bottlenecks: Automate, Delegate, Eliminate.
AI excels at all three. It automates processes, enables and manages delegation (sometimes through outsourcing), and eliminates inefficiencies by delivering transparency and reducing waste.
However, AI alone is not enough. Re-engineering a process is not about throwing technology at a problem. It requires leadership, a deep understanding of why bottlenecks exist in the first place, and the willingness to take decisive, sometimes radical, action.
The brutal truth: AI doesn’t make bad decisions good, lazy leadership effective, or broken cultures functional. It just automates the mess faster. If organizations don’t adapt, if people, workflows, and mindsets don’t shift, then AI will be nothing more than an expensive distraction.
To truly reap its benefits, businesses must not just implement AI but also create an environment where it can thrive. And that demands real leadership. AI does not lead, it can only go where directed, led to the situations where its ability can be leveraged. If leadership is missing, all AI does is magnify and accelerate the impact of the problems, creating uncertainty on the way.
Feb 28, 2025 | Marketing, Strategy
‘Find a niche and own it’ has been a mantra of mine for years.
SME’s who have done this can do very well.
What it implies is that you have gone out and found those few people who overvalue what you do very well.
Defining what you do better than anyone else is the start.
You do not have to be the best in the world, you just have to be the best available to your ideal customer. For many SME’s that is a geographic market, for others, it may be personal service, or a particular blend of coffee beans the delivers a specific flavour, every time when made by Tony the barista.
When you excel at something that a potential customer overvalues, that is a recipe for success. Price will become a secondary consideration.
My eldest son paid his way through university buying and selling guitars, and valves for amps. He knew guitars and their value, so was able to make a few bucks on the arbitrage. However, he knew valves to an extraordinary level of detail. His market was highly specialised Blues guitarists in Sydney, those few insisted on valve amps rather than the modern electronic units. They came to him explaining the sound they wanted from their amp, and Geoff would assemble a valve set that delivered. It was a very narrow, deep, and specialised market and price was never a determining factor.
As University neared completion, he had to ask himself if there was a market in the niche, rather than just a niche in the market. His conclusion, yes there was a market in the niche, but the infrastructure and investment necessary to make a real commercial go at it, rather than just be a side gig for a uni student was more than he was able to make. As a result, he wound it down, and got a ‘proper job’ after graduation.
Briggs and Stratton is one business that years ago identified, leveraged, and now owns a global niche for mobile, small capacity internal combustion engines designed for outdoor use. Lawn mowers, outboard motors, pumps, and mobile generators all use B&S motors, often supplied and branded with the end product. For example, Victor lawn mowers in Australia is a venerable brand. The motor is branded Victor, the engine is actually supplied by B&S.
As their markets ‘electrify’ power systems (engines and batteries) for mobile machinery, it remains to be seen if they can retain their position.
When you are the only solution to a burning problem, even when only a few have it, price becomes increasingly less relevant as the urgency of the problem increases.
The marketing challenge is to identify and highlight the problem to which your solution is the only one possible.
Header drawing by DALL-E
