Dec 16, 2024 | AI, Leadership
The characteristics of leadership we expect from the local nonprofit or sporting club, to the largest businesses in the country, to the Prime Minister, are pretty much the same.
Trust.
We need to trust them. Trust is earned by the behaviour we observe, never just given. It is also incremental, built over time, but is also fragile, and can be brought down in a minute by one bad example. The test, if there is such a thing is whether we believe that the private conversations the ‘leader’ is having are the same as the public ones, and would they be prepared to say those private things on the 6 O’clock news. By this test, many in prominent so called ‘leadership’ roles in this country fail. Dismally.
Dependability.
This has many forms, from delivering on the big promises made, to turning up on time for an appointment with the local hairdresser. In any leadership role, no matter the size, when a real leader finds themselves from time to time unable to deliver, they do not walk away from the fact, they acknowledge the failure, learn from it, and move on. To many, this is the essence of leadership, to me, in it’s simplest form, it is just common courtesy painted on a wider canvas.
Competence.
Someone placed in a leadership role, who is an example of the Peter principal is corrosive to the rest of the organisation. Those being led must believe that the leader is someone they can follow, and learn from. That does not mean they never make a mistake, it does not mean they are never unsure of themselves, or exhibit human frailties, it just means that we believe that they have the wisdom, skills and experience to get the job done.
Humanity.
We are herd animals, we rely on those around us for safety, and security. We have evolved and prospered as a species because we are able to collaborate and care for one another and rely on our neighbours in times of stress and crisis. In short, we care about others. Someone in a leadership position who does not care about those being led, is not a leader, at best they are a manager, dispensable and easily replaced.
When an individual displays these four characteristics, followers just seem to appear.
Header by DALL-E, who cannot be made to spell correctly no matter how hard I try to get its digital brain cells to listen!!
NOTE: Before posting this, I saw I had written an almost identical post a few years ago. While the four parameters are the same, the way I expressed them is a bit different. So, rather than scrapping it, as i have done before when realising i am repeating myself, I elected to post it anyway. Repeating a good idea is rarely a bad thing.
Aug 16, 2024 | AI, Governance, Strategy
AI is the newest, shiniest thing we have seen since, well, perhaps ever, at least in the speed with which it has overtaken consciousness.
ChatGPT was released to the ‘wild’ in November 2022. In commercial terms, yesterday.
In that time, it has overtaken discussion, business planning, capability questions, and profoundly changed the face of stock markets.
An amazing outcome for a technology without a business model.
The committed AI infrastructure spending over the next year by the big 5 LLM builders, OpenAI, Amazon, Microsoft, Amazon and Google is over $200 billion. Depending on your sources, this might vary a bit, but may even be on the low side. It does not count the billions being spent by everybody else, largely on setting about leveraging the ‘infrastructure’ delivered by the LLM’s.
Again, depending on your sources, the revenues being generated over the next year by AI suppliers, both of the infrastructure and tools rapidly becoming available is probably $20 billion.
Nowhere in history has there been a tsunami of investment of this size and speed in the absence of a solid business model. There is no clear way forward to generating a return on that investment.
This is the equivalent to a goldrush, except, in a gold rush if you were the lucky one to find those elusive nuggets, you had some idea what they were worth, and an established way of monetising the metal.
Nothing of the sort exists with AI.
I have done plenty of capital proposals in my time, some with forecasts that bordered on the wildly optimistic because I believed a change of some sport would be generated by the object of that Capex. In my wildest dreams, I have never proposed anything like the ratio of capex to current revenue exhibited by this investment.
There is confusion around the term ‘Trillion’. Historically, the US and UK definitions differed, the UK version being 10^18, 1,000 times larger than the US trillion which is to the power of 12, or one million million. I explain this for clarity and comparative purposes.
On current stock market valuations (August 2024) Nvidia, a business few had heard of a year ago, is the most valuable company on earth with a valuation of US3.2Trillion. They trade places regularly with Apple for the No. 1 spot. Currently Apple is number 2, also at a rounded 3.2 trillion, but a few tens of millions behind Nvidia. Microsoft is third with 3.1 trillion, followed by Amazon at 1.9, and Meta at 1.3. The comparison I wanted to highlight is with the GDP of Australia, of US1.7 trillion. Australian GDP is just over half the market valuation of Nvidia and Apple, a sobering thought.
An investment of 200 billion against current revenues of 20 billion is simply the biggest financial gamble in the history, by a logarithmic amount.
The people running these massive businesses are not stupid. They see and are betting their companies (and they are ‘their’ companies, as control is in a very few hands) on massive returns, which means in turn that the fabric of everything we see and do must change, very quickly. The business models will change, and they will not be just everybody subscribing for modest monthly amounts to the latest LLM model. There will have to be whole new industries being ‘invented’ with successful business models in place for there to be a return on the capex being deployed.
The windows of opportunity that will open, and close just as quickly, over the next decade are immense.
No wonder there is a gold rush, it is just the location of the gold still in question.
Aug 8, 2024 | AI, Management
AI promises a multitude of productivity benefits for all enterprises.
For the thousands of SMEs competing with much larger rivals, AI offers the potential for easily accessible, reliable, and credible data on an unprecedented scale.
One such opportunity lies in market research, which has often been out of reach for SMEs due to its high cost.
AI systems are sophisticated probability machines. Given a base to ‘learn’ from and a set of instructions, AI can predict the next letter, word, sentence, illustration, piece of code, or conclusion. Feed it the right data to learn from, prompt that ‘learning’ with instructions, and the probability machine goes to work.
‘Synthetic data’ is the analysed outcome of a well-articulated AI search for relevant data from publicly available sources, potentially enhanced by data from a company’s own resources.
For instance, an FMCG supplier might need ‘attitude and usage’ research to support ranging of a new product in major retailers. Traditionally, they might spend $100-200k on a combined qualitative and quantitative market research project, which could take several months to complete.
Way out of the reach of most SME’s.
Alternatively, they could invest $15-25k in an AI application to scan social media, relevant publicly available statistics, and their own sales and scan data. This AI-generated ‘synthetic data’ might not be quite as accurate as a well-designed and executed market research study. However, it could be produced quickly, relatively cheaply, and be sufficiently accurate to provide compelling market insights and consumer behaviour forecasts.
Suddenly, opportunities previously out of reach for SME’s can be leveraged. Combined with their shorter decision cycles and less risk averse nature, SME’s now have the potential to haul back some of the ground they have lost to deeper pocketed large businesses.
Header illustration is via a free AI tool. it took less than 30 seconds to brief and deliver.
Jul 30, 2024 | AI, Leadership
Increasingly, we must distinguish between ‘content’ created by some AI tool, masquerading as thought leadership and advice, and the genuine output of experts seeking to inform, encourage debate and deepen the pool of knowledge.
I’m constantly reminded as I read and hear the superficial nonsense spread around as serious advice, of the story Charlie Munger often told of Max Planck and his chauffeur.
Doctor Planck had been touring Europe giving the same lecture on quantum mechanics to scientific audiences. His constant chauffeur had heard the presentation many times, and had learnt it by heart. One night in Munich, he suggested that he give the lecture while Doctor Planck acting as the chauffeur sat in the audience, resting.
After a well received presentation a question from a professor was asked to which the chauffeur responded, ‘I am surprised that in an advanced city like Munich, I get such an elementary question. I am going to ask my chauffeur to respond’.
It is hard at a superficial level to tell the difference between a genuine expert, and someone who has just learned the lines.
To tell the difference between those two you must
- Dig deeper to determine the depth of knowledge, where it came from. Personal stories and anecdotes are always a good market of originality.
- Understand how the information adjusts to different circumstances, and contexts. An inability to articulate the ‘edge’ situations offers insight to the depth of thinking that has occurred.
- Look for the sources of the information being delivered. Peer reviewed papers and research is always better than some random Youtube channel curated for numbers to generate ad revenue.
- Consider the ‘tone of voice’ in which the commentary is delivered. AI generated material will be generic, bland, average. By contrast, genuine originality will always display the verbal, written and presentation characteristics of the originator.
- Challenge the ‘expert’ to break down the complexity of the idea into simple terms that a 10 year old would understand.
These will indicate to you the degree of understanding from first principles, the building blocks of knowledge, that the ‘Guru’ has.
The header is a photo of Max Planck in his study, without his chauffeur.
Jul 22, 2024 | AI, Strategy
Our brains work on 3 levels.
At the most basic is the ‘reptilian brain.’ This is the ancient wiring that is common with every other animal. It monitors and manages the automatic things that must happen for life. Our instincts, temperature control, heart rate, respiration reproductive drives, everything necessary for the survival of the animal.
The limbic system. This manages our emotional lives, fear, arousal, memories, it is where we store our beliefs. It in effect provides the framework through which we look to make sense of the world.
The Neo cortex, the newest part of our brain that differentiates us from other animals. It is where we make choices, it controls our language, imagination, and self-awareness.
This three-part picture is a metaphor. The parts of the brain do not act independently, but in an entirely integrated manner, each having an impact on the others, and receiving input from the others.
Consider the parts of this complex interconnected and interdependent neuro system that is replaceable by AI. There is not all that many of them, beyond the extrapolation of language and imagery from what is in the past.
Despite the hype, we have a long way to go before artificial sentience will be achieved, if it is possible. (Expert opinion varies from ‘Within the decade’ to ‘Never’).
However, who cares?
The productivity gains from AI are present in some form in every current job, and the numbers of new jobs that will emerge are huge. Nobody had conceived of the job of ‘prompt engineer’ 3 years ago!
These new jobs in combination with the renewal of those currently available, will deliver satisfaction, and a standard of living out kids will thank us for.
Sadly, there is always a flip side. In this case it is the dark downsides we all see emerging from social media, which will also be on steroids, and the social dislocation that will occur to those on the sharp end of the changes in jobs.
How we manage that balance will be the challenge of the 2030’s.
Image by Canva.com
Jul 15, 2024 | AI, Governance, Leadership
In a world dominated by discussions around AI, electrification to ‘save the planet’ and its impact on white collar and service jobs, the public seems to miss something fundamental.
All this scaling of electrification to replace fossil fuel, power the new world of AI, and maintain our standard of living, requires massive infrastructure renewal.
Construction of that essential electricity infrastructure requires many skilled people in many functions. From design through fabrication to installation, to operational management and maintenance, people are required. It also requires ‘satellite infrastructure’, the roads, bridges, drivers, trucks, and so on.
None of the benefits of economy wide electrification and AI can be delivered in the absence of investment in the hard assets.
Luckily, investment in infrastructure, hard as it may be to fund in the face of competing and increasing demands on public funds, is a gift we give to our descendants.
I have been highly critical of choices made over the last 35 years which have gutted our investment in infrastructure, science, education, and practical training. Much of what is left has been outsourced to profit making enterprises which ultimately charge more for less.
That is the way monopoly pricing works.
When governments outsource natural monopolies, fat profits to a few emerge very quickly at the long-term expense of the community.
Our investment in the technology to mitigate the impact of climate change is inherently in the interests of our descendants. Not just because we leave them a planet in better shape than it is heading currently, but because we leave them with the infrastructure that has enabled that climate technology to be deployed.
Why are we dancing around short-term partisan fairy tales, procrastinating, and ultimately, delivering sub-standard outcomes to our grandchildren?
Header illustration via Gemini.ai
