Mar 29, 2023 | Change, Governance, Strategy
The government’s $15 Billion National Reconstruction Fund faces a range of strategic and management dilemmas.
The Treasurer Jim Chalmers set out the governments priorities in his essay ‘Capitalism after the crisis’ in February. He called for focus on three things:
- An orderly energy and climate transition of the economy
- A more resilient and adaptable economy
- A focus on growth hand in hand with equality of opportunity.
The response has been roughly equal from those who see his views as the defining principles for development of the economy from the poor relations role currently played amongst the OECD, to those who condemn his views for their generality and naivety.
Given these seem to be about equal, he must be close to the mark.
The dilemma in the deployment of any ambitions public program is governance.
The opposition condemns it, claiming that it will achieve no useful outcome, being just a huge a magnet for rent-seekers. I guess they should know how to recognise a snout-ready trough when they see one. The government seems to dismiss this concern as something that can easily be managed, and while it is an admirable sentiment, the ‘yes minister’ syndrome will play a big role. Again, the very difficult middle path seems to be the ideal outcome.
From my experience running a tiny, micro version of this initiative 25 years ago there are some lessons to be learnt and applied, or at the very least, considered in the design of the management and operational infrastructure:
- There needs to be an accountable board made up of mix of experienced and wise people from outside the vested interests, committed to the outcome of moving Australia up the various ‘industrial complexity’ scorecards.
- It needs to be separated from the bureaucracy and run its own management processes, and grant budgets that are multi-year. Tying the operational and grant budgets to an annual calendar dictated by allocations in the national budget is to ensure its failure as a strategic tool. This choice will be difficult for any government, and will probably precipitate another bureaucratic turf war.
- A company limited by guarantee is one structure that can be useful. This does not in any way compromise the accountability of the management for the financial governance of the ‘business’. The shareholders would likely be Federal government, via Dept. of Industry, CSIRO, and one of the credible business associations with a wide cross-industry membership.
- The board would be chaired by a credible figure like Proff. Roy Green. Board members will represent the shareholders, and include several non-aligned members familiar with the areas of strategic focus from the perspective of the evolving technology, financial constraints and opportunities, business development, and strategic marketing expertise.
- The first job of such a board must be the definition of the strategic priorities of the ‘business’. These are one step down from the general outline in the Treasurers essay and take the form of a priority list of industry sectors that will be eligible to receive funding. Within this pathway there must be some discretion, as predicting the future is a challenging task, and you never know what will bob up in the development process that deserves support. The parameters of ‘deserve support’ should be at the discretion of the board, but widely agreed.
- Staffing and budgeting of the ‘business’ must be from outside the bureaucracy. Bureaucratic rules and conventions need to be taken only selectively when they clearly add value to the process. It is quite likely there will be very qualified people currently within the bureaucracy, who may elect to take a leave of absence from those roles to take up one with the business. This could be regarded as a secondment, but the management of the personnel concerned must be at the discretion of the management of the ‘business’.
- Non-profit, research institutes, and quangos are not eligible for funding unless in collaboration with a viable commercial operator. The business will play a pivotal and catalytic role in putting these two pieces of the puzzle together in ways that may lead to funding.
- Dictate to collaborative bureaucracies that they are required to collaborate and co-operate with the ‘business’. This is not to ensure primacy, but to ensure collaboration within the boundaries of commercial in confidence. The business must be ‘cross departmental’ and seen as a neutral player there only to be a ‘compounder’ of public resources.
$15 Billion is a big chunk of money, although dwarfed by the magnitude of the challenge facing the country. This sort of approach should have been implemented 30 years ago, but better late than never, so long as it is done right!
Header credit: Knicked from the NRF website
Mar 15, 2023 | Change, Governance
One of my sons is a radiographer, working in a large public hospital, carrying some management responsibility while still being ‘on the tools’ in an under-resourced, bureaucratic and highly structured environment.
On one hand there is the health system, hobbled by rules, work practises inherited from another century, wrapped up in extreme risk aversion. On the other you have the doctors, ranging from the juniors who are hospital employees, to the specialists who after years of study and work have the opportunity to ‘cream’ the system.
Of interest here when considering the role of AI, is the relationship between the radiographers, who construct the images, and the specialist radiologists. The radiologists carry complete responsibility for the interpretation of those images, along with the directions for treatment to other medical branches that carry out the hands-on care of patients, from nursing to surgery. The radiographer just takes the ‘pictures’, and is prohibited from diagnosis, no matter how experienced they may be.
Being a commercial bloke, for years I have been asking my son, where to from here?
Being a public servant for life is not all that attractive to him, overworked, frustrated and grossly underpaid. On the other hand, to go into business for himself, the combination of the capital required for the imaging gear, and the simple fact that the regulations require that only a specialist radiologist interpret his ‘pictures’, means they have the private radiography game completely sewn up. No private radiography studio can set up without a Radiologist locked in to sign off every image.
However, AI is happening.
One of the earliest uses of AI has been to read medical images. Their ability to ‘learn’, and consistently improve means that the room left for interpretation by a human is being squeezed into an increasingly narrow field loosely described as, ‘So what now”. As this continues to evolve, the need for the specialist radiologist in diagnosis will disappear. With this increasing irrelevance, in a free market, my son could start his own radiography business. This should be free of the regulatory constraints that dictate diagnosis is only to be done by a Radiologist, whose role will be little more than to ‘sign off’ an AI generated diagnosis. Radiology is a medical speciality whose only role within a very short time will be answering the ‘so what now’ question, and that will be increasingly answered by AI, informed by the outcomes of previous cases.
I am sure the ‘Radiologist union’ will fight tooth and nail by lobbying, to prevent that from happening. They are a part of a very smart and very highly educated cohort who have made a huge investment of time and energy into their future, and are unlikely to easily let the rewards from that investment trickle away.
We have only just begun to think about the impact of AI in the wider strategic context, but it seems evident to me, just based on this small example, that huge changes are afoot, many of which will be hobbled by the past, making the changes necessary to leverage the capabilities of AI extraordinarily challenging.
Feb 24, 2023 | Change, Innovation
Hemmingway observed in ‘The sun also rises’ that ‘the future comes slowly, then all at once’.
He has been proven right many times.
Since the release in November last year, ChatGPT has proven the future of AI is here, all at once.
That reality leads to the key question: so, what now?
We often look back on the spread of electrification as a template for thinking about the digitisation of our economies. It is a fair representation except for one small detail, which makes all the difference.
Electrification was a process that proceeded sequentially, piece by piece added as efficiency improved. From the beginning of the digital age, and the recognition of the reality of Moore’s Law, this has changed.
The driver of change has been compounding, each stage building on the previous, with increasing speed. While this has been seen by most as just normal improvement, the cumulative impact has been far greater.
Einstein noted that the most powerful force in the universe is compounding. Imagining the impact of compounding is really hard, makes my head hurt. To imagine it, there is still no better metaphor than the old rice on the chessboard fable.
The emperor promised someone (probably an ancient consultant) a payment in rice on a progressive scale, calculated as doubling for each of the 64 squares on a chessboard. 1, 2,4,8,16,32, and so on. It seemed like a good deal to the emperor who was clearly not mathematically minded.
By the 31st square, payment topped a billion grains of rice, enough to cover your average ancient town square. That is where the problems started as payment kept on doubling, quickly outstripping the total world production of rice.
The tipping point is somewhere around square 25, where the rice was a couple of wheelbarrows full, then seemingly suddenly, it became a vast amount.
Such has been the case with digitisation.
We have been watching its progression since Gordon Moore wrote his 1965 article predicting a doubling of the number of circuits on a single chip every 18 months. A bit like the emperor, we have watched and suddenly it seems we have reached a tipping point led by ChatGPT and its sibling DALL-E. Hot on Chats heels came ‘Bard’ from Google, although stumbling at the launch last week, and no doubt Amazon and Apple are close behind.
The difference we face to that faced by the emperor, is that had he used his abacus, he could have predicted the outcome of his agreement, as it is calculable, to a point. What happens now with the compounding of AI is not so predictable. What we do know is that it will be a disruptive force coming at us with compounding speed and power.
This power to increase the speed, accuracy, and therefore efficiency of the processes we digitise will extract a range of very high tolls. These will be the increased risk of personal data being available and almost inevitably used against us, amplification of bias, ever increasing complexity of the systems we will come to absolutely rely on but not understand how they do what they do, and a complete ‘rework’ of work. This revision of work will make the changes from the cottage industries pre industrial revolution look like minor adjustments by comparison, and will happen at lightning speed.
Of concern to me is that only a few have the scale necessary to ‘train’ these systems. Microsoft, Amazon, Google, and Apple have that scale, which will serve to entrench their dominance in the space. Theoretically governments also have the scale, but will be hobbled by concerns unshared by commercial players.
Within a decade, every current job, those that remain, will be almost unrecognisable, and there will be new jobs we cannot yet predict taking their place. What will remain is the human element of creativity, that capability that distinguishes human beings from all other species, the ability to do something completely new.
The good news is that we will still need engineers, architects, doctors, plumbers, and bricklayers, but the shape of their day will be nothing like it is today.
When digital photography took off, putting a quality camera in every pocket, most thought it was the end of photography as a profession. Not so. What became quickly obvious was that there was a clear distinction between the real, creative skills of the elite photographers, and those of the ordinary. The pareto distribution of photographic skill applied, and those that survived as professionals had more time and better tools with which to capture and express their images. This will be repeated in every job across the economy.
Unanswered is the question of how we educate our kids to thrive in a work environment we are unable to visualise.
Header credit: Dall-E. The instruction I gave Dall-E was ‘Surrealist impression of the change from cottage industry to knowledge work’ This was one of 12 generated in about 30 seconds. Look closely at the face.
Feb 20, 2023 | Change, Culture, Governance
Lifelong employment is a thing of the past, casualisation, remote work, and the gig economy have consigned that idea to the dustbin of history.
It seems to me that there should be a revision to the way we seek to employ people, on whatever basis that employment occurs.
When recruiting for my clients as I do from time to time, I use a checklist that has a number of elements not usually obvious in most recruiting processes I have seen, or indeed been subjected to. The checklist assumes that anyone you are speaking to has the required domain qualifications and experience to in theory, get the job done. After that I look for ‘the 3 C’s and E’
Curiosity. To my mind curiosity is essential to be able to see alternatives and options from outside the domain. A wide span of interests, hobbies, reading, and an apparent ‘let’s just see’ attitude are signposts.
Critical thinking. To be able to subject opinions, data, and so-called facts to a process that strips away the inbuilt bias, self-interest, ‘short- termism’ and just bullshit, to reveal the foundation assumptions and facts. ‘How would you approach……..’ Type questions and resulting conversation surfaces this ability quite quickly, as does asking about times they have failed to reach an objective, and what they learnt as a result.
Collaborative capacity. Collaboration has unfortunately been turned into a cliché. However, the reality is that we are in a knowledge world, and most of the valuable knowledge is elsewhere, so you better figure out a way to get access to it. Generally, those who demonstrate they take responsibility for problems in their area of responsibility, while passing on praise for good work by others will find themselves as a ‘node’ in communication networks, rather than being just a receiver or originator of input. The number and distribution of ‘Nodes’ drives collaborative outcomes.
Education, in its broadest sense. STEM education is vital, from cutting-edge technology to basic trade skills. These technical skills drive productivity. Just as important are the ‘soft skills’, the capacity to see through the eyes of others, engage in constructive debate, and accommodate conflicting ideas in your brain at the same time. Education powers the three ‘C’s above
The recent changes have been profound, and the train has not stopped. One of my concerns for the world my grandchildren will inherit is what we are going to do with those who are displaced by technology? The argument that they will find new jobs created by the changes as has always happened in the past, may not happen as smoothly this time. The chances are in my view, that we will see increased levels of pain and anxiety.
We have an emerging social disruption over the next 20 years we have no idea how to manage, and really are not even considering the challenges in any meaningful way.
Header cartoon courtesy Tom Gauld. Originally published in New Scientist magazine.
Feb 13, 2023 | Change, Small business
The term work/life balance seems to have been taken into our commonly used language. It pops up everywhere there is a discussion about stress, personal development, post covid back to work, and many others.
To me it is a deeply flawed metaphor.
The term ‘Balance’ immediately brings to mind the mental picture of the old-style balance, as in the header.
Our lives are not binary, there is way, way more than just work and life involved. How does family, ambition, community, workplace equality, financial comfort, and a host of other factors we all face come into view and play a role?
Depending on the context in which we think about these things, the weight we put on all these factors will change. Therefore it is more like a complex jigsaw puzzle where the size, shape, relative weight, and manner in which the pieces fit together is a far better description.
I have a friend going through the process of selling his small, successful business to retire and find greater work/life balance. From the time he told me he was going to sell a year ago, to our most recent conversation a few days ago, the shape and relative weight of the pieces in his ‘jigsaw’ have continued to evolve with his changing state of mind.
Selling a business you have worked your arse off to build can be a deeply emotional decision, subject to uncertainty about the way hindsight might score the decision.
As he has progressed through the various stages necessary to ensure he maximises the sale value to him, while keeping faith with his client base, I have observed a wide range of emotions. These have been completely at odds with the initial reason he gave me of finding more work/life balance in semi-retirement, whatever that might look like.
So, do not believe in binary absolutes, ever. They are just put there to appear to simplify complexity, but which inevitably lead to uncertainty and miscalculation.
Feb 5, 2023 | Change, Leadership
Every individual and group on the planet has in their heads a set of parameters built by the personal experiences they have had, and those that are passed on by the parents, grandparents, all antecedents, and their social circles.
The formulation of strategy intersects with these stories, beliefs, and biases, which greatly influences our behaviour in the future.
Throughout our history, great advances have been made by those few brave enough to call out the metaphorical emperors clothes when they (don’t) see them.
Like many, I am of the view that we face an existential crisis caused by the human emission of carbon dioxide into the atmosphere. Demonstrably, the planets climate has changed many times over geological history, remaking itself at the expense of what has gone before, but never at anything like the pace that is happening currently. For perspective, the origin of homo sapiens is around 300,000 years, or .007% of geological time. If the geological life of the planet was a 24-hour clock, we have been around for only tiny fractions of a second of the available 24 hours.
As we seek answers, nuclear power is, at least in this country, off the table. The fact that it is not off the table in other countries makes Australia’s position somewhat ridiculous, as we are all part of the same planet.
However, it is off the table here due to the political problems of waste, and risks of disaster exemplified by 3 Mile Island, Chernobyl, and Fukushima. Somewhat irrationally, we are nevertheless prepared to sell the raw material to power these plants to ‘approved’ buyers, recognising the commercial reality that if we do not, someone else will.
I know absolutely nothing about nuclear technology beyond the stuff I had shoved down my throat 50 years ago at school. However, I do know that like every other branch of technology, nuclear has undergone incredible and compounding advances since the first demonstration of its power in the New Mexican desert in 1945. As the father of the theoretical science that led to that explosion, Albert Einstein noted, ‘Compounding is the most powerful force in the universe’. Our knowledge of atomic science has grown at a compounding rate since that first explosion, and the subsequent opening of the first power plant in Obninsk, 100 k’s from Moscow in 1954, and should not be discarded.
If we are to stop the self-induced implosion of our world, we should not rule out any potential solution by kow-towing to our collective prejudices and emotional response to technology 70 years old. Rather, we should seek out the truth, understand the developments in nuclear technology that have evolved, are likely to evolve, do reality checks, and ramp up investment in rapidly evolving understanding of the physics surrounding ‘science fiction’ ideas like Fusion. We must know if the general perception of the risks of nuclear are still valid, or if they are just the projection of our fears of a 70 year old technology.
Are our collective heads stuck in the sand, or can we have a rational debate that recognises the sceintific developments over the last 70 years?
