Feb 3, 2025 | AI, OE, Small business
Sledgehammers in skilled hands can be both a significant tool of productivity, and a destructive force.
AI is the newest sledgehammer on the commercial and personal block.
It gives everyone the opportunity to write a blog, book, opera, make a movie, paint a landscape or portrait, or post an outrageous opinion. It is the most democratising technology ever invented.
What AI does not do, and will never do, is replace the quality of thought and creativity that humans are able to bring to a problem, situation, or creative exercise. However, AI can amplify human ingenuity by offering the opportunity to greatly increase the quality, efficiency, and breadth of thought an individual can bring to a situation.
For small manufacturing businesses and their supply chains, AI is typically seen as a productivity tool. Indeed, it excels at optimising operations, streamlining workflows, and enhancing quality control. More importantly for the future however, it is a tool that expands capabilities, enabling businesses to innovate faster, respond dynamically to market demands, and identify new opportunities before competitors do.
Imagine brainstorming sessions supercharged by AI, where potential solutions are generated, refined, and paired with actionable deployment plans in real-time. This can give small manufacturers a significant edge, allowing them to pivot swiftly in response to challenges and lead their industry through innovation rather than follow.
This has profound implications for talent acquisition and retention.
Rather than just focusing on traditional technical expertise, increasingly available via AI, businesses should prioritise those with ‘flexible minds.’ These individuals may not always be top-tier engineers in terms of mathematical skills, extremely creative marketers, or inquisitive operations managers, but they excel at envisioning multiple outcomes and solving complex problems creatively and rapidly. They can visualise scenarios, identify risks, and devise solutions backwards and forwards, often outperforming those who think only sequentially.
This ability will equip employees for the increasingly complex, variable, and competitive world of modern manufacturing. By leveraging AI to empower employees to perform tasks outside their established skill sets, small businesses can boost innovation, adaptability, and resilience. This not only enhances productivity but also builds a workplace culture that fosters satisfaction, motivation, and long-term growth.
In the past, I have advocated that the primary consideration in identifying productive employees, after being very clear about the required skills to do a job, is curiosity. The emergence of AI elevates curiosity almost to the level, and in some cases, above, the requirement for specific skills.
The risks of ignoring AI adoption are stark. Competitors who embrace AI will gain efficiencies, reduce costs, and innovate faster. Businesses that delay integrating AI will find themselves outperformed, struggling to keep up with quality expectations and delivery timelines.
The question small manufacturing businesses should ask themselves is: Are we willing to risk falling behind, or are we ready to lead the industry through smart, strategic AI adoption?
By increasing participation, independence, and the breadth of employee skills through AI integration, small businesses can secure their competitive advantage and thrive in an AI-driven world.
Jan 29, 2025 | AI, Governance, Strategy
The tech news of the decade blew up on Monday January 27, 2025.
Nvidia, the darling stock of the AI revolution dropped six hundred billion (17%) in market capitalisation in one day. This is the biggest one day loss in stock market history. It sparked a selloff of other tech stocks, leading to a sector drop of 5.6%.
Has the bubble burst, or is it just the theories of Clayton Christianson writ large, again?
The spark was the recognition of the impact of the Chinese AI architecture represented by DeepSeek R1 by the technical wizards and stock analysts.
Surprisingly, DeepSeek released a research paper outlining their approach to AI training. This details an architecture that dramatically reduces cost and complexity of training LLM’s while delivering results at least as good as OpenAI and comparable models. It took a week or so for the described technology and results to be absorbed and understood, culminating in Mondays panicked sell-off.
Is this a bubble bursting or just a sensible reordering of expectations?
Two factors outside corporate malaise have dogged my innovative efforts over the years, both of which are in play here:
- The notion that innovation takes place in an environment of constraints. While history demonstrates the truth of this, the stories we tell ourselves celebrate what appears to be great innovation emerging as a result of chaos. In this case, the restrictions placed on China getting the existing technology created restrictions they have beaten.
- What I call the ‘Christianson effect’, better known as the Innovators Dilemma, after Harvard professor Clayton Christianson is proven accurate time after time, after time. Again, Christianson accurately saw that a high cost solution to a problem would eventually be replaced by a much lower cost solution to the same problem. DeepSeek is just another example of the power of his observation.
The US under the Biden administration for security reasons put export bans on Nvidia chips, chipmaking tools, and development software. These bans covered US allies in an effort to isolate China from the Intellectual capital as well as the means to bridge the technology gap that suddenly appeared. It would appear that rather than accepting the ban and going home, the Chinese reacted by using the ban as a motivator to rethink the engineering of the guts of AI systems, and come up with a solution that addressed the two hurdles facing current AI:
- The enormous amounts of data required to train the models.
- The huge drain on power required to process even modest requests to the models for a response.
Both it would seem, are gamechangers, as the cost reduction probable for AI platforms is enormous.
The real question for those who run businesses that use this technology, or are starting to use it more generally in our lives, which is all of us, is what comes next?
Here is what I think, assuming the initial hype is close to the mark, and not another chimera like the Theranos scam.
- The huge allocations of capital being made by the big US companies, Microsoft, Google, Amazon, and Meta, will be put on ice. Nvidia has hundreds of billions of dollars in orders from these giants that it cannot currently adequately fill. Some if not many will be quietly cancelled.
- More billions allocated to build the infrastructure to accommodate the models, big chunks of expensive land, and power sources will also be slowed down. For example, the project called the ‘Stargate project’ triumphantly announced last week by the president involving a 500 billion dollar investment by the government will become just another Trump press release consigned to the round file. The project as outlined is a JV with Oracle, Microsoft, Softbank, and others to build AI capability in the US. It represented an equity investment by the government in the commercial leveraging of emerging technology, a first. I also speculate that the proposal to fire up a mothballed nuclear reactor at 3 Mile Island by Microsoft will require a rethink, although it may have just been at best, a thought-bubble.
- The disruption created by the DeepSeek technology will redirect the tsunami of capital towards Chinese technology, until the next innovation iteration comes along. This will both geometrically accelerate the rate of adoption necessary by business if they want to keep up with competitors, and make the current security concerns surrounding Tik Tok look trivial by comparison.
- The disruption might ‘democratise’ the use of AI in the sense that it will be more widely available once the costs are dramatically reduced. Alternatively, it may mean that the existing ‘moat’ controlled by the current crop of AI platforms, all American, will be replaced by a Chinese moat.
- Regulating AI in some way has been a topic of frantic debate since OpenAI launched Chat. To observe that regulators have no idea would be accurate. Now, instead of regulators being caught with their pants around their ankles, it is apparent that their pants, if they own any, are secure in the wardrobe. In a regulatory and geopolitical sense, we are spinning out of control.
- The rate of development of systems that enable humans to expand the reach and depth of the intelligence we evolved to have will be extended at a rate that is further accelerated by the huge reduction in cost that appears probable as a result of this Chinese breakthrough. We had better all start learning Mandarin.
As the old Chinese saying goes ‘We live in interesting times’
Jan 26, 2025 | Governance, Leadership, Personal Rant
John Maynard Keynes once said, “The difficulty lies not so much in developing new ideas as in escaping from old ones.”
On this Australia Day, it feels particularly apt as we continue to grapple ineffectively with deeply embedded issues that requires systemic adjustment. This sort of change is beyond the short-term populist sport that passes as leadership in this country.
The 26th January is just a date, but one that has become an institution for many. It does not mean the many injustices by current standards perpetrated on indigenous inhabitants should be forgotten or dismissed in any way. Perhaps by contrast we should be celebrating that most of those injustices have been acknowledged. Effort, ineffective as it may be if measured by the gaps in health, education, and opportunity of indigenous Australians, is being exercised to reverse the lingering effects.
They could also choose to see it as a day to celebrate what small amounts of indigenous culture remain, and see the day as an opportunity to inform others about what has been lost, the cost to us all of that loss, and the agonies of the frontier wars that so few of us, particularly my generation, know anything about.
Marketing 101: take a negative and find a way to turn it into a positive.
WooHoo, an election.
We all look forward to the coming tsunami of creative press releases making flimsy, transparently self-interested promises daily. They will inhabit our lives along with the high viz jackets, hardhats, and staged media events that bear no relation to reality until life returns to normal after the poll.
Our three-year cycle, combined with the election dates being in the hands of the government are too short. The first months of a new parliament are spent crowing and blaming, the next 12-18 months is spent back patting, and the last period moving towards an election ensures that nothing will get done. From now, speculation about poll dates, claims and counter claims about anything that can be boosted up to the level of trivial will crowd out anything resembling sensible policy debate, development and more importantly, implementation from now until the poll results are called.
The AI Revolution.
The rise of artificial intelligence is reshaping industries and redefining the future of work. Generative AI, while transformative, is prohibitively expensive to train. This will leave the development in the hands of a very small number of individuals creating an extremely powerful oligopoly. This will leave small businesses at a cost and capability disadvantage. Australian SMEs, the backbone of our economy, are struggling to implement even basic AI tools for back-office automation, and the pace will continue to accelerate. Many will go to the wall, some of them deservedly so, but many valuable enterprises will disappear simply because they do not have the wherewithal to invest in harnessing AI to compete effectively.
Yet, there is cause for optimism. AI is not about replacing jobs, although people using AI will replace those who do not. The number and type of jobs that emerge will outweigh the losses, as has happened every time in history when a transformative technology emerges. In the transformation will be many opportunities, if we are smart enough, and ready to grab them.
The challenge lies in avoiding overhyped claims. Social media is awash with “AI-powered” solutions that often offer little substance. The real opportunity lies in training workers and rethinking education systems to prepare Australians for an AI-enabled future. I look forward to seeing the policies to generate positive outcomes being unveiled, and more importantly, deployed after the election.
Housing: A long term ‘Crisis’
For decades, Australia has underinvested in public housing while urban migration has intensified, leading to skyrocketing rents and property prices. Young Australians find themselves trapped, unable to afford homes in cities like Sydney or Melbourne, while regional areas remain underdeveloped.
‘Crisis’ is the wrong word to describe 40 years of policy failure. It implies a short term phenomenon, when the drivers of the current situation are anything but short term. Those poor, short term policy choices across several domains of responsibility have cemented in a systemic housing shortfall that will only be addressed by painful in the short term but long term focussed remedies.
Sadly, in the coming election I expect housing to be a political football, abused and accused by all colours of politics.
Education: Cost or investment?
Our education system is at a tipping point. While private schools thrive with abundant resources, public schools are starved of funding. Stories of teachers buying basic supplies like pencils and paper for their classrooms are sadly common, something I know first hand. These disparities perpetuate inequality, leaving students in disadvantaged areas with fewer opportunities over their lifetime. This suppression of opportunity also supresses the vitality and competitiveness of economic activity, which affects us all.
We need to reimagine education as an investment, not a cost. Finland’s model, where public schools are well-funded and attract the best educators, proves that equity and quality are achievable. Equipping every child with access to air-conditioned classrooms, modern technology, extracurricular programs, and professional ‘cream of the crop’ teachers should not be a luxury but a baseline expectation.
Beyond infrastructure, we must value vocational education and practical skills. The loss of manufacturing jobs in Australia has eroded our trades base. The car industry, once a “university of engineering” for many Australians, is gone. If we want to build a nation ready for the future, we need to invest in apprenticeships, technical training, and industries like renewable energy component manufacturing, technically advanced machine tools, cutting edge pharmaceuticals, value added processing of Australia’s inventory of raw materials from bauxite, iron ore, rare earth minerals, and wool.
The economy is stretching, where is the limit?
Australia’s tax system is increasingly unbalanced, with a disproportionate reliance on PAYE taxpayers while wealthier individuals and corporations exploit legal loopholes to reduce their obligations. This creates a growing divide between those who contribute their fair share and those who shift profits to low-tax jurisdictions or benefit from capital gains and resource rents taxed at far lower rates. PAYE taxpayers bearing the brunt of funding essential public services which others dodge, must have an end point.
The consequences of this imbalance are stark. Social cohesion erodes as the gap between the “haves” and “have-nots” widens. Essential public services: education, healthcare, infrastructure, social services, all face increasing demands for their services, while resources are becoming increasingly scarce. The Henry Tax Review, released in 2010, highlighted these inequities and proposed reforms. All but a very few of its reasoned and economically sensible recommendations remain unimplemented.
Politicians across the parliament have been spooked by the modest efforts of the Shorten-led opposition’s push to close a few obvious loopholes, presented to the electorate in the 2019 election. Without substantial reform, which history proves must be bipartisan, the system risks imploding under the weight of its inequities. It is time to revisit comprehensive tax reform to ensure a fairer distribution of the burden and a more sustainable future.
Energy transformation.
Australia’s energy transition is both a challenge and an opportunity. Electrification is accelerating, with everything from transport to manufacturing shifting away from fossil fuels. This increased demand for power risks overwhelming our grid unless investments in renewable energy and storage are fast-tracked, and the dilemma of a dependable on/off base load power resolved.
The quality of debate about energy policy over the last 20 years would make schoolkids blush. The need for change has been obvious for years, but that need has been passed around like a parcel at a kids birthday party. Well, the music has stopped, and the parcel seems not to have a chair.
There are initiatives like community-owned solar farms and battery projects that show the way. Yackandandah in Victoria is one such example. The town has become a model for energy independence, aiming to generate 100% of its power from renewables. Projects like this are tiny experiments, out on the fringes, which is where most change starts. The complexity and cost of scaling from local initiatives to an economy wide electrification are huge, but the path is very clear, and the necessity absolute.
Geopolitics.
The world appears to be stumbling backwards, and at the same time becoming increasingly polarised between the old fashioned descriptors ‘left’ and ‘right’. These descriptors no longer apply. China has demonstrated an ability to generate, harness and deploy capital while building capabilities at an unprecedented pace, hallmarks of capitalism, unmatched by that icon of capitalism, the US. The re-ascension of Trump to the big house, and gathering kleptocracy that surrounds him triggers uncertainty, mistrust, and will result in an implosion of geopolitical trust and collaboration, already at a very low point. The wars in Europe, the Middle east, and the less publicised but no less savage civil war in Somalia, on top of tensions around the Taiwan straights are a poor starting point for a peaceful world. There are also a number of regional conflicts that barely raise a sweat globally, all of which could be a catalyst for wider conflict.
Our defence expenditure is increasing as the world becomes more unstable, all from the diminishing tax base, and we have harnessed ourselves to a potentially erratic US (at least for the next four years) and a lame duck UK by the arrangements of AUKUS. This is a huge ‘all or nothing’ bet on nuclear subs, which to me seems muddle headed at best. There are potentially significant technical and industrial benefits to be gained, but the cost is effectively unknown, the defence capability doubtful, and the time frame long. Usually I am a supporter of long term thinking and placing bets on the shape of the future, it just seems that the bet on AUKUS is a poor one.
Something will break, somewhere.
The environment.
The place we live is the glue that holds the rest of the forgoing together. We must figure out a way to protect and nourish it, while accommodating the accelerating demands coming from an increasing population.
We are in a crunch. The demand for electricity is increasing, and will continue to do so driven by the predicted geometric increases in consumption by digital systems. At the same time, we are winding down power sourced from fossil fuels. The loser, unless there is a dramatic change in direction, will be the natural environment. If that continues to be the case, our grandchildren and (for me at least) great grandchildren will be screwed.
The Path Forward
As a group, we Australians need to exercise the muscle between our ears.
Stop listening to the ‘news’ and accepting the nonsense presented as news as fact. Instead, be philosophical and examine the sources of that ‘news’ and consider the bias that will be inherent in it.
Treat the filter of ‘news’ by social media with the contempt it deserves. Social media is a great tool, which we have seen monetised by a small number of billionaires for their own purposes, by using our behavioural instincts in ways evolution did not foresee and has failed dramatically to adjust to.
Look for sources of the opposite of what is fed to you by ‘news’ publishers and the cesspool that is social media. Perhaps then you might get a better picture.
Whenever we build a ten foot wall to address some sort of problem, or shortcoming, the smart set, armed with lawyers, morality deprived publicists and urgers, turn up with an eleven foot ladder. There is nothing we can do but be vigilant and continue to repel the pirates wherever they appear. This takes leadership, resilience, and a sense of duty to the wider community that is sadly lacking currently. The pirates are swarming over the fences, and if the US is any measure, the supposed good guys are being deployed to remove bricks.
Keynes was right. Escaping old ideas is hard. However, if any country can rise to the occasion, it’s Australia.
Pop a beer and throw an extra snag on the barbie for me. Have a great Australia day and consider the calls for a change in date to be motivated by a desire to have the best possible outcomes for all Australians.
Jan 24, 2025 | AI, Marketing
Close your eyes.
Now think of the sound that happens when you open Netflix or HBO, the cello riff at the opening of Game of Thrones, the McDonalds ‘ba dada boop ba’ that ends every ad.
You can ‘hear’ them in your mind, they are an unambiguous reminder of what you are about to see and hear.
Think now of a song that meant something important to you when you were growing up. All you need are the opening bars of the music.
Can you feel the emotion that memory brings?
We humans are very tuned in to music (apologies for the poor pun). Somehow is sticks in our brain, and opens a door to our memories, emotions, and situations.
How would you like to have a sound that to your customers, wider networks, and those who have a casual acquaintance with your brand, brings your value proposition straight into their brain?
In the past that marketing luxury has been the territory of large companies with large marketing budgets. You had to pay songwriters, musicians, pay royalties, hire studios, session singers, or even celebrities.
All very expensive and time consuming.
Not now.
Now you can do it in a few hours at most with an AI tool (CHAT, Claude, Gemini, et al) that will write lyrics for you, and another tool to deliver you the sounds to order. Want your lyrics to be performed in the genre of country, pop, hip-hop, metal, whatever, tell the tool, and it will deliver. It will take some iterations, and prompting can be a challenge as music is much less specific than prompting using text., but you can get there.
There are several AI sound generators. Suno.ai is the tool of choice of a mate who has experimented with several, and which I found to be amazing, but there are others.
Want that sonic brand identifier?
It is now easily within your reach.
