Aug 22, 2024 | Collaboration, Communication, Governance
Throughout history, humans have existed in small groups, tribes, and clans. We have worked together for the common good of the small tribe, and often, perhaps most often, been at odds with the tribe across the river.
British anthropologist Robin Dunbar introduced his theory that humans can maintain stable social relationships with no more than 150 people. This is a theory now so well accepted that ‘Dunbar’s number‘ has almost become a cliché.
The phrase ‘Stable Social Relationships’ has particular relevance in the age of social media platforms. How many friends do you have on Facebook, connections on LinkedIn, followers on Instagram?? For many, it is way beyond 150, often into the many hundreds, and often thousands.
How do you maintain Stable Social Relationships’ with that number of people?
Answer: you cannot.
Social media gets the blame for all sorts of things, rightly so, but it is not the fault of the platforms, it is the fault of evolution.
Our application of technology has run way ahead of our evolutionary capacity to manage it and retain the relationships that made us the most successful species ever.
It seems to me that the growth of private messaging, reversion to personalised even hand written notes, and emotional engagement of ‘Local’ things is a response to the ‘platformisation’ of our social relationships.
I think it is a trend that will continue and grow.
The power of social media platforms will slowly erode as more one to one enablers incrementally retake the ground lost. In the process, we humans will build up ‘evolutionary resistance’ to their power.
I do however see some hurdles in the way, the dark side of social media is as powerful as ever, and Dr Dunbar has little advice on that score.
Header cartoon credit. Lynch. (I have no idea where I found it)
Aug 20, 2024 | Leadership, Strategy
George Patton is reputed to have said ‘A good strategy today is far better than a perfect one tomorrow.’
This is absolutely correct. However, any strategy is only as good as its deployment. This is always best when it is clearly understood, consistently communication, and completely aligned towards the objective.
Business is all about making choices, from the c-suite to the factory floor, everyone is faced with choices. Those in the c-suite may be different to those on the floor, but they are nevertheless choices that together impact on the performance of the business.
‘I will do this, I will not do that’
While seeking rhythm and flow in a business, I also look for ‘strategic nesting’
How will the choices made at one level be understood and acted on at different levels in the business in a consistent manner, such that the outcomes do not create turbulence in the flow of activities that occurs.
The challenge of integrating ‘Flow’ into a smooth set of processes that merge at the points where they intersect is substantial. This is where the notion of ‘nesting’ comes into play.
Processes are ‘nested’ in sets of sub processes that are all ‘in synch’ and contribute to the end outcome.
Often this is called alignment, but just using the term without the further idea of ‘nesting’ misses the point. Alignment is one dimensional, nesting is multidimensional.
Effective processes contain sub processes that act in partnership creating synergy, and when done really well, compounding outcomes. Each part of the ‘nest’ is optimized, internally, and in relation to those external parts on which it depends. This enables the optimization of the whole to be compounded.
Effective processes, from the strategic development and implementation to the cleaning of the coffee machine, rely on the effective nesting of sub processes.
The implementation of strategy is always challenging. You are translating high level choices into sets of cascading targets in functional action plans with appropriate KPI’s and feedback loops for optimisation. There are multiple levels from a strategic plan to the execution of daily activities in the workplace for things to fall out of the nest.
The evolution of a ‘happy nest’ is an iterative process. It requires the input of those involved at all levels, and a leadership capable and prepared to adjust choices under new circumstances.
All the parts are moving at the same time, and they all influence each other. Iteration must be a multi-dimensional challenge, you can iterate up, down, and across functions, on the basis of feedback. The challenge is to get it all done without disturbing the flow of the processes.
Jul 10, 2024 | Innovation, Leadership
Roger Federer is the greatest tennis player I have seen in a long life of watching and playing the game. He may have been overtaken by Djokovic as the winner of the most grand slams, which seems to be the public benchmark of the GOAT, but he will remain the greatest to me.
His greatness is not just on the court, where everything seemed effortless. It extends to his demeanour and humility off the court.
In a recent commencement speech at Dartmouth College, he gave the graduates a critical piece of wisdom that applies widely to life:
“Perfection is impossible. In the 1526 singles matches I played in my career, I won almost 80% of those matches.
Now, I have a question for you.
What percentage of points do you think I won in those matches?
Only 54%.
In other words, even top-ranked tennis players win barely more than half of the points they play. When you lose every second point on average, you learn not to dwell on every shot.
You teach yourself to think, okay, I double-faulted … it’s only a point. Okay, I came to the net, then I got passed again; it’s only a point. Even a great shot, an overhead backhand smash that ends up on ESPN’s top 10 playlist. That, too, is just a point.
And here’s why I’m telling you this. When you’re playing a point, it has to be the most important thing in the world, and it is. But when it’s behind you, It’s behind you. This mindset is really crucial because it frees you to fully commit to the next point and the next point after that, with intensity, clarity, and focus’.
Those words resonated with me.
They resonated, not just because I lose way more than 50% of the points I play these days, and must accommodate that in my competitive brain, but because it applies to the way we all should live our lives.
It certainly applies to those I work with, where an obsession with the past often clouds the next move, and the one after that.
We need to understand why what we did worked out differently to the plan, and learn to adjust both on the run, and over time as we alter the mechanics and drivers of activity. Beyond that, the past is irrelevant. It is the past, unchangeable, immutable.
By contrast, what we do with the lessons of the past is crucial.
Jun 24, 2024 | AI, Change
We’re all familiar with the standard XY graph. It shows us a point on 2 dimensions.
AI does a similar thing except that it has millions, and more recently, trillions, of dimensions.
Those dimensions are defined by the words we write into the instructions, built upon the base of raw data to which the machine has access.
The output from AI is a function of the data that the particular AI tool has been ‘trained’ on and accesses to respond to the instructions given.
Every letter, word, and sentence, generated is a probability estimate given what has been said previously in the database of what the next word, sentence, paragraph, chapter, and so on, will be.
Generative pre-training of digital models goes back into the 1990’s. Usually it was just called ‘machine learning’, which plays down the ability of machines to identify patterns in data and generate further data-points that fit those patterns. The revolution came with the word ‘transformer’, the T in ChatGPT. This came from the seminal AI paper written inside Google in 2017 called ‘Attention is all you need’.
The simple way to think about a transformer, is to imagine a digital version of a neural network similar to the one that drives our brains. We make connections, based on the combination of what we see, hear, and read, with our own domain knowledge history and attitudes acting as guardrails. A machine simulates that by its access to all the data it has been ‘trained on’, and applies the instructions we give it to then assemble from the data the best answer to the question asked.
The very first paper on AI was written by Alan Turing in 1950 was entitled ‘Computing machinery and intelligence’. He speculated on the possibility of creating machines that think, introducing the concept of what is now known as the ‘Turing Test.’
The original idea that drove the development of the transformer model by Google was a desire to build a superior search capability. When that was achieved, suddenly the other capabilities became evident.
Google then started thinking about the ramifications of releasing the tool, and hesitated, while Microsoft who had been also investing heavily through OpenAI, which started as a non-profit, beat them to a release date, forcing Google to follow quickly, stumbling along the way.
Since the release of ChatGPT3 on November 20, 2022, AI has become an avalanche of tools rapidly expanding to change the way we think about work, education, and the future.
Header cartoon credit: Tom Gauld in New Scientist.
Jun 19, 2024 | Change, Governance, Leadership
Many years ago, I worked for Dairy Farmers Ltd. It was a large dairy co-operative operating in the dying days of milk regulation in NSW. The business had two divisions, reporting at EBIT. The first and biggest by a very large margin was the regulated milk business.
All milk produced in NSW at that time was by regulation vested in a statutory authority, which then ‘sold’ the milk to processors to be processed and distributed as fresh milk. It was a highly regulated and price-controlled industry from the cow to the consumers fridge.
Milk in excess of the requirements for fresh milk was termed ‘manufacturing’ milk. The farmers were paid directly by processors at a market rate.
At the time, the price paid by the diary corporation for fresh milk was roughly 2.2 times the price the co-operative paid for manufacturing milk by the second division, the Dairy Foods division that produced all dairy products beyond fresh milk.
Manufacturing milk was unregulated in any way beyond food safety.
The commercial imperative for the dairy farmers was clear, albeit not viable long term.
After 8 years of struggle, the Dairy Foods division had recovered from being a commercial basket case, one step from the corporate mortician to a significant and profitable player in the national market. The culture that supported that huge improvement was highly competitive, productivity focused, and financially disciplined. By contrast the milk division was a cost-plus business operating as a regulated monopoly, and so had become fat and lazy.
A newly arrived Managing Director decided to merge the two divisions. His reason, supported by a report by a highly paid consultant, was that the commercial culture of the dairy foods division was needed to be patched onto the milk division, facing the reality of deregulation at some point.
As a newly appointed GM of the dairy foods division after those 8 long years of struggle, I resisted this change as strongly as I knew how. I argued that culture could not be ‘copied and pasted’ from one organisation to another, even those working under a common ownership and centralised head office structure that allocated capital. It seemed to me that the much larger still regulated business would reject the completely different culture of the smaller unit, which would in turn erode the competitive culture of the dairy foods division they were trying to spread.
That is what happened, resulting in Dairy farmers becoming another sovereign corporate casualty.
- Processes that ordered, allocated and paid for milk for the regulated fresh market dominated the cash flow of the merged divisions. The Dairy Foods division cash flow processes and management became lost in the quagmire of the regulated cash flow of the much larger former milk division. Focus and discipline went out the window.
- The board of the business, was made up of farmers with 2 exceptions, the chairman and MD. The rest of the board were dairy farmers who unanimously rejected the notion of deregulation. It was clearly in their short-term financial interests to retain the existing regulated system. There was simply no formal recognition that the regulated system was an economic basket case. Privately, several of the board members did recognise that fact, but the power of the status quo prevailed formally.
- Major customers, the supermarket retailers were able to bring significant pressure onto trading terms given the previously completely separated divisions were now one. This pressure seemed to me to be a catalyst that brought forward the date of deregulation. The retailers started to bring fresh milk across the border from deregulated Victoria, and discounting in NSW in defiance of the state regulations, citing Section 92 of the Australian constitution, which bans constraints on interstate trade.
- The financial discipline beyond managing cash flow exercised by the former Dairy Foods division was lost as the reporting was merged. It was further complicated as Dairy Farmers set about ‘merging’ (Co-Operative speak for taking over) other Co-ops in NSW, QLD and SA. These co-ops were all different, but all were afflicted by lack of commercial and competitive focus on customers and consumers.
All of these point to the fact that culture is organic, and like all organic systems requires time, investment, alignment across the broad stakeholder population, and nurturing.
What should have happened but did not.
- There was no attention paid to the differing cultures that existed. Little useful thought was given to the practical challenges of merging them. The merger came via announcement, and a revision of the organisation chart. The two were simply incompatible. While a sensible review would have highlighted that fact, it was ignored.
- There was no integration plan that ranged from the strategic to the tactical and operational. Again, it was driven by the revised organisation chart, with little effort made to successfully articulate the reasons for the merger to anyone, including senior management.
- Any attempt to articulate a ‘vision’ for the merged entity was missing in action. The justification was all about the imagined financial benefits that would flow, and the risk mitigation coming from the probable deregulation of the fresh milk business at some future point. Both were reasonable expectations, but there was no thought about how to turn reasonable expectations into cash. Somehow, by some unknown osmotic process, it was supposed to just happen.
- There were no objectives for the integration that reflected the strengths of both, the holes that needed filling, and the resources necessary to achieve the restructured strategic objectives.
- There were no financial or operational objectives beyond budgets generated by spreadsheet aiming at an EBIT that was by decree, rather than by any disciplined process. The budgets of the two separate divisions were just merged, with the mythical improvement index applied.
- There was always going to be considerable resistance from both sides of the merger. Almost universally, (most certainly by me) the merger was seen as a retrograde step, ignoring the very different challenges faced by the two entities.
The great irony I see from the perspective of 30 years, is that Bega Co-operative virtually broke on the back of cheese factory expansion that had run significantly over budget, was saved by a cash injection by Dairy Farmers. Bega has since evolved into a major producer of branded packaged goods to supermarkets. Dairy Farmers has disappeared as a commercial entity.
The lesson: Cultural change is complex, messy, and potentially terminal in the absence of skilled leadership, complete transparency, and what at the time would seem to be significant over-communication.
Header cartoon credit: www.Gapingvoid.com
