Making Business Great Again or Puff the Magic Dragon?
Generative AI is, frankly, little more than a highly trained monkey genetically spliced to a parrot.
Many New Zealand and Australian companies have been beating down the doors of high-priced consulting firms to understand just how AI might benefit them.
Another well-worn path has been to the doors of company CIO’s who in many cases seem almost as confused as the rest of us. They spout technology terms like LLM (Large Language Models), Agentic AI, Natural Language Processing, Predictive Modelling and Robotics Process Automation. Most have failed to describe practical, and measurable business benefits
After reading dozens of articles and interviewing many of my most learned colleagues in the AI space I remain underwhelmed at how New Zealand businesses are moving to leverage AI to drive profit and growth.
So what makes AI Different?
To answer that question, we need to look at the two major threads of AI – Generative AI and Agentic AI.
Generative AI is delivered in tools such as Co-Pilot, Gemini and Chat GPT. Instead of us creating our content its automation capability allows us to do instant research, generate sophisticated text and formulate bold and innovative images, all in seconds. If we don’t like what we first see we just tell the AI to do the job again. Seconds later a simpler or more detailed edit is created depending on our interaction with the system.
However, as a productivity tool, Generative AI is little more than a new generation of personal assistants. In the same way that word processing replaced millions of typists and an entire typewriter industry in the late 1980s, Generative AI will replace millions of jobs where their sole value is creating the documents necessary to do business.
In the most simple of terms, if any part of your role is creating and refining documents (sales proposals, job descriptions, tender reports, legal contracts, patient health notes, meeting agendas and minutes etc) then this part of your role will not exist within three to five years.
Scary as this may sound to some of us, including me because I like writing posts like this, Generative AI is not going to bring the world of business to an end any more than the PC and Smartphone has made our lives more tolerable and our spare time more available.
Generative AI is, frankly little more than a highly trained monkey genetically spliced to a parrot. The model is limited by its inability to learn, especially in the context of your unique business data. It cannot, for example, analyse the trends in the New Zealand electricity market and predict pricing movements based on the legal, commercial, production and consumption factors available.
Agentic AI models, however, are designed specifically for this type of reasoning.
Part Two Agentic AI. Should we welcome our new robot overlords or pull the plug now?
We have all watched with varying degrees of horror and sadness as first Auckland and then, a week later, the entire North Island suffered from catastrophic weather events and their aftermaths.
I can’t help but think we were warned about this over two decades ago and that these events are a shocking example of climate change writ large, with more to come.
‘Climate change, and specifically global warming, is not new. Swedish scientist Svante Arrhenius posited that burning fossil fuels would add carbon dioxide to the atmosphere resulting in a ‘greenhouse effect’ (anthropogenic climate change) in an essay in 1896. ‘Global warming’ came into the public domain in a paper by Wallace Broecker published in the magazine Science in 1975. Source – John Walton Feb 18 2023
Critical infrastructure left wanting
My strategic hat tells me that this is a crisis for individuals and businesses that will rewrite the way we consider the basics such as reliability of power, water, food, sewerage systems, stormwater and fuel supplies.
The impact on communications is also significant. Our mobile phone and data networks rely on power to stay up. Battery backups are designed to maintain mobile transmission towers for a few hours until a service crew can arrive – not to keep systems up for days if not weeks without power.
This starts with our national grid and the local lines distribution network that delivers power directly to our homes and businesses. All these need to be designed and upgraded for greater resilience and higher availability. The issue here is that this costs a lot of money, time and resources.
For example, imagine that you are a lines company operator in a flood or storm damaged area like Hawke’s Bay or Northland. Your regional population is, say, thirty thousand people and you are faced with a bill of $100 million dollars to restore, repair and then bring your power systems up to the regulated standards of reliability and availability.
The cost to do this is $3,333 per head of population or roughly $10,000 per household.
Next, you are a water company in the same region whose filtration, pump and pipe infrastructure is also in poor shape. Water infrastructure funding is not my bulwark but it’s fair to say that $50 million would go some way to solving the problem in this example.
That’s another $1,666 per head or roughly $5,000 per household.
Crisis will rewrite the future
The problem will only get worse over time if the climate scientists and weather forecasters are to be believed. Just fixing the damage today might not solve the problem tomorrow.
Any city or town in New Zealand could find themselves staring down the barrel of rates increases, electricity lines charge increases and in many cases increases in water rates at a time where employment and economic growth are by no means guaranteed.
In the meantime the power goes out, the drains leak and our drinking water quality is questionable, while all the time our elected politicians local and central fiddle while Rome drowns.
Cyclone Gabriel is conservatively estimated to have cost the country $13 billion in repair costs alone.
If, as I believe, we can expect more and worsening climate destruction, we will have to build in some resilience to our infrastructure networks – and fast.
*Part two of this series addresses the after effects of Cyclone Gabrielle and will look at the options for more available and reliable power for businesses and the rural economy.
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I began my journey to a sustainable future envisaging a world of tree-hugging, lentil soup and freedom from reporting fuss. Little did I know that the bureaucrats had got in ahead of me and set up a rules-based order that made tax returns look like a walk to the dairy.
It turns out that the United Nations, Ministry for the Environment, MBIE and agencies like Toitū, the Green Building Council and NABERS, all have stringent requirements for the benchmarking, measurement, auditing and verification of greenhouse gas emissions, energy efficiency and carbon footprint.
As I first looked at the reporting requirements it was quite off-putting. Would businesses really put up with this level of bureaucracy? How many private companies would be willing to divulge what could be very sensitive competitive information? Just where would businesses find the resources to report with the level of accuracy demanded?
Paperwork, compliance & more compliance…
And last month the compliance demands got even more stringent.
Any company listed on the NZ Stock Exchange and with a market capitalisation of over $60 million will be required to report on all its direct emissions with the regime commencing on 1st January next year, 2023.
To be specific, if your financial year ends on 31st March 2023, you will be expected to be able to verifiably report on a whole year’s carbon emissions, risks and remediation in full as of the year commencing 1st April 2023 to the 31st March 2024. If your year ends on the 30th of June, then you have a little more time to prepare, with reporting commencing on the 1st July, 2023. Annual shareholder reports just took on a whole new sustainability focus.
If your company is privately held or has a market cap of less than $60 million, this is no time to breathe easy. The new $60 million number is down from $500 million previously. Expect the government to widen its orbit once it has systems in place to demand more from the average medium scale business.
Before readers start crying, “Government overreach and political interference gone mad,” this new government mandate is only one of a series of sustainability challenges facing businesses.
It’s not just about the mandatory GHG and Carbon reporting for bodies like Toitū. It’s about shareholders and stock exchange reports, board reports, executive updates, feedback to staff and stakeholders.
Sustainability – the ‘Data Monster?’
It’s easy to think of sustainability as a data monster with no end to its demands on your businesses time and skills and with little benefit to show for it.
But then if you ask business influencers and stakeholders about their motivation for taking a sustainable position, it turns out there are many different reasons people choose a path to sustainability:
Government mandated reporting
Cost reduction
Saving money
Being more efficient
Supplier and customer demands
Recruitment and retention of the new generation of environmentally aware talent
Shareholder owners themselves who have defined a policy that reflects their own commitment to a sustainable future
These intended uses help form the policy and action statement that an organisation will formulate and highlight in communication with regulatory bodies and key stakeholders.
They also define the priorities which drive choices and resource allocation.
Finally, they define the type and depth of reporting that an organisation will commit to delivering in the years and possibly decades ahead.
As Peter Druker, founding father of modern business management so succinctly put it, “If you can’t measure it you can’t manage it.”
Unfortunately, ‘screw the paperwork’ just isn’t going to cut it anymore.
Part Three of Planet Spratt’s Journey to Sustainability
The tragedy of the commons is an economic problem in which every individual has an incentive to consume a resource, but at the expense of every other individual—with no way to exclude anyone from consuming. Initially it was formulated by asking what would happen if every shepherd, acting in their own self-interest, allowed their flock to graze on the common field. If everybody does act in their apparent own best interest, it results in harmful over-consumption (all the grass is eaten, to the detriment of everyone)
The problem can also result in under investment (since who is going to pay to plant new seed?), and ultimately total depletion of the resource. As the demand for the resource overwhelms the supply, every individual who consumes an additional unit directly harms others—and themselves too—who can no longer enjoy the benefits. Generally, the resource of interest is easily available to all individuals without barriers (i.e. the “commons”). *
*The Investopedia Team – March 2022
As a child I spent my hazy summers at a family bach overlooking a local farmer’s property. His property commanded sole access to a tidal beach and we could only go down to swim, sail and play with his permission. It was permission he gladly granted – it was the asking that was the important thing.
Over the years we got to know this “old man” and he would share information, “secrets” he called them, about the beach and its bounty. First there was the cockle bed well past the low tide mark but easily accessible for adventurous nine-year-olds prepared to get their bottoms wet. We would walk out at low tide, shuffle our feet around in the sand and then fill our little buckets with shellfish. We only took enough for dinner (cockle fritters with a touch of sand) and never wasted them for fear of a stern telling off by mum and dad or the farmer.
Later he showed us how to set a net for the snapper that schooled into the Bay at high tide during their early summer migration. The snapper fed on the cockles and kina, fattening up before moving up into the shallows to spawn among the mangroves in the upper harbour.
When we were a little older he showed us how to live bait off the rocks for the highly territorial kingfish who feasted on the Sprats, Mackerels and baby snapper that returned to our bay in late summer after spawning.
Then came the changes. The farmer died and no one survived him who was willing to run the farm or pay the rates. The local council stepped in to “protect the asset” and turned it into a park for use by all. We watched with interest as roads were built, footpaths laid, public toilets and bus stops installed. Then the people came. First in ones and twos. Then in their dozens. By the height of summer hundreds and sometimes thousands descended onto our once private slice of heaven.
With them came cockle hunters. We didn’t mind the kids and parents with their buckets and squeals of delight. It was the “sack people” who walked up and down the beach in human chains descending on the cockle beds when they discovered them and then filling huge sacks with their prize. They came every weekend taking and taking and taking until even our “secret” bed had been found and pillaged.
After a couple of seasons the cockle beds were almost totally destroyed. The sack people still came, but only very occasionally and for lean pickings. Every sack they took reduced the shellfish stocks even further. The families who took home a hard won bucket of cockles don’t really bother with cockling too much these days. An icecream from the dairy up the road is an easier prize.
The snapper don’t come round the headland much these days either, there isn’t sufficient left for them to eat. The kingfish still hunt mackerels and sprats around the rocks, but their numbers are tiny compared to before and none of them are the 75cm legal size even if you were lucky enough to catch one.
People still swim and laugh and play in the shallows. What they don’t know is that the sack people have denied them the pleasure and privilege of nature’s bounty. Their children will never understand the perfect complexity that once existed here and at many other beaches all up the Coast.
It’s called The Tragedy of the Commons and applies to so many of our supposedly limitless resources. The giant North Island kauri forests are gone, pillaged for export and local housing by the saw millers and gum diggers in the early days of settlement. Before them the Moas were extinguished by fire, weaponry and the fierce folk who wielded them both.
Now it is the streams, lakes and oceans that are being polluted, pillaged and poisoned by a few to their own benefit and to all of society’s great loss. It is an invisible plague that doesn’t even have the courtesy to call “bring out your dead” when passing by in their mega machines.
The Tragedy of the Commons problem that William Forster wrote about nearly two hundred years ago tells us a lot – mainly about ourselves.
One issue is the way we humans so often rationalise our behaviour with cliches like:
“I have my rights you can’t tell me what to do”
“If I don’t take it someone else will”
“There is plenty to go around I am only taking my fair share”
Another issue is that the application of quotas, catch limits, water rights and pollution controls require three main things:
Government Intervention
Willingness by both companies and individuals to pay for the cost of the resources that they consume
A means of measuring and controlling resource exploitation
The true cost of unfettered resource exploitation has occupied my mind recently. I made a trip to Nelson and saw the scallop seeding plant down near the harbour.
The scallop fisheries in Tasman and Golden Bays were fished to extinction back in the 1970’s and an attempt has been made to restore this lost treasure by breeding fledgling scallops in huge tanks and then collecting their “seeds” and distributing them across a range of sites that previously contained large quantities of these wonderful shellfish.
Nature’s resources destroyed forever
This decade-long attempt has been a failure. Dredging was the preferred (and cheapest) way of taking scallops commercially and privately fifty years ago. This method destroyed the sea grasses that covered the sandy bottom. These seemingly unimportant grasses were in fact the source of protection for growing scallops. The sandy bottom has been left a desolated desert and the scallops are gone, forever it seems, despite science’s best efforts to heal the damage done two generations ago.
What makes this, and so many other examples, so important is that there are still many people in New Zealand and around the world who treat our common resources as unlimited and consider the “most economically efficient” method of extraction as being the right way to do things. It’s not just businesses who act this way. Individuals like the sack people will destroy a resource seemingly without a second thought for the consequences.
Many of my generation have grandchildren now. Like me they have been to the beaches of our childhoods and found them depleted and barren – despite the pretty trees, the shiny concrete footpaths and solar powered public toilets.
We Baby Boomers too have seen that we have a role in changing the world around us. We are powerful and rich (so my children tell me) but we are not utterly immune to the pain of the loss of our natural treasures.
My colleagues and I are analysts by training and profession. Our response to sustainability is actively measuring our business’s carbon footprint now. Things like fuel, travel, lighting, heating and freight are all counted. We offset these emissions by paying for the carbon we consume either directly via renewable energy certificates (REC’s) or indirectly via government mandated carbon credits.
We are also doing this same analysis for many of our clients who are recognising that their customers want real answers to the problem of climate change and environmental destruction.
Our customers also see younger talent making employment choices on the basis of a firm’s social responsibility policies.
By measuring our usage, limiting our consumption and paying a fair price for our share of the planet’s prolific treasures there may be light at the end of the tunnel.
Perhaps one day my grandchildren’s grandchildren will see this time as a turning point in history as they fill their tiny buckets with just enough shellfish for a meal of cockle fritters with a touch of sand.
“If a thousand years were to pass in a second what would be left of us?”
The Dig – Movie
I read somewhere that the best time to plant a tree is twenty years ago. The next best time is today. Autumn is coming and with the rains will come the opportunity to begin planting out the stream on my property that is so in need of a kind and considerate lover.
It is only five weeks but my efforts to bring my stream back to life have been an inspiration. Not in a, “Gee Dave, you are a great green guy,” kind of way, but with the people I have already met and talked to along the way.
Jim
Jim used to live on my land along with all the land around it. He wasn’t an easy conversationalist, preferring his own company unless it was down at the golf club over a few beers. He was, though, inspiring when we moved out from town eleven years ago.
Inspiring because he always helped but never interfered. Inspiring because he seemed capable of turning his hand to any task.
Most of all he was inspiring because he planted, one by one, the trees, bushes and shrubs that became the beautiful wetland and arboretum (a botanical garden dedicated to trees) that borders my place. My stream, when it’s not bone dry, flows into the wetland on Jim’s arboretum. From there it flows down and on to the Manukau Harbour.
Eels, conversely make their way back up from some mysterious place in the Pacific, into the Manukau and eventually find a safe place in amongst the wetland reeds. If I succeed in making it a safer place, they will continue their journey up my stream as they have done in the past.
Each morning I have my tea and toast on the front deck and look across and up at the established kahikateas and ancient totara that inspired him to protect by surrounding them with plantings from a nursery that was closing down and saplings from surrounding farms.
All I see is how many different colours of green there are. All I hear are the hundreds of birds he protected by sustained pest control programmes.
One time the neighbour clear felled a patch of trees on the land nearby. Possums, destroyers of forests and bush and predators to nesting birdlife, fled across to my place and into Jim’s arboretum. We silently went into competition, killing sixty of them in a two week period. Maybe the neighbour did us a favour – he never controlled pests on his land. Possums have never been a major problem since.
“We sure sorted them,” Jim said over a beer one evening.
‘WE’. Jim never said ‘we’. He was far too stoic to say that.
Jim left without really saying goodbye last year. He never liked a fuss. He sold the property and arboretum to Gary. Rumour has it that developers were eyeing up the land and that Jim rejected their offers despite pressure from the agent.
Gary
Gary had been looking for a spot to build a place for a while. He went over Karaka way and all he saw was bare blocks. “By the time I planted it out and the trees grew I’d be dead.”
He had a look at the arboretum and the land behind it that he could build on . He fell in love and made an offer which Jim rejected as ‘too low.’
“How much?”
“Ask the agent.”
“Too much,” said the agent who didn’t know the value of trees except as firewood.
“How much?” asked Gary.
The agent told him and Gary said yes. It was cheaper than the bare blocks in Karaka and he liked the view.
I spoke to Gary about the stream and my plans for it the other day. He lit up and offered me cuttings from the giant flaxes in the wetland.
“I’ll give you a hand planting them if you like. We can have a beer on the porch after and share the view.” ‘WE’. He said we. He never says ‘we’ except to his mates.
Ken
Ken is a horticulturist, gardener and all round ball of muscle and energy that makes this skinny old guy feel more than a little inadequate when he arrives with his chainsaw, weed wacker and hedge trimmer and smashes through work in a day that would take me a week if my back held out.
We have known each other for a while now and when I showed him my stream project I wasn’t sure if he would be as overawed by the enormity of the task as I am prone to be. He was engaged – no excited about the plan. I felt energised just being around him.
“We could clear five metres back from the stream to make it a bit easier to sort out the planting and fencing plan,” he offered after a bit of thought.
WE. He never says ‘we’ – he is too polite to say that.
A day later the stream bank was cleared, the old man’s beard cut back with the contempt this native forest smothering vine deserves and all the existing native shrubs were upright and free of weeds. Ken was on fire and so was I.
Samuel
Samuel minds my sheep for me. These days there are only six older ewes, all a bit fat from over feeding, beautiful and a bit posh. They are the product of a breeding programme that ended when I tired of lambs bleating all day and night because they were separated from their mum by a seven-strand fence and a wide-open gate.
Samuel treats them with a gentle hand. He even whispers to them– mimicking their low bleating and soothing them when he and his dogs work with them. I’ve never seen them cut, not even a nick, when he shears them. That is more than I can say for the ‘expert’ shearer I hired a decade ago whose heavy-handed brutality saw me shoo him off my property.
“Bloody townie,” he called back, not amused that I had held him responsible for the blood stains on my shell shocked animals. He didn’t hear my reply as he left – neither will you see it in print. I am far too polite for that.
Samuel is also a fencer in the off season. We walked the stream and I shared my hippy vision of plants, fish, frogs and eels. “We can fence off this spring,” he said. “The frogs and fish can breed in there away from the kingfishers. Set a couple of rat and stoat traps and it’ll be ideal.” ‘WE’. He never says ‘we’ – he’s far too shy and solitary for that
Please feel free to contact me, Planet Spratt, at [email protected] if you have any feedback, ideas or suggestions
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