Jun 30, 2025 | Leadership, Management
As a consultant, I am often faced with managing the fragmented attention of my clients. The grass is always greener, and the new shiny thing syndromes are hard at work, particularly in the minds of the stressed owners of an SME, looking hard for an easier way.
Somehow, they must manage their limited resources of time, money, capability, operational capacity, and expertise, insulating themselves against the pull of the siren song of the silver bullet.
There is no substitute for the focussed application of all available resources on a market niche of some sort where there is a competitive advantage that can be defended. The niche may be as local as the best plumber close to your home, or as broad as a revolutionary application of technology to the world market, the logic remains consistent.
The late Charlie Munger had as part of his wardrobe of mental models one he called ‘The circle of competence.’ He credits this idea with much of the success he and Warren Buffett have had in Berkshire Hathaway.
In summary, he assesses all opportunities presented by determining if Berkshire Hathaway has a greater level of competence in the domain within which the opportunity lives than anyone else. The closer to the edge of the circle of competence, the less interesting it is, simply because there are others who know more about the drivers of long-term profitability than he does, and therefore in the long run, he is unlikely to win.
Many years ago, while working for Cerebos, I launched a breakfast cereal into test market in South Australia. It was a bridge between muesli, where Cerebos was a major brand in a small segment with Cerola (now disappeared from shelves) and the standard breakfast cereals, Wheat Bix, corn flakes and rice bubbles. It was a genuinely different product, offering a ‘bridge’ between the ‘tree hugger’ image of muesli, and the sugar laden three products that at that time stood alone in the market.
The launch was extremely successful, at first. Three months after our launch Kelloggs countered with a look-a-like product, ‘Just right’ and blew us away with the weight of advertising, power of the Kelloggs brand, and in store merchandising resources.
While it seemed that our new product, ‘Light and Crunchy’ was a logical and consumer centric expression of the trends in the marketplace, it was a step outside the ‘circle of competence’ of Cerebos. We did not have any competitive advantage in the general cereal market that could be leveraged after Kelloggs rubbed out the modest first mover advantage. It fell right in the middle of the ‘what you think you know’ circle of competence.
We did everything right, the longevity of ‘Just Right’ is evidence of that, but we did not sufficiently understand the drivers of our new competitor, Kelloggs, and the determination they brought to wiping out an interloper in what they saw as ‘their’ market. We were not sufficiently competent to be successful.
That insight came at considerable cost.
Jun 17, 2025 | Change, Leadership
“They snatched defeat from the jaws of victory.”
That phrase echoes around footy grounds when a team, cruising to a win, suddenly collapses. The hunger fades. The cohesion cracks. The urgency evaporates.
Winners who stay winners do so because they never switch off. They stomp on a throat when they have the chance. And when they’re behind, they still believe they can come back.
Sporting analogies make great business metaphors. They’re colourful, visceral, and most of all, familiar.
Skype is a prime example of dropping the ball over the line.
Microsoft has been a cash machine for decades. Dominant, deep-pocketed, and ruthless when it suits. In short, they know how to win. But last month, they quietly walked off the field and took their former champion with them.
Skype was officially euthanised on May 5, 2025.
The original disruptor. The upstart that reinvented digital voice communication. The king of the mountain. Gone.
Skype began in 2003, the brainchild of two Estonians who wanted to reduce the cost of voice calls by using peer-to-peer protocols. The product exploded. eBay snapped it up in 2005 for $2.6 billion. Then in 2011, Microsoft bought it for $8.5 billion. It should have been a match made in heaven.
But inexplicably to me at the time, Microsoft launched Teams in 2017, and from then on, Skype looked like yesterday’s hero. Despite a global user base, a household brand, and a treasure trove of usage data, Skype was left to wither.
Why? Only insiders can say for sure, but from the outside, it looks like the classic case of a team where the halfback and five-eighth couldn’t agree on the game plan. Maybe one group wanted to modernise Skype. Another pushed all-in on Teams. The result? Strategic paralysis.
Then came COVID, and video conferencing exploded. Zoom turned from a quirky tool into a verb, others rushed to grab a piece of the expanding pie, and Skype appeared to be disinterested in even playing.
Microsoft had every advantage: distribution, brand, cash, data, development talent and loyal users by the millions, but they didn’t press the advantage. They coasted, and the game moved on.
So the final whistle has blown. Skype, once the dominant player, was taken off the field not by a better team, but by its own coach.
Small business owners: don’t assume past success guarantees future wins. Stay hungry. Stay alert. Don’t let a lazy midfield cost you the match.
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 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.
Mar 26, 2025 | Governance, Leadership
A question I always ask my clients is “what would a VC firm do if they took over management today?”
It always leads to deep and challenging conversations. It enables discussion that recognises the complexity of the strategic and tactical environment in which we all compete to live.
In a world changing as rapidly as the one we now inhabit, there is no such thing as a safe haven based on previous success. Nothing will remain unchanged over the coming decade.
The lessons we can learn from 30 years of VC activity can be used as a trigger for existing management to realign and regenerate for the future.
The question should be asked from two perspectives, as the answers will be different.
What changes would a VC firm make to the business?
Would I survive such an invasion?
Venture capital (VC) firms evaluate businesses through a rigorous lens, and when assessing a previously successful business facing headwinds, they focus on key indicators to determine whether it’s worth investing in, restructuring, or passing on entirely. Following are 14 of the obvious questions a VC would ask.
- What are the revenue, gross margin, cash flow, and profitability trends?
- What is the competitive position you hold? Is it differentiated and competitively sustainable?
- How would the culture be described?
- What is the picture of your current customer base, and prospecting success?
- What are the current driving forces in the market, and are they likely to persist?
- How does your business model work? Is it resilient and/or ‘pivotable’?
- What does the long term past look like? Is it smooth and cyclically predictable or erratic?
- Are business processes defined, consistently applied, and subject to continuous improvement?
- What is the quality of existing and future leadership and management?
- Are there any regulatory or legal risks?
- Does the business have potential for strategic development via M&A, takeover (taker or takee) or alliances?
- What is the ‘risk profile’ of the business? Ie is it an innovator, follower, or stuck in time?
- Are there valuable personal relationships in play?
- Exit potential for investors?
There is no reason to limit that conversation to a business, why not apply it to yourself?
‘If a gun young engineer/marketer/salesperson, (whatever you do) walked in today, and sat in your chair, what would they do?”
