Jul 28, 2025 | Change, Strategy
My time is spent assisting SME’s to improve their performance. This covers their strategic, marketing, and operational performance. Deliberately, I initially try and downplay focus on financial performance as the primary measures, as they are outcomes of a host of other choices made throughout every business.
It is those choices around focus, and resource allocation that need to be examined.
Unfortunately, the financial outcomes are the easiest to measure, so dominate in every business I have ever seen.
When a business is profitable, even if that profit is less that the cost of capital, management is usually locked into current ways of thinking. Even when a business is marginal or even unprofitable, it is hard to drive change in the absence of a real catalyst, such as a creditor threatening to call in the receivers, or a keystone customer going elsewhere.
People are subject to their own experience and biases, and those they see and read about in others.
Convention in a wider context, status quo in their own environment.
Availability bias drives them to put undue weight in the familiar, while dismissing other and especially contrary information.
Confirmation bias makes us unconsciously seek information that confirms what we already believe, while obscuring the contrary.
Between them, these two forces of human psychology cements in the status quo, irrespective of how poor that may be.
Distinguishing between convention and principle is tough, as you need to dismiss these natural biases that exist in all of us. We must reduce everything back to first principles, incredibly hard, as we are not ‘wired’ that way.
The late Daniel Kahneman articulated these problems in his book ‘Thinking fast and Slow’ based on the data he gathered with colleague Amos Tversky in the seventies. This data interrogated the way we make decisions by experimentation, which enables others to quantitively test the conclusions, rather than relying on opinion.
That work opened a whole new field of research we now call ‘Behavioural Economics’ and won Kahneman the Nobel prize. Sadly however, while many have read and understand at a macro level these biases we all feel, it remains challenging to make that key distinction between convention, the way we do it, the way it has always been done, and the underlying principles that should drive the choices we make.
As Richard Feynman put it: “The first principle is that you must not fool yourself—and you are the easiest person to fool. So, you have to be very careful about that.”
Jul 23, 2025 | Governance, rant
Last week’s “unintended” Treasury leak about the unsustainable state of the budget fooled nobody who’s been around the block. It is an old trick: float a policy balloon, wait for the howls, then retreat or advance, depending on which way the wind is blowing.
Fiscal discipline? We all cheer for it as long as it doesn’t hit our own slice of the pie.
The Treasurer’s challenge is less about balancing numbers, and more about navigating the swamp of human psychology. We feel the pain of losing a perk much more strongly than the pleasure of gaining it.
Daniel Kahneman called it “Loss Aversion”.
Hand out a benefit to appease a small group, and you’ve just set a trap for your future self. Try clawing it back, and the noise will make a toddler’s tantrum look civil. Ever tried taking a birthday present from a six-year-old? Good luck.
That’s how government spending grows. Drip by drip, group by group. Give out enough trinkets and nobody notices until it’s time to start collecting them back. Suddenly, the losers organise, mobilise, and scream bloody murder, while the rest of us just mutter, shake our heads at the stupidity of it all, and pay the bill.
Take the latest fuss over super accounts above $3 million. Only a handful are affected, but the outrage is theatrical. Why? Because the few that are in line to benefit do not want that benefit stripped away. Meanwhile the vast majority of us will not be affected, but do tend to be caught up in the emotion of being rorted by the government, again, without understanding the facts.
Nobody wants their treat taken away, but most are perfectly happy to see cuts, as long as it’s not their treat on the chopping block.
Maybe we’re just a nation of optimists who secretly believe we’ll all be in the $3 million club one day. Dream on.
The real leak here? Not Treasury’s numbers, but the enduring political tactic: float a “mistake,” watch the reaction, then call it consultation. Mr. Chalmers is no stranger to policy trial balloons.
Header courtesy of DALL-E
Jul 21, 2025 | Change, Governance
Few readers will have heard of Hyman Minsky. However, given the Australian parliament reconvenes in its post-election form tomorrow, it may be time.
Minsky was a prominent economist whose theories, labelled ‘Financial Instability Hypothesis’ were largely ignored until the financial crisis in 2008.
The dominating financial theory before the wake-up of 2008 was that financial markets were generally efficient, reflecting the best information available at any one time.
The financial crisis killed that idea.
Suddenly Minsky’s theory was that markets are driven not by just the available information, but by cycles of greed, fear, and the pursuit of power. (I feel certain that Daniel Kahneman would have agreed)
I wondered if the same cycle could be applied to the Australian body politic and economy.
It seemed an appropriate time for such thoughts, heading as we are into a term of government where the incumbent has a huge majority, and no effective opposition.
So how appropriate is the Minsky cycle to the current political and economic environment the Albanese government faces?
In the aftermath of the election, aware sentiment can change quickly, the Government surprises, and turns risk averse. After all, they now believe they have several terms to ‘get stuff done’, and do not control the Senate. This starts to create frustration in the electorate, as it seems obvious that genuine change is more possible now than for the last 30 years. Only vocal interest groups are scaring the government into inaction. The presence of such hoarding of political capital provides the catalyst for a renewed opposition to effectively attack the inaction on pressing issues.
The cynic in me assumes that none of the challenges we face as a country will be adequately addressed. Politics has devolved into a Ponzi scheme of elaborate lies, misdirects, and inaction. The focus is on gaining and keeping political power for the sake of the power, not for the long-term betterment of the country.
The optimist in me is tempted to listen to the practiced rhetoric of the two leading Labor figures and think: ‘perhaps this time’.
The header is my adaptation of the Minsky cycle reproduced below.
With apologies to Hyman Minsky.HET: Hyman P. Minsky
Jul 18, 2025 | Branding, Marketing
When you ask that question: ‘What is the most effective word in Sales” of a group, any group, the majority will respond with the word ‘free’.
The problem of course is that the question included the word sales, and by definition, free does not constitute a sale, simply an exchange. It might lead to a sale down the track and often does which is why it is used so extensively to sell digital products, the so-called freemium model.
This however is not what I regard to be the most effective word in sales.
That word is ‘imagine’.
If you were and estate agent seeking to convince a young couple that the house they were looking at currently was the right one for them to buy now, there are a bunch of tactics you could use. Most would be articulating the benefits of the house, location, condition, number of bedrooms, quiet neighborhood, and so on.
By contrast if the agent simply used the words ‘ imagine carrying your new bride over the threshold of your new home‘ leads to a different conversation and probably outcome.
One of my clients, Windows Factory, sells and installs thermally broken uPVC windows and doors. The temperature stability and resulting comfort, coupled with the reduction in power costs delivered by this technology are wonderful. However, for some, the greater benefit is that this technology dramatically reduces transmission of outside noise.
The sales conversion ratio difference between these two statements is dramatic:
- ‘ These thermally broken uPVC windows reduce outside noise by 70%’
- ‘ Imagine being having a quiet conversation with your partner uninterrupted by the noise from the road outside’.
Try it. There is no limit to the domains where human imagination can take us.
All it takes is some thought that allows you to summon an emotional response to your offer, adding to any benefit delivered by a recitation of the rational benefits.
Header credit: The late, great, John Lennon.
Jul 15, 2025 | AI, Strategy
We are so busy debating whether AI will take our jobs, we’ve missed a more dangerous question: what happens when it takes the jobs that create our leaders?
So far, the brunt of automation has fallen on blue-collar roles. Machines took over factory lines, robots handled dangerous or repetitive manual tasks. But the spotlight is shifting. White-collar work, particularly at the entry level, is squarely in the crosshairs of AI. Roles in sales, marketing, law, accounting, admin support, anything process-driven or rule-based are already being swallowed up by bots, templates, and AI agents that never sleep, strike, or slack off.
In past industrial revolutions, we saw enormous upheaval in labour markets. Steam displaced the weavers. Mass production killed off artisans. Electricity reduced manual labour but turbocharged the rise of middle management. Each wave destroyed jobs but also created new ones. That’s the comforting story we tell ourselves.
But this time, the tempo is different. AI is rolling through industries faster than we can repurpose workers. We may eventually find equilibrium, but it’s likely that the rate of job creation will lag the rate of job destruction. And this time, it’s not just jobs on the line, it’s the culture, resilience, and leadership pipelines of entire organizations.
Most of the white-collar roles under threat are entry-level. These are the proving grounds where future leaders learn the ropes, earn their scars, and get spotted by mentors. Strip away those jobs, and what are we left with? A dangerously thin layer of next-gen talent. No feeders. No bench strength. Just a void.
This matters. Organisations depend on a steady flow of energetic, irreverent, risk-taking young guns to shake things up. These outliers challenge orthodoxy, surface new ideas, and eventually rise to reshape the culture. Remove the ground floor, and over time, the whole building becomes brittle.
We don’t yet know the full consequences. But we do have some clues. History is littered with unintended consequences when change is forced onto complex systems.
Consider China’s one-child policy. Designed as a population control measure, it has led to a demographic cliff. Too few young workers. A rapidly aging population. Long-term consequences no one foresaw.
Or nature: rabbits and cane toads introduced to Australia for pest control. Wolves removed from Yellowstone to protect livestock. In each case, the ecosystem was disrupted. Only decades later did we see the cascading damage, and in the case of Yellowstone, the healing when wolves were reintroduced.
The same pattern may emerge in our workplaces. AI may be brilliant at cutting costs and boosting productivity. But if it wipes out the very roles where human potential is first tested and tempered, we could be sowing the seeds of a cultural and leadership vacuum that won’t show up in KPIs until it’s far too late to fix.
