Jan 13, 2025 | AI
‘Tokenisation’ is a term bandied about by my AI literate colleagues, commonly at least 40 years my junior. Usually, the term is used in the context of ‘it takes X number of tokens to complete this job’ or similar.
In AI, tokenization is like breaking a sentence or text into smaller pieces (tokens) so that a computer can understand and based on statistics, predict what the next word (token) will be. The process takes a paragraph and chops it into words, parts of words, or even individual letters now called tokens. This then enables the system to find patterns and make predictions of the next part of the text using probabilities derived from the context represented by the previous tokens.
All AI platforms like ChatGPT, Perplexity, Claude, and myriads of tools that have emerged from the woodwork over the past 2 years, are trained to understand and generate tokens in this manner. They ‘learn’ by examining tons of text and figuring out how words and sentences relate to each other statistically. Tokenisation is the first step in this process.
When you give text to an AI tool, it:
- Breaks the text into ‘tokens’.
- Assigns a number to each token (a kind of code).
- Processes these numbers to understand statistically the patterns and relationships.
- Uses this understanding to answer questions, summarize, or generate text or in some cases, a graphic representation of the tokens.
There are different ways to break down text, depending on the instructions given to the model. It is also why the response to instructions can sometimes go crazy, as the machine does not always ‘hear’ what you thought you said. The placement of something as simple as a comma in the instructions can, and often will, alter the output.
This breaking down of text into ‘tokens’ is an essential step in the AI process. It is all about statistics and patterns, without any meaning as we understand it being given to the words themselves.
AI is a predictive machine that gives you the next most likely outcome given the instructions you have given the model. The way those instructions have been interpreted based on the way the tokens drive the patterns and relationships, delivers the outcome.
It is also how AI can work across languages, and why it consumes huge amounts of energy to run the billions of statistical calculations underlying the response it gives.
The above is a vast simplification of the process, but it ‘sort of’ satisfies an old marketer like me, trying to understand this new world that has suddenly arrived on my doorstep. It also explains the limitations of the models, as the ‘training’ is done on existing data. The system has no capability to leverage ‘knowledge,’ that human capability that enables completely disconnected facts and ideas to be put together in entirely new ways. I can only assume that this is where the current research is directed, building the ‘neural networks’ artificially, that we have as an outcome of millions of years of evolution.
Jan 8, 2025 | Change, Governance, Leadership, Strategy
Around this time two years ago, I questioned the effectiveness and fairness of the initiatives bundled into the ‘National Reconstruction Fund.’
I am still questioning.
With an election looming in early 2025, I expect a predictable flurry of press releases from both sides of the political divide, each extolling their own recycled virtues. If we were able to fast forward to 2027 and look back, I have little doubt that the progress made will have been as glacial, if discernible at all, as it has been in the past decade.
Since my initial commentary, the updated Harvard Complexity Index has marked Australia’s further decline to a rank of 102, squeezed ignominiously between Senegal and Yemen. This is a stark indictment of the nation’s diminishing capacity to engage in sophisticated manufacturing and industrial activities.
There are no short-term fixes for this relentless erosion of economic potential.
The likelihood that our grandchildren will enjoy the same standard of living my generation took for granted grows slimmer with each passing year. Tragically, the long-term structural reforms needed to reverse this trend remain conspicuously absent from the agendas of those currently in power, and those seeking it. Beyond facile declarations and populist slogans there is little real substance.
The pack of political clowns in Canberra and beyond, hold the levers necessary to drive meaningful change. However, they seem paralysed: too timid to take bold action against the vested interests of a few, too ensnared by the trappings of power today, or, perhaps most damningly, too inept to grasp the urgency of the situation.
Perhaps it is all three?
Our past prosperity was built on the back of commodities.
For most of the 20th century it was those we grew, wool, beef, and grains. From the 1970’s that reliance evolved to those we dug up and exported for others to add the value. In parallel, manufacturing crashed from close to 30% of GDP in 1970 to 5.4% according to World bank figures in 2023.
Future prosperity will have an entirely different face.
It will be constructed of applied technology delivering globally competitive solutions to challenges only just emerging.
For those we require education, scientific discovery, application of those discoveries to global challenges, and a deep well of intellectual and financial capital generation to drive the development.
This is a challenging agenda, and we need to start the surgery now. The longer we leave it, the more painful it will be, and the further behind our competitors we will be starting.
Addendum January 11, 2025.
Professor Frank Bongiorno From ANU published a thought provoking piece back in 2021 reflecting on the erosion of Australia’s universities. It articulates my views on the topic way better than ever could, and deserves to be noted and spread. It was republished on ‘Inside Story’ here, and I reshared it on Linkledin.
Jan 6, 2025 | AI, Strategy
This time of year is filled with self-congratulatory posts, the ‘Ten best posts of the year’ types. All of them I see, use as the measure the number of views, shares, and other external measures to rank them.
I am going to be different.
The posts I put up come from two places.
Firstly, the experiences I see amongst my group of clients and similar, mainly but not exclusively, SME manufacturers. Some are service providers of various types, but all are SME’s. Sadly, none who can or would pay the consultant rates routinely scooped up by institutional consultants with large offices filled with eager MBA’s who have not experienced anything beyond a sophisticated student piss-up.
Secondly, from the frustrations I feel as I scan and negotiate the economic technical and commercial environment, being the antennae for those few clients who put up with my garrulous nature disguised as wisdom, and wide and deep commercial experience.
The published posts are the outcomes of the usually conflicting ideas, opinions, and reading of that landscape, that goes on in my brain. I write to sort it out, at least a bit.
The tsunami of AI generated ‘content’ combined with the continuing evolution of the algorithms means my meagre readership has eroded over the last year or so, going down by 30-50%, depending on your starting point.
Part of me wants to tear my hair out, what little is left, but the reality is that writing these posts is a selfish activity. I benefit from the exercise, and if that spreads to a few others, great, if not, too bad.
Therefore, my list is of the 10 posts that reflect the original thinking, research and wisdom of the years I bring, or try to bring to everything published, but which got almost no traction at all. In other words, the best of the 2024 that were also the most ignored.
In no particular order beyond the month in which they appeared.
- Is another government review an answer to our slide down the complexity rankings? https://wp.me/p5fjXq-3hd December. This is fairly recent, so perhaps there is time yet for it to get traction. Yeah…maybe not. We are a complacent bunch, and it seems no number of words, moaning, and harsh critique by a few will shake us out of that state. It needs a bloody good crisis!
- The large, uncalculated cost in your business. November. https://wp.me/p5fjXq-3ge I have never seen an adequate review of Opportunity cost in any strategic or planning document. Yet, it should be a significant factor in any resource allocation choice, as resources are finite. I guess it is too hard? Years ago I made an attempt when arguing for a long term commitment to brand advertising as an investment. I argued that rather than treating advertising as a short term variable expense in the P&L, it should be seen as an investment in future profitability. My analysis, based on the flimsy empirical evidence available at the time, opinion, and case studies clearly showed the long term benefit to profitability. While there were many arguable points, I was unaware of the key, deciding consideration. The MD was planning to retire early, and so was completely disinterested in the long term profit at the expense of the short term, upon which his bonus was calculated.
- Positioning: The secret weapon of aspiring market leaders. November. https://wp.me/p5fjXq-3g2 . Positioning is an old fashioned marketing idea, widely misunderstood by todays ‘marketers’. It is not just a catchy slogan, it is a strategic framework, a statement of how value is added, that drives resource allocation choices.
- The increasing value of intangibles. November. Again. (I must have been taking something in November) https://wp.me/p5fjXq-3gv The evolution of our economy from a base that requires hard, tangible assets to one that is based on services has a flip side. The value of an enterprise is now almost wholly dependent on intangibles. This is the value ascribed to your customer base and relationships, documented and managed processes, capacity to innovate, strength of the ‘management bench’ strategic position in a market, and many others. None of these appear in a balance sheet. Traditional accounting fails monumentally at reflecting the value of a business as a result.
- Institutional memory as the critical component of future success. September. https://wp.me/p5fjXq-3eV As life has sped up, become remote, is increasingly locked into screens and the tools accessed by screens, we are in great danger of losing the institutional memory that prevents us from repeating mistakes. When we lose the memory, we are more likely than ever to ensure that history repeats itself.
- Breaking up supermarkets: A really stupid idea. July. https://wp.me/p5fjXq-3ej ‘Colesworth’ has been on the receiving end of much negative, and in my view, totally unwarranted comment. They are regularly accused of ‘price gouging’ by uninformed commentators, politicians seeking an easy target, and simply those in the queue waiting to pay the increasing costs of a weekly shop. The negative commentary demonstrates conclusively the ignorance of those commenting on the drivers and dynamics of the supply chains that exist to serve supermarket customers. Almost as an aside, it should be understood that every Australian with a managed superannuation fund is a stakeholder in one, and mostly both, Coles and Woolworths. In other words, if you are unfortunate enough to be in a queue of 10 people waiting to pay the checkout bill, 9 of them are stakeholders in whichever ‘Colesworth’ store you are in.
- Strategy does not include execution. May. https://wp.me/p5fjXq-3dj Most management groups I have seen, and been a part of, undertake some sort of ‘Strategic planning’ exercise. In that process, 10% of the time is spent on strategy, the rest is spent on execution, or ‘budgeting’ as the usual shorthand. Not only does this grossly underestimate the challenges of genuine ‘strategy’ development, it conflates two profoundly different processes. It is like trying to mix oil and water, stir all you like, they will remain separate, and using them together makes both way less effective.
- Four strategic tasks for the owner of a successful SME. March. https://wp.me/p5fjXq-3cu Every business I deal with wants to scale for a whole range of reasons that all boil down to the simple truth that scale delivers options and further growth and profitability. Most fail. They might survive, but they survive as an SME that requires the owner to be in the weeds on a weekly, and usually daily basis. That is not success, that is buying yourself a job, that usually comes with stress, and less financial rewards than are achievable elsewhere.
- Revolution by Digital: a survival necessity. February. https://wp.me/p5fjXq-3bd In February the impact of AI was just being felt and seen for the first time by many. Few had done any more than play with the early version of ChatGPT, and most of them had come to the conclusion that AI was little more than another cog in the hype-cycle. Digital to most was still a vague term that led to added cost and confusion. A year later, and it is dawning on most that ‘Digital’ meaning the adoption of AI into their enterprises is a life and death choice.
- The two most important words in Strategy. January. https://wp.me/p5fjXq-3aY Libraries have been filled with well intentioned, academically sound analyses of strategy, along with a big lump of flimsy, self-serving stories of success. The latter group always fail to articulate the many hundreds of times their magic strategy potion had failed, only reflecting on the successes, and then they are often as much good luck as good management. In my world, there are two words that summarise a credible effort to build a strategy that will offer the guardrails and macro performance measures of a viable long term strategy. Imagination, and Possibilities. Application of these two drivers of human behaviour in concert will lead to strategic conclusions worth the paper they will end up being written on. Absence of either, and at best you have a budget.
That is my ten most unfairly ignored posts for the year.
I had a lot to choose from. Over 150 mostly ignored posts, all coming from my observations of the strategic, competitive, and regulatory constraints under which we, and most specifically my few clients operate.
None have been spawned, copied, or revamped from the tsunami of stuff spewing from AI generators. Every word is mine, and mine alone. The commentary on AI, of which there is a fair bit, is again mine. My comments reflect the importance and potential of the geometrically compounding impact of AI, and my frustration at the apparent lack of interest evident amongst the business sectors I seek to work with to improve performance by leveraging the potential of AI.
It has been a tough job picking the top ten ignored posts. This blog generates very little traction, although the feedback from those few who are regular readers is encouraging.
As a last observation, I add the first post I wrote after ChatGPT was launched on November 30, 2022. Published on December 19th 2022, just two weeks later, the post asked the first question everyone asks, ‘will it take my job‘? Progressively over the first few months of 2023, I added 20 addendums to the post as I stumbled across more and more tools, use cases and understood better the implications of AI. By then, there was general awareness, and hundreds of newsletters that did a better job of keeping track of this digital tsunami as it surges across our lives, so I called ‘time’ on the post. I have however come to the conclusion that AI will not take jobs, but individuals that use Ai will take the jobs of those who do not.
Jan 1, 2025 | Change
Have you noticed that today, New Year’s Day 2025, marks the halfway point of the 2020s?
So what you ask? Fair question.
We tend to see halfway points as representing a significant choice, a catalysts for change, the point of no return.
Is today such a point?
What should we be considering as we step into the latter half of the decade?
Continuous Improvement is a Game of compounding 1%.
Small improvements, made consistently, compound into massive progress over time. This “game of 1%” is simple to understand but challenging to execute. It requires discipline, alignment, and a commitment to consistent action. The key lies in identifying obstacles and either eliminating or outsourcing them to free up your time and energy, both finite resources.
Often, these obstacles are subtle sources of friction you may not notice until you actively search for them.
The early stages of 1% improvements are straightforward. You can achieve them by working a bit harder, smarter, or longer, and removing obvious friction in the processes you run. However, as you progress, the gains become harder to realise, demanding cultural and operational change to unlock the next level. Continuous improvement is not just about short-term wins; it’s about laying the groundwork for sustained success.
Start with the Hard Stuff
Traditional New Year’s resolutions often fizzle out because they lack structure and focus. A mentor once taught me the power of tackling the hardest tasks first thing in the morning. This approach, though difficult, transformed my productivity and continues to serve me well.
In my corporate life, I prioritized difficult decisions, conversations, and analytical tasks early in the day. Now, working for myself without the external pressures of a corporate environment, this habit is even more critical. When you are accountable only to yourself, it is easy to fall into procrastination. Starting with the hard stuff sets the tone for a productive day and a successful year.
Be Contrarian
We are told to set goals, pursue our mission, and stay the course. However, in a world evolving at the speed of an F1 race, flexibility and adaptability within a solid strategic framework are essential survival skills. The challenge is to marry these two conflicting forces, and zig into less contested spaces, when everyone else is zagging.
It requires that you see the commercial and strategic environment through perspectives that usually make others uncomfortable.
Flexibility and adaptability, while often used as synonyms, are very different. Flexibility implies you bend with the wind, then revert back to the previous shape when the wind stops. By contrast, adaptability is the ability to adjust tactically as circumstances change, while maintaining the strategic direction.
Once a strategic direction and priorities are agreed, I encourage my clients to plan in cycles of five quarters in preference to an annual budget. That offers a horizon that is close enough to allow real-time adaptability but far enough to maintain and strengthen strategic direction.
AI is the Game-Changer
Artificial intelligence is no longer the future; it is the present. The release of ChatGPT-3 in late 2022 sparked a wave of innovation in the tools enabling enterprise planning and operations.
Businesses can no longer afford to ignore AI. Those who embrace it will widen the gap between themselves and those who hesitate. AI is not just about efficiency; it’s about transformation. If you have been hesitant to dive in, now is the time. The water is warm and deep, and the potential rewards are immense.
The Ultimate Differentiator is curiosity.
In a world where change is the only constant, curiosity has become a superpower. Those who remain curious will continue to learn, adapt, and evolve. Those who do not will fall behind at a negative compounding rate.
Curiosity drives exploration, creativity, and innovation. It’s what keeps us engaged with the new frontiers of thought and action.
Make 2025 the year you lean into your curiosity, seeking out opportunities to learn and grow.
Dec 23, 2024 | Change, Leadership
Yesterday was the summer solstice here down under. The longest day of the year. While it is a long slide into the modest chills of winter, it has begun, again.
It is also just two sleeps until my grandchildren can rip away the wrapping paper and play for a short time with their new stuff, mysteriously left by a bloke with a beard (and tatts?) before they get back to being endlessly curious about everything around them.
Wonderful thing having grandchildren. As American writer and commentator Paul Harvey said, ‘Nobody should have children, but everybody should have grandchildren”. I’m not too sure how that would work, but am fully on board.
What a year.
Our American allies voted in, again, a convicted felon as President. Nobody I know understands the dynamics of this choice, we just hope it works out better than we think it will.
World economies are struggling, and while Australia’s economy is in a per capita recession, and we have all sorts of challenges, the government seems to be delivering the promised ‘soft landing’. However, if you are renting in Sydney or Melbourne, you probably do not see anything soft about it. It also seems to me they have squibbed on several important (to some) questions. Gambling advertising will continue, we do not have any transparency on political donations, the federal ICAC has been shown to have no teeth, no regulatory progress on promised measures to mitigate carbon emissions, and housing affordability. That last one will hurt the government, as they will carry the blame for 40 years of underinvestment, and tax breaks given by both sides of politics to buy votes, which has led to the current ‘crisis’.
Investment in infrastructure generally has been lacking for years, but 2024 saw a surge in big ticket items like roads and suburban rail, showing massive cost blowouts. Snowy 2 point whatever is good in theory, and perhaps history will be kinder than me, but what a cock-up! Add AUKUS and a few others and you have the seeds to common disbelief in the ability of public bodies to get out of their own way.
Private investment in productive assets is also lacking, reflecting both a lack of long-term confidence, the incentives favouring non-productive assets, and the lack of depth in our own company’s ability to compete on the world stage. Beyond digging stuff up and shipping it off for value adding elsewhere, we are diminishing as a viable competitor in the world economy. This is a structural failure over a very long period. Donald Horne observed in 1964 that we were the ‘lucky country’. Most misunderstood the sarcasm of the statement at the time, and still do. However, we continue to sail along as if there was nothing to be fixed.
Our politics is stressed, superficial, divisive, and utterly short term, and over the first few months of 2025, will only become more so as the election approaches.
ChatGPT, launched into the wild on November 30, 2022 has led to a frenzy of innovation that will be seen by history as being as momentous as the printing press, and electricity. When I first stumbled across it in mid-December 2022, I thought it was astonishing but had little idea of the impact over the following months, and now two years. The initial thought was ‘will it take my job? I have concluded that AI will not take peoples jobs, although every job will change, and some disappear being replaced by ones we have not thought of yet. However, people who use AI will take the jobs of those who do not. No use hiding, the world has changed, again.
2024 also saw increased ferocity in the Ukraine and Gaza. Many have noted that War is the logical result of the failure of diplomacy. In both these current cases, you could add massive ego and fanaticism to the failure of diplomacy over centuries. From the comfort of a Sydney home, it seems a long way away, until a synagogue in Melbourne is torched, and there are riots in Sydney.
This is my last post for 2024.
I will sit back and wait for Santa, have a drink, see if the Boxing Day test has given us an opener who can withstand the wiles of Bumrah, and contemplate my expanding naval until early in 2025. Thanks to those few regular readers, I hope I have added to your menu of possibilities over the year.
Unlike many, every word I write is mine. Nothing artificial, inorganic or transcribed from elsewhere, although from time to time, I have asked for help in writing a headline that grabs attention. The tsunami of so called content spewing out of the AI tools makes the fight for attention more aggressive, vicious and destructive than ever.
Hug your kids, love your partner, value your friends, and stay safe and well.
Merry Christmas, and I will ‘see’ you next year.
