May 1, 2025 | Governance, Leadership
By Sunday morning we will know the outcome of this visionless, spineless, idea and leadership-free zone that has passed for an election campaign.
Whatever the outcome, we can look forward to more of the same. Sadly.
It is unreasonable to compare the governance of a country to that of a major corporation, they are apples and pears. The objectives are so substantially different it’s absurd to pretend they’re the same.
However, at a macro level, there are striking similarities in the systems, structures and disciplines that should underpin both. Many of the principles that drive successful corporate governance are desperately needed in government.
Long-term financial sustainability
Corporations must generate enough cash flow to sustain their operations. Shareholders, lenders, and customers all have options: they can walk if they don’t see value. That pressure forces financial discipline.
Governments by contrast levy taxes to raise their revenue without the taxed having choice. In addition, they can ‘create’ money by borrowing from the central bank via the issuing of government backed bonds. Short term this acts as a cushion for cycles in the economy, but long term, just like a corporation, there must be an ability to both pay the interest and on maturity, retire some of the debt. Failure to do so will result in economic erosion and eventual ‘banana republic’ status.
The long term rules of ‘financial gravity’ apply equally to corporations and governments.
Development and deployment of human and physical assets
Corporations invest in leadership and capability because returns depend on it. Governments have a deeper responsibility. Their role is to shape the society’s capacity to think, build, and adapt. Education is the backbone of economic and social growth. It is more than teaching the necessary practical skills needed by the economy, it is also the intellectual and emotional development of the country. We chase the sugar hit and skip the slow burn by treating education as a cost centre, rather than an investment with a long term payoff in wider ways than just financial. The price of misunderstanding the role of education is paid in wasted potential and stalled progress.
Building strategic moats
Warren Buffett nailed it: build moats or die trying. Moats defend your competitive edge.
In national terms, it’s about sovereign capability. Countries that do not invest in strategic domains: energy, food, defence, Intellectual Capital, lose control of their future. Sovereign capability is leverage, and without it, we drift.
Compounding and patience
Einstein called compounding the most powerful force in the universe. Most companies struggle with it. Governments are even worse.
The three-year electoral cycle kills patience. Most policies are Band-Aids with media-friendly headlines. Real compounding needs time and resolve, both of which require leadership.
A handful of exceptions stand out in our history: floating the dollar, Medicare, GST reform. Rare moments of a recognition that the long-term always arrives, sometimes all of a sudden.
Seeing the trends and riding them
Both corporations and governments need to play the trend game. Spot it, bet on it, build around it.
But here’s the catch: governments should do what companies cannot. They must back the long-term, risky bets that create public good. They must build the infrastructure: physical, intellectual, scientific, and social that will serve future generations. This requires an agile mind that can take in new information, process it and arrive at a different point, then execute a long term pivot. This governance characteristic is totally absent from our politics, where the focus is on predicting and planning an answer to the ‘gotcha’ question at the next press conference.
Transparency and trust
Trust is oxygen. Lose it and nothing else matters. Great organisations know this. They operate with clarity, keep promises, and hold people accountable.
Governments? Far too often, the reverse. Opaque processes, spin over substance, accountability dodged. When transparency dies, trust doesn’t just die with it—it rots.
Has anyone seen a trace of any of these six characteristics in this election campaign?
Anyone?
Apr 28, 2025 | AI, Change, Governance
American Roy Amara first coined what has become known as Amara’s law.
‘We tend to overestimate the effects of technology in the short term, and underestimate the effects in the long run’.
‘It was put more simply by (I think) Reid Hoffman who said: ‘the future is like a windscreen coming at a moth at 100mph.’
The initial excitement, hype, enthusiasm for the idea is followed by a period of underperformance, and disillusionment, before the real impact of the technology kicks in and changes the way we do things. Gartner’s well thumbed ‘Hype cycle’ is a better known version of Amara’s law.
Time and again over the last 30 years we have seen this effect on vivid display.
The internet, smartphones, AI, electric vehicles, Hydrogen as an energy source, (just entering the disillusionment stage) and many others.
It can also be applied to wider contexts, we just need to look for it.
Advertising.
No new TV ad campaign was ever released into the world without exalted expectations about the sales that would result coming from the ad agencies and those often clueless advertisers paying the freight. Then, unexpectantly, the ad is shown to be a dog, and is quietly euthanised.
Climate change.
Remember the hype and enthusiasm for ‘doing something’ that accompanied Al Gore’s influential doco ‘An Inconvenient Truth’ back in 2006. Nothing happened, the hype and enthusiasm was drowned by hubris and short term individual, corporate and political self-interest. While it seems unlikely at the moment, I remain confident that realisation will hit soon that we must take remedial action now in order to mitigate the long term becoming worse. Meanwhile. continuing to do nothing more than provide lip service ensures the moth will hit the windscreen in my grandchildren’s lifetime.
Business.
There are cycles of ‘fashionable’ management frameworks that seem to come, become the next great management breakthrough, undergoes the hype, then is shown to be np more than an emperor dressed in some transparent new clobber. Sometimes they re-emerge rebranded to go through the process again. Michael Hammers 1993 book ‘Re-engineering the corporation’ was such a fashion. I recall sitting around a board table listening to a very slick but hollow (even obvious to me at that time) presentation by a high priced consultant making promises of easily won great profit improvements from an aggressive ‘re-engineering’ of my then employer. That business hit the windscreen several years later, having cherry-picked the easy bits of the process, while ignoring those that actually made the long term difference because they were too hard. A few years later, Al ‘Chainsaw’ Dunlap had another run at it which made him a fortune, but left chaos in his wake. There are many more examples, the fall of GE from the largest corporation in the world to being virtually broke being one.
Politics.
Governments are relentlessly hyping the impact of their latest policy, more intensely than usual around election time. They whip up enthusiasm, at least amongst their acolytes, then falling into the trough of hubris. Usually, there is a renewal under a different name at a later time, often the next election. Remember the ‘Gonski reforms’ to education hyped by the then government, and supported in principle at least by the then opposition? Swept under the carpet of hubris and self-interest, again. Similarly, the 2010 Henry tax review was received by a grateful government who then shelved it. We may now have reached a point where the dust will be partially removed by necessity.
Americans are in the midst of waking up, again, to the reality of a second Trump administration. My contacts over there indicate dismay bordering on horror, and most of the working class Trump voters are about to learn the cost of the hype to them. The US moth seems likely to be splattered over the windscreen by the 2026 mid-term elections.
Artificial Intelligence.
Occasionally, the outcomes go way beyond what was originally envisaged. AI has been evolving for decades, but it exploded into the wider public awareness when ChatGPT was launched in November 2022. We are still experiencing the upswing in the hype cycle; I am certainly playing my small part. However, at some point I suspect soon, the tsunami of tools emerging, the sheer complexity of choice being forced on us will overwhelm all but the few, and we will collectively throw our hands in the air when the robot that does our washing does not appear. This collective action, if that is the way it occurs, will just let the first movers race away with the lollies.
The hype cycle remains around us, daily impacting on our lives. Its greatest risk is that we let it drive our decision making by making short term choices that are strategically flawed.
Apr 17, 2025 | Governance, Leadership
Like most, I have watched the videos of President Trump and his Vice President deliberately undoing the fabric of European security that has served us well since 1945.
The Marshall Plan after WWII saw the US invest hugely in former enemies, Germany and Japan, to rebuild their shattered economies. The belief was that helping them also helped the rest of us, and history proved that belief to be right.
Now, in just a few months since November 5 last year, Trump has flipped that post-war consensus on its head.
Change requires a catalyst, something or someone that triggers a shift and galvanizes others to follow. But change also always triggers resistance. Most initiatives fail when the resistance is greater than the momentum for change. However, when resistance is weak, change can run rampant.
That seems to be what we’re seeing now, and it presents a three-cornered problem.
First, the US empire is crumbling. Not just because of Trump’s antics or his disdain for democratic norms. It’s deeper. It’s the rot of internal decay: a crumbling infrastructure, rising inequality, a broken political culture, and a staggering $2 trillion deficit on top of $30 trillion in debt. Interest payments alone are chewing up 27% of government spending. If the US were a company, the receivers would have been called in long ago. But it’s not a company. It is still the world’s largest economy, tightly intertwined with everyone else.
Second, Europe. With a combined GDP larger than China’s, Europe is the US’s biggest trading and investment partner. But it has become complacent under the American security umbrella, protected and prosperous without paying the full cost of its own defence. That may be about to change.
Third, China. In 40 years, China has leapt from an agrarian backwater to a global power. It now demands a louder voice in world affairs, and if it’s not given freely, it will be taken. Their strategy is long-term. Ours is tomorrow’s news cycle.
The post-war world order is being forcefully reshaped by the new US administration.
Like it or not, Trump won. The question now is: what happens next?
Smart people everywhere are asking that question. So far, the answers are foggy. But from where I sit, a few likely outcomes are coming into view.
- US tariffs will be met with reciprocal tariffs. Global trade will shrink. As trade shrinks, the capacity for mutual cooperation goes with it. When mutual benefit disappears, self-interest takes over, and we risk an accelerating downward spiral.
- The US will enter recession. The wealth gap will widen, especially if Trump follows through on further tax cuts for the wealthy. Social unrest will follow. The 2025 mid-terms might bring some course correction, but the real hope lies in November 2028. The clock is ticking.
- Europe will be forced to step up support for Ukraine. This will mean massive increases in defence spending, much of it still sourced from the US, which will create tensions. Either taxes rise or social services get gutted. EU nations will also scramble to build defence capacity independent of the unreliable US.
- China will double down on its global push. Diplomatic soft power and military posturing will both increase. Their lens is generational. Short-term pain is an accepted cost for long-term strategic gain.
- Russia is likely to become a failed state. Its economy, barely larger than Australia’s, cannot survive prolonged isolation and war. China’s quiet support may prolong its agony. India will continue to play both sides, enjoying cheap commodities to fuel its own rise.
- And Australia? We’re caught in the middle. A commodity exporter with little pricing power and few alternatives, we rely heavily on China, especially for coal and iron ore exports. If China gets a cold from clashing with the US, we’ll catch pneumonia. The Morrison-era trade troubles will look like a stubbed toe by comparison.
The old order is breaking down. The new one is not yet clear, and the immediate outlook is global financial chaos on an unprecedented scale.
Apr 14, 2025 | Change, Communication, Governance, Leadership, Marketing, Strategy
When you look you see Hofstadter’s law around you everywhere, every day.
We all understand Murphy’s law, which accurately states that is something can go wrong it will, probably at the worst time. Murphy has a sibling, articulated by Douglas Hofstadter which states: ‘A task always takes longer than you expect, even when you take into account Hofstadter’s law’.
Planning is a part of our lives. Some things are easy to plan, the consistent characteristic of these is that there are very few variables over which you do not have control. For example planning a trip to the supermarket, you can check what you need you control the time, the choice of supermarket, where you park, how you work the store, the choices you make between brands. Very few uncontrolled variables.
By contrast strategy is an exercise not just in predicting the future, but then making choices how best to deploy your resources in a way that enables you to shape the future to your benefit by exerting some influence over the range of variables over which you have no control.
Entirely different challenge, as there is never an explicit ‘right’ answer.
When we talk about strategic planning we are effectively mixing two incompatible factors. The uncertainty of the future and the forces over which we have no control, and the certainty of the resources we have to deploy, with uncertain outcomes.
Currently in this country we have a huge black hole called defence planning into which billions of taxpayers dollars are being poured, in the mistaken view that we are able to predict the future and therefore plan as if we could control the variables.
The better way is to have a robust strategy which enables flexibility in the way assets are deployed short term.
Projects tend to expand to fill a time available, while at the same time we habitually underestimate the time that is required to complete any given task, no matter how rigorous we are in the planning.
Apr 11, 2025 | AI, Governance, Management
Anyone who has engaged with any bureaucracy at multiple levels will tell you that what is said at the top often does not get down to the operational levels.
It seems not to matter whether the bureaucracy is private or public, multiple levels result in an increasingly dense set of rules and regulations that should be followed and are often a default excuse for not thinking.
However, it does seem also that public bureaucracies are less able to accommodate any sort of flexibility in the absence of instructions from on high, and even then, it is difficult.
AI has invaded and won significant ground in private domains and will be rapidly deployed as businesses seek the potential productivity gains as a source of competitive advantage.
What of government?
There is no competition in the public bureaucracies, their political masters come and go, policies change, as do some senior people, but largely, they remain intact. How will they adapt to the new world of AI?
In a word, very slowly indeed.
Regulations, behavioural rules, and protocols set at the top level, are filtered down through organisations. At each level, they are imposed with the addition of seemingly necessary additions in order to stop those who seek to find ways around the rules, and in the eyes of the bureaucrats subvert the intent of the rule.
This imposition of rules compounds to the point at the operational end that navigating the imposed landscape becomes incomprehensible to normal people.
I spent time recently navigating the minefield surrounding the simple transition of my mother from her own home to an aged care facility.
The process required two apparently warring bureaucracies to simply recognise the assets Mum had, combined with the aged pension through Centrelink, and the War widows’ allowances due to Dads military service in New Guinea. My sister who did most of the work required, is an intelligent educated woman, but was driven almost to despair. The nonsensical overlapping and duplicated requirements of both departments, where it seems a comma in a different place in similar lodgements to each department necessitated we start from scratch with both after the applications were deferred or judged void.
The operational individuals were largely helpful but completely restricted by rules to which no variation was allowed. Yet, the policies stated from the top are designed to make the lives of aged Australians, particularly those who have given much to the country as have war widows as comfortable as possible.
What happens in between these levels.
Regulation begets regulation upon regulation as the rules are cascaded down through the organisations. As each level sets about ensuring they are not accountable for any misdirection of funds, and therefore difficult questions, the mess becomes ‘Gordian’.
All this does is catch and frustrate those trying to do the right thing, while the ‘smarties will always find a way through,
Into this maelstrom walks AI.
In theory AI should ease the logjam, making most of the necessary form-filling and translation of details from one point to another automatic and easy.
In practice, the flexibility and agility that AI platforms are capable of will be adopted very slowly by public bureaucracies. They require changes in culture, operating processes, and inter-departmental collaboration in more than just words and press releases.
Those changes seem unlikely despite the urgent need.
Apr 7, 2025 | AI, Governance
As we come to rely more and more on the output of machines, we tend to forget that they are intrinsically binary operations.
The output is either black or white.
One little mistake or variation in the output that can be driven by something as simple as the placement of a punctuation mark in your prompt, can deliver very different outcomes.
When you string a series of tasks together even simple ones that rely on the output of the previous output, any error that is not picked up will be compounded.
Therefore, my contention is the greatest problem with AI is not technical but our belief in the output and that any error anywhere in the system compounds.
The danger of compounding errors is obvious. One simple O-ring worth a couple of dollars that was not malleable enough to accommodate the cold weather on that January morning in 1986 led to the end of the Challenger space shuttle. The unusually low temperature that morning was not anticipated, and so not included in the variables that determined the specifications of every piece in that multi-billion dollar vehicle.
Boom.
The only antidote to this misleading, erroneous and potentially nasty outcome is human scrutiny. We may have been released from the repetitive and mundane parts of all our jobs, but that release comes with a price: we simply must be highly sceptical of the outputs, and subject them to vigorous scrutiny starting with first principles.
