Apr 14, 2025 | Change, Communication, Governance, Leadership, Marketing, Strategy
When you look you see Hofstadter’s law around you everywhere, every day.
We all understand Murphy’s law, which accurately states that is something can go wrong it will, probably at the worst time. Murphy has a sibling, articulated by Douglas Hofstadter which states: ‘A task always takes longer than you expect, even when you take into account Hofstadter’s law’.
Planning is a part of our lives. Some things are easy to plan, the consistent characteristic of these is that there are very few variables over which you do not have control. For example planning a trip to the supermarket, you can check what you need you control the time, the choice of supermarket, where you park, how you work the store, the choices you make between brands. Very few uncontrolled variables.
By contrast strategy is an exercise not just in predicting the future, but then making choices how best to deploy your resources in a way that enables you to shape the future to your benefit by exerting some influence over the range of variables over which you have no control.
Entirely different challenge, as there is never an explicit ‘right’ answer.
When we talk about strategic planning we are effectively mixing two incompatible factors. The uncertainty of the future and the forces over which we have no control, and the certainty of the resources we have to deploy, with uncertain outcomes.
Currently in this country we have a huge black hole called defence planning into which billions of taxpayers dollars are being poured, in the mistaken view that we are able to predict the future and therefore plan as if we could control the variables.
The better way is to have a robust strategy which enables flexibility in the way assets are deployed short term.
Projects tend to expand to fill a time available, while at the same time we habitually underestimate the time that is required to complete any given task, no matter how rigorous we are in the planning.
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.
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?”
Mar 24, 2025 | AI, Governance, Leadership
It appears to me that there is a wave of intellectual agoraphobia driven by the sudden emergence of AI platforms and tools gripping many of those I interact with commercially.
My recently departed mother, in the last year or two of her life found it hard to leave the immediate environs of her home. She increasingly felt intimidated by change, and the tension of just interacting with the unfamiliar.
To me it looked like mild agoraphobia, but my siblings thought it was just a retreat from change because she felt unable to deal with it easily.
Agoraphobia is not just a fear of wide-open spaces or going outside the house. At its core, agoraphobia is about the fear of being trapped in situations where escape might be challenging, help unavailable, with no place to hide beyond the familiar. It’s a state of mental paralysis, driven by the anxiety of the unknown.
How does this psychological insight impact on an enterprise?
Plenty of businesses suffer from what could be called ‘commercial agoraphobia’. A stubborn unwillingness to venture into new territories, innovate, and embrace change. At board level it is passed off as a Conservative Risk profile’ in shareholders best interests.
In fact, directors and management are reluctant to leave the familiar comforts of old processes and established wisdom.
Even worse, some institutions and enterprises deliberately build barriers to prevent any sort of change filtering in, usually in the name of probity, governance, and consistency. To my mind that preference becomes intellectual agoraphobia.
This condition traps otherwise intelligent and capable leaders into rigid, immovable thinking, dismissing the forces exerting pressure on the business as passing. Even as change surrounds them, these people stick to the comfortable routines of the past.
This brand of agoraphobia thrives in echo chambers, fed by confirmation bias and groupthink. It is the subtle saboteur of growth, quietly whispering that risk is too high, change too uncertain, and innovation too risky.
However, staying inside this comfort zone guarantees eventual irrelevance.
The leadership of Nokia pre smartphone suffered from this affliction. Similarly, Kodak leadership failed, initially seeing the potential of digital photography, then killing it. Xerox missed the slew of innovations coming from their PARC labs. There is a long list of intellectual agoraphobics in our commercial history. IBM, Blockbuster (who had a leader but fired him as they did not like the message) Olivetti, Borders, and many others, a few of whom saw the light in time, such as Bill Gates’s late recognition that the internet would change everything and successfully pivot.
Intellectual agoraphobia leading to strategic stagnation.
The only antidote? Real leadership.
Leadership is not just about authority or charisma. It’s about the courage to challenge assumptions, dismantle outdated practices, and push beyond intellectual comfort zones. Leaders must confront intellectual agoraphobia head-on, fostering a culture where questions are encouraged, risks intelligently managed, and curiosity and adaptability prized above complacency.
It is like learning to swim as a kid. You must overcome that uncertainty and fear of the unknown to achieve an uncertain outcome.
Small businesses are as likely as large ones to suffer, more so as they often lack the depth of resources that gives large businesses a buffer. The benefit they have is agility, a great advantage in a homogenising world changing as rapidly as the one we currently inhabit.
Artificial intelligence is driving a tsunami of change across our commercial landscape.
Hiding from those changes by ignoring them, or dismissing them as a passing fad, will not be an option for long.
The only antidote is to get out there and play, learn, adopt, get some mud in your eye, and recognise that intellectual agoraphobia leads to commercial irrelevance.
Are you succumbing to Intellectual Agoraphobia?
Mar 17, 2025 | Governance, Leadership
‘You understand why I did it? ……The man that passes the sentence should swing the sword.’
Those are the words of Edard Stark in Season 1, Episode 1 of Game of thrones as he explains to his son why he was the executioner of a deserter from ‘The Wall’
There is a lesson for all leaders in this passage.
As James Clear put it: ‘The one making the choice should also be subject to its consequences’.
The scale of modern economies and enterprises and the nature of the communities into which we have evolved since the industrial revolution have made this core tenet of management and leadership an extremely hard benchmark to reach. We have put the decision makers way above the normal flow of consequences from their choices.
Directors are there to represent the best interest of the shareholders they represent.
Politicians are there to represent the best interests of the majority of those they represent.
How often do you see the choices made by these groups, and many others up and down the scale of the social and economic edifices we have built in the name of the greater good reach that high moral standard.
Rarely it seems.
Perpetrators of ‘White collar crime’ that occupy seats of real influence are rarely prosecuted. Partly this is because it is often very hard to ‘prove’ in a legal sense, and I suspect also partly because it is a ‘victimless’ crime. However, such victimless crimes all have consequences, diffused amongst faceless stakeholders somewhere out there.
Occasionally, the consequences do come home to roost.
Elon Musk has made many choices in his life. Those choices made him a multibillionaire, an innovator who could do the impossible. Make digital payments of online purchases safe? Change the face of the auto industry? Land a space vehicle on a platform ready to be reused? These were all impossible, until he did them. By force of sheer will, determination, imagination, and an ability to attract incredibly smart people into his dreams, he did the impossible. Then he made a choice, to swing to a seemingly destructive position supporting a set of values completely at odds with those who had supported him and his businesses.
The consequences of that choice are becoming clear very quickly as the sales of Tesla cars around the world tank, contracts for the services of Starlink, a fantastic product are being cancelled, and the multibillionaire of today is rapidly becoming the sad millionaire of tomorrow. It will only take one bank to call in a loan made on the basis of the stratospheric value of Tesla shares a few months ago to blow the house of cards away, revealing the hollow commercial centre to be on display.
The one making the choice should also be subject to the consequences.
Elons choice to harness himself to a narcissistic sociopath that looked like the investment choice of the century in November last year, now looks like the absolute opposite. Musk will feel the consequences where it really hurts: his ego, self-belief, and $billions, as well as his ability to attract those who provide the means to make him so successful into his orbit.
Sadly, the impact of Musk’s choices will also be felt by many who have followed him, many without much more than a wish to ensure they were on the gravy-train.
The wider community will be worse off by the fall from grace of a remarkable innovator. However, I would not count out a revival, assuming my gloomy picture of the immediate future is correct. Musk, amongst his many traits is incredibly resilient.
