Sep 4, 2026 | Leadership
Most business leaders want employees to think and act like owners.
Inevitably the conversation reaches financial transparency, and their enthusiasm for implementation of what seems a good idea in principle, evaporates.
Share too little and employees assume management is hiding the real numbers and its motives. Share too much without context and explanation, and many will compare the EBIT line in the P&L with their pay packet and conclude that the owner has been ripping them off.
Business leaders often frame this as a binary choice: open books or closed books.
It is not a simple binary choice.
Every business sits somewhere on a continuum. You can choose how much information to share, with whom, when, and in what form. The benefits and risks remain; only their degree changes.
We also need to separate two decisions that often get carelessly bundled together. Financial transparency about how the business performs is not the same as disclosing every individual’s salary. You can explain how a business makes and loses money without pinning everyone’s pay packet to the lunchroom wall. Transparency on individual pay packets in my experience creates more problems than it solves.
Over a long career, I have operated at both ends of the transparency continuum. The outcomes surprised me more than once.
Many years ago, I worked as a senior executive in a major dairy company. We operated a cottage cheese plant in a large regional town.
The plant appeared to have no viable future. We were not the lowest-cost producer, and we could see no commercially sensible way to invest enough capital to compete from a sound cost base.
We made the difficult decision to close it and exit the category.
I had to manage the closure with the least possible cost and disruption to the business while recognising what it meant for employees who had often served the company for many years. The decision would affect families, milk suppliers and the wider regional community.
We told employees what we intended to do and planned a gradual wind-down that might take up to 12 months. That gave people time to look for other work. It also allowed us to run down packaging stocks and gave milk suppliers time to find alternative buyers.
As part of the plan, we also raised prices significantly, expecting that to slow sales.
Demand did not slow at all.
That response forced us to question the assumptions behind the closure. A small difference in the existing production processes gave the cottage cheese characteristics that a significant group of consumers preferred. They valued that difference enough to pay considerably more for it.
At the new price, investment made sense.
We built a new plant alongside an existing milk intake and processing facility in another location. We also offered relocation assistance to several long-serving employees.
Transparency did not save the old plant. It did preserve trust, create time and leave us room to change course when the market proved our assumptions wrong.
I faced the opposite approach after another dairy industry merger.
One of the manufacturing plants that came under our control became redundant. Product rationalisation meant we no longer needed its volume. Its quality was dreadful and its costs were significantly inflated by excessive overheads, low productivity, and the aforementioned poor quality.
Again, I had to guide a plant closure.
This time, the managing director instructed me to say nothing. If anyone asked whether the plant might close, I was instructed to deny it.
On my first visit, employees asked the obvious question about the plant’s future, and I avoided giving them a clear answer.
On my second visit, I defied the instruction.
I told them that we expected to close the plant. I explained the reasons: poor quality, excessive costs and surplus capacity. I also gave them the proposed closure date and outlined how we would help employees through the process.
The effect astonished me.
Costs fell. Quality improved.
The uncertainty had hung over the plant for years, well before the merger that had landed the problem in my lap. Removing it gave people something concrete to deal with. Some found other jobs, others stayed for the redundancy package. Those who remained also set out to prove that the case for closure rested on assumptions they could overturn.
The secrecy intended to preserve stability had helped destroy it. The truth focused attention.
My third encounter with this dilemma came much more recently.
A small manufacturing client followed my advice to share information about costs and profitability with employees. We opened the books further than the culture and financial understanding of the employees could support.
Employees looked at the EBIT line at the bottom of the Profit and Loss, compared it with their pay packets, and decided the owner had been exploiting them.
They did not understand the cash tied up in working capital, the cost of equipment, the need for reinvestment, the risks carried by the owner or the return on capital required to justify those risks.
That failure belonged to management, and partly to me. We had shown people the scoreboard before explaining the rules of the game.
Financial transparency can improve performance, trust and the quality of decisions. Information alone, however, creates neither understanding nor ownership.
Employees need to understand what the numbers mean, which ones they can influence, what actions will improve them and how the gains will flow back to those who helped create them. Without that line of sight, transparency becomes an invitation to misinterpretation.
Start with the economics closest to the work: scrap, rework, overtime, yield, customer returns, throughput and the cash cost of delay. Explain the difference between profit and cash. Explain why capital carries a cost and why the owner expects a return for carrying risk.
Then repeat the explanation, again, and again. One presentation of the profit and loss statement does not create financial literacy any more than one driving lesson creates a Formula One driver.
Increase transparency as understanding and trust grow. Keep individual salary disclosure as a separate decision, and be very wary of disclosure of individual pay.
Opening the books does not create owners. Giving people context, agency and a fair stake in better performance will.
Jun 2, 2026 | Leadership, Management, Marketing, Strategy
A ‘heuristic’ is a ‘rule of thumb’ that takes the place of conscious calculation in the interests of speed and reduction of cognitive load in our brain. Cognitive overload creates the ‘friction’ in our brains resulting in indecision and anxiety. Heuristics, or ‘mental models’ bring the cognitive load down to a level we can deal with efficiently.
It is a function of evolutionary psychology.
To survive, you had to make a choice quickly about that rustle in the grass. Ignore it too often and you could end up as tiger shit.
Remember, we are all survivors of those who ran in order to not take the chance with the rustle being a tiger.
We all use these mental models daily, usually unconsciously.
In 2009 Chesley ‘Sully’ Sullenberger ‘landed’ the Airbus A320 he was piloting in the Hudson River after a flock of birds shut down both his engines on take-off from La Guardia airport.
He ‘knew’ without doing the calculations that he would not make it back to La Guardia, or the alternative airport of Teterboro in New Jersey.
His only option was the river, or a crash landing in populated areas of New York, and he had seconds to make the choice.
Subsequent investigations eventually confirmed his choice.
Sully applied unconsciously, a heuristic, a framework that was a result of his extensive flying experience, and knowledge of the gliding performance of the Airbus A320.
No data, no standard operating procedure that was useable, he acted and saved the life of every person on the plane as a result.
We all have a set of heuristics in our heads. The cumulative result of our experiences with life, and the context in which we have lived. We can either understand and leverage them to the advantage of ourselves and those around us, or we can fail to recognise their presence and power.
In your business, you are applying heuristics every day.
Choices that seem automatic: which customer to serve, who to hire, sales conversion, leadership choices, all are made with the assistance of heuristics. They are an essential and integral part of our management, but are only valuable when they are built from valid experience and regular testing and review.
You need to update your heuristics with regular feedback in the manner of an ‘after action review’ type analysis. What worked and what did not, where to lay the chips next time around, where to double down, and where to run.
When left untended, heuristics can evolve in suboptimal ways. Don’t leave yours untended, they may save you.
Mar 30, 2026 | Governance, Leadership
In the pre-internet age, facts had a pedigree. You could trace them back to a source, weigh their credibility, and argue your position with some confidence. These days, we are so awash with claimed ‘facts’ that we are overwhelmed. Cheap, mass-produced, often anonymous ‘facts’ handed from one digital platform, morphed and handed on again. No clear origin, no accountability, just noise, self-serving claims, paranoia, or dreams, dressed up as certainty.
That creeping uncertainty has seeped into every corner of our lives, mostly unnoticed. The rules we live by are still shaped by politicians and enforced by institutions funded with our tax dollars. But the values behind those rules have all but disappeared.
We used to look for consistency. If someone claimed to value integrity, we expected them to act like it. Now we get performative posturing. Followed by policy U-turns, PR spin, or flat-out contradiction.
When behaviour doesn’t match the values on the label, it screams hypocrisy. As the old marketing joke goes ‘the consumer is not stupid, she is your wife’
We’re hardwired to trust facts. However, when the ‘facts’ themselves are selectively shaped, bent to fit a narrative, or worse, manufactured from thin air, we get understandably anxious and likely to distrust.
In its mild form, this is spin. In its extreme form, it’s lying. Denial. Gaslighting.
Hypocrisy is no longer just the politician’s disease; it has crept into every corner of our lives.
Public debate has been hijacked by competing ‘facts’. Not competing opinions. Competing truths. There’s no transparency, because transparency forces accountability. When nobody is accountable, integrity goes out the window.
Integrity now is so rare we wouldn’t recognise it even if it walked up and smacked us with a code of conduct.
The result? Polarisation.
Information travels faster than reflection. The moment a ‘fact’ hits the feed, the rebuttal, if it exists at all, is buried under a pile of clickbait. And if by chance a real fact does slip through, one that’s been tested, sourced, and stands up to scrutiny, it gets drowned in the noise.
Knowledge used to mean something. Now it’s riddled with bias, spin, and wishful thinking. Often wrong. Always louder than it should be.
That erosion of clarity has gutted our trust in political systems. We expect spin, so we ignore or do not recognise the occasional truth when it confronts us. When we stop trusting the institutions, we stop trusting what they publish, even when they’re right, imagination and conspiracy theories take their place.
What follows is stubbornness disguised as principle.
We cling harder to our own view, no matter how flawed. We trust only those who confirm it. Collaboration becomes competition. Dialogue turns into tribal shouting.
Meanwhile, confirmation bias is doing its work: steering our decisions, shaping our teams, and wrecking our ability to truly listen.
So, what’s the fix?
Truth. Accountability. Transparency. Not slogans. Actions.
Tell the truth based on facts you can trace. Show your working. Hold yourself and others to the same standard. Accept that facts evolve, but insist that the path of that evolution is open for all to see.
That’s how you earn trust back. One uncomfortable truth at a time.
Header credit: A single panel from and old ‘First dog on the moon’ cartoon says it all.
Oct 16, 2025 | Leadership, Strategy
On the surface there is little in common between these two manufacturing inputs. However, there are two commonalities
First: Australia has plenty of both in its raw form
Second: Australia currently and into the future has little or no chance of being a significant supplier of the end value added product.
Australia remains a significant contributor to the world’s supply of raw wool. In volume we are now second behind China. In value we are the runaway leader after 100 years of genetic management leading to a fine and consistent wool staple, ideal for the manufacturing of high-end clothing. We do only a tiny, artisan level of processing of the raw wool in this country. Over time we have outsourced this dirty, effluent heavy process to India and China.
Sadly, the huge value add to wool occurs after the initial processing of the raw clip, and we are not getting any of it, beyond a few scraps.
In the case of rare earth minerals, we have plenty in the ground, very little of which is being mined currently, and very little of what is mined is processed.
These science fiction sounding minerals occur at very low concentrations, requiring hundreds if not thousands of tonnes of earth being mined and processed to deliver very small amounts of the final product. The subsequent processing is capital intensive, uses toxic chemicals, consumes vast amounts of water and energy, and for neodymium in particular, the critical component of high performance magnets, emits vast amounts of CO2 during processisng. . As a result, we have the raw material, but no way to add the value.
China has a stranglehold on the world supply of these minerals, controlling around 90% of processing and around 70% of the volume of mined material for subsequent processing. Over 20 years China has invested heavily in generating this chokehold on the critical inputs to a modern economy. 20 years start gives them immense price and availability leverage over the industrial activity of the rest of the world, which increasingly requires those science fiction sounding rare earth elements in the manufacture of a vast range of products.
In recent days China has changed the rules on the mining, processessing and export of products made with rare earth elements. The technology required to process the raw materials, and the manufacturing technologies necessary to produce end products are now all subject to licenses being given by the Chinese government. If nothing else, this should scare the wits out of the loonies in the White House.
While building a lather abour rare earch minerals, we should aslo remember the dominence China now has in minerals that are not classed as ‘rare earth’. Managnese, Cobolt, Graphite, lithium, and others.
It would be a brave man to predict any change in this situation in anything less than decades, hundreds of billions invested, and really politically sensative choices being made about the environmental impacts that expansion of non Chinese supply would entail.
The Australian government has announced a ‘Critical minerals strategy’ that includes a Critical Minerals Strategic Reserve. This all sounds appealing, but the acid test will come the first time a mining enterprise proposes to mine an area that is the last habatat of some rare insect, and add CO2 to the atmosphere by establishing a pilot processing plant. The last time the government got involved with supply chain management of a raw material with a view to controlling price and availability was with the wool industry. That ended up as an absolute disaster, and would be logarithnically easier to get right than it will be to bridge the gap with rare earth minerals..
A ‘Critical Minerals Strategy’ sounds like a good idea, is a better sound bite, but is a practical hurdle of enormous proportions. However, China’s dominence should be seen as a challenge to be met with application of the pool of scientific and mining intellect we have in this country. We must find a pathway to making the existing lead China enjoys redundant by the generation and application of scientific understanding, and subsequent development of the technology.to process the stuff in an environmentally sustainable manner.
Oct 13, 2025 | Change, Innovation, Leadership
If everyone in the room agrees, you are probably all wrong. Innovation does not come from consensus; it comes from the friction created by different ideas and perspectives.
If you listen to comedians, there is a common thread through everything they say. A friend of mine who does a bit of fun standup calls it the ‘1,2,5’ of conversation. The first statement sets the scene, the second reinforces the first, the next is entirely unexpected. It is not the obvious ‘3’, rather, it is oblique, often the opposite, and always a surprise. The laugh, or in my friends case, occasional quiet chuckle, comes from that unexpected punchline.
Consider the survival chances in a hostile environment of two groups of people.
One is a homogenous group, that automatically sees things in a similar way.
The second is a neurologically diverse group that sees things from different perspectives.
Which is the more likely to survive that hostile environment?
This leads to the obvious but often ignored idea that the way you make up the groups in your business requires some heretics, comedians, and philosophers.
Rather than randomly allocating people to a group tasked to undertake a specific challenge, would it not be better to ensure you have a neurologically diverse group undertake it, as they are way more likely to surface new, different ideas. Some of those ideas, even most, may be absolute crap, but it just takes one to deliver the idea that changes everything.
Nicholas Copernicus presented the idea that the earth was not the centre of the universe, using Galileo’s newly invented telescope. This led to him being excommunicated for heresy by the Catholic church. Later, he was proved right, which did not help him. In time however, it helped the rest of us as it completely changed the way we think.
Every new idea starts as a heresy noted 19th century philosopher Thomas Huxley.
If you want these ideas that are often extremely inconvenient, to emerge from your group, you need to work for them.
Header: The eyepiece of Galileo’s telescope
Oct 8, 2025 | Analytics, Leadership, Operations
We have learned over time, led by Toyota, that ‘root cause analysis’ thereby seeing the root cause of problems is the road to continuous improvement.
At any time when there is a problem, do not let it get papered over, do not let the symptoms be treated, dig and dig until you understand the root cause and then fix it.
Often this is a challenging task, root causes by their nature are usually well hidden, and often ambiguous until there is a forensic examination. However, they are always there and rooting them out enables a compounding of improvements over time.
That analysis requires a cultural context in which to work, as it takes time, consumes resources, and is never completed, as there is always another problem to be analysed. That is the nature of problems, root out one bottleneck, and the blockage just moves to the next spot, previously hidden by the former one.
However, we also seem to look at a process from its beginning, setting out to define a hidden problem occurring inside the process.
Should we reverse the order, and look at the causes of success?
Why and how has Toyota managed to remake themselves from the crappy stuff carrying the lousy quality implications of ‘made in Japan’ from my childhood to an icon of quality, and in the process, driven change through manufacturing globally?
What is the root cause of their success?
My contention is that the root cause is a simple piece of rope.
The Andon cord.
Toyota put Andon cords through their factories, so that any person on the line could stop the line at any time when they saw a fault.
Not only were they empowered to stop the line, they were expected to do so any time a problem occurred that could not be fixed in the time allowed at that station in the line. When the line was stopped by a worker, the supervisor immediately went to the stoppage point with two objectives:
- Solve the problem to ensure it would not be repeated, and that the problem got not one step closer to a customer.
- To congratulate the worker for stopping the line so the problem could be fixed. This ensured there was not any reluctance to address a problem by such radical means as stopping a whole factory.
This is an extreme example of empowering the front line, making those who can see problems as they face them all the time, responsible for fixing them.
When introduced, this must have caused headaches, as the productivity would have plummeted. The number of cars produced dropped off a cliff, but those that got through would be as good as they could be, and slowly, as problems were solved, productivity rose, quality rose, as over time Toyota became the benchmark for motor vehicle quality around the world.
All from a simple piece of rope, and the surrounding culture that delivered to those at the coal face, the responsibility to exercise their right to pull it.
What is the equivalent of the Toyota Andon cord in your business?
