Sep 21, 2026 | Management, Strategy
The world is divided in many ways, but every way that divides also compresses down to a strategic choice most do not consider.
Are you operating in a world dominated by a Gaussian distribution, or a power distribution?
We are all familiar with the normal curve, which is a gaussian distribution. Many, if not most things across the commercial, natural, and institutional worlds we live in operate on a normal curve. Human height, manufacturing variation, travel time to work, cricket scores, heads thrown in a game of two-up. All are plottable in a normal curve, and the larger the sample, the more ‘normal’ the curve becomes. It is the statistical basis of every political poll you have ever seen.
Italian mathematician Vilfredo Pareto noted the wildly differing income levels amongst Italians. This pattern did not comply with the normal curve leading to the insight that reversion to the mean did not apply at a micro level. The differences in income of individuals, 80% of which accrued to 20% of Italians, led to the 80/20 ‘Pareto rule’.
Wherever you look, you see the pareto rule at work. A closer examination often also reveals a power distribution playing a key role.
Cricket is a game where the scoring is constrained by the maximum of 6 runs. Hit the ball over the boundary on the full, and it is six runs. Whether the ball clears the boundary by an inch, or by 100 meters, the maximum runs scored is six. However, if you were to perform a power distribution of the batsmen who had hit a six in test matches, the 80/20 rule prevails. Of the 1,828 sixes scored by Australians in test matches over the last 25 years, the top five batsmen scored 79.6% of them, the other 448 batsmen combined scored the other 21.4%.
By contrast, Rugby league is not constrained by a maximum. The score in Saturday evenings semi-final game between Cronulla and Easts was 46 to 10. The commentators were discussing the chances of Easts breaking 50 in the last few minutes of the game, as there is no limit applied to scoring beyond the time of the final whistle ending the game.
These differing perspectives lead to the question referred to in the header: Are you in a commercial context that is constrained by a reversion to the mean, or are you competing in a ‘pareto-like’ context?
The obvious follow up question is ‘does that optimise the commercial outcome’
The domain you are in drives the nature of the strategic choices made.
A domain dominated by a power curve business model is one where many bets are laid, knowing most will fail, but the few that work will deliver a disproportionate share of the total value delivered by all bets. The challenge is that those that will deliver the disproportionate outcomes are unknowable when the bets are laid. Typically venture capital works in this domain.
To continue the cricket analogy, coaches might look for the characteristics that made Gilchrist, Smith, and Co the outliers amongst the long tail of cricketers who score none or few sixes in their careers, and coach them to hit those sixes. Most will get out even more quickly than they normally would if trained for defence, but perhaps one or two might join the elite group in the 20% club.
In the bell curve or gaussian analysis, incrementalism is the driving force. Coaching the average test bowlers to turn their average test scores from 6 or 7 into the teens over time will optimise their capacity to contribute to the total reliably.
Long term success depends on both approaches being applied judiciously, as trade-offs must be made.
Scott Boland has a bowling strike rate of 39 balls per wicket of Australian test bowlers over the last 25 years, and a batting average of 9. He struggles to find a place in the test team other than in the absence of Hazelwood, Stark or Cummins, despite having the best balls/wicket ratio. (let’s not debate the obvious impact that his balls/wicket ratio is heavily influenced by his astonishing 7 for 55 in the 2021 boxing day test)
As someone running a business, you must also make these trade-offs between incrementalism and ‘hitting for the fence’ in the ways that best suit the circumstances of the business and its competitive context.
Note: explanation of header graph.
- The top 5 scorers of the 1,828 sixes hit over a 25-year period, Gilchrist 5.5%, Hayden 4.5%, Ponting 4.0%, Warner 3.8%, and Smith 3.7%, together account for 79.6% of all sixes hit by all 453 Australian test batsmen over the last 25 years.
- 276 players hit no sixes, the average being 3.9 sixes each.
- Gilly, is 8 standard deviations from the mean, making him, as we knew, a freak!
Aug 13, 2026 | Lean, Management
Best practice is a standard aspired to by many small businesses. Leaders look at what top-performing companies in their market do to maximise profitability, then attempt to duplicate those exact practices in their own operations.
If your business is currently chaotic and disorganised, looking toward industry best practices as a baseline is sensible. It provides clear guidance on where to allocate resources to start improving.
However, if you are already operating smoothly, blindly chasing “best practice” can actually hold you back. Why? Because best practice is, by definition, an average calculated across a wide range of businesses.
Averages are misleading
If Elon Musk walked into a crowded football stadium, the average net worth in that stadium instantly makes every person in it a billionaire on paper.
When viewed through that lens, setting out to hit an “average” suddenly isn’t so attractive.
Best practices are always a collection of individual processes designed to generate an optimal outcome for one specific business, in one specific competitive and regulatory context.
When you set out to duplicate someone else’s best practice, for example in a manufacturing operation with many individual steps, you can never copy every variable perfectly. Even if you get most steps 99% right, compounding works against you
You end up with a sub-optimal process that falls significantly short of your original goal.
Build your own SOPs first
A Standard Operating Procedure (SOP) is an individualised blueprint for how a task is executed within your specific business to guarantee repeatability. The ultimate goal is ensuring the procedure can be executed reliably by anyone, not just the current process ‘owner’.
Building detailed procedures for your core processes is a critical step in optimising performance. It is also the mandatory starting point for automation.
Regardless of what tech or tools you use, the primary challenge is to optimise the human process before you automate it. There is little worse than spending valuable resources automating a flawed workflow. All that guarantees is that you will deliver sub-optimal outcomes faster and at scale.
The bottom line
Rather than trying to match someone else’s standard of best practice, focus on optimising your unique value offering for your customers. Then work backward to build systems that guarantee consistent delivery. I call it ‘Hindsight planning’, and it is a key to strategic success.
Jul 30, 2026 | Analytics, Management
Assembling and leveraging the complex mix of information and capabilities required to ‘win’ is a challenge similar to climbing a slippery ladder.
Most rely on data, spreadsheets, and extrapolations, blended in with optimism.
At the bottom of this ladder is data. Raw, unfiltered, and almost useless on its own. Just numbers, words, events. Noise without context. Like a kids jigsaw puzzle upended in a pile on the floor.
The ‘ladder’ has five steps.
Data. The pile of numbers, littered around files, outside sources of information, and peoples brains, without context relevant to the questions being posed.
Information. You start sorting. Cleaning. Labelling. Structure begins to emerge. It’s janitorial, unglamorous, tedious, and essential. This is where many people mistake motion for progress.
Knowledge. Connecting dots delivers knowledge. You see cause and effect, frequency, variation, and importantly the outliers. You can answer questions like “What’s happening?” and “How often?” Knowledge is a map, but it is still two-dimensional.
Analysis. This requires you test the knowledge, isolate variables, run comparisons, identify the outcome drivers, and develop ‘what if’ models. You don’t just have answers; you know how strong the answers are, and where they might fall apart. It gives you that added dimension.
Insight. Here’s where the real game begins. Insight is not just about seeing patterns, it’s about seeing meaning. It’s the inflection point, where a thousand observations converge into a single, clarifying idea.
But insight alone is not enough.
Running parallel to this clean, rational ladder is a tangled, intuitive, and very slippery pole: wisdom. Hard to see, impossible to teach, and absolutely critical to success.
Wisdom doesn’t follow steps. It grows from pattern recognition forged from lived experience. Mistakes made, ‘hunches’ that turned out to be right, and often spectacularly wrong, opportunities misread or missed completely. It takes time, perseverance, an ability to learn, curiosity, and determination.
It’s what lets a seasoned operator say, “That’s not going to work,” without needing a single chart, and be right. It’s instinct layered over time, a mental shortcut engine built on scars, sweat, and sleepless nights. It’s experience distilled into reflex.
The irony is that the higher you climb the corporate hierarchy, the more you need that slippery pole of wisdom.
If you only trust the data ladder, you might build the wrong solution brilliantly. If you only trust the pole, you risk hubris.
But when you climb with both, methodical analysis on one hand, and wisdom on the other, you are better able to understand problems, see the wider context, and spot points of leverage.
That’s the difference between a strategist and everyone else.
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.
Apr 9, 2026 | Management, Small business
The Reserve Bank hands down its next rates decision on 5 May.
The cash rate already sits at 4.10%. Markets and many commentators still expect at least one further rise on May 5, probably followed by at least one more. Against this backdrop, there is a federal budget trying to deliver on the social undertakings made to the electorate, while dealing with a structural deficit, soft consumer confidence, and geopolitical uncertainty, particularly as it relates to energy.
This is a toxic mix for SME’s, which despite being largely ignored by governments, are still the backbone of the economy.
That mix should sound familiar to anyone old enough to remember the 1970s. Growth stops, costs increase, consumers keep their hands in their pockets, and the cycle repeats.
That is when small businesses fail.
Whether the Reserve Bank raises again or pauses, the core message for SMEs stays the same.
Do not wait for certainty: Prepare now.
Tough times do not usually kill a business in one dramatic moment. They kill it by progressively tightening a dozen small screws at the same time. Debtors pay later. Stock turns slower. Quotes sit longer. Margins erode one discount at a time.
The businesses that come through rough periods usually do a few simple things early and do them hard.
- They preserve cash.
- They accelerate every cycle time in the business.
- They protect gross margin like it is oxygen.
- They stay close to good customers.
- They cut vanity spending and keep useful spending.
And they remember an old truth Warren Buffett expressed well: when times get tough, cash gives you options. Opportunity often knocks when nobody feels like opening the door.
The following specific advice has been heard many times, but once more will not hurt.
Know your cash position.
Know your true cash position every week, not intermittently once a month, every week, or better still, every day. Chase debtors hard, but with wit and humanity, as they are probably also suffering as you are.
Run a 13-week rolling cash flow forecast. Update it every week. Assume at least some customers will pay later than promised because they will.
Accelerate cycle times.
Every process has an established cycle time that ‘settles’ into a comfortable rhythm when times are OK. When times get tougher, those that can accelerate their cycle times will win.
This is particularly the case with your cash conversion time. To speed that up, quote faster, invoice the same day, chase deposits sooner, work operational assets harder, and reduce if not eliminate rework. Get jobs finished, signed off, and billed without dead time between steps.
The lessons of John Boyd and his OODA Loop are never so relevant as in a crisis.
Protect gross margin.
Tough markets tempt owners to discount just to close the sale. That usually backfires. The better tactic is to sell on value, drop unprofitable work and reprice where you can.
Complexity creates transaction costs, which are always hard to see. Removing complexity frees up cash to be used productively.
Keep your best customers close.
Your existing customers are cheaper to retain and increase your share of their ‘wallet’ than new ones are to win.
Call them, collaborate to solve their problems, check in before they complain, and ask for referrals and testimonials.
Cut costs carefully.
Across the board cost cutting is a desperate mistake. Do not slash the parts of the business that help you sell, collect cash, or keep customers.
Cut the ‘vanity’ and nice to have costs aggressively, not the activities that generate revenue, margin, and cash.
Tighten inventory management
Stock that does not move is just dead cash.
Reduce slow-moving lines, buy smarter, Increase visibility on lead times and reorder points. Stop over-ordering to ensure ‘safety stock’. Aggressive management of cycle times in your inventory can have a dramatic impact on working capital requirements.
Pareto the pareto
Not all customers, and products deserve to survive. The Pareto rule always applies, not always as 80:20, but it is there.
Identify the customers, products and jobs that produce real margin and reliable cash. Defend those first. and progressively eliminate those that do not contribute. When you have done the first round, do it again, you will always find more that can be productively removed. You are in effect, stress testing the revenue and cost generation base of the business.
This exercise intimidates many SME’s, who tend to form emotional ties to products, customers, and distribution channels. In tough times, emotion must be set aside.
Renegotiate early.
Banks, landlords and suppliers all hate surprises. They will listen more carefully and be more accommodating when they are a part of the process of ensuring bills will be paid, even if a bit late.
Secure facilities early. Reset terms where needed. Ask for flexibility while you still look like a good risk.
Keep hustling for sales
A weak market is not a good excuse for sloppy selling.
Tighten follow-up. Improve conversion rates. Shorten the path from enquiry to proposal to close. Make it painfully easy for the right customer to buy.
Stay visible
Marketing investments are often the first savings made in any downturn. Resist the temptation, as history clearly demonstrates that those that keep investing during the tough times come out way stronger when the worm turns. Besides, when others pull their marketing, you become more visible for no extra cost.
Be aware of bargains.
Downturns create bargains. Competitors stumble. Good staff become available. Assets get cheaper. Market share can move. Cash lets you act while others freeze.
Lift your prices.
This is sure to give some the ‘wobbles’ and is always difficult, but if you have done all the above, you will be delivering real value to customers. An extra dollar added to the revenue line drops straight through the P&L onto the profit line. There is no quicker way to increase financial resilience than to lift prices while holding volume. Even if you drop a bit of volume, do the maths, and 9 times in 10 you will be better off after the price rise.
Header credit: Scott Adams and Dilbert
Jan 19, 2026 | Management
The most important to do list is not the one you try and discipline yourself to do every day as a means to organise your life, set priorities, and be more productive.
It is the one you write that lists the ‘to do’ that others owe you.
We exist in communities, co-dependencies and interdependencies abound. When all those varied business and personal networks are considered as a separate list, shared with the ‘information debtor’ your productivity will increase.
In my work as a business coach, I find myself constantly reminding people that it is necessary to chase the money owed to you. Reluctance to do so is a red flag for failure. This is an example everyone understands, but many do not embrace, as the power of the negative response when you ask for what is owed overwhelms many.
Why is it any different for any other factor in our lives?
That expected response to an email requesting information by Friday. Has it come in? why not? To what extent is the slipping of deadlines impacting on your productivity, and commitments to meet the undertakings you have made to others?
A boss of mine years ago used to keep a little notebook.
In it he would record undertakings and deadlines I agreed to in the conversations we regularly had relating to the actions and outputs of the functions I managed in the enterprise we both worked for. He never had to highlight the fact that I had agreed to something, I knew it, and I knew his little book would ensure he did not let it fall through the cracks.
It worked. You should try it.
