Apr 19, 2023 | Change, Strategy
Many times, I have expressed the view that we train dogs, but we must educate people.
The critical difference is the ability to solve problems from the mundane to gordian complexity, and to plan, turning reactive into proactive. These both require critical thinking and creative skills.
Neither of these are available, yet, and perhaps never will be in an AI chatbot.
Rather than banning the emerging wave of AI tools, we should embrace them.
The challenge is twofold.
Teachers who spend their days in front of students are overworked and underpaid for the long-term value they are being asked to deliver, at least in this country. Asking them to rethink the way they are organising their lesson plans and manage the intellectual development of students is a big ask. Many will not willingly take on the task without help and appropriate training, as they have lives outside their roles as teachers.
Asking the education bureaucracy and academia to change their spots is at least as challenging. Most have built their careers on the perpetuation of the status quo in one way or another.
However, the case for change is compelling.
Rather than focussing outrage on the sudden availability of answers to questions, we should be rethinking the process of asking the questions. Anyway, what is different here to when Google first hit the streets? The easy availability of answers to questions, and essays on everything from an easy recipe to string theory, should force us to consider the ways this technology makes the classroom more interactive. It delivers the opportunity for personalised plans that match each kids abilities, and removes the burden of admin that seems to have built up inexorably.
Many good teachers leave the profession after a few years seeking to make their living in less demanding but more financially rewarding ways. Perhaps this AI revolution is a part solution to that problem?
As a final rock into the pond, if an AI tool makes the production of an answer too easy, requiring little or no student understanding, should we throw out the tool, or revise the question?
What if the assignment was to generate an AI response to the assignment, to which the students annotated their commentary on the relevance, effectiveness, accuracy and utility of the points in the AI generated answer? Teachers would also give marks on the prompts used by the students, another marker to understanding.
That would be education.
AI will, or should be, a boon to educators. They need to think creatively about how it will be used, rather than throwing their hands in the air and banning them.
King Canute found the hands in the air strategy did not work.
Header credit; King Canute fighting chatbots courtesy Dall-E, as envisaged by Sal Dali
Apr 17, 2023 | Change, Innovation, Strategy
Over the years I have helped a number of start-ups. Almost all have been single or a few people who have a drive to start something they own, where they can call the shots, and be away from the dead hand of corporate bureaucracy. Sometimes this has been a formal assignment, more often, the result of a series of casual conversation in cafes, networking meetings, and at BBQ’s.
Across these conversations, there have been some consistent themes,
They focus too much on the little things that do not matter much in the long run.
Logo, company name, design of the proposed website, details that do not make or break a new business. At the early stages, these things can be easily changed, modified, and often are dumped.
What this does is take the attention away from what really does matter. Clearly defining the product and/or service to be provided, who is the most likely ‘ideal’ customer, why they should buy from you rather than elsewhere, and how they communicate with them about the value they can deliver without wasting resources. These are the things that matter. Their common characteristic is that they are qualitative, hard to measure, and they evolve.
Evolution happens on auto pilot, make it positive.
Things change, often they change while you are not looking, and only become evident with the benefit of hindsight, by which time it is sometimes too late to do much. The other side of the coin is that evolution also applies to the good things. The task of a new company is to set the guiderails so that the good stuff outweighs the bad. Alignment of all personnel and outside stakeholders is vital in this process, as the pressures will be coming from all sides. And like a child learning to walk, you need to have some of those guiderails in place, or you will wander off in random directions. I call it having a robust, deeply considered strategy.
Imposter syndrome always plays a role.
Unless you are a sociopath, imposter syndrome will grab you from time to time, you will feel out of your depth, wondering why everyone is looking to you for direction and confirmation. It will feel like that first time on a big public stage, dread about what is to come. When you look back, assuming you have done the preparation, you will recognise it for what it really is, a test, and a great learning opportunity.
Spreadsheets are liars.
Most businesses start with some sort of plan, most often articulated via a business plan template and a few spreadsheets. If you are looking for outside finance, these will be mandatory. However, I have never seen a spreadsheet or written plan that accurately reflects what actually happens. Most are nice, comfortable extrapolations of continuous growth along a predictable path. The growth of every successful business looks like a game of snakes and ladders. 3 steps forward, and whoopsie, 2 backwards. The trick is to ensure the steps upward and forward outweigh the falls. Sometimes this simply does not happen, and the snake hole swallows those who fall into it. Spreadsheets never allow for the ‘snake-holes’
Internal Vs External.
Most start-up failure comes from two sources. Firstly, from the lack of cash management. To my mind, there is no greater sins that not being proactive with cash, a simple set of disciplines often ignored. The second is because they have neglected the management of their customers by looking inwards, managing the inevitable personal and process friction that occurs, rather than looking at how they can add value to their customers. Customers do not care about your internal challenges, they are paying you to release them from theirs.
People are your greatest asset, and liability.
A business without people is just a scrawl on a piece of paper. A ‘micro-business’ which is what almost every business is at birth, can be strangled by one poor choice. Equally, that one choice can be the making of you. In the early days, when everyone is acting in all sorts of roles, you need people who are self-reliant, resilient, and happy to ‘muck in’. They are very hard to find, and even harder to keep when you do find them. Equally, when you think you have found the one, only to realise they are not as advertised, which is what they were doing during the interview, remove them quickly. A wrong employee at an early stage can become toxic very quickly. Sometimes that person is great at what they do, are seen by others to be vital, but they are a pain in the arse for some reason. Experience tells me that the benefits of what they are good at are usually outweighed by the hidden costs of them not being aligned with the rest of the team, and its objectives.
Being seduced by opportunity.
That old cliché of working in the business instead of on the business is almost always true in the early days. You will be swamped from all sides by problems as well as opportunities, both of which will radically dilute, if you allow it to, that characteristic of successful start-ups: focus. Plan for what comes next, focus your very limited resources on the key drivers of that outcome, and eliminate everything else. This is never easy, but is absolutely necessary.
None of this is easy, if it was, everybody would be doing it.
The failure rate of start-ups from the corner coffee shop to high-tech gizmos is very high.
Finding the right sort of outside ‘reality check’ advice and input that delivers true value is perhaps the eighth challenge, which so many get wrong, but which can change the outcome dramatically.
Header credit: Arrived via my new AI mate Dall-E
Apr 11, 2023 | Change, Governance
Now we have a legislated ceiling on carbon emissions, ‘The safeguards mechanism’ the challenge is to ensure compliance.
That is the hardest part, yet to come.
The means by which the emissions will be reduced by business are unregulated, but there is no doubt it will incur capital expenditure. This will provide a challenge for business, that generally sees their first priority delivering immediate returns to shareholders.
Where will the balance be between their regulated and long term moral public responsibility, their short-term responsibility, and often the jobs of decision makers fall?
How will the safeguards mechanism be governed for the long-term benefit of all?
There are two ways to govern the implementation.
The first is the one always top of a governments list, regulation. Sadly, it will not work very well. You can regulate, inspect and punish to the letter of the law, and when necessary, regulate further till the sky turns black. The short-term cost of compliance is likely to be less than the profit generated by finding loopholes and screwing the system. In addition, the regulators are in the thrall of the carbon generating industries, and will always be behind the latest discovery of holes through which businesses can squirm if they choose.
The second is the same as the above, with a wrinkle to fill the unanticipated and unseen holes. Publish the results in a form easily understood by Joe Public. For greater effect, add a few extra columns, such as the domicile of the controlling entity, Income tax paid, and profits declared.
This would bring into play a powerful motivator, Social Proof.
Rio felt the weight of Social Proof when they destroyed the Juukan Gorge caves. I suspect the internal culture of Rio has changed as a result. While this is an extreme example, it makes the point.
Such a publicly available register, all data coming from public sources, (compliance reports, Tax department, stock exchange notices) would serve as a resource for those advocating for change. It would also be a source of goodwill and potentially stock market value for those doing the right thing.
Publishing data on all the top 500 polluters would lead, in a relatively short time, to behaviour changes that will do more for carbon emission reduction than regulation by itself can hope to achieve. It might also lead to a few of the most obvious changes to the tax rules applying to internationally domiciled businesses to be made. The irony is that it is also a simple solution, so will probably not be considered.
Header cartoon credit: Again, Scott Adams and Dilbert distil the challenge into a few words and drawings.
Apr 5, 2023 | Change, Culture, Innovation
Never before has the need for creativity been more critical.
Never before have set about crushing creativity before it has a chance to bloom more than we do now.
My nephew is dyslectic, always had trouble at school, with teachers, sitting still, and anything that required him to read and write. In a parent-teacher interview when he was about 12, my sister was distraught and angry to hear that her son, who had by then built a computer from bits and pieces, powered by a cobbled together solar panel on the roof, would be lucky to progress beyond being a day labourer.
He was lucky. After scraping into a regional university with a practical focus, he earned a masters degree in electrical engineering, got bored, and went back and did medicine. He is now an ophthalmic surgeon, restoring sight in the footsteps of Fred Hollows.
Had his practical talent not been recognised by an academic with a long life of non-academic experience behind him, my nephew may have continued tinkering in the garage while making his living on a production line. What a waste that would have been.
How many like him have we wasted?
How many like him will we continue to waste as we dose up the kids who cannot sit still in school, or colour between the lines, with Ritalin?
Back in 2008 an executive coach named Wayne Burkin wrote a book called ‘Wide Angle Vision: beat your competition by focussing on Fringe suppliers, Lost customers, and Rogue employees’. The title says it all.
Creativity and the resulting change does not come from those who can colour between the lines, always behave in a disciplined manner, are prepared to do as they are told at all times. It comes from the outliers, the originals, the rebels, as Steve Jobs noted, those who ‘Think Different’.
Seth Godin’s remarkable essay introducing us to the ‘Purple Cow’ resonates even more now than when it was written back in 2003. Paragraphs 5 and 6 should be reproduced and stuck on every wall of every room that ever has a student of any kind in it, and every office of anyone seeking to be a leader.
Never have we needed those who think different to have their hands on the wheel of the companies and institutions that together make up the economy, and will shape our kids futures more than we do currently.
Header cartoon courtesy of gapinvoid.com
Apr 3, 2023 | Innovation, Lean, Management
The double entry bookkeeping system we are familiar with, or should be, has been around for millennia. In the form we now know it, double entry bookkeeping was codified by Franciscan monk Luca Pacioli, a collaborator of Leonardo da Vinci in a mathematics text published in 1494.
It remained largely unchanged, just increasingly complex until the 1920’s when Alfred Sloan, the king of General Motors for 50 years developed the system of management accounts we still use, with standard product costs as a foundation.
As the ‘lean manufacturing’ movement, pioneered by Toyota, extended throughout the western world from the late 70’s onwards, the system of standard costs became increasingly problematic.
It tends to set in stone the assumptions that are built into the standard product costs, rather than using them as a basis for continuous improvement. Even worse, management KPI’s tend to be centered around functional silos that have little to do with the overall productivity of assets in delivering value to customers.
I have been subjected to ‘stalking’ variances, those that seem never to go away, but persist in defiance of management edict many times. The easiest way to get rid of them is to adjust the standard. Not very smart, but accepted practice and often the only way to achieve KPI’s in a corporate environment. It also has the effect of hiding opportunities for improvement, and ensuring reliable data is not available in real time. In parallel, we have increasingly digitised operational processes by multimillion dollar installations of MRP (Manufacturing Resource Planning) and its more expensive sibling ERP (Enterprise Resource Planning) systems. These tend to set in stone standard costs and variances down to the micro transaction level contained in work orders, which complicates and adds cost to the reporting and management processes without adding value for customers.
One of the core ideas of Lean is ‘Flow’ which is at odds with standard costing systems. Standard costing gives precedent to operational efficiency at individual stages in a process, rather than flow through a whole system, ignoring varying capacity and efficiency constraints. This results in several usually uncomfortable conflicts.
Two examples:
- Lean seeks to reduce inventory of all types, raw material, work in progress and finished goods, seeing it as a cost, tying up working capital. Traditional accounting treats inventory as an asset, and when a Lean project reduces inventory, it reduces the current assets in the balance sheet, giving a misleading perception of financial performance.
- Lean focusses on capacity utilisation and ‘Flow’ through the processes necessary to create a product. Capacity is the key operational constraint, but does not appear anywhere in the general ledger other than by inference, as a function of capital invested, the calculated value of inventory, and unit sales. Delivering capacity is only of value when that capacity is used to add value in some way, usually by producing more product from the same fixed cost base. Standard costing ignores this reality of operational management.
There are no easily GAAP (Generally Accepted Accounting Practice) conforming measures for calculating immediate capacity utilisation, and flow, and no sensible calculation of actual product costs on a short term basis that conforms to the standard cost model. A second set of measures, which use the same data base as GAAP accounting, but in different ways is necessary.
While it will take work to set up these alternative measures, once deployed they will reduce the reporting workload and error rates inherent in the highly transaction based standard cost models, delivering both utility and accuracy to operational reporting and analysis. Deployment is however not like installing an ERP system, it is a process of continuous improvement.
Setting out to implement a Lean accounting environment in the absence of collaboration and mutual understanding at the senior executive level, is akin to climbing Everest in a t-shirt. Success requires a complete change of mindset from that taught by most accounting institutions where the concentration is on financial and reporting compliance, rather than gathering and critically analysing the information that enables better management decision making and continuous improvement.
Header credit: Nick Katco from ‘The Lean Accounting CFO’
