Jun 17, 2026 | AI
Most recognise the danger of AI. It delivers a slick, formatted persuasive response to a prompt. It has become way too easy to just accept the veracity of the response and move from the drivers seat to the back seat. This removes yourself from the sweat of doing the work, and the responsibility for the outcomes.
We see it all the time, often in spots where we accept that there has been a level of scrutiny that should deliver reliable outcomes. For example, the crapola pie Deloitte delivered to the government in June 2025, which then published the deeply flawed AI generated report without any review.
The answer is in the transparency of the process of assembling, analysing, and preparing the output. What is included, what has been ‘AI imagined’ to fill the gaps in the prompting and resulting workflow, and easiest to miss, what has been left out.
The challenge is rapidly compounding as we move into the ‘AI Agent’ world, where we expect a whole multi-step process to be executed on our behalf by a machine.
Following a few sensible steps can dramatically improve the quality of the output.
Set hard boundaries.
- Define in explicit terms what the process will and will not do. Is the workflow restricted to your own files, or can it go outside?
- If it is instructed to use outside sources, what are the boundaries?
- Explicitly instruct that there be no generation of conclusions before a human review of the sources and for/against arguments.
- Insert a series of ‘stop’ points beyond which the tool will not proceed until instructed to do so. Instruct the tool to act as a devil’s advocate at each stop/go point.
Transparent provenance.
AI tools extract information from the sources it finds or are directed to. Those sources define the potential of the output to deliver useful value of some sort to the user. Curating the sources the tool examines is therefore a fundamental step in the generation of that value.
Remain curious.
Just because a tool can repeat a workflow accurately every time does not mean that the workflow is perfect. It takes human curiosity and experimentation to test and retest a process that is designed to deliver an optimised outcome. The AI cannot do that optimising; it requires a curious human to be in the drivers seat asking that key ‘what if’ question. So, turn off the process from time to time, and go back to the old way, manual execution.
An exercise I did many times pre-AI to improve a record-keeping process was to imagine myself as a paperclip, attached to relevant documentation. I would follow the document through the process, documenting every point at which the document was delayed, added to, moved, and authorised, and the time lapse of each of those points. Map it out, and inevitably you will see improvement opportunities. AI cannot see those opportunities.
These steps will stop the tool trying to please you by being agreeable and synthesising conclusions.
Jun 2, 2026 | Leadership, Management, Marketing, Strategy
A ‘heuristic’ is a ‘rule of thumb’ that takes the place of conscious calculation in the interests of speed and reduction of cognitive load in our brain. Cognitive overload creates the ‘friction’ in our brains resulting in indecision and anxiety. Heuristics, or ‘mental models’ bring the cognitive load down to a level we can deal with efficiently.
It is a function of evolutionary psychology.
To survive, you had to make a choice quickly about that rustle in the grass. Ignore it too often and you could end up as tiger shit.
Remember, we are all survivors of those who ran in order to not take the chance with the rustle being a tiger.
We all use these mental models daily, usually unconsciously.
In 2009 Chesley ‘Sully’ Sullenberger ‘landed’ the Airbus A320 he was piloting in the Hudson River after a flock of birds shut down both his engines on take-off from La Guardia airport.
He ‘knew’ without doing the calculations that he would not make it back to La Guardia, or the alternative airport of Teterboro in New Jersey.
His only option was the river, or a crash landing in populated areas of New York, and he had seconds to make the choice.
Subsequent investigations eventually confirmed his choice.
Sully applied unconsciously, a heuristic, a framework that was a result of his extensive flying experience, and knowledge of the gliding performance of the Airbus A320.
No data, no standard operating procedure that was useable, he acted and saved the life of every person on the plane as a result.
We all have a set of heuristics in our heads. The cumulative result of our experiences with life, and the context in which we have lived. We can either understand and leverage them to the advantage of ourselves and those around us, or we can fail to recognise their presence and power.
In your business, you are applying heuristics every day.
Choices that seem automatic: which customer to serve, who to hire, sales conversion, leadership choices, all are made with the assistance of heuristics. They are an essential and integral part of our management, but are only valuable when they are built from valid experience and regular testing and review.
You need to update your heuristics with regular feedback in the manner of an ‘after action review’ type analysis. What worked and what did not, where to lay the chips next time around, where to double down, and where to run.
When left untended, heuristics can evolve in suboptimal ways. Don’t leave yours untended, they may save you.
May 25, 2026 | Change, Governance
Economist Joseph Schumpeter observed in 1942, “economic progress, in a capitalist society, means turmoil.” That observation shows he had a good handle on the future as it is currently panning out. Chaos seems to be the order of the day, globally, as well as in this country.
The federal budget presented on May 12 was based on the principle of generational equity. Clearly, the tax pendulum has swung too far against Australians under 45 or so, in favour of their parents, and requires adjustment.
The incentivising of investment in real estate was enacted in the changes to the tax treatment of Capital gains in the 1999/2000 budget. Mixed with negative gearing which had been a feature of the tax system since 1936, it created a tax driven distortion in the allocation of capital, resulting in a shelter for investment in real estate.
Taxing capital gains has a potted history.
Prior to 1985 capital gains were untaxed, while wages and salaries were taxed at a 60% top marginal rate. Why should capital profits go untaxed while wages were fully taxed? This inequity created distortions in the deployment of capital. The Hawke government introduced a capital gains tax that matched the top marginal rate, excluding primary domestic residences in 1985, and reduced the top marginal tax rate to under 50%. The taxing of capital gains brought a fierce backlash. In 1987 there was a discount system put in place that recognised the impact of inflation on prices and removed the inflationary impact from any sale price for tax purposes. The changes in 1999 were aimed at simplifying the calculations to arrive at a taxable income that included capital gains, by introducing a flat 50% discount.
The backlash is evident again, as interest groups very effectively use the tools of AI combined with social platforms to rail against the proposed changes. While there are some areas where the detail in the budget was absent, and there are reasonable arguments against the blunt instrument approach in the budget, the principle was clear. Make the difficult changes now. Accept the impact on political capital for the benefit of the economy in the long term.
The pendulum swings again!
There was a lot of other stuff in the budget, but mostly it was business as usual and window dressing. This was not good enough in my view, when there are significant pressures coming from the changing environmental and geopolitical context that need attention.
A few of those are noted in the following sceptical notes.
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- Climate change and the industrial challenges created in manufacturing largely generated by the pivot to electricity sourced from renewables rather than from fossil fuels and the accompanying/enabling technology is a huge change. We need to invest heavily in the technology and infrastructure of global electrification to catch the wave, or be left behind. We must ignore the anti-scientific and financial nonsense coming from some parts of the political spectrum demanding we remain wedded to fossil fuel. Kicking that can down the road, again, is just plain stupid.
- Digital has morphed into AI, and the hounds are, rightly, concerned about job losses, as the shape of organisations and daily work pivots to ‘done for you’ by a machine. The disruption will be substantial, and upon us very quickly, so we need to be prepared. We are not even doing the basic things that will prepare for the changes, such as thinking creatively about how to educate our kids for a world very different to the one we grew up in.
- The steady reversal of the economy from one relying on physical assets to services has made the measurement of just about everything that we see as the foundation of economic modelling redundant. Modelling the outcomes of policy and economic activity is now about as certain as the mumbling from the coloured tent in the corner of the fairground. We desperately need an agreed methodology to realistically measure progress on those parameters. GDP as a realistic measure of activity in the economy is nonsense when it cannot capture most of the activity in services. The cliché ‘if you cannot measure it, you cannot manage it’ is as true in the case of an economy as it is in the management of an SME.
- Geopolitics is in turmoil. This is not just from the depredations of the current idiot in the White House, who has turbocharged it, and the grab by Russia to rebuild the USSR, but from the rise of China. 30 years ago China was an agricultural economy. Now it is the worlds manufacturing and industrial technology powerhouse. While domestic growth has slackened off, it has not stopped, but the rest of the world now relies on China for critical inputs to their supply chains for everything from advanced technology to manufacturing simple appliances, and Christmas ‘stocking-stuffers’. Where to next for China? I think it will attack the sclerotic economies of the west by buying in and disrupting the comfortable order that prevails. For example, European and US car manufacturing is being killed by Chinese imports of EV’s. So, they respond with various barriers that protect their own industries. The natural response from China will be to buy into the market either by start-ups or buying established brands, and building manufacturing capability behind any barriers. Chinese firms already own Volvo, MG and Lotus. Who is next? Volkswagen? The Chinese strategy is clear, and driven by long term thinking, not the next election cycle.
- Australia is not immune. International investment in Australia is essential for our economy. To date it has largely been US and European investors, we have a somewhat xenophobic attitude to Chinese investment, noting we cannot easily invest in China, and if we do, the conditions are onerous. However, we need them more than they need us, so the outcome is obvious. Australia and the western world generally has prospered under the umbrella of international trade fostered by the US since the Marshall Plan set about rebuilding Europe and Japan after the war. Now that plan is in tatters, torn up by its parent. We however, remain wedded to it as the US is so deeply integrated into our economy, while no longer being our biggest trading partner. That guernsey goes to China, the recipient of the openness of world trade, and now in a position to shape it through its domination of the key commodities and technologies of the early 21st century. That reality is yet to work its way into the Australian narrative in any way beyond observations of the importance of China as the major buyer of coal and iron ore. We were taught a painful lesson about the power of China to dictate terms under the previous government. The position we hold as a critical supplier of commodities will diminish over the next 25 years as Chinese integration into mineral wealthy Africa comes of age. What will we do then? Nothing in the budget even gives a hint of preparation, indeed, we continue to spend heavily on straw men like AUKUS.
- Australian R&D, both public and private is low by standards seen in competitive economies. It is also fragmented by our governance system that feeds turf wars at every level of activity. If we set about designing a governance system with a clean sheet of paper, there is no way we would end up with what we currently face. Therefore, it should be a priority of the government, every government, to remove the duplication, waste and opportunity cost such a system encourages. The budget did allocate a small increase in funding for CSIRO, but also directed that the current headcount reduction continue. Other changes to the R&D tax incentive and allocations to specific projects were also announced, but none to address the central challenge of doing the science, then turning it into a commercial outcome.
- The US S&P is driven by tech companies. Of the top 10 in market value, only Berkshire Hathaway is what might be termed ‘Old industry.’ In Australia it is the exact reverse. Of the top 10 only CSL could be termed ‘new industry’. Notably, several unicorns born in Australia have migrated, Atlassian and Canva being the poster children of this migration, but by far, not the only ones. We must find ways to create and nurture innovation. Progressively taking the axe to public expenditure on science, as noted above, is not a good start.
- November 2022 saw the public release of ChatGPT, which kicked off the AI ball. Subsequently, AI-related stocks have registered 76% of the S&P 500’s return, 87% of earnings growth, and 90% of Capex growth. The returns in the US, upon which much of our super returns rely is reliant on the ‘magnificent 7’, and most specifically Nvidia, continuing their growth driven by AI. Shakey ground indeed for the future prospect of returns when we are increasingly reliant on a superannuation system heavily invested in the S&P to fund retirement.
- We have an ossified political system. It is however, starting to break down, exemplified by the capturing of seats by ‘Teal’ candidates who removed the heart of the Liberal party over the last 2 elections, and the rise of the policy free bluster-ball that is One Nation. We need imagination and vision in the national parliament, and the courage to follow through. The outdated structures need to be at least renovated if not removed. We should start by limiting or even removing corporate donations to political parties. The alternative is a publicly funded system, open to citizens, and capable of receiving donations from citizens with a limit. The limit is to prevent rich individuals and businesses donating more than a concerned citizen on a median wage can afford. That might begin to earn the title of ‘Democracy’, and put a brake on the ability to influence policy choices by vested interests.
This is not a complete list, but it touches most of what concerns me about the direction we are taking.
Header: My thanks to Hugh McLeod for once again, capturing a complex idea in a simple graphic.
May 18, 2026 | Uncategorized
Harvard political scientist Graham Allison popularised the term “Thucydides Trap” to describe the danger that arises when a rising power challenges an established one.
The idea comes from the ancient Greek historian Thucydides, who argued that the rise of Athens and the fear it created in Sparta helped make war inevitable.
Allison originally used the concept to examine the rivalry between China and the United States, but it has a broader application. It is really a way of thinking about what happens when a dominant force begins to lose its grip and the challenger starts to look not only stronger, but more confident.
That makes the question worth asking in Australian politics: has the Liberal Party fallen into its own Thucydides Trap?
For most of the post-war era, the Liberals were the dominant force on the Australian centre-right. But over the past 20 years, that dominance has been steadily eroded. Labor has become more competitive and electorally successful, while the conservative space has fractured, with One Nation drawing support from voters who may once have been assumed to sit comfortably within the Liberal orbit.
The 2025 federal election underlined the scale of the problem. The Liberal/National Coalition was reduced to 43 seats, (now 42 post Barnaby’s runner)and the Liberal Party itself held just 18 seats in the House of Representatives. That is not just a bad election result; it is a sign of a party that has lost its old sense of inevitability.
At the same time, One Nation remains a real presence on the right. In the 2025 Senate vote, Pauline Hanson’s One Nation secured 5.67% of first preferences nationally, and last week won their first Reps seat (apart from the turncoat Joyce) by winning the by-election in Farrer with 39.5% of the vote after preferences. That is unlikely to make it a potential government at the next general election, but it does make it a spoiler, a magnet for protest votes, and a significant pressure point on the Liberals’ right flank.
This is where the Thucydides analogy becomes useful.
The Liberal Party is not facing a single clean challenge from Labor. It is dealing with pressure from two directions at once. Labor is the external competitor. One Nation is the insurgent force pulling at the edge of the party’s traditional coalition. That combination makes the Liberal problem look like a structural crisis.
The internal divisions make it worse. The Liberals have been plagued by factional conflict, in NSW and Victoria, and relegated to ‘phone-box’ size in SA and WA. That electoral failure is further amplified by the fragile nature of the coalition, that acts like teenagers on their second date.
In practical terms, this means the party is trying to solve a political problem while fighting itself at the same time. One faction wants to reclaim the centre. Another wants to sharpen the message and move further right. A third is mostly concerned with survival, which is often the most dangerous faction of all, because it mistakes tactical retreat for strategy.
The result is familiar to anyone who has watched a declining institution under stress. The more pressure it feels, the more defensive it becomes. The more defensive it becomes, the more it narrows its appeal. Inevitably, the narrower its appeal becomes, the harder it is to recover the trust of voters who have already started looking elsewhere.
There is also a deeper identity problem. One Nation is not simply another competitor; it is a party that speaks directly to voters frustrated by elites, suspicious of moderation, and impatient with compromise. That puts the Liberals in a bind. If they move too far right, they risk alienating urban moderates and business-oriented voters. If they move back to the centre, they risk losing more ground to the hard right.
That is the political version of the Thucydides trap. The rising challenger forces the established party into a reactive posture, and the fear of losing ground produces increasingly unstable choices. In Thucydidean terms, the rise of the challenger creates anxiety in the incumbent, and that anxiety begins to shape every response.
Of course, the analogy has limits. No political party is Sparta, and no election is the Peloponnesian War. The point is not that the Liberals are doomed, or that history repeats itself in a literal sense. The point is that dominant institutions often struggle most when they lose the confidence that once held their coalition together.
That is where the Liberal Party now seems to be. It is no longer the natural party of government on the centre-right. It is a party trying to decide whether it wants to chase the middle, absorb the right, or somehow do both at once. That is a very hard balancing act when the ground beneath you is shifting.
So, has the Liberal Party fallen into the Thucydides Trap?
Yes.
A once-dominant force has fragmented and risks becoming increasingly irrelevant at a time when we need a competent, cohesive opposition able to put aside partisan nonsense for the benefit of the country.
Header Thucydides: courtesy Wikipedia.
May 12, 2026 | Uncategorized
Price is often the last thing considered, and then only briefly, inconsistently, by the wrong people, and for the wrong reasons. This is a huge mistake many, if not most make.
The pricing architecture you put in place is a foundational driver of strategy implementation. That statement assumes you have a well thought out, documented strategy.
Irrespective of the standard of your strategy, sticker price can be a determining factor in a purchase decision. It may not be the first thing they see when contemplating a purchase, but it is usually the ‘pepper stroke’ in the process.
Failing to consider the strategic implications of both strategic and tactical choices surrounding your price will result in suboptimal outcomes. Price is the single biggest contributor to profitability over which management has complete control.
The fundamental mistake many businesses make is to set prices on a range of parameters that have little to do with how customers assess value. Customers do not care how much a product costs, how you cover your overheads, or how much profit the owners demand, they only care about what it delivers for them.
A customer sees a price and instantly makes a judgement. Most often this judgement is subconscious, automatic and unappreciated, similar to the ‘fight or flight’ response to danger we all understand.
Daniel Kahneman gave us the best starting point in Thinking, Fast and Slow. We do not meet price first as rational calculators. We meet it first as animals with memory, fear, ego, habits, shortcuts, and a deep reluctance to feel foolish.
System 1 reacts first.
System 2 arrives later, when and if it is given a chance.
In a commercial context, the ticket price seen by a potential customer is the beginning of the process of determining if a transaction will occur. That process is the assessment of a range of behavioural drivers of the purchase, followed by a more quantitative assessment that leads to the conversion, or not. In a supermarket, these two elements of the whole process may take place in an instant, or it may be a bit longer as a consumer assesses the value of their regular purchase against that of an alternative on special. In a situation where the purchase is much more expensive, so comes with greater consequences, the process can take months, or longer.
The supposition implicit in a sticker price is that you have built a solid strategy and have made the usually challenging choices surrounding the five elements of the pricing architecture: the strategic priorities, the business model, level of market power, price packaging, and the behavioural drivers you will engage.
