ZYDA RYLANDS *
WHERE IS SHE? THE DEARTH OF TOP WOMEN EXECS P.26
*
LIZ WISEMAN THE POWER OF THE MULTIPLIER LEADER P.22 MUHAMMADU BUHARI CAN NIGERIA’S NEW PRESIDENT DELIVER? P.66
R39.95 incl vat
Issue 15 • First Quarter, 2016
RETAIL MAGIC AT WOOLWORTHS SA. P.30
It is one thing to imagine a better world. It’s another to deliver it.
aecom.com
contents Issue 15 • Fourth Quarter, 2016
Issue 15 • Firtst Quarter, 2016
features
P.22 ZYDA RYLANDS
Issue 15
WHERE IS SHE? THE DEARTH OF TOP WOMEN EXECS P.26
*
LIZ WISEMAN THE POWER OF THE MULTIPLIER LEADER P.22
Author, speaker and trainer Liz Wiseman tells Chris Gibbons about the power of the Multiplier Leader..
MUHAMMADU BUHARI CAN NIGERIA’S NEW PRESIDENT DELIVER? P.66
R39.95 incl vat
• First Quarter, 2016
RETAIL MAGIC AT WOOLWORTHS SA. P.30
*
MULTIPLY FOR SUCCESS
ON THE COVER Photo: Morne van Zyl
P.26
WHERE IS SHE?
Cara Bouwer investigates why there are so few female CEOs in the JSE’s Top 40 companies.
P.30
TAKE THE SHOT
GORDON INSTITUTE OF BUSINESS SCIENCE
Zyda Rylands, Woolworths South Africa new CEO, talks to Cara Bouwer about her career and leadership philosophy.
ACUMEN IS ALSO AVAILABLE AS AN APP for your iPad or iPhone in the Apple App Store, as well as in the GooglePlay store for your Android device.
P.66
NOT BUSINESS AS USUAL
West Africa expert Dianna Games puts the spotlight on new Nigerian president Buhari and asks if he can deliver?
P.26
et cetera
P.02 Contents P.05 Contributors P.08 From the Editor P.10 Network
opinion
P.14 Gender, Diversity
and Resilience
p.16
Trudi Makhaya argues that we need to think hard about the future, difficult though that may be.
GIBS Dean Prof. Nicola Kleyn comments.
The South Africa of Tomorrow
p.17 Back to the Streets Dan Moyane says recent protests remind him of Soweto in 1976. p.20 Africa Horizontal Again Royal Africa Society director Richard Dowden laments Africa's lost opportunities.
South Africa
p.34 Setting Up a Private
Equity Fund
SAVCA CEO Erika van der Merwe explains the basic steps.
p.38 Job Creation the Key to
Reducing Inequality
Thomas Piketty is dead wrong when it comes to jobs and poverty, says James van den Heever.
p.42 The Business of Printmaking Chris Gibbons explores why prints are different from other forms of visual art.
P.70
P.53
p.48 Patently Lagging Science writer Sarah Wild explains why new legislation might well be hindering R&D.
Back to Black
p.51
Cara Bouwer examines whether the Business Rescue process is achieving its intended goals.
general management
p80 Now Hiring – But Differently Dion Chang explains why your fit with a company is more important than your qualifications.
renew
p.82 Castilian Heat & p.83 Catalan Cool Globetrotter Caroline Hurry goes to
Segovia and Barcelona.
p.53 Win Back the Trust Chris Gibbons investigates what Volkswagen has to do in the wake of the emissions cheating scandal.
p.84 The Finer Things Acumen's fashion expert Cheska Stark reveals her list of must-haves for autumn.
p.58 Bashing Bias GIBS faculty Gert Scholz outlines four ways to make better decisions.
p.86 Forward Motion A new 27.5 MTB from Giant and Volvo's stunning new XC90.
p.62 Attrition vs. the Big Bang Prof. Nick Binedell wonders about the merits of two different kinds of strategy.
p.88 Techno Aki Anastasiou visits the world's biggest consumer gadgets show in Las Vegas.
dynamic markets
p.64 Fair Winds for Climate Change Victor Kgomoeswana attends COP 21 in Paris and sees history being made. p.70 Doing Business In... Chengdu Kate Whitehead explores one of China's fastest growing and most interesting cities for business.
p.90 Books Chris Gibbons reads about working in silos, coaching, negotiating and one of Africa's youngest billionaires. p.92 Classic Investing Prof. Adrian Saville explains the importance of diversification. p.93 Alternative Investing Rare cameras as investments? Paul Perton gives us the picture.
p74 Top Eight Things to See and Do
in Chengdu
p.94 Wine Oenophile John Maytham spots a winning blend from Wellington.
And while you're in Chengdu, Kate Whitehead gives her recommendations.
p.95 Ray Phiri's Unfinished Story Victor Dlamini pays tribute to Ray Phiri.
entrepreneurship
p76 The Sultans of Swimsuit Sean Christie charts the continuing success of Netsport Media.
looking backwards
p.96 Caveat Emptor Sam Cowen goes online to find reviews for the most unusual services.
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contributors
DION CHANG is an
5
VICTOR DLAMINI
innovator, creative thinker and visionary. He is a sought-after trend analyst and, while his feet remain firmly planted on African soil, he uses a global perspective to source new ideas, gauge the zeitgeist and identify cutting-edge trends. He contributes to various print publications and online portals as a freelance journalist and social commentator.
is a writer, columnist, communicator and portrait photographer with a deep interest in social issues. He collects art and music, especially jazz. He graduated cum laude in English at the University of Natal in Pietermaritzburg.
RICHARD DOWDEN is the director of the Royal African Society and a former Africa editor of The Economist and Independent. He is also author of the bestselling Africa: Altered States, Ordinary Miracles and has been writing about the continent since his first visit in 1971.
TRUDI MAKHAYA is
CEO of Makhaya Advisory, an economic and competition policy consultancy. She also writes regularly for Business Day, was previously Deputy Competition Commissioner and a Rhodes Scholar at Oxford where she earned an MBA and a Master’s degree in development economics.
DEPT LABOUR AD
6
contributors
DAN MOYANE is a
seasoned broadcaster with 35 years of experience under his belt, having worked as a news reporter, editor and presenter. His broadcasting credentials include Radio Mozambique’s English Service, BBC, Talk Radio 702, SABC and eNCA. Currently he anchors Morning News Today on eNCA on weekdays from 6 to 9am. He has been responsible for corporate communication and corporate social investment at MMI Holdings since 2009.
lectured and taught widely in both South Africa and around the world, and has received the Excellence in Teaching Award at GIBS on nine occasions since 2007, and in 2012 was nominated for the Economist Intelligance Unit’s Business Professor of the Year Award. While completing his doctorate in economics, he formed an investment vehicle which became the forerunner to the investment business Cannon Asset Managers, now part of the Peregrine/ Citadel stable.
editor Chris Gibbons Gibbonsc@gibs.co.za managing editor Zenzile Hlongwane HlongwaneZ@gibs.co.za cover photography Morne van Zyl layout and production Contact Media and Communications (Pty) Ltd designer Quinten Tolken proofreader Angie Snyman publisher Sean Press Pressman@contactmedia.co.za Contact Media and Communications (Pty) Ltd 011 789 6339
GERT SCHOLZ is a GIBS
advertising sales Damian Murphy Damian@contactmedia.co.za 082 888 1137
faculty and class guest speaker, co-developer of an MBA elective and external examiner. His expertise is in decision-making, negotiation and influence. His book The Keys to Persuasion is prescribed reading for a GIBS elective course.
contributors Aki Anastasiou Prof. Nick Binedell Cara Bouwer Dion Chang Sean Christie Sam Cowen Victor Dlamini Richard Dowden Dianna Games Caroline Hurry Victor Kgomoeswana Prof. Nicola Kleyn Trudi Makhaya Jacques Marais John Maytham Dan Moyane Paul Perton Prof. Adrian Saville Gert Scholz Stephen Smith Cheska Starck James van den Heever Erika van der Merwe Kate Whitehead Sarah Wild marketing director Howard Fox Foxh@gibs.co.za contact Acumen 26 Melville Road, Illovo, Johannesburg P O Box 787602, Sandton, South Africa, 2146 011 771 4000 Acumen@gibs.co.za
VICTOR KGOMOESWANA is
GORDON INSTITUTE OF BUSINESS SCIENCE
author of Africa is Open for Business; anchor of Africa Business News – a weekly programme on CNBC Africa and anchor of PowerHour, Monday to Thursday, on PowerFM.
Brought to you by:
CARA BOUWER is a freelance
PROF ADRIAN SAVILLE is Professor of
Economics and Competitive Strategy at GIBS, and Chief Strategist at Citadel. He has
journalist and editor. She’s been published in a variety of local titles including Business Day, Private Life, Destiny and Sawubona. She cut her teeth at Penta Publications in the early 1990s before moving on to Business Day where she made history by becoming the newspaper’s youngest sports editor and the first woman to hold this title on a national daily in South Africa. She later became the paper’s chief subeditor.
Disclaimer: Acumen is the official publication of the University of Pretoria’s Gordon Institute of Business Science (GIBS). All material is strictly copyright and all rights are reserved. No portion of this magazine may be reproduced externally, wholly or in part, in any form without the written consent of GIBS. The views and opinions expressed by the contributors to this publication are not necessarily the views and opinions of the publishers, GIBS or its associates. While every effort has been taken to ensure the completeness or accuracy of the published information, errors and omissions may occur. The publishers, GIBS and its associates cannot accept responsibility for any loss, damage or inconvenience that may arise from the unauthorised use of this publication.
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8
editor’s note
FROM THE EDITOR Words Chris Gibbons
Most managers understand that business is cyclical. Very few, however, are able to use the cycle to their advantage. Or if you prefer, sunshine almost always follows rain and vice versa. So have you fixed that leaky roof or prepared your garden properly?
GORDON INSTITUTE OF BUSINESS SCIENCE
Right now, South Africa and much of the rest of the world remain in a tight spot. In our case, the rand dropped nearly 35% against the dollar last year, the JSE is lacklustre, some government decisions remain incomprehensible and many parts of the country have been racked by drought. The storm clouds seem to have been in place for a very long time indeed, and we have no way of knowing when the skies will clear, only that because of the cyclical nature of things, we will find ourselves and our companies better off at some point in the hopefully not-toodistant future. Under such circumstances, you have two tasks. The obvious one is simply to ensure that your company survives with as little storm damage as possible. Less obvious, however, is the second, which is to use the tough times to go over every nook and cranny in the business and prepare it for when the cycle swings up again. Talk to your customers, play ‘undercover boss’, have deep and meaningful conversations with key staff members across the organisation (as opposed to meaningless performance reviews!) and consider every aspect of your operations and supply chain in great detail. Think of this process as a form of fitness training for the company. It has to be done
now, because when the cycle turns – as it will – you won’t have time to catch up. No athlete trains for a race after the starting gun has gone. When the order flow increases, you won’t have time or space to think about how to handle it. Part of this process should also involve deep thought about key team members, and where they’re heading. We live and work in South Africa, so employment equity must be high on your list, but just as important, if not more so, is the gender question: how many women do you have in senior positions and how many are in the pipeline with a more-than-reasonable chance of making it all the way to the C-suite? The evidence is very clear: companies with higher numbers of women at the very top, including main board directors, are simply more profitable. On the other hand, while at mid-management level men and women are represented more or less evenly, by the time we examine the board and the top executive team, the number of females drops to a mere 5%. If you believe – as you should – that you have a duty to your shareholders to maximise profitability, then part of that duty has to involve employing more and more women at higher and higher levels in the firm.
We examine this issue in more depth in this edition of Acumen and it’s why our Cover Story features an inspiration called Zyda Rylands, who was recently appointed CEO of Woolworths South Africa. After a hugely successful spell as head of food at Woolworths, her appointment was one of the most senior for a female in recent times in this country. But I would urge you, as you read, to pay particular attention to the Dean’s Note, from Professor Nicola Kleyn. She makes the critical observation that it’s not about employing people to tick boxes or fill numerical quotas. It is very much about the kind of people you employ, what they bring in terms of diversity and exactly how that diversity contributes to your organisation’s resilience. That requires more very intense thought, observation and introspection and the bottom of the business cycle is exactly the right moment to start.
.
MANAGEMENT EXCELLENCE: GENERAL MANAGEMENT PROGRAMMES
DAYS
DATES
PRICE (ZAR)
GLOBAL EXECUTIVE DEVELOPMENT PROGRAMME (GEDP)
26 DAYS
JUL – OCT*
225 500
GENERAL MANAGEMENT PROGRAMME (GMP)
14 DAYS
APR – OCT
105 000
GENERAL MANAGEMENT FOR RESULTS PROGRAMME
4 DAYS
23 – 25 MAY & 2 AUG
22 260
LEADERSHIP ACCELERATION PROGRAMME
8 DAYS
20 SEP – 1 DEC
54 450
MANAGING MANAGERS FOR RESULTS
4 DAYS
4 – 6 APR & 1 JUN
19 610
MANAGING FOR RESULTS: ACHIEVING RESULTS THROUGH OTHERS
3.5 DAYS
19 – 21 APR & 8 JUN
15 200
THE NEXT MANAGER: PREPARING TO MANAGE
3 DAYS
16 – 18 FEB
12 700
BOARD AND DIRECTOR DEVELOPMENT
DAYS
DATES
PRICE (ZAR)
BOARD LEADERSHIP CORE PROGRAMME
3 DAYS
1 – 3 MAR / 11 – 13 OCT
21 000
BANKING BOARD LEADERSHIP PROGRAMME
2 DAYS
5 – 6 APR
14 000
BUILDING BETTER BOARDS
2 DAYS
28 – 29 SEP
14 000
STRATEGY
DAYS
DATES
PRICE (ZAR)
SCENARIO PLANNING AND STRATEGIC THINKING
3 DAYS
23 – 25 MAY / 6 – 8 SEP
16 590
CUSTOMER CENTRIC STRATEGY: STRATEGY DESIGN AND EXECUTION
2 DAYS
1 – 2 JUN / 2 – 3 NOV
14 175
BUSINESS STRATEGY ESSENTIALS
2 DAYS
5 – 6 MAY / 10 – 11 NOV
10 300
MASTERING STRATEGY DESIGN
7 EVE + 1 DAY
4, 8, 11, 15, 18, 22, 25 & 29 AUG
18 500
EFFECTIVE STRATEGY EXECUTION
2 DAYS
25 – 26 JUL
14 175
LEADING ORGANISATIONAL STRATEGY
2 DAYS
22 – 23 NOV
13 750
STRATEGIC MERGERS & AQUISITIONS
2 DAYS
23 – 24 AUG
14 175
WINNING STRATEGIES IN DISRUPTIVE TIMES
2 DAYS
10 – 11 MAR
14 800
DYNAMIC MARKET SERIES
DAYS
DATES
PRICE (ZAR)
BUSINESS OF AFRICA
8 DAYS
1 – 9 JUL
72 975
COMPETING IN THE AFRICAN MARKET: MAURITIUS
5 DAYS
10 – 14 APR
33 600
LEADERSHIP
DAYS
DATES
PRICE (ZAR)
STEERING ORGANISATIONAL CHANGE
2 DAYS
JUN*
14 175
LEADING AND COACHING FOR SUPERIOR RESULTS
3 DAYS
13 – 14 JUL & 31 AUG
15 645
LEADER AS MENTOR
3 DAYS
11 – 12 MAY & 28 JUN
13 500
BUSINESS COACHING PROGRAMME: BECOME AN ICF ACCREDITED COACH
6 DAYS
MAR – MAY / JUL – AUG / OCT – NOV
41 475
WOMEN AS LEADERS
3 DAYS
4 – 6 JUL
12 500
MARKETING AND SALES
DAYS
DATES
PRICE (ZAR)
MARKETING FOR MANAGERS**
2 DAYS
3 – 4 AUG
14 175
DESIGNING YOUR KEY ACCOUNT MANAGEMENT PLAN
2 DAYS
MAY*
16 275
DRIVING SALES FORCE PERFORMANCE
2 DAYS
6 – 7 APR / 12 – 13 OCT
16 500
SERVICES MARKETING
1 DAY
18 OCT
6 000
FINANCE
DAYS
DATES
PRICE (ZAR)
STRATEGIC FINANCE AND VALUE CREATION
2 DAYS
15 – 16 MAR
14 595
FINANCIAL MODELLING
2.5 DAYS
20 – 22 APR / 14 – 16 SEP
14 595
FINANCIAL MODELLING IN CORPORATE ACQUISITION STRATEGIES
2 DAYS
15 800
FINANCE FOR NON-FINANCIAL MANAGERS**
4 DAYS
1 – 2 NOV 22 – 25 FEB / 16 – 19 MAY / 27 – 30 JUN / 26 – 29 SEP / 31 OCT – 3 NOV
16 695
INNOVATION
DAYS
DATES
PRICE (ZAR)
THE INNOVATION ARCHITECT
3 DAYS
20 – 22 SEP
16 500
DIGITAL DISRUPTION & BUILDING THE INNOVATIVE ENTERPRISE
2 DAYS
JUN*
16 500
PERSONAL AND ORGANISATIONAL EFFECTIVENESS
DAYS
DATES
PRICE (ZAR)
THE EXPERT NEGOTIATOR
3.5 DAYS
16 – 19 FEB / 7 – 10 JUN / 8 – 11 NOV
17 950
DRIVING EMPLOYEE PERFORMANCE**
2 DAYS
JUN*
10 500
STRATEGIC PROJECT MANAGEMENT
2 DAYS
24 – 25 MAY
11 025
PROJECT MANAGEMENT FOR NON-PROJECT MANAGERS**
2 DAYS
30 – 31 MAR / 16 – 17 NOV
10 335
NEUROSCIENCE AND DECISION MAKING
2 DAYS
19 – 20 MAY
16 500
PRODUCTIVITY AND EFFICIENCY ANALYSIS FOR MANAGERS
3 DAYS
MAY*
18 900
10
network
NETWORK Words Acumen Contributors
Our regular look at GIBS’ events and guests.
GIBS FORESIGHT 2016
This year promises to be another turbulent one for South Africa, according to the panel of experts representing business, civil society and academia which gathered at the School in December for the annual GIBS Foresight. There was also a unanimous view that action would be needed to pull South Africa out of its current malaise. On the proposed national minimum wage: “It is key for business to be competitive and sustainable. There is no point in regulating it out of existence.” – Kuseni Dlamini, Chairman, Massmart.
Government spending and debt has hit a ceiling. Now government has to demonstrate that it has the credibility to sustain social and economic stability.” – Trudi Makhaya, CEO, Makhaya Advisory & Acumen columnist.
“We are going to have to work hard for the kind of country that we want. We can get through this, but we have to do better than we are at present.” – GIBS Professor of Strategy & Leadership Nick Binedell
GORDON INSTITUTE OF BUSINESS SCIENCE
“Entrepreneurs are able to act quickly and solve South Africa’s problems, rather than waiting for others to do it.” – Stacey Brewer, co-founder of Spark Schools.
“We live in a reality where being intelligent is just not good enough if you are poor.” – Shaeera Kalla, President, Wits SRC during the #FeesMustFall protests.
“We are approaching what will likely be the most heavily contested election in post-apartheid South Africa. [On the Constitutional Court decision to overturn the Tlokwe Municipal by-elections] The IEC has stumbled very badly. There are not enough institutions that hold South Africa up and we are rapidly reaching a tipping point.” – David Lewis, Executive Director, Corruption Watch.
network
11
GIBS HOSTS MAJOR HEALTH CONFERENCE
Several of the world’s leading business schools and universities came together at GIBS in November 2015 to host a major healthcare conference. Working in conjunction with GIBS were MIT, Georgia Tech, Northeastern University and INSEAD with a programme dedicated to Health and Humanitarian Logistics in the wake of the Ebola crisis in West Africa earlier in the year. Keynote speaker was Girish Sinha, Director of Mission Support for the United Nations Interim Force in Lebanon (UNIFL), former Mission Support for United Nations Mission on Ebola Emergency Response (UNMEER).
Girish Sinha, Director of Mission Support for the United Nations Interim Force in Lebanon (UNIFL)
GIBS RETAINS TOP SPOT IN AFRICA FOR ITS EXECUTIVE MBA PROGRAMME
GIBS has once again taken top honours among South African and African business schools in the latest UK Financial Times Executive MBA Ranking 2015. The annual ranking, now in its 15th year, measures the top 100 Executive MBA programmes globally. The latest ranking sees the GIBS modular and part-time MBA formats feature in 87th place worldwide. “The Financial Times ranking is a further testament to our efforts to be a leading business school in South Africa and increasingly on the African continent. This ranking strengthens our resolve to produce business leaders who are not only inclusive and global in their thinking and attitudes, but whose roots remain firmly in our continent,” says Dean, Professor Nicola Kleyn. The Business School is in joint first place for the number of women represented on its board, and is ranked 13th for its percentage of female students. Once again, this recognises GIBS’ efforts to ensure gender diversity, both internally and across its programmes.
Minister Lindiwe Zulu
GIBS PARTNERS GLOBAL ENTREPRENEURSHIP WEEK.
As official partner to Global Entrepreneurship Week 2015, GIBS held a series of events and competitions on campus in November, officially launched by Small Business Development Minister Lindiwe Zulu. The minister urged the 300-strong audience to fast track development through entrepreneurship and innovation – fields in which GIBS holds expertise. The school has two specialist units that work with entrepreneurs: the Enterprise Development Academy, which provides scholarship-based training to start up, micro and small businesses, and the Network for Social Entrepreneurs, which works in the uniquely blended space of profit and social impact.
According to the Financial Times, business schools must meet strict criteria to be considered for the ranking.
The country’s high business failure rate – more than 70% of start ups don’t make it past their third year – necessitates new ways of doing business, a message echoed by the minister: “Business failure is often attributed to the lack of entrepreneurial knowledge and skills such as innovation and risk-taking. These should therefore not be overlooked. South Africa needs innovative ideas to develop and hone business and entrepreneurial skills to build a thriving economy,” said Minister Zulu.
The annual Financial Mail MBA survey also recognised the GIBS MBA as the South African MBA with the best overall reputation by employers and the first choice among prospective MBA students surveyed, if cost and location were not a factor.
The week culminated in the Festival of Ideas, which saw ten entrepreneurs and their innovations challenge for start up awards worth more than R200,000 sponsored by Life College, SAB Foundation and SEA Africa.
GIBS MBA alumni continue to receive internationally competitive salaries according to the ranking, once again placing 35th out of 100 in the world for present day US$-denominated salary and receive above average salary increases compared to the alumni of the top 100 ranked schools.
12
network
Gold Fields CEO Nick Holland
GOLD FIELDS’ NICK HOLLAND OUTLINES TOMORROW’S GOLD MINES
Conventional mining as we know it would soon no longer exist and mines of the future would have to be “agile and be able to respond to changing demand,” said Gold Fields CEO Nick Holland at a recent GIBS Forum. They would have to do this by implementing digital technologies that could monitor real-time information across the mine’s entire value chain, said Holland, adding that “we can’t rely on an increase in the gold price to bail us out.”
ACCOLADE FOR THE DEAN
GIBS’ Dean Professor Nicola Kleyn has a well-deserved reputation for shining a spotlight on the achievements of others in the School, so Network thought it only fair that a small sliver of light came her way, too. Professor Kleyn received a Citation of Excellence certificate from Emerald Group Publishing, for one of the most highly cited and highly influential papers published in 2012, Corporate identity, corporate branding and corporate reputations: Reconciliation and Integration, in the European Journal of Marketing. The article was also one of the most downloaded in 2015.
GORDON INSTITUTE OF BUSINESS SCIENCE
Holland told the audience that “Mining has become high-tech and the digitisation of mines is going to happen sooner than we think.” As the control room would become the focal point of future mining operations, Holland said “a completely different type of miner” would be needed in five to ten years’ time. “We have to train and upskill our workers and our communities, or it is going to become a huge risk.” He also pointed to water and energy constraints as future risks for the gold mining industry: “Energy and water are going to be scarce resources in the future. We are going to have to use them better and make use of renewable energy and underground water treatment systems.”
Professor Nicola Kleyn
network
13
René Grobler, Head of Investec Cash Investments. Gerald Mwandiambira, Acting CEO, South African Savings Institute. Professor Adrian Saville, Professor of Economics & Competitive Strategy, GIBS, and Chief Strategist, Citadel. Gugulethu Cele, MC and business journalist.
GIBS, INVESTEC LAUNCH INAUGURAL NATIONAL SAVINGS INDEX South Africa falls short of national savings ‘pass rate’ In a South African first, GIBS and Investec have partnered to launch a national Savings Index to measure the country’s state of savings against international counterparts and provide the real facts about savings, as well as to support the country’s economic growth objectives. The structural decline of SA’s national savings rate over the last two decades has been no secret. However the importance of savings to fuel investment for sustained economic growth is less understood.
corporate, economic, academic and social perspective,” says René Grobler, Head of Investec Cash Investments. “Only once we have the facts, can we begin to measure the performance of our economy in terms of its critical savings components,” she adds. Professor Nicola Kleyn, GIBS Dean, states “A dialogue between all the country’s stakeholders regarding our economic standing where saving is concerned is much needed. We hope that the fresh macroeconomic research provided by the Investec GIBS Savings Index will facilitate this dialogue to elevate the country from the current low savings conundrum and steer us towards a path of sustained fiscal growth.”
• The savings rate, represented by the flow of savings into the savings pool; and
A score of 100 represents SA’s pass mark for national savings measured against the country’s structural high watermark or the average scores of 13 countries termed the “savings stars”. These are Botswana, Brazil, China, Hong Kong, Indonesia, Japan, Malaysia, Malta, Oman, Singapore, South Korea, Taiwan and Thailand. All of these have achieved sustained GDP growth in excess of 7% for 25-year periods at points since 1950.
• The changes to environmental factors that influence savings.
THE INVESTEC GIBS SAVINGS INDEX FOR 2015 PRODUCES A SCORE OF 63.4.
The quaterly Investec GIBS Savings Index assesses SA’s savings performance based on three pillars: • The extent of SA’s stock of savings or savings pool: to fund the economy’s installed investment base;
“We decided to create a Savings Index because we recognised the importance of raising awareness of South Africa’s current state of saving and stimulate the discussion on savings from a
“At below two-thirds of the way towards ‘passing’ the savings test, the results of the Investec GIBS Savings Index make it clear that South Africa is stuck in a low savings trap. If our economy is to achieve elevated and sustained growth that translates into
social inclusion and development, it is a necessary condition that the country closes this gap,” says Dr. Adrian Saville, Professor of Economics and Competitive Strategy, GIBS, and Chief Strategist, Citadel. Among the key insights derived from the Investec GIBS Savings Index, are the following: • The country’s stock of savings (the extent of saving versus other dynamic economies) needs to expand permanently by about one-third. • The research suggests that the South African economy’s flow of savings needs to almost double to achieve its growth objectives. • Environmental factors and forces are predominantly to blame for the inadequate savings result. The three main obstacles to higher savings are sluggish growth in per capita income, slow growth in productivity, and a high rate of unemployment. “The Savings Index research indicates that there are at least three ways that South Africa can escape the ‘savings trap’ – by reducing consumption to bolster savings, attracting non-resident savings to promote portfolio investment and promote household savings. This kind of insight is critical to exploring possible solutions and with on-going measurement now possible, stakeholders have a place to start,” concludes Grobler
.
14
dean's note
GENDER, DIVERSITY AND RESILIENCE Words Professor Nicola Kleyn
At the time of my appointment as the Dean at GIBS, I received many positive messages about the promotion. A relatively large number of predominately female colleagues, clients, students and alumni expressed their delight that a woman had been appointed to a position of senior leadership. A few weeks later at a GIBS graduation, I overheard a group of graduands and their families expressing their disappointment about my promotion because I was not black.
GORDON INSTITUTE OF BUSINESS SCIENCE
Although there were others (from across the race and gender spectrum) who commented about how they felt my leadership style and experience might serve GIBS going forward, what was typically absent from the race and gender-focused observations was any type of holistic reflection on my potential to contribute to successfully steering GIBS on its future course. Since then I’ve been asked many times how, “as a woman”, I feel about being appointed to the position, sometimes how “as a mother” I manage, and occasionally how “being a marketer” shapes my thinking. The facets of our identities are numerous and informed by both our demographics and our life experiences. In my case, I have no doubt that my ability to lead and support GIBS has been shaped, by not only my race and gender, but also by my educational path, work experience (both in the School and out of it), my middle class South African background, the fact that I am married and have children, not to mention the limitations and advantages that other aspects of my genetic makeup confer. Whilst it’s natural to wonder about the relative roles played by the
many variables that contribute to our individual identities and how others might perceive us, I believe the tendency to stereotype along any single dimension is something to be avoided. What we need to rather focus on, whether at group, organisational, industry or country level is two things – a quest to go beyond diversity to foster inclusivity (not only when recruiting but more generally), and the vigilant pursuit of common agreement on purpose and shared behaviours. Our egregious past makes us deeply aware, as it should, of the dangers of limiting access to opportunities, particularly when it comes to judgements and blind spots about both race and gender. Working to remedy these historical injustices needs to fuel our efforts to accommodate diversity and inclusivity. There are additional reasons that go beyond our divided history that suggest the importance of fostering diversity. In their fascinating book on resilience, Andrew Zolli and Ann Marie Healy cite research across the biological and social spectrum ranging from coral reefs to the ability of human beings to navigate out of crisis situations that shows that the more diverse the
I AM OFTEN ASKED ABOUT WHETHER, AND IF SO HOW, MY LEADERSHIP STYLE IS INFLUENCED BY BEING A WOMAN”
dean's note
15
FOSTERING INCLUSIVITY AND VALUING DIFFERENCE, DOESN’T HOWEVER MEAN THAT ANYTHING GOES” actors, be they species, or mindsets, the more resilient the system they build. Pursuing a quest for resilient systems calls for us to acknowledge the advantages and difficulties that go along with building teams and organisations that embrace difference. It’s much easier for a homogenous group of people to acclimatise to each other, identify a common purpose and start moving towards it. Diverse groups take longer to agree on what defines success and how best to achieve it. In easy, stable times, homogenous teams get the job done more easily and with greater speed than their diverse counterparts. But when the going gets tough, the ability of diverse groups to solve problems is much stronger than their uniform counterparts. The way that 2015 panned out, not only for South Africa, but in so many other parts of the world that faced political, social and economic turmoil, means that few would disagree that we need to do all that we can to develop resilient systems that can collectively address a vexing array of wicked problems. Garnering a varied group of people that tick a variety of boxes (be they gender, race, political affiliation, nationality, age or some other variable that might be used as a proxy for diverse mindsets) emphasises representativeness rather than diversity. Embracing diversity means not only that we need to celebrate
differences in thinking, feeling and doing, but that we should avoid stereotyping by assuming that because an individual represents a particular cohort of human beings, they will behave in a particular way. I am often asked about whether, and if so how, my leadership style is influenced by being a woman. Of course I have certain things in common with my female counterparts, but in my view, spending time developing assumptions around how being female might be a major causal driver of my behaviour at work, deflects from the need to rather concentrate on how to create workplaces that not only accommodate but actively seek to include a range of individuals who have differing perspectives and hence an important contribution to make. Fostering inclusivity and valuing difference, doesn’t however mean that anything goes. All systems need commonalities that unite as well if the system is to survive. When we think about our “we”, whether as a team, a company, a government or a country, the importance of a common culture where members have a clear understanding of the behaviours that are endorsed and united sense of purpose about why they exist is an imperative. A focus on inclusivity is far from an issue peculiar to South African organisations. It’s a major challenge for any multinational organisation. In a recent Harvard Business Review article,
cross-cultural professor at INSEAD, Erin Myers, underscores the importance for companies expanding abroad of understanding the dimensions along which different cultures vary, giving everyone voice but also socialising all employees in key company norms. It’s time to stop focusing on how to make workplaces more attractive for particular groups, be they women, working parents or members of a particular nation or sub-culture. We need to extend our reach to emphasise building environments that encourage us to jointly explore what success means, to vocalise our perceptions about the barriers and enablers that influence our progress no matter who we are, and to work collectively to move forward. A number of studies have shown the positive correlation between diversity at board and senior management level with organisational performance. To assume that one causes the other would be spurious, but I do find myself wondering whether there is not a third, more-oftenthan-not unmeasured variable at play here – that of an organisational culture with norms that embrace and encourage alternate points of view whilst fostering integrity, ethics and accountability. It’s an approach that not only works in the long run for business, whether locally focused or increasing its international footprint, it’s relevant for countries operating in tough times as well
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opinion
THE SOUTH AFRICA OF TOMORROW Words Trudi Makhaya
What does the South Africa of tomorrow look like? I pose this question at a time where there are fraught discussions about the performance of the economy, against the backdrop of persistent challenges of unemployment and inequality.
GORDON INSTITUTE OF BUSINESS SCIENCE
If the discussions and protests that dominated the headlines in later 2015 revealed anything, it is how fragmented South African society has become once again. The student protests against university fee increases elicited widespread sympathy. Students in all their diversity marched side-by-side, black with white, the affluent with the poor. But by year-end, the #ZumaMustFall movement reminded us that though South Africans lament the country’s leadership, they are unable to mount a united political struggle to effect change. Protesters donning the old South African flag, or expressing racist sentiments, however few, undermined the aims of that fledgling movement. Let me digress a bit. A few years ago I worked for a corporate venturing unit in a large professional services firm. The key service offering was to help established businesses to identify and pursue new business opportunities. The deliverable in each project was ‘the business of tomorrow’. At first, I had this nagging question – should business executives and managers not be doing this for themselves? How can outsiders excite insiders about their own future? But, as I discovered, it was very difficult for many managers to think about the future. They were bogged down by the
demands of the present. Or sometimes they did feel not empowered to look to the future, thinking that this was above their pay grade. Some of the forces that stifle forwardthinking in organisations are also at play on a grander scale in the national sphere. At the national level, of course, the task of imagining the future is not something that can be outsourced, at least not willingly, though a country can lose control of its affairs to the point where external intervention becomes inevitable. In 2016, it is hard to look towards the future. On the economic front, the country’s macroeconomic stability is under serious scrutiny. One of the few certainties that defined the country’s management was undermined over the course of four days in December 2015. And so, many participants and observers of the economy will wonder if the finance minister (whoever he may be when this piece is published) will have enough resolve and backing to stick with the established fiscal path or not. Where government has thought about the future, its capabilities and intentions are under question. The national health insurance scheme is well-intentioned in its aspiration to have universal healthcare for all, which is delivered free at the point of service. But is this ambition appropriate in light of the state’s capacity to deliver healthcare, and the revenue shortfall that needs to be closed to make it a reality? The need to expand electricity generation
is indisputable, but the motives driving the choice of nuclear energy are under question, with much scepticism about the integrity of the procurement process that is to be followed. This is the challenge of developing a vision where public institutions are weak or the citizenry does not trust them. The implementation of the National Development Plan, the document that is meant to provide a roadmap to the South Africa of the future, is flailing. The government argues that the plan is embedded across government, within each department and agency’s annual performance plan. This diffusion of the plan might be necessary for practical reasons. But unless there is a way to demonstrate progress against the plan in a clear and focused manner, whatever the actual implementation mechanisms, then it will fail to excite society. Local government elections will drive much of what happens in the political sphere this year. This is also the year in which the next phase of the student movement will set forth its agenda. Civil society has also been emboldened, and new movements may arise. The challenge for emerging leaders is to understand what the past means for the future, without being defined by it. They should also not be overwhelmed by the present. From our messy reality, we must find the path towards the South Africa of tomorrow.
opinion
17
BACK TO THE STREETS Words Dan Moyane
On 27 April 2015, we celebrated 22 years of a democratic South Africa. We have come a long way, but we still have a long way to go in order to protect gains made and secure our hard-won democracy for future generations. It is positive to see the rise of non-partisan protest involving citizens from different political and social affiliations. After all, South Africa belongs to all those who live in it. A number of recent public protests have definitely taken on a new texture. Since the dawn of democracy in 1994, we have not witnessed protests that have united civil society organisations and ordinary South Africans across the board, to the degree that we have seen recently. Most of us had become mere onlookers and commentators, accustomed to violent service delivery protests mainly by South Africans in disadvantaged areas. Exercising the constitutional right to protest was seemingly the realm of the poor. However, as South Africa’s democracy turned 20 in 2014, the middle class woke up to the fact that they too could hit the streets in protest. A campaign against e-Tolls was born, uniting the labour movement and ordinary citizens, expressing their discontent against a project regarded by many as expensive, opaque and unnecessary. The anti-e-Tolls movement may not have succeeded in scrapping the system but it forced government to re-price and offer discounts to non-payers. The main achievement though – in my view – is that the protest forced the powers-that-be to listen and be held to account. Accountability was once again at the core of what was definitely the epitome of non-partisan protest action as the #FeesMustFall student campaign gripped the country towards the end of 2015. Students from different social standings
and political affiliations joined forces to call for free tertiary education and an end to contract workers at universities. When government and university management responded in their usual manner to these demands, the students intensified their protest and demanded responses with clear actions and timelines. The students would not budge until the authorities committed to agreements with defined timelines. 2016 may yet become a watershed year for the future of education in our country.
. . . THE PROTEST FORCED THE POWERS-THATBE TO LISTEN . . . ” 2016 may also become a defining year in terms of the kind of leadership we need to take South Africa into a prosperous and secure democratic future. Leaders from different sections of South African life will be required to put their shoulders to the wheel. Sadly, in the past year there were several missed leadership opportunities along the way. One was the day when students marched on parliament while the house was in session. Instead of inviting representatives of the protesting crowd into the National Assembly to address
the people’s representatives, government unleashed public order police who fired stun grenades at the students, drawing widespread condemnation. Imagine what might have happened had the student leaders been afforded just one hour to address parliament, impromptu, and table their grievances to the elected representatives of the people. The political leadership that South Africa really needs now is one that is inclusive and puts the Constitution, the country and all its citizens first and above all else. We also need more business leaders who will speak out against corruption wherever it rears its ugly head. It is no secret that in recent years there has been a weakening of a number of key state institutions and a plundering of state assets under all kinds of guises and manipulation. We need more civil society leaders who will mobilise ordinary citizens to demand accountability and service delivery. The dawn of the “#SomethingMustFall” social campaigns has introduced a new dynamic in our political landscape. Just like in 1976, the youth is standing up and demanding a new order and a new way of running the affairs of the country. It is a significant shift in the overall political texture and flavour in the country.
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Whether it is sustainable or not is another matter.
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SHORT-TERM INSURANCE INDUSTRY DISRUPTED BY CLIMATE CHANGE Words Anees Vazeer, Chief Financial Officer, Lion of Africa Insurance
The bruising drought and the stifling heatwaves that swept through South Africa during this summer have brought the issues of climate change to the fore. Three years ago, flooding and severe hail storms wiped out entire crops. This had a detrimental impact on the farming community and adversely impacted the country’s exports and saw the insurance industry incurring severe losses. These losses resulted in a strategy change for certain insurers which exited the agricultural crop insurance market. This year, South Africa is experiencing extreme drought which will again result in punishing losses to the farming community and insurers. The volatility of the climate change, increased frequency and severity of natural events will again force insurers to re-evaluate the viability of continuing to insure agricultural crop business. Climate change has resulted in more severe “electrical� storms, especially in the Highveld area of the country. This has resulted in increased lightning damage and fire losses to property. Insurers have responded with a consumer education campaign informing them how to prevent damage from lightning strikes. Climate change has also seen an increase in the frequency and severity of hail storms. In 2012, the industry recorded six significant catastrophe events in the last five months of the year. This increase in frequency of severe hail storms causing serious damage in built-up areas, not experienced before, caused losses in Motor and Property portfolios. In November 2013, one significant hail storm was experienced across most of Gauteng. The losses experienced by the insurance industry from this single event surpassed the cumulative losses sustained from the six events of 2012. To mitigate future damage and thus potential insurance losses, insurers have started proactively informing clients of expected hail storm activity, so that preventative measures can be taken to reduce losses. Global warming is causing sea levels to rise, increasing the risk of damaging flooding events during potent coastal storms. This has a notable impact on properties in low-lying coastal areas which also face the risk of shoreline erosion and degradation. The Southern Cape has been identified as one of the regions where rising sea levels could pose a future threat. In 2014, the Cape region experienced raging fires caused by a combination of high winds and an arid landscape. The fires swept
Anees Vazeer, Chief Financial Officer, Lion of Africa Insurance
uncontrollably across vast areas causing damage to property although, in this instance, the industry did not incur significant losses. South Africa has experienced significant catastrophe events in the last four years which have had a significant impact on the insurance industry. Happily, the industry has reacted positively and, indeed, proactively to these events: future strategies of insurers have been altered and consumer education campaigns have been rolled out to prevent future losses. In addition, collaboration initiatives with government, municipalities and farmers have begun to address threats and sustainable new practices. Climate change not only brings risks with it, but opportunity too. A move to green energy will see new installations requiring insurance while there will be demand for creative solutions for covering losses due to climate change.
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20
opinion
AFRICA HORIZONTAL AGAIN Words Richard Dowden, London
GORDON INSTITUTE OF BUSINESS SCIENCE
Slowing growth in China looks like leaving an awkward set of problems for Africa. What happens now? Like an overcooked cake that suddenly collapses with a hiss, the Africa Rising bubble has been pricked by the fall in commodity prices. China, which gobbled up African oil and minerals for over a decade is now halving its intake of African commodities. Mining companies are cutting production. Some are pulling out of the continent. For the last 15 years Africa has enjoyed growth figures that had not been seen since the 1970s. Driven by Chinese
demand for the continent’s minerals, commodity prices had a 15-year high. The task for African governments during those years of plenty was to spend the revenue on infrastructure and education. Energy generation, power stations and a continent-wide grid should have had top priority, followed by transport infrastructure, roads and railways to link up the continent. The second priority should have been schools, universities and technical colleges and the development of appropriate curricula for Africa to
produce well-trained and well-paid teachers to bring Africans up to globally competitive standards for all. African governments should have played hardball with the Chinese and insisted on contracts that built factories and trained workers to process and manufacture goods in Africa, not just ship raw materials to China to create jobs there. But African presidents were flattered by Chinese hospitality in Beijing and saw the Chinese as an ally to play off against
AFRICAN GOVERNMENTS SHOULD HAVE PLAYED HARDBALL WITH THE CHINESE . . . ”
DIXCART DOMICILES
THIS IS THE MYSTERIOUS, UNRECORDED BUT VAST SURVIVAL ECONOMY IN AFRICA’S SHADOWS” the West. Only a few countries negotiated seriously with them. That could have worked had they also played off the West against the Chinese in bidding for mineral rights but they did not. Anecdotal evidence suggests that Chinese were extremely generous to African presidents and ministers. Now Africa is counting the cost. In the 1990s, before China arrived, African growth rates were a dreary 2% but they shot up to 4.7% in the new century and reached 6.5% in 2012. But they are now languishing stubbornly around 4%. Knock off 2% for the annual rise in population and real growth is not looking anything like the soaring African Superman on the cover of Charles Robertson’s book The Fastest Billion – The Story Behind Africa’s Economic Revolution. He has fallen to earth. So are we back where we were before China met Africa and the commodity boom? 4.5% growth is predicted for Africa in 2016 but a hoped-for 5% next year is looking unlikely unless the Chinese economy recovers and demands more raw materials. So what do African governments need to do now? The choices are limited. Millions of young Africans are coming into the jobs market every year but jobs are few and difficult to get unless you have family or ethnic connections. Having used so much of their families’ resources on education they cannot go back to the village. Most try to find a livelihood of some sort in Africa’s burgeoning towns. Many find or build a meagre shack or room to rent on the edge of town and spend hungry days doing a little bit of buying and selling, carrying or messengering. From time to time they go back to the family farm to collect basic foodstuffs to sell and survive on. Young men may start with a bicycle, then get a small motorbike and, when they can afford a car, they rent it out or use it as a taxi. A young woman may set up a hair braiding and beauty shop, or tend a small patch of vegetables for sale. This is the
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mysterious, unrecorded but vast survival economy in Africa’s shadows. Millions survive on it hoping for better times. The hopeful continent. But if the margins become too thin, these people will become poorer and hungrier. That is the prelude to anger and riot. But if presidents and politicians are smart they can manipulate this underclass and use them as cannon fodder for street battles against rivals. These are descendants of the “verandah boys”, young men who were cooks or gardeners for the British in Ghana. They rioted against British rule and eventually drove them out. Most African cities have similar gangs today and the middle classes will drive the long way round to avoid their areas. The difference between this generation of ambitious but poor young people and previous ones is that today’s young in Africa are connected with each other and the world. They are no longer isolated and can mobilise quickly. In Burkina Faso recently they played a vital role in the change of government. The impact of this new generation on African politics can only grow. Governments without income from the Chinese will have to take them seriously. In most democracies when politicians cannot deliver and people are feeling poorer the ruling party gets voted out of office. Africa works differently. Presidents in Africa have given themselves sufficient power over the electoral process to ensure they win. Elections in Africa are less about debating the national interest or a rational choice about which ruler will make their lives better. For many voters it is often more about the resources they can extract now from a candidate. Although there have been some dramatic changes of government by the ballot box in Africa, only a handful of sitting presidents have lost an election and stepped down and they all come from the same countries: Namibia, Tanzania, Botswana, and Senegal. Maybe the rest of Africa’s presidents should drink from the same springs
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22
dialogue
GORDON INSTITUTE OF BUSINESS SCIENCE
Liz Wiseman
MULTIPLY FOR SUCCESS Words Liz Wiseman, in conversation with Chris Gibbons
Many great leaders seem to have an uncanny ability to get the best out of other people. Liz Wiseman is a researcher, executive advisor, and speaker who teaches leaders around the world; she calls this the Multiplier Effect and described how it works to Acumen.
dialogue
YOU CHARACTERISE LEADERS EITHER AS ‘MULTIPLIERS’ OR ‘DIMINISHERS’ – WHAT DO YOU MEAN BY THOSE TERMS?
Multipliers are leaders who use their intelligence to amplify the smarts and capabilities of the people around them. When these leaders walk into a room, light bulbs go off over people’s heads; ideas flow and problems get solved. These are the leaders who inspire employees to stretch themselves and get more from other people. At the core, Multipliers believe that “people are smart and will figure it out.” Diminishers, on the other hand, operate under the assumption that “people won’t figure it out without me.” They shrink the intelligence of the people around them, and end up getting less from their people.
WHAT’S THE MANAGEMENT STYLE OF A MULTIPLIER?
Multiplier leaders want to learn from the people around them and understand. They are full of curiosity and questions that bring value to those working for and with them. The logic of a Multiplier – whether in times of boom or bust – is the ‘logic of multiplication’: how can we get more from the resources we already have? My research shows that, amazingly, Multipliers get virtually all of people’s intelligence – 95% of it, while diminishers get less than half – 48% of people’s capability. So essentially, the organsation is paying $1.00 and getting back 48 cents of value from the people they have hired who work under diminishing leaders. The logic of multiplication entails saying, “Hey, we’ve got all this latent, unused intelligence inside of our organisation; rather than hiring more people, why don’t we start by fully utilising the people we already have?” This not only makes sense for economic reasons, but because when you fully utilise talent, you create a vibrant, exhilarating place to work. Multipliers believe “people are smart enough to figure it out.” Because of this they look for valuable talent in others, give people space to think, and instill accountability, which commands people’s best work. As well, they ask the challenging questions that unlock thinking and generate possibilities.
WHAT EFFECT DOES THIS HAVE ON THE PEOPLE WHO WORK WITH SUCH A MANAGER?
When we began our research, we expected that Multipliers would get more from their people. However, our first surprise was just how much more they actually received. Multipliers don’t just get a little more – they get vastly more. In terms of impact, we found that across companies and industries, Multipliers accessed employees’ capabilities 1.97 times more than Diminishers, almost twice as much. In other words, leaders who are Multipliers essentially double the intellectual power of their workforce for free. Imagine what your organisation would be like if everyone led
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like a Multiplier and succeeded in getting the team to apply the full range of its intelligence and depth of capabilities to solving problems? The problem, however, is that most leaders think they are getting more from their people than they really are.
WHAT’S THE MANAGEMENT STYLE OF A DIMINISHER?
Diminishers drain intelligence, energy and capability from the ones around them and always need to be the smartest ones in the room. They are idea killers, energy sappers, and diminishers of talent and commitment. Diminishers tend to assume that “people will never figure this out without me.” As a result, they tend to tell others what to do, make decisions themselves, create pressure, and micromanage the details to ensure performance – all the while underutilising the talent that they’ve brought into the organisation.
WHAT EFFECT DOES THIS HAVE ON PEOPLE ON THE DIMINISHER’S TEAM?
With their focus on their own ideas and capability, Diminisher leaders shut down the ideas and capabilities of the people around them, getting less than half of the available intelligence of people on their team. In our research, we discovered that many leaders were simply unaware of how management practices they thought to be empowering were actually limiting or restricting employees from using the intelligence they had. Their intent was quite different to their impact. Many of these same leaders had been promoted into management after being frequently praised for being intellectually adept. Thus, they assumed that they had or were supposed to have all the answers. Others had worked for Diminishers or in diminishing cultures for so long that they had become accustomed to such thinking. Many of these leaders were like the one high-tech director who said, “I have the heart and mind of a Multiplier, but I’ve lost my way.” Intentional or not, the effect of a Diminisher on team members was the same: people were unable to enlist their full brainpower to the challenges at hand.
CAN YOU INSTANTLY SPOT A DIMINISHER? ARE THEY THE SUPER-TYRANTS?
Diminishing behaviour can be incredibly subtle. Most Diminishers are not the super-tyrants, throwing their chair and yelling at their direct reports. But you might just be an Accidental Diminisher. Either way, your effect on your team members is the same: You’re not tapping their full brainpower. Here are four signs you might be an Accidental Diminisher: YOU’RE AN IDEA-PERSON
You’re continually spouting new ideas for your team to explore. You think you’re sparking the creative process; in reality, you’re causing organisational whiplash as people scurry to keep
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dialogue
up with each idea, making only a millimeter of progress in a hundred directions. YOU’RE ALWAYS ON
You’re passionate, articulate and can consume a lot of space in a meeting. You think your passion is infectious; in reality, it’s stifling other people’s thinking. YOU’RE A RESCUER
You hate to see people fail and experience the career-limiting ramifications of their mistakes. You think you are protecting them; in reality, you are weakening their reputation and denying them the learning they need to grow. YOU'RE A PACESETTER
You lead by example. For example, if you want a more clientfocused team, you model customer service, assuming people will notice and do likewise. But when leaders set the pace, they create more spectators than true followers.
CAN A MANAGER LEARN TO STOP BEING A DIMINISHER AND BECOME A MULTIPLIER?
If becoming an Accidental Diminisher is, by definition, unintentional, it means that with self- awareness, someone can change course and begin operating more like a Multiplier. Here are three simple but powerful starting points: SHIFT FROM GIVING ANSWERS TO ASKING QUESTIONS
The best leaders don’t provide all the answers, they ask the right questions. Use your knowledge of the business or a situation to ask insightful and challenging questions that cause people to stop, think and rethink. Instead of continually selling your vision, ask the questions that get other people thinking and piecing that vision together themselves. DISPENSE YOUR IDEAS IN SMALL DOSES
If you are an idea-person who is prone to tossing out more ideas than anyone can catch, try articulating your ideas in increments. Introduce fewer ideas and leave white space. Providing more distance between your ideas has a powerful dual effect: First, it creates room for others to contribute, and second, your words will be heard more frequently and will be more influential. GORDON INSTITUTE OF BUSINESS SCIENCE
EXPECT COMPLETE WORK
People learn best when they are fully accountable and face the consequences of their work. Instead of jumping in and fixing the work of others, give it back and let people know what needs to be improved or completed. And ask people to go beyond pointing out problems. Ask them to find a solution. By wrestling with it themselves, they’ll grow their capability and be able to operate more independently next time. Another powerful way to begin to make the shift to Multiplier leadership is to start with your assumptions. How would you manage if you held the assumption that people are smart and will figure it out?
SO HOW DO I KNOW THAT I’M LUCKY ENOUGH TO BE WORKING WITH A MULTIPLIER? WHAT ARE THE KEY CHARACTERISTICS OF SUCH A PERSON?
Multipliers are: 1) Talent magnets who attract and optimise talent; 2) Liberators who create intensity that requires best thinking; 3) Challengers who extend challenges; 4) Debatemakers who debate before deciding; and 5) Investors who instill ownership and accountability. Our research shows that they get 2X capability from their people! Here are a few signs that you might be working for a Multiplier: 1) You feel smart but uncomfortable, 2) You are making mistakes but you are successful, 3) You are doing what you love to do, but you are growing into your job.
BOTH DIMINISHERS AND MULTIPLIERS HIRE SMART PEOPLE – BUT THEN THEY TREAT THEM VERY DIFFERENTLY
I work in Silicon Valley, and so many of the companies here are just obsessed with hiring brilliant people. They comb through the universities and bring in the top graduates they can find. Diminishers love to hire smart people as much as the next person; but what I have noticed is, they don’t spend much effort thinking about how to utilise that intelligence once it’s in the door, and as a result, talent is often underutilised.
COULD YOU GIVE SOME EXAMPLES OF FAMOUS MULTIPLIERS? MITT ROMNEY
Numerous people interviewed in our research pointed to Mitt Romney, the 2012 candidate for US President, as a Multiplier, particularly as a developer of talent in others. Meg Whitman, CEO of Hewlett Packard, worked for Mitt early in her career at Bain & Company. She said, “Word spread that he was the best boss to work for because he knew how to lead a team and he grew his people. Everyone grew around Mitt.” “MAGIC” JOHNSON
This former Olympic basketball player, born Ervin Johnson II, was a phenomenally talented basketball player at a young age. While a youth, Johnson received some advice from his coach who said, “Every time you get the ball, take the shot.” So he did. And, he scored nearly all of his team’s points. After a series of wins, he caught a glimpse of the disappointment on the faces of the parents of the other players. This gave him the conviction to truly lead and to use his God-given talent to help everyone on the team become better players. He was later given the nickname of “Magic” for his ability to raise the level of play on every team he played on. STEVEN SPIELBERG
This award-winning film director is a creative genius, but his real genius might be his ability to elicit more from his crew than other directors do. People who have worked on Spielberg’s films say, “You do your best work around him”
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south africa
WHERE IS SHE? Words Cara Bouwer
In late-2015 Acumen undertook an analysis of the JSE’s Top 40 listed companies. Of these heavy hitters, only one (2.5%) had a female CEO, Barclays Africa Group’s Maria Ramos. Only three (7.5%) had a female Chair. The Chairs identified within the JSE’s Top 40 were: Barclays Africa’s Wendy Lucas-Bull, Aspen Pharmacare’s Judy Dlamini and Bidvest’s Lorato Phalatse; all well-respected businesswomen with stellar track records. Certainly these women are worth celebrating and there was another positive development in September 2015, when retail stalwart Zyda Rylands was elevated to the position of Woolworths SA CEO, under Woolworths Holdings Ltd Group CEO Ian Moir. But there was precious little else to applaud at the top-end of the business ladder. Broadening the sample does little to improve the picture. The Businesswoman’s Association of South Africa (BWA) Women in Leadership Census 2015 studied 293 listed companies, of which 2.4% had female CEOs and 9.2% had women Chairs. Of South Africa’s more than 4 000 directorship positions, 935 were held by women – although, only 500 women shared those 935 positions. Furthermore, the BWA research highlighted that while women made up more than 50% of new recruits into the workplace, they filled just 29% of senior management positions. Both studies raise questions about blockages in South Africa’s pipeline of women leaders.
GORDON INSTITUTE OF BUSINESS SCIENCE
SLOW PROGRESS
Prof. Cheryl de la Rey, Vice-Chancellor of the University of Pretoria, believes a legacy issue is still at play: “It’s only in the last two decades or so that we’ve seen women move into mid-level management positions in a number of private and public sector organisations. So I’m optimistic that in the near future we’re going to see meaningful changes in the list of women CEOs.” This view is shared by Prof. Nicola Kleyn, Dean of GIBS. “The low representation of women CEOs on the JSE is not unusual in the global context. We’re starting to see a significant shift in women occupying top positions but it’s going to take more time before the growing number of female directors on boards translates into CEO positions.” However, believes Kleyn, it’s about more than just a pipeline issue. When it comes to the issue of women in leadership, you can’t move away from the impact of societal expectations. “Women still face an uneven playing field, both in business and out of it,” says
Kleyn. “Until social expectations of women equalise it’s still going to be an uphill battle for women.”
FEMINISM ISN’T SEXY Getting this right would require a shake-up of the global discourse around women’s empowerment. Take, for example, the September 2015 release of the British film Suffragette. Director Sarah Gavron’s political drama cost a modest US$14 million (about R201 million) to produce, according to Variety magazine. This compares with blockbuster budgets of US$150 million (R2.1 billion) for Jurassic World and about US$250 million (R3.6 billion) for the 24th installment of the James Bond franchise, Spectre.
WOMEN STILL FACE AN UNEVEN PLAYING FIELD . . . ” In a somewhat scathing review of the feministic film in Time magazine in November 2015, John Anderson wrote that due to Gavron’s limited budget, cinematographer Eduard Grau was forced to “shoot much of the film up close and claustrophobically”, eliminating the need for “elaborate sets or the taking-over of city streets”. So the impact of the film was diminished. As Anderson rightly pointed out, it was not until 1928 when Emmeline Pankhurst, the leader of the British suffragette movement, died that women got the full vote in Britain. In South Africa, white women received the vote in 1930 and, of course, their black counterparts only in 1994. What has this to do with the dearth of women in senior positions in business? Everything, because it speaks to a lack of investment in women and the celebration of female icons. And it makes the notion of feminism a dirty word.
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WHAT WOMEN WANT
Farzanah Mall, President of the (BWA), believes we do need to invest in developing female talent. “Part of the reason why we have so few women (in leadership positions) is that we do not create opportunities for women; we’re not investing sufficiently in training and development programmes to fully understand how you can retain your top performing female talent and then give them the opportunity to lead.” Over time this would create an expectation of having women at the top. This came into stark relief recently when newly elected Canadian Prime Minister Justin Trudeau appointed a cabinet comprising 50% women. The move elevated Canada (alongside France and Liechtenstein) to joint-third in the world for female representation at the top-tier of government. Finland, according to the Inter-Parliamentary Union, ranks top (62.5%) with Sweden and Cape Verde in joint-second (52.9%). But, the response from some quarters, was: why? “Because it’s 2015,” Trudeau told NBC News. Of course, it’s not that simple, and in order to bolster such highlevel appointments Mall firmly believes that the “onus is also on women to ask for leadership positions”. This is not always an easy task when young women are faced with conflicting messages about what they can and cannot expect from a career. In November 2015 the UK’s Daily Telegraph newspaper,
for example, carried an article in which a leading school headmistress, Vivienne Durham, said teachers should stop lying to girls that there is no glass ceiling. “I’m not a feminist. I believe there is a glass ceiling – if we tell them there isn’t we are telling them a lie. Women still have to plan for a biological fact. That is, motherhood.” Durham was voted Tatler’s best head teacher of a British private school in 2014. While stressing that girls should not be criticised for the path they choose, Durham’s views fail to take into account that when women do put up their hands and find a place at the boardroom table, the benefits for business are often significant. So women should be pushing themselves forward.
. . . TEACHERS SHOULD STOP LYING TO GIRLS THAT THERE IS NO GLASS CEILING”
PHOTO: GETTY IMAGES / GALLO IMAGES
Maria Ramos, CEO, Barclays Africa Group
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WOMEN ADD DEPTH TO ANY CORPORATE STRATEGIC AGENDA ” PHOTO: GETTY IMAGES / GALLO IMAGES
WHY BUSINESS NEEDS WOMEN
Woolworths’ Rylands says: “I think business needs to recognise that diversity is a competitive advantage rather than a statutory requirement.” She adds: “I’ve always believed that without diversity there is no richness to dialogue, because there is a lot of sameness. I’ve certainly seen that, whether it’s bringing on people of different races, age groups, genders, different physical capabilities, it opens up again a window that your mind hasn’t yet explored.”
GORDON INSTITUTE OF BUSINESS SCIENCE
From a consumer perspective alone, Mall believes women add depth to any corporate strategic agenda. “Women make up more than 80% of consumers of products and services today,” she says. “From a business perspective your biggest differentiator is your people optimisation; ensuring you have a highly productive, highperforming workforce.” This view is borne out by the findings of a 2015 Grant Thornton study (Women in Business: The Value of Diversity) into publicly traded companies in the US, UK and India. The research found that the opportunity cost for firms with male-only boards, in terms of lower returns on assets, was US$655 billion (about R9.4 trillion) in 2014. In the US, S&P 500 companies with diverse boards outperformed rivals by 1.91%. In the UK FTSE 350 the gap was 0.53% and for the Indian CNX 200, 0.85%. This translates into an opportunity cost of US$567 billion (R8.1 trillion), US$74 billion (R1 trillion) and US$14 billion (R202 billion) in each of these markets respectively – or around 3% of GDP in the UK and US, found the authors. At the time of the report’s release, Francesca Lagerberg, Global Leader for Tax Services at Grant Thornton, said: “There is a large opportunity cost for companies associated with male-only executive boards. Those businesses stuck in the past are not fully unlocking their growth potential… I liken the debate around board diversity to that of renewable energy. We know it’s the right thing to do – both in terms of fairness and for sustainable future growth – but collectively society is dragging its heels.” Figures from the International Labour Organisation support this notion by highlighting that, globally, women are underutilised by 50% in the world economy compared to 22% for men.
Aspen Pharmacare’s Judy Dlamini
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Traditionally the argument has been that some careers are more suited to women and their leadership styles; often ‘soft skills’ like marketing, communications and HR. But, notes De la Rey: “We’re seeing changes in the hard side of engineering, for example”. Highlighting mining engineering, a tough, male-dominated sector, she asks: “Is that profession only aligned with a certain kind of macho masculinity? Can a feminine individual be tough and take on the challenges of being 5kms underground? The answer is yes.” De la Rey believes the next generation of women are “shifting their own thinking about careers and taking up a whole range of careers that women didn’t take up before”. However, increasingly the problem is not that women can’t gain entry into their professions, but that something happens in the middle management phase of their careers which stops them driving forward.
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OVERCOMING THE FEAR
GIBS’ Kleyn also credits the enabling environments in which she has worked for allowing her to advance her career. “I’ve been fortunate to have been supported both in the workplace and out of it,” she notes. “I grew up in a relatively liberal all-daughter household, and it never occurred to me that my aspirations should be any different because I am a woman.” Kleyn notes that although she started her academic career at Wits in a department where faculty was exclusively male, “I received a great deal of support and mentorship from both peers and superiors. I’ve been very lucky to have spent the last 15 years of my career in an environment where women were regularly promoted into senior leadership positions.”
WHAT HAPPENS IN THE MIDDLE?
Mall, too, credits those who have mentored her. “I’ve been carried on the shoulders of giants who invested time in sitting down with me and really understanding what my goals and purposes were, and also holding up a mirror and being able to share both my strengths and development points honestly,” she says. But, like Kleyn, De la Ray and Herrendoerfer, she also advocates taking advantage of the opportunities on offer. “It is important to ask for what you want.”
This approach starts at board level, believes De la Rey. “We need to think about ways to encourage more women to put themselves forward when openings come up at the top levels… We have to do more to shift perceptions of the people who make choices about recruitment into top management.”
IT IS IMPORTANT TO ASK FOR WHAT YOU WANT ”
Mall says: “By the time women reach middle management positions they’re in the latter part of their 20s, sometimes in the early- or mid-30s. Their family and other obligations become a priority.” However, Mall also believes that having a family is no longer an excuse. “It’s no longer about being at the office between eight and five, it’s about ensuring you create environments where the best talent can flourish, even if they have other priorities and objectives.”
This is certainly the experience of many women on the ground, including the outgoing GM of the Park Hyatt Zanzibar, Marcela Herrendoerfer. This Chilean-born German national began working for the Hyatt group as soon as she completed her hotel studies and has been with the hotel chain for more than 20 years. Until recently, when she was moved into a new role within the group, Herrendoerfer was Hyatt’s only female GM in Africa. “What I have found, and I’ve also read, is that women work hard but fall short of getting to the ultimate top because there is always this sense of ‘Can I do this?’ We often think we aren’t ready, whereas men just go and do it. We think more,” she says. De la Rey’s own experience confirms this view and she fervently advocates that women in middle management “put yourself forward. You can lead your organisation.” She recalls that her own rise to the top was aided by arming herself with the right qualifications and then “taking a risk by applying for a post”. While being self-motivated and taking responsibility for your career is critical, Herrendoerfer also highlights the importance of an enabling corporate culture which looks to promote and develop women. “At Hyatt, women are being pushed in that direction because they see we can do it,” she says. “Once we are there, it’s about management, it’s adapting – all of which we can do.”
Hard work, passion and commitment are a given, believes Mall, so too is the willingness to take risks, explore your potential, take opportunities and accept that “sometimes you will fail and sometimes you will succeed beyond expectations”. Turning the statistics around does, therefore, appear to require a twopronged mindset shift: from those setting the business agenda and from women up and down the corporate ladder that they have what it takes. Says Kleyn: “The shift in mindset about the roles that women can and should play in both the boardroom and outside needs to happen among both women and men. We need to work together to create more fluid roles that enable both women and men play to their individual strengths.” And, from the latest women to join the ranks of South Africa’s most senior female leaders, Rylands adds her voice to the call for women to believe in themselves: “In the business world I would urge women not limit their aspirations. We see the world through a different lens and we have enriched the business world with our experiences, perspectives and approach. Moreover, I would like to see more women support each other in the private sector.”
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GORDON INSTITUTE OF BUSINESS SCIENCE
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TAKE THE SHOT Words Cara Bouwer
Two storms greeted Zyda Rylands upon her elevation to CEO of Woolworths SA in September last year: a Twitter trolling attack and ongoing pressure from a pro-Palestinian activist group. Fortunately she’s a woman who doesn’t back away from a challenge.
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“Since Zyda’s appointment, Woolworths Food has seen 83% growth in turnover as well as a 240% growth in profit,” said Moir. Sandwiching in time to talk to Acumen between the group’s AGM and a whistle-stop tour to Turkey for the Coca-Cola Retailing Research Council, Rylands was typically humble in her assessment of Moir’s words. “The foods business delivered a strong performance well ahead of the market, and continued to gain market share. This success has been driven by a team of incredibly talented and passionate ‘foodies’, empowered by a clear and aligned strategy, who have worked tirelessly to ensure this remarkable performance,” she said. In her new role, Rylands will shoulder the responsibility for the entire food and clothing business in both South Africa and across the rest of Africa. She explains: “I’m now CEO of the entire South African and African Woolworths operations. In this capacity, I’m responsible for Woolworths SA’s strategy and approach, which will be aligned to the overall WHL business strategy.” Woolworths SA strategy has already been set and revolves around the group’s aspirations to be a leading retailer in the Southern Hemisphere. In this context, Rylands sees her job as developing and setting strategy, along with the other executives of the Woolworths ExCo. “My focus for now is on mobilising the team behind implementing that plan, while we continue to review the strategy, taking our fast-changing customer needs into account.” Ever conscious of the importance of teamwork, she adds: “I aim to continue to remind our teams about who we are and what we stand for, through emphasising our values and purpose and encouraging everyone to keep making a difference. It is such a privilege to be given the opportunity to lead this amazing brand and I am going to work hard to protect and build on the foundation already created.”
While boycott, divestment and sanctions against Israel in South Africa welcomed the appointment of the retailer’s first black and female CEO, they promised no cessation to their actions against Woolworths, despite Rylands being, in their words, “black and Muslim”. Similarly, parody account @Woolworst_SA kept up their scathing social media interactions with the retailer’s clients. While Rylands will certainly not be exempt from such issues during her tenure at the top, she is a woman who – with 20 years at Woolworths under her belt – boasts a deep knowledge of the local retail segment, the company, its people and its culture. She is also a calm and capable business head, and the woman credited by Woolworths Holdings Limited (WHL) CEO Ian Moir for transforming Woolworths Food into a business of size, stature and with a reputation for sustainability and quality.
IT IS SUCH A PRIVILEGE TO BE GIVEN THE OPPORTUNITY TO LEAD THIS AMAZING BRAND . . . ” A LISTENING LEADER
This approach to teamwork and inclusive leadership has been a hallmark of Rylands’ career. When I first interviewed her in 2008 for Destiny magazine, she was a Woolworths director and Chief Operating Officer (COO): Support Services. She was already among an elite group of high-ranking corporate women, whose star was well on the ascent. At the time she described her approach to leadership thus: “I’m a B-style leader. I’m not autocratic – although obviously I have times when I do that, depending on the situation. The important part for me is that people feel heard and engaged, and valued.”
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GORDON INSTITUTE OF BUSINESS SCIENCE
. . . THE IMPORTANT PART FOR ME IS THAT PEOPLE FEEL HEARD AND ENGAGED, AND VALUED..” Come 2015 and that approach had clearly stood her in good stead. Asked if this was still her attitude, she responded: “It’s the only style I know. My approach is to practice principle-centred leadership and keep it simple by calling things as I see them. I try to balance high challenge with high support to help people be and deliver their best. It has stood the test of time and helped me be more considered and conscious of how people feel in my presence.” She fully appreciates that a leadership style is a personal choice, and this is hers. “I hope more people practice B-style leadership – it works for me!”
A STEADY RISE
It certainly has served her well, as has an approach to gaining knowledge at each step up the corporate ladder. When you look at her CV, Rylands’ rise has by no means been a straight line – nor has it been an easy ride.
One of five children, Rylands grew up in Athlone on the Cape Flats. “I was born in Cape Town in 1964 and grew up during a very volatile chapter of our country’s history. I realised early on that I had to work hard and stay focused on what I wanted to achieve. There are no free lunches,” she recalls. She went on to become the first person in her immediate family to go to university after receiving a study loan from a business associate of her father, Lexie Bernstein, then joint MD of footwear retailer Shoerama. She achieved a B.Com degree from the University of Cape Town and, she tells me: “I worked every weekend and holiday to repay the loan.” She went on to complete her Honours through the University of the Western Cape, completed her articles at Kessel Feinstein Grant Thornton and qualified as a chartered accountant in 1993. After working for Caltex Oil SA, as a Treasury Financial Admin Manager, she joined Woolworths in 1995 in the audit and finance department and, after 18 months, was appointed as Executive Assistant to the then Woolworths MD, Brian Frost. This, she recalls, offered invaluable insights and helped to “demystify the board and understand the business better”. Next she headed up financial accounting and corporate planning, followed by a role as financial executive for all Woolworths’ stores and a move to Gauteng to run a commercial division. At this point in her career Rylands had overtaken the point at which many women stop advancing (statistics from the
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. . . COMPETENCE COMES BEFORE COLOUR AND GENDER.” International Labour Organisation tell us that while some 50% of middle management positions are filled by women, only 5% of senior management positions are). Already Rylands was one of the elite 5% and still she pushed forward; although not without support. “Along the way I’ve had the privilege to work with incredible people and exceptional leaders, who mentored, encouraged and believed in me,” she recalls. “In life we have to seek out those we aspire to. We also need to acknowledge our loved ones, they are the people who anchor us in life and support us most in our endeavours.” With this support Rylands became Director of People at Woolworths in 2004, then the first female executive director to be appointed to the WHL board as Director of People and Transformation in 2006. She was elevated to COO: Support Services in 2008 and, in 2010, became MD for Foods. She has served on FirstRand’s board and is currently on the Consumer Goods Council of South Africa board. Looking back on this steady progression, Rylands notes that her career at Woolworths has not been affected by the so-called ‘glass ceiling’. “In Woolworths, our senior leadership teams are well represented and this is because the business recognises that diversity drives our competitive advantage. However, this remains an ongoing journey for women in the private sector generally, not just at Woolworths,” she says, noting that the issue “does not exist in a vacuum and often the challenges we see in business reflect those of our society”.
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Rylands’ own views are clear: “I believe competence comes before colour and gender. Having said that, I would like to see more women in business; across all sectors.” To this end she is a passionate advocate for the education and development of women in society and has mentored and supported many young women. “I support education initiatives and feel that education plays the most crucial part in the development of women, and indeed, our country as a whole,” she says. Her career has, critically, been punctuated by ongoing learning. In 2013 she attended Harvard University and graduated from the Advanced Management Programme. She also attended the London Business School in 2005.
A TOUGH INDUSTRY
Working in the notoriously challenging retail sector is also a constant learning curve. For those youngsters looking for a career in retail, Rylands says: “Regardless of qualification, I think if you work hard, go beyond what’s in your job description, demonstrate a real understanding and an appreciation for business dynamics, have an unadulterated passion for retail, and want to serve the customer of today and tomorrow, you will succeed in Woolworths, and indeed in most environments.” A clear believer in knuckling down to a task, there is also a sense of being part of something greater about Rylands; about ‘reaping what you sow’. She says: “My motto in life has always been that you suffer the pain of sacrifice or suffer the pain of regret, and I did not want to regret anything in life.” A philosophy grounded in pragmatism, hard work and an appreciation for her blessings. “This all means, dare to dream, work hard and believe in yourself, be open to feedback, never stop listening and learning and, finally, when you are presented with the right opportunity, take the shot."
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SETTING UP A PRIVATE EQUITY FUND Words Erika van der Merwe, CEO SAVCA
Being a founder in a private equity firm is highly aspirational. The private equity industry is seen as exclusive and financially rewarding. But establishing a private equity firm requires endurance, sustained hard work, a particular set of skills and extensive networks. Here are some guidelines from private equity practitioners for those starting out on their own:
Erika van der Merwe, CEO: Southern African Venture Capital and Private Equity Association (SAVCA)
GORDON INSTITUTE OF BUSINESS SCIENCE
HAVE THE RIGHT QUALIFICATIONS, EXPERIENCE AND SKILLS SET Private equity partners should undoubtedly have a university education, often followed up with complementary postgraduate professional qualifications. Private equity practitioners include chartered accountants, those with MBAs or actuarial degrees, or the global Chartered Financial Analyst qualification. They can also include less finance-specific qualifications – for example, degrees in computer science/ information technology, engineering, chemistry and agriculture. Equally important is long, hard experience in the field, whether at an existing private equity firm, or at an investment house where doing deals and managing business assets is the central focus. A credible private equity practitioner requires deep expertise in leading investment deals through all stages of the investment cycle, from sourcing and structuring deals, to value creation and exits.
A UNIQUE INVESTMENT THESIS MUST BE CLEARLY DEFINED AND DEMONSTRATED
A private equity business must demonstrate a unique investment proposition that matches the skills set and experience of its team members. For example, if you aim to specialise in start-up technology firms, African agriculture or infrastructure, there must be the experience, skills and networks to back up this vision. Your target investments must also be consistent with the appetite of institutional investors. Various sectors come into fashion and then lose appeal, so you have to offer investment opportunities that resonate with investors at that particular time in the economic cycle. When the investment thesis is clearly established, only then should potential investors be approached. These discussions can be jump-started by highlighting your strong networks and business-building skills. Get references from management of investee companies and professional service providers who have worked with you and the team in your previous positions. A private equity fund manager must also be able to demonstrate the rigour of its investment processes when assessing and then investing in target companies.
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WHAT IS PRIVATE EQUITY?
Private equity is a long-term, alternative, institutional asset class which entails fund managers raising thirdparty funds from various classes of investors to buy assets that are predominantly held privately. The private equity life cycle extends over a number of stages and years. It commences with the fundraising process, through which investors commit to a private equity fund, typically for a ten-year investment holding period. The fund usually has five years in which to invest funds, through the purchase of portfolio company assets. A process of active management follows, with the fund manager providing strategic and other hands-on guidance to the portfolio company, and giving input to improve the company’s governance, environmental and social performance. The asset realisation stage is the exit process, at which point the shareholding in the portfolio company is sold, e.g. to a trade buyer, to another financial buyer, to management, or through a listing. Don’t disguise failed investments you may have had; rather, transparently use these experiences to highlight how you have refined and improved your investment thesis and adapted processes.
HAND-PICK YOUR TEAM – CHEMISTRY AND PASSION ARE KEY TO SUCCESS
A private equity team is together for the long (long!) haul, so there must be complementary experience and chemistry, and a good combination of operational and finance skills. You need a passionate team to get through the gruelling fundraising process. And all key staff must have significant personal capital invested in the fund – so-called “skin in the game”, so be clear on terms that require the team to make monetary commitments to the fund.
TAP INTO THE RIGHT INVESTORS
Private equity fund managers are ultimately accountable to investors, be they retirement funds, development finance institutions, sovereign wealth funds, or family offices, and these can be local and international. So the close alignment of the interests of investors to those of the fund manager’s investment thesis is crucial, to ensure longstanding and supportive partnerships. Before you start talking to investors, decide on which agreement terms can be modified or changed, and which are not up for negotiation. The market for fundraising is a crowded one, with many players chasing the same financiers, so terms and structures may have to be altered in order to attract the attention of the finite pool of lenders. For example,
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are you willing to offer economic or governance incentives to cornerstone or first-close investors? In rare instances, it may be necessary to turn away funding commitments if investor interests are not aligned with yours.
NURTURE NETWORKS IN ORDER TO BUILD AND MAINTAIN THE DEAL PIPELINE Sustainable private equity requires solid and dependable deal flow. Successes need to be replicated at regular intervals, and infrequent opportunities will deter investors. A private equity firm must show that it will regularly be able to source attractive deals consistent with its investment thesis. This means building longstanding relationships with lawyers, advisors, placement agents, intermediary brokers, professional associations and experienced investors.
SET OFF WITH PATIENCE, AND BECOME A MASTER OF CHANGE MANAGEMENT
Each step is likely to take longer than you expect. Private equity practitioners will admit to feeling overwhelmed and even disillusioned at times. The fundraising process can be challenging and disheartening. Potential investments require extensive due diligence and many come to nothing. This is an industry with multiple legal and regulatory hurdles and requirements. And it can be a long journey and the time it takes to establish reputation, relationships and industry credibility should not be underestimated, and cannot be short-circuited. Have a clear short-, medium- and long-term vision for your business – while being flexible and adaptable when required
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WHAT DOES SUCCESS LOOK LIKE?
Two examples of successful private equity firms are Medu Capital and Actis, both of whom attribute their success to “sticking to their knitting”. Medu Capital is focused on and invests in medium-sized businesses in South Africa, as it believes this market segment has a range of attractive features to generate sustainable investment returns. The team has a track record that demonstrates it has the discipline to invest according to a proven investment strategy across the economic cycle. Actis is a multi-asset pan-emerging markets private equity house. It has $7.6bn in funds under management and a growing portfolio of investments across Asia, Africa and Latin America. An established team of around 100 investment professionals in ten countries apply developed-market disciplines to emerging markets, and identify investment opportunities in private equity, energy and real estate. A signatory to the United Nations Principles for Responsible Investment (UNPRI), Actis brings financial and social benefits to investors, consumers and communities.
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READY TO TAKE THE BULL BY ITS HORNS
Executive Mayor Malefu Vilakazi, handing-over of paved road in Qholaqhwe
Thabo Mofutsanyana District Municipality is a Category C municipality located in the eastern Free State and is one of five districts in the province. For the most part, the municipality borders on the Kingdom of Lesotho and KwaZulu-Natal, and comprises of six local municipalities (Setsoto, Dihlabeng, Nketoana, Maluti-A-Phofung, Phumelela and Mantsopa). Named after Edwin Thabo Mofutsanyana, a stalwart of the Communist Party, the district’s main economic contributors are agriculture and tourism. The N3 and N5 National Roads pass through the district, and the famous 11 600 hectare Golden Gate Highlands National Park is found on the slopes of the Drakensberg Mountains. This part of the Free State is incredibly scenic and is well known for several other famous tourist attractions. It also features a
variety of festivals each year. Despite some of the socio-economic challenges facing this district, the area’s tremendous tourism potential and rich cultural heritage have been identified and are continually being developed. The vision for this District Municipality is to create integrated, self-reliant and sustainable communities throughout the Thabo Mofutsanyana highlands, with financially viable, participative and developmental local municipalities. Under the guidance and leadership of Executive Mayor, Councillor Malefu Vilakazi, and Municipal Manager, Takatso Lebenya, the district has high hopes of continually improving and developing the living conditions of their communities by providing efficient and effective bulk services and creating a conducive environment for business opportunities and jobs.
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In order for the Executive Mayor and the Municipal Manager to meet the 2012-2016 government priorities, they have adopted several strategic objectives that will support its programmes. These key priorities are to invest in sustainable infrastructure, local economic development, job creation, tourism, agriculture and rural development, stronger social development, sports, and arts and culture through better governance and community participation. The key driver for all these priorities is for the district to remain completely financially viable. The 2011 Census estimates the population of the Thabo Mofutsanyana District Municipality to be around 736,000 people. At just over 35%, unemployment in this region is high and, as such, there is a large dependency on the assistance of the municipality. Within her first year as Executive Mayor, Vilakazi has already criss-crossed the district to reach out to the communities through her mayoral outreach programme. This programme includes, among other things, the distribution of food parcels and blankets to destitute families and the elderly, launching and handing over of projects, schools visits, cleaning campaigns, interaction with churches and a mayoral imbizo. “We have worked hard to ensure that we push back the frontiers of poverty through various poverty alleviation programmes such as distribution of food parcels, Expanded Public Works Programme, learnerships, internships and SMME developments. We have also completed a number of infrastructure development projects, through which we were also able to create jobs,” said the Executive Mayor at the tabling of the district municipality’s budget vote for financial year 2015/2016. After becoming only the second woman to be elected as District Executive Mayor, Vilakazi called on her vast experience in local government as the Councillor in the Dihlabeng Local Municipality to ensure she “serves her people and her organisation with loyalty and commitment.” The ANC’s decision to promote Vilakazi to lead the biggest district in the Free State Province “shows confidence in her leadership capabilities as a woman.” Prior to her ascendancy to the position of the Executive Mayor, Vilakazi was the Chairperson of the Municipal Public Accounts Committee at Thabo Mofutsanyana District Municipality. Previously, she was also a Member of the Mayoral Committee for Community Services, also at Thabo Mofutsanyana District Municipality. She is also the Chairperson of the Women’s Commission of the South African Local Government Association (SALGA) and has been since 2011. Another important part of the team taking the Thabo Mofutsanyana District Municipality forward with the Executive Mayor is Municipal Manager, Ms. Takatso Lebenya. Lebenya has extensive work experience gathered during the daunting task of taking over the municipal management of one of the poorest district municipalities in the country. She says “it seems like a calling rather than just a job opportunity”. Having started her career as a social worker, Lebenya worked her way through several community- driven positions giving her insight into the operations to ensure the successful management
Municipal Manager Takatso Lebenya
of a municipality. Lebenya has been a Special Programmes Officer, the Communications Manager and Special Programmes Manager and also the Director for Community Services at Thabo Mofutsanyana District Municipality and Alfred Nzo District Municipality during the course of her impressive career. Lebenya says her appointment as a Municipal Manager of Thabo Mofutsanyana District Municipality means a lot to her as “it confirms that government is serious about recognising the potential and the contribution that women can make in advancing democracy. The government does not only pronounce its intentions in ensuring that women are empowered and deployed on merits, but implements its decisions.” It for this reason that Lebenya is also determined as a woman to raise awareness among women in the workplace and help them to realise who they are, nurture their inner potential by availing resources and information to them. “We have to make a point that their efforts are realised by placing them where it suits them according their merits.” Her vision is to see this district municipality become a vibrant, self-sustainable institution with the greatest potential of drawing investments. Her aspiration was also to steer the municipality towards achieving a clean audit. For the past five years the municipality has received an unqualified audit opinion, but the Thabo Mofutsanyana District Municipality has received a clean audit report for the 2014/2015 financial year and is the only municipality in the Free State to do so
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Thabo Mofutsanyana District Municipality 1 Mampoi Street Old Parliament Building Private Bag X 810 Witsieshoek 9870 Tel.058 718 1000 Fax: 058 718 1078
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JOB CREATION THE KEY TO REDUCING INEQUALITY GORDON INSTITUTE OF BUSINESS SCIENCE
Words James van den Heever
Thomas Piketty has done us all a favour by providing rich data sources to ground the debate about the nature of the growing inequality that plagues many economies. But when it comes to South Africa, at least, his solution is lacking. Much has been written about Thomas Piketty’s theories of inequality, and how to solve the problem. In this article, I propose rather to focus on two critical issues of particular relevance to South Africa, based on the Nelson Mandela Memorial Lecture delivered by Piketty in Soweto on 3 October 2015. One is general: the inappropriate and unrealistic reliance on the state to rectify supposed failures of capitalism; the other is the specific question
of jobs, poverty and inequality, an area in which Piketty is weak and in which business can make a real contribution. Piketty correctly pinpointed four areas to target in reducing our perilously high levels of inequality: access to decent work, high-quality education, property, and economic and political democracy (by which he means worker participation in company
PHOTO: GETTY IMAGES / GALLO IMAGES
Thomas Piketty
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management). All are essentially structural injustices, inherited from apartheid, that in turn prevent economic justice, says Marilise Smurthwaite, Professor of Applied Ethics and Peace Studies at St Augustine College. Piketty proposes a solution that relies on the state to do the heavy lifting. Yet it is all too apparent that much of the failure to address inequality in South Africa can be directly attributed to the state’s incapacity, rather than any failure in market forces. Quite simply, South Africa has always had a hybrid economy characterised by high levels of state intervention, something that has increased significantly since 1994. Professor William Gumede of the Wits School of Governance is surely correct when he says that we already have the right policy and plan in place (the National Development Plan) as well as the necessary institutions: we just need to use them properly. “If we just fixed government, we would make some headway,” he says. Angus Deaton, this year’s Nobel laureate in economics, offers valuable insights into inequality. Of particular relevance is his assertion that poor governance is one of the primary causes of poverty.[1] South Africans already know that the tidal wave of corruption, mis- and underspending of tax revenues, managerial incompetence and lack of accountability are largely responsible for slow progress in demolishing the main structural barriers to greater equality. We know what needs to be done, the money is there, but still there is failure to launch. Proper governance is the cure for these failures – clearly, it is neither fair nor accurate to blame capitalism for them. The irony is that South Africa is a global leader in corporate governance, which is easily adapted to state institutions, and has been shown to work. If only Mervyn King would apply for cadre deployment.
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Natrass and Bernstein both give considerable weight to the power of employment – even at low pay – in reducing poverty and thus inequality. A low wage is better than unemployment and no hope, Bernstein argues. Her research has shown that rural Chinese women have successfully used poorly paid factory work to gain skills and then better jobs, or to finance a successful return to their rural homes. In any event, Nattrass and Jeremy Seekings have convincingly argued that South Africa already has minimum wage levels comparable to Brazil, and within international norms. They conclude that introducing a single national minimum wage, if set too high, could threaten jobs, especially in those sectors exposed to international competition.[2] So what is the appropriate level? Picketty’s caveat is that a national minimum wage can reduce inequality if set at the “right level”. But the discourse of “decent” work gets in the way of what is needed: technical exploration of what level of minimum wage would not undermine employment. Government, and particularly the union movement, is implacably opposed to anything that smacks of inappropriately low wages for black workers, particularly when managers (still mainly white) have seen their salaries balloon in line with global trends.
IF WE JUST FIXED GOVERNMENT, WE WOULD MAKE SOME HEADWAY”
IT’S THE JOBS, STUPID
The other key issue relates to Piketty’s advocacy of a national minimum wage to solve the key structural challenge of access to decent work. This is one area where business must play a key role; it’s also one in which capitalism can rightly be fingered: jobless growth has characterised many broadly capitalist economies, South Africa included, for some years. First of all, we need to understand the dynamics between poverty, jobs and inequality, something Piketty does not. His focus on inequality, and thus on wealth, blinds him to the basic fact that unemployment is the real driver of poverty, a key dimension of inequality. Professor Nicoli Nattrass from UCT’s Centre for Social Science Research observes, “I was struck by the silences in his speech about employment. Inequality might be driven primarily by the very high earnings/incomes of the rich, but poverty is driven primarily by unemployment.” Ann Bernstein, Executive Director, Centre for Development and Enterprise, broadly agrees. “Piketty is dead wrong in dismissing employment as unimportant in the discussion about inequality in South Africa,” she says. “South Africa is a global outlier. In almost all countries, some 60% of the workforce is employed whereas here the employed number is just over 40%: that is a major cause of our appalling poverty and thus of inequality.” 1 2
While one must empathise with this view, the reality is that inequality and poverty are two sides of the same coin, and poverty has to be tackled first. While strongly believing that a society in which only the rich and connected seem able to prosper is in trouble, Bernstein argues, along with Nattrass and Seekings, that what’s critical is expanding the job market, not artificially raising the pay for existing jobs, especially in sectors facing international competition. Wage regulation can only adjust inequality amongst the employed but, as noted, could cost jobs; it will certainly not promote job expansion. In other words, tackling salary/job inequality directly will ultimately cause further inequality by perpetuating poverty, and prejudicing the poor. The Chinese experience referenced above is instructive, and we can all see how emigrants to this country are improving their lots by taking on low-paid work that locals spurn. TACKLING JOBLESS GROWTH
Another related economic reality is the phenomenon of jobless growth. The key to understanding what is going on lies, I believe, in the work of Professor Clayton Christensen of Harvard Business School.
A good introduction to Deaton’s thought in this area may be found in Leopold Scholtz, Escape from inequality, available at Fin24.com/Opinion/Escape-from-inequality-20151015. Jeremy Seekings and Nicoli Nattrass, ’National’ minimum wage-setting in South Africa, Forthcoming Centre for Social Science Research (UCT) paper; see also Lisa Steyn, SA unpicks Piketty’s Brazil knot, Mail & Guardian, 9-15 October 2015.
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. . . INEQUALITY AND POVERTY ARE TWO SIDES OF THE SAME COIN . . . ” Christensen’s argument is basically that the reliance on certain key management metrics (such as internal rate of return) leads companies to favour a short-term and low-risk approach to investment, and thus, in turn, sustaining rather than disruptive innovation. Sustaining innovation involves doing the same thing better, resulting in job losses through efficiency, outsourcing and the use of technology. Disruptive innovation, by contrast, aims to change the game by developing new products and services, and it can result in the creation of jobs. It has longer payback times, and is obviously riskier, at least in the short term.[1] Disruptive innovation, Christensen’s research shows, only happens when an innovator uses a low-cost, low-margin sector from which to attack established players. The disruptive products or services target the most price-sensitive, least-loyal customers – creating new jobs but destroying jobs in established firms. Christensen’s most famous study shows how US Big Steel had its lunch eaten by smaller competitors coming up from the bottom. Similarly, the first cars sold abroad by Toyota and Honda were low-quality, inexpensive sedans, and Mexico is progressing from low- to high-quality supplier to the US market.[2] The same principle is at play in China, which is arguably using manager-metric bias to convince firms to shift assets from their balance sheets (ownership) to their income statements (outsourcing fees).
GORDON INSTITUTE OF BUSINESS SCIENCE
SELLING THE FAMILY SILVER
Companies that focus on sustaining innovation exclusively are often profitable as they extract more value from existing customers, but chasing high margins and short-term financial returns can lead to diminished capacity and intellectual capital, making them easy prey. Dell offers a perfect example of this trajectory, says Christensen’s collaborator, Professor Kyle Welch of George Washington University. Once the leader in PCs, after several rounds of outsourcing Dell found itself competing with its outsource partner, ASUS, which is now the leader in personal computers. Here’s one reasons why “unpatriotic” South African companies are sitting on vast cash piles instead of investing in new, jobcreating enterprises. They simply do not see the quick returns
1 2 3
that corporates and their shareholders now expect, and so they find it better to hold the cash. As a result, South Africa, and Africa, are de-industrialising as manufacturing capacity is lost. The Economist[3] recently highlighted the issue in a must-read article. High African growth is being shown up as just commodity-driven (again), while manufacturing has declined by 1% from an already low 12% of the total economy. As a result, sub-Saharan Africa’s declining share of global exports stands now at 2.5%, while emerging East Asia is at just under 20%. We are back at the point made earlier by Nattrass and Bernstein: countries, like people, get rich first by working, and only then by inching their way up the value chain. And here, dare one say it, is where government could play a genuinely facilitative role: by making it worthwhile for companies to take their cash out of the bank and invest it in job-creating initiatives here in South Africa. Of course, this cash pile – one figure is R680 billion – is partly a vote of no confidence in the current government, but it’s also a by-product of the “financialisation” of industry described by Christensen. It dangerously impairs the company’s ability to remain competitive over the long term, but by contributing to rising levels of inequality through jobless growth, it also threatens the social stability on which business depends as much as the rest of us. GIBS’ Professor Adrian Saville says that it took the whole country to dismantle apartheid and that, similarly, it will take all of us to get the economy right. Smurthwaite would agree, arguing that we will need to create a different kind of economic approach to solve our issues. “We can’t just sit passively and wait for the state to do it,” she says. The snake eats its own tail, and we return to the question posed by my article on Mark Cutifani’s speech in July 2015 and the need to re-imagine the economic dispensation: Who will lead? When it comes to jobs and job creation, business must do what is necessary to deliver this pre-eminent social good
See Why finance is killing innovation in Acumen 12, p 30 for more detail. Greg Mills and Lyall White, In Mexico, manufacturing is a race to the top, Daily Maverick, 12 November 2015; a Brenthurst discussion paper is to be published on Brenthurstfoundation.org. More a marathon than a sprint, 7 November 2015, available at Economist.com.
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THE BUSINESS OF PRINTMAKING GORDON INSTITUTE OF BUSINESS SCIENCE
Words Chris Gibbons
As part of its series of Art on Campus exhibitions, GIBS recently staged the first SA Fine Art Print Fair, featuring the crème de la crème of the country’s printmakers. This prompted Acumen to take a closer look at the whole process, including both the business and artistic rationale behind the decision to make prints, instead of a single work of art like an oil painting or a watercolour. We spoke to experts Sharon Sampson, artist, printmaker and organiser of the SA Fine Art Print Fair, and Collin Cole of Parktown’s Blue Door Studio.
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WHAT MAKES A PRINT DIFFERENT FROM ANY OTHER FORM OF IMAGE?
SAMPSON: A print is an image transferred from a surface – usually
a plate (which can be Perspex, copper, zinc, aluminium or lino) – onto paper. The surface can be worked into creating a matrix, from which multiple images can be printed, unlike a painting.
COLE: Prints are produced by drawing or carving an image onto a hard surface such as a wood block, metal plate, or stone. This surface is then inked and the image is transferred to paper by the application of pressure, thus creating an impression, or print. The printed image that results is the exact reverse of the image on the plate. Unlike paintings or drawings, prints usually exist in multiple impressions, each of which has been created from the inked plate. The total number of impressions made is called an edition. Artists began to sign and number each impression around the turn of the 20th century to ensure that only the editions they intended to make would be in circulation. Plates are not to be used in subsequent printmaking runs without the artist’s explicit authorisation. The process of printing the edition is therefore just as important to the authenticity of a print as the act of inscribing the image onto the plate.
Above: Retrospect 1, Bevan de Wet, Intaglio, relief and embossing Below: Innocence, Mike Ellman-Brown, Drypoint etching
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Above Left: Blue Bulls Welcome to Soweto, Tommy Motswai, Ten colour lithograph Above Right: Wild Dog Disappearing Series, Marina Prando, Drypoint with charcoal Below: E is for Enemy of Democracy, Anton Kannemeyer, Nine colour lithograph
WHY WOULD AN ARTIST CHOOSE TO GO DOWN THIS ROUTE? SAMPSON: Printmaking allows the artist to produce
multiple images thus communicating with a wider audience. The artist also gets more ‘mileage’ from one artwork. Editioned prints (more than one), however they are produced, are considered original artworks, albeit in multiple form. Printmaking should not be equated to mass reproduction of images, as fine art printmaking is very hands-on.
COLE: One of the main reasons for the development of printmaking was the desire of artists to make more money from their work by selling multiple copies; printmaking satisfies this motive. The production of multiple copies also tends to reduce production costs and market price when compared to a single or unique image.
GORDON INSTITUTE OF BUSINESS SCIENCE
DO PRINTS SELL BETTER BECAUSE THEY ARE MORE ACCESSIBLE IN TERMS OF PRICE?
SAMPSON: Price is a key factor in printmaking. Generally
speaking, an editioned print by an artist should be less expensive than a painting or drawing – the identical size – by the same artist. Prints from a large edition should be less expensive than those from a small edition, or a single one-off print (monotype).
COLE: The price of each print is generally based on the size of the edition; prints from a limited edition, are worth more than those from an unlimited edition. The smaller the edition, the more valuable it is which creates exclusivity. Prices vary. For instance Sotheby’s set a record for one of the most expensive prints ever sold at auction, Pablo Picasso’s etching La Minotauromachie, 1932, which fetched £1.273 million in 2010.
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The Unrestricted Organisation of the Average Man, Colin Cole and Dina Kroon, Digital print on archival paper
DOES THE ARTIST NEED AN ADDITIONAL SKILL SET TO MAKE PRINTS?
SAMPSON: The artist needs to be skilled in drawing and most are
superb draftsmen. They should also be keen on experimentation and need to engage in the particular qualities that each printmaking process offers. Being a good technician also helps!
COLE: Intaglio printing is very much part of the total art of producing the fine print and should be considered as such – not as a separate process. It is easy enough to pull a fair proof on the first attempt. It is quite another matter to print consistently clean impressions, closely identical to each other, which will reveal the optimum of the image that lies below the surface of the plate. There are many variables in the selection of inks and papers, in press impression, wiping techniques, and other factors. Only after much experience will the artist-printmaker fully realise the plate’s inherent possibilities and be able to use them in a way most consistent with his own image.
THERE SEEMS TO BE A VERY GREAT RANGE OF PAPERS AND MATERIALS THAT CAN BE USED FOR PRINTMAKING? SAMPSON: Paper obviously plays a very important role, as it is
the printmaker’s ‘canvas’. Printmakers are very particular about the paper they use. As you say, there is a wide range and variety
produced in many countries, though the selection in SA is limited. When choosing a paper, the printmaker will take many aspects into consideration: The technique will prevail when it comes to selecting the paper’s weight, texture, colour, price. It might be hand-made, mould-made, sized. Even the edges come into play; deckle on four sides or just two. Materials include inks and printmaking mediums: plates, brayers, water baths (for soaking paper), drying racks for drying prints, pressing racks, plan chests for storage and of course a printing press. COLE: The success of a print depends to a large degree on the quality and character of the paper chosen for a particular purpose. The knowledge of paper, its history, its chemistry and characteristics, is therefore of vital importance to the printmaker, or, in fact, to anyone who uses this precious material for artistic purposes. When referring to the medium of printmaking it relates directly to the technique in the making of a print for example, intaglio, engraving, lithography, serigraphy, reliefprinting, photomechanical processes, mono-printing, stencil printing, chine collet, collagraph printing. Each of these mediums has characteristics and intrinsic elements that are unique to each other. The artist would select a medium that best fits the characteristic of his or her subject matter and content.
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PRINTING CAN INVOLVE EXPENSIVE EQUIPMENT – DO MOST ARTISTS MAKE THEIR OWN PRINTS OR DO THEY TAKE THEM TO SPECIALIST PRINTERS? SAMPSON: Artists who don’t have their own
presses print at print studios (they are few and far between in SA). Print shops will print an edition for professional artists on a ‘contract’ or ‘publish’ basis. Smallish printing presses are made locally and are reasonably priced. I bought a locally manufactured large hydraulic printing press (bed size 150 X 90cm) six years ago, which I believe is now the price of a small car!
GORDON INSTITUTE OF BUSINESS SCIENCE
Above Left: Aloe isaloensis, Sibonelo Chiliza, Seven colour lithograph Above Right: Untitled 2, Jeremy Sampson, Monotype Below: Tribute to Ephraim Ngatane, Sam Nhlengethwa, Eleven colour lithograph
COLE: Artists who are fortunate enough to own their own presses and art studios are able to make a print from its conception to final edition in their studios. However some artists use the facilities of other print studios and publishing houses to facilitate the production of their work. For example, David Krut is the official production and publishing studio for artists like William Kentridge and Diane Victor.
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advertorial
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LEADERSHIP NURTURED BARLOWORLDGIBS CUSTOMISED LEADERSHIP PROGRAMME YIELDS REAL RESULTS
Delegates for the Barloworld Leadership Development Programme at GIBS from 2015
on specific topics suited to our business. This programme has yielded positive results, both for the company and our employees,” said Wish. Within the company, the EDP and LDP are viewed as prestigious programmes with stringent entry requirements. It really is an enticing prospect and our employees aspire to be part of these programmes as it not only shapes their careers, but enhances our leadership capacity. Also, the research and development insights are invaluable for our businesses.
JOHANNESBURG – BARLOWORLD is cementing the strength of its leaders through a pioneering leadership programme rolled out in partnership with the Gordon Institute of Business Science (GIBS).
The programme is well supported by Barloworld’s senior leadership. Each group is allocated a project sponsor from Barloworld’s senior executive leadership to guide them on the viability, implementation and presentation of a final project, as well as its suitability to Barloworld’s stable of businesses.
For the past 15 years Barloworld has run two leadership programmes through GIBS: its Leadership Development Programme (LDP) and the Executive Development Programme (EDP), for its middle- and toplevel management respectively.
“The project has to be meaningful and all the projects are presented to Barloworld’s Executive Committee for approval. There have been a number of projects which have been successfully implemented in our business,” said Wish.
The courses are both action learning programmes, and are based on customised projects related to the Barloworld business. The specialised curricula include courses on strategy development, financial management, leadership, stakeholder management and pertinent topics related to the environment and climate change and their impact on today’s business, the impact of technology and many more. The yearly intake is 30-40 candidates for the LDP, and 20-25 delegates for the EDP. To date, 783 delegates have attended the two programmes at GIBS.
A common challenge for companies adopting a group model structure is the integration of strategic thinking across its various businesses, said Wish. “This programme has helped our employees from various businesses share their ideas, and build stronger working relationships. We have effectively used this platform to communicate our strategic thinking as a collective business.”
Jane Wish, Barloworld’s Executive for Global Human Resources, said Barloworld was one of the first companies to partner with GIBS on customised leadership programmes. “GIBS has been very accommodating of our needs, and has brought in subject matter experts and used our senior executives for training
Karl Hofmeyr, the Professor of Leadership at GIBS, said it was clear from the onset that Barloworld was going to invest time and effort in the design and shape of the leadership programmes. “We really value our long-standing relationship with Barloworld, and we have learnt from them how these leadership programmes should and could be designed. The programme is a real showcase of how this concept of customised leadership programmes can work well. It was really encouraging to see how committed Barloworld’s executives were to it, walking the path with their candidates,” said Professor Hofmeyr
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For more information on Barloworld: web: www.barloworld.com twitter: @BarloworldLtd email: Groupmarcomms@Barloworld.com
Delegates for the Barloworld Executive Development Programme at GIBS from 2014
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PATENTLY LAGGING South Africa's patent numbers paint a dismal picture of the country's competitiveness, but attempts by government to grow the reservoir of patented intellectual property are being met with suspicion by industry.
GORDON INSTITUTE OF BUSINESS SCIENCE
Patents, and the intellectual property contained in them, are considered an important metric of companies’ – and countries’ – ability to compete in a global marketplace. The countries with the intellectual property sell products, services and systems to countries without that know-how. As things stand, South Africa is a consumer of technology, bleeding money to other countries. According to the most recent science, technology and innovation indicators, in 2013 the country imported $1.9-billion worth of technology, but only received $63-million for its own technological exports. This gap continues to widen each year, as we increasingly buy other countries’ technology while our own technology commercialisation lags. At the launch of these figures in early 2015, South Africa’s National Advisory Council on Innovation’s Dr. Azar Jammine said: “If you keep importing more than you are exporting, you have this balance of trade deficit and you become more and more reliant on foreign exchange...
“The more you innovate, the more competitive you should become to your peers. It enhances the ability of your country to export more with its own facilities, and not rely on imports to keep the economy going.” South Africa’s negative technology balance of payments “is one of the largest anywhere in the world. It means we are dependent on the whims of international investors,” Jammine said. As the rand sinks to its weakest levels ever, the country’s reliance on imports and foreign exchange becomes even more expensive. A DOWNWARD GRAPH
But the country’s patent numbers – a tangible metric of the extent to which we are innovating and developing new products and services – continue to drop. From a decadal high of 144 patent families in 2008, that number plummeted to 45 in 2012. A patent family is a group of patents filed at different patent offices for the same invention by the same owner or inventor. The authors of the 2014 indicators do note, though, that there may be a lag in the patent figures due to processing and publishing this data.
PHOTOS: SHUTTERSTOCK IMAGES
Words Sarah Wild
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For some context, according to the Organisation for Economic Co-operation and Development’s 2010 triadic patent family figures (which are for patents filed at three international patent offices, namely the US, European and Japanese), South Africa had 26, China had 875, the US had almost 14 000. There is an argument in innovation circles as to whether it is fair to compare South Africa, with its relatively small nascent innovation system and comparatively small population, to innovation behemoths like China and the United States. When asked, Anastassios Pouris, Director of the University of Pretoria’s Institute for Technological Innovation, said: “The approach is similar to a marathon. It does not help if you run and everyone else is faster than you. Our GDP, our economic activity, depends on how competitive we are in comparison to the rest of the world.”
. . . SOUTH AFRICA IS A CONSUMER OF TECHNOLOGY, BLEEDING MONEY TO OTHER COUNTRIES” While government has mechanisms and programmes in place – that have met with varying degrees of success – to encourage research and patenting by businesses, it cannot force business’s hand. It does, however, have the ability to dictate what happens with research conducted with taxpayers’ money – one of the few mechanisms in the innovation space that it has the ability to control directly. This is particularly notable considering that the 2012-2013 financial year heralded a watershed for the country’s science, technology and innovation space: for the first time in democratic South Africa, government spent more money on research and development (R&D) than business. This is a rather singular situation because, worldwide, business is usually the driver of R&D. DISINVESTMENT
In South Africa, though, business’s investment in R&D has been steadily declining for a number of years because, as analysts have pointed out, R&D is just another form of investment and there is a wider reticence on the part of business to invest in South Africa. This does not help the country’s rather dire patent situation. According to the 2007 Innovation Fund special report on the state of patenting in South Africa, over a 15-year period, South African institutions accounted for about 4% of all patent applications originating from the country.
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“This is a very low patenting rate considering [that universities] comprise the biggest concentration of knowledge workers in the country,” says McLean Sibanda, Chief Executive Officer of The Innovation Hub in Pretoria and author of the 2007 special report. “The lack of appreciation by researchers of the value of intellectual property emanating from their research has also characterised itself in some of the most internationally cited and recognised patents emanating from South African institutions being sold to off-shore entities with meagre returns to the country.” GOVERNMENT’S ROLE
Enter the Intellectual Property Rights from Publicly Financed Research and Development Act, known as the IPR Act. Signed into law in 2008, the act aims to “make provision that intellectual property emanating from publicly financed R&D is identified, protected, utilised and commercialised for the benefit of the people of the Republic, whether it be for a social, economic, military or any other benefit”. All researchers who receive taxpayers’ money are now required, by law, to determine whether the intellectual property developed through their research should be protected. However, this makes industry partners nervous. “In a nutshell, whenever government funding is involved, the rules for intellectual property don’t favour any foreign companies at all,” an employee of a multinational company doing research in South Africa told Acumen. The source spoke on the condition of anonymity, as being named could damage relations with government and university partners. “Even if you are co-funding on a 50-50 basis, you have no rights to any of the intellectual property… The only time you get the intellectual property is 100% funding,” the source said. “[Otherwise] the best you can hope for is royalties to use the intellectual property, and the institution is still at liberty to sell the intellectual property to another company… It’s a sticking point when it comes to putting more money into research.” Ela Romanowska – Director of Technology Transfer at the University of the Witwatersrand’s Wits Enterprise, and VicePresident for Innovation and Technology Transfer at the Southern African Research and Innovation Management Association – says tech transfer directors are aware of the negative perceptions surrounding the IPR Act and its impact on industry partners working with universities. “The bottom line is that in the past, an industry partner would pay for a bursary for a Masters or a Ph.D student, and they would automatically expect to get the intellectual property,” she explains. But the full cost of funding research is more than just the registration fees, Romanowska says. “[Following the IPR Act] to own the intellectual property that comes out of a piece of research, industry is having to pay more than the registration fee. We appreciate that that will meet with some resistance, but I don’t think that it’s a fundamentally flawed principle.”
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. . . THE INTELLECTUAL PROPERTY WAS BEING SHIPPED OFFSHORE . . . ” NIPMO
The IPR Act is based on a piece of legislation introduced in the United States in 1980: the Bayh-Dole Act, or Patent and Trademark Law Amendments Act. The United States saw a significant increase in patents following this legislation, which mandates research institutions to protect commercialisable research paid for with federal money and license it. “South Africa was by no means the first country [to] implement this Bayh-Dole-type legislation,” says Dr. Kerry Faul, head of the National Intellectual Property Management Office (NIPMO). Similar types of legislation have been passed in Germany, China, Malaysia and Brazil, among many others. There were two main reasons why South Africa went this route, Faul says. “Firstly, large amounts of public funds are being spent on R&D, but the translation into products, processes and services was observed as being low. Secondly, we were finding that when intellectual property was being developed – which had the potential for resulting in a product, process or service – the intellectual property was being shipped offshore and as South Africans we were not benefitting from the intellectual property, and instead were faced with the possibility of having to pay again to access the resultant product, process or service.”
GORDON INSTITUTE OF BUSINESS SCIENCE
Since it came into effect in August 2010, the number of disclosures at technology transfer offices has almost tripled with the number of patents doubling, Faul says. The IPR Act legislated for the establishment of NIPMO, as well as a number of technology transfer offices around the country to which all research institutions are now obliged to report. NIPMO, the office which manages publicly funded intellectual property, “has received over 1 000 disclosures from institutions, of which 71% are inventions, 5% have been licensed and over R2.5 million in revenue has accrued to the institutions”, she says. But while this is positive for university-developed intellectual property, what does it mean for co-developed intellectual property? The IPR Act offers business three scenarios for conducting research through or with universities or research councils: the institution owns the intellectual property (this is the default position), co-ownership or the company owns the intellectual
property (which occurs when the company pays for the full cost of the research). If the company pays for 100% of the research, it is considered outside of the scope of the IPR Act. Faul notes: “It is not just about what intellectual property you own, but also about what intellectual property you can access. If you own it, you have to carry all the costs for prosecuting and maintaining it, but if you have access (via a license) then you can use the intellectual property.” UNDERSTANDING NEEDED
However, the Act is broad and discretionary, Wits’ Romanowska says, indicating that they offer several options for industry to gain intellectual property or own it outright. Industry partners “can decide, depending on the commercial sensitivity and how much they are prepared to pay, which modality they prefer … Every project is different and, depending on the modality they choose, they would pay different amounts,” she says. But there is no one-size-fits-all within an institution or a standardisation across institutions, as projects and industry partners’ requirements differ. “A university is free to negotiate whatever they like… The IPR Act doesn’t value intellectual property at all, although it sets a bar in terms of what constitutes the full cost of conducting research. Ultimately the price for the intellectual property is a negotiation between the institution and the company. The IPR Act says, ‘Pay a fair price’,” Romanowska says, adding that industry partners can also obtain access to the intellectual property under license. Universities can price themselves out of the market, though. “I imagine that universities would be pragmatic and check that they are at least competitive in the market. At the end of the day, that’s how business works,” she says. “If they charge too much, industry will go somewhere else … If the university charges their researchers’ time at R10 000 an hour, but the work could be done at R2 000 an hour, they are clearly pricing themselves out of the market.” Both Romanowska and Faul acknowledge that there is a negative perception that can only be altered through awareness, fair negotiations and advocacy. “Intellectual property issues may well be scaring away collaborators but in general it is due to a lack of understanding of the legislation,” Faul says
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UNIVERSITIES CAN PRICE THEMSELVES OUT OF THE MARKET . . . ”
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BACK TO BLACK
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Bruce Berry
Words Cara Bouwer
With the economy in dire straits, South Africa cannot afford to let businesses fail. Business rescue holds the hope of a stay of execution for beleaguered companies; is it up to the task? In May 2011, Chapter 6 of the Companies Act 2008 introduced the term ‘business rescue’ into the South African business lexicon. Like a rehabilitation programme, business rescue aims to restore ailing companies to good health while maintaining as much value as possible. Bruce Berry, Manager: Business Support and Recovery Unit at the Development Bank of Southern Africa, explains that business rescue has taken over from the old regime of judicial management or liquidation for companies in trouble. “Given the political and economic situation in South Africa, we need to preserve as many jobs as possible,” he says. With the South African economy projected to grow at only 1.5% in 2015 and 1.7% in 2016, Keith Fairhurst, of Unleash Business Consulting, adds: “The lifeblood of most modern economies is not the listed companies but the small and medium enterprises (SMEs), and those SMEs need every leg up so they can survive. Then some will become large businesses. The economy is in a
particularly bad way and that is impacting on all businesses, but the not-so-big businesses are particularly feeling the pinch.” The purpose of business rescue is to give a struggling company a legal moratorium during which time the leadership can devise a turnaround plan. During this time a business rescue practitioner takes over the company. Berry explains: “The company is still operating in most cases and the business rescue practitioner becomes the CEO.” So he or she is responsible for managing the company and coming up with a viable turnaround strategy. “As part of that plan, you might have to slice and dice, and you might have to lose some jobs, but you try not to lose all of them.”
THE PROBLEMS OF YOUTH
A business rescue practitioner needs to cover the gambit in terms of business management and general management; they need an understanding of financials, the law, ethics, accounting and management. But this multi-faceted young industry currently suffers from a lack of regulation. Berry explains: “At the
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moment, in terms of how you become a licenced business rescue practitioner, you submit a portfolio of evidence of work done and a CV and on that basis, CIPC (the Companies and Intellectual Property Commission, which has oversight and issues licences for business rescue practitioners in terms of the Act) will accredit you. The problem is that there is no standardisation within the industry, so you have some business rescue practitioners who are taking on a lot of matters, too many in our opinion (as Turnaround Management Association Southern Africa) for them to reasonably (service).” Berry chairs the education committee for the TMA SA, which is based on the United States’ TMA, the largest professional global association for turnaround practitioners. Fairhurst, also a TMA SA member, explains: “The mission in South Africa is to professionalise the turnaround and business rescue industry. We expanded to go beyond just business rescue to include turnarounds, because turnarounds can happen before you need hospitalisation or intensive care.” To this end in 2015 the TMA drew on international input and teamed up with the University of Pretoria to create the Certified Rescue Analyst course. Fairhurst explains that the “first intake finishes in March or April 2016. The second intake commences at the beginning of 2016”. By educating business on what to look for and what to do when the warning lights go on, Berry believes the effectiveness of business rescue will increase. “Of course you will have liquidations, but with business rescue at the right time, with the right input, and the right follow through, you can achieve the desired result.”
GORDON INSTITUTE OF BUSINESS SCIENCE
A SUITABLE CASE FOR TREATMENT
A high-profile current case, which promises to be a litmus test for the business rescue industry, is Evraz Highveld Steel and Vanadium Limited. Once the country’s second-largest steel producer, Highveld Steel was placed under business rescue in April 2015, due to a slump in demand for steel. In late October 2015, Bloomberg News quoted business rescue practitioners Matuson & Associates as saying that without Hong Kong’s International Resources proposed buyout of the company (valued at R370 million), Highveld would likely have to be liquidated. This after Russian steelmaker Evraz opposed the proposed rescue package. Fairhurst says Highveld highlights a real need for business rescue. “The impact of stress goes way beyond what is being reported,” he says, noting that talk on the street is that up to 600 companies in the Witbank (eMalahleni) area are dependent on Highveld. “The knock-on effect of a company like Highveld failing goes way beyond the direct measures being reported.” Unleash represented one of these ‘downstream’ companies in business rescue. Still owed R10 million by Highveld, the company was ultimately put into liquidation. Fairhurst explains: “We also
represented another two creditors on the Highveld matter; one of them (in for R9 million) can weather it. The other, in for R1 million, has been incredibly prudent over the last four years, [and has] in place a war chest for hard times, so they can weather a bad debt of R1 million.”
ACT EARLY
These are the good news stories, but Fairhurst believes that for business rescue to have any chance of working, owners and managers need to act swiftly at the first sign of trouble. “Many companies are living in denial. It’s recognised that the first step in sorting out distress is management acknowledging there is a problem. We believe the signs are there two years before. Some experts believe they can forecast (a company is in trouble) up to five years in advance; in large companies.” Taking heed of these warning signs certainly requires a level of maturity at director level; as well as a deep sensitivity to the challenging business environment in South Africa. “There is a nice saying that when the tide goes out you can see who isn’t wearing swimming costumes. That is what is happening at the moment,” comments Fairhurst. “Every inefficiency that builds up in an organisation in the good times is now being exposed. I think it’s putting it mildly to assume 2016 will be a tough year. I think we are going to see a lot of naked people.” The question is: does business rescue have enough towels?
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FACTS AND FIGURES
Between 1 May 2011 and 31 March 2015, 1 654 business rescue cases were started in South Africa – 883 cases are still active and 771 cases were concluded; of which 155 ended in liquidation. These findings are among the few statistics available currently on the new industry. Compiled by Dr. Marius Pretorius, Professor: Business Rescue, Strategy and Leadership from the University of Pretoria (UP), the Status of Business Rescue Proceedings in South Africa (March 2015) report shows a steady increase in the number of cases opened: 384 in 2011-2014 (102 still active as at 31 March 2015) rising to 413 in 2014-2015 (344 still active). Of the 1 654 cases opened, the bulk of proceedings involved private companies (1 047) and most (over 53%) were located in Gauteng, with 17% in the Western Cape. Of the affected industries, 17% of cases involved firms in the wholesale, retail trade and motor repair sector, followed by construction (10%), mining and quarrying (10%) manufacturing (9%), real estate activities (9%), finance and insurance activities (8%) and transportation and storage (8%).
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PHOTO: GETTY IMAGES / GALLO IMAGES
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Wolfsburg VW Plant
WIN BACK THE TRUST Words Chris Gibbons
Following shock revelations about cheating on diesel emissions tests, top executives at German car-maker Volkswagen say their number one priority is to win back trust. Are they going about it the right way, though? VW’s supervisory board Chairman Hans Dieter Pötsch says the firm has “lost the trust of our customers, investors and employees. As well as the trust from politicians and the public. The biggest challenge is to win back that trust.”
Testifying to Congress in Washington a fortnight or so later, Horn, a 25-year VW veteran, confirmed that the company had “broken the trust of our customers, dealerships, and employees, as well as the public and regulators.”
Unsurprisingly, VW’s new CEO, Matthias Mueller and the head of the giant car-maker’s North American business, Michael Horn echo Pötsch’s sentiments. “My most urgent task is to win back trust for the Volkswagen Group by leaving no stone unturned and with maximum transparency,” said Mueller shortly after his appointment in September last year. He was brought on board after then-CEO Martin Winterkorn fell on his sword as a result of the scandal.
So what should a vast company like VW do when it finds itself in a mess of such epic proportions? And has the Wolfsburg-based giant taken the right steps so far?
TRUE CONFESSIONS “One of the core principles of crisis mitigation is that you’ll be judged not by what caused the crisis but by your actions and decisions responding to it. Your response reflects your character
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and values,” says Alan Hilburg, New York-based president of Hilburg Associates and a global leader in this field. “VW was initially responsive and nimble, but they lost the narrative because they were too slow in assigning responsibility for who knew what and when, and doing something about it. They took no dramatic action steps to say, ‘We’ve identified the executives that made this anti-values decision and we’ve removed them.’ A bad situation that drifts out of control always gets worse,” says Hilburg, whose experience stretches back to the strategy he designed in 1982 for Johnson & Johnson, when a mass murderer laced their Tylenol pain-killer product with cyanide, killing seven people in the greater Chicago area. Horn certainly drew praise for his honesty on Capitol Hill, particularly when he stated that he also struggled “to understand how such a thing could have happened without the knowledge of senior management.” But South African car industry veteran and marketing expert Chris Moerdyk agrees with Hilburg: “VW head office has failed dismally in terms of crisis management, generally speaking.” He is also scathing about VW South Africa’s response: “VW South Africa has a history of arrogance, in my opinion. As someone who gets involved in customer service training, I have had all manner of conversations with VW owners who have experienced bad enough service to lead me to this conclusion. “Another example of this arrogance was VW South Africa’s eventual media statement claiming that VW cars in South Africa were all within the emissions requirements. No mention was made of the fact that SA’s emissions requirements are much lower than the US, for example,” says Moerdyk.
WHAT NOW?
Several critics of VW have pointed to the company’s structure as one cause of the crisis – a few very large and secretive shareholders, along with management and supervisory boards made up almost entirely of insiders. If this is indeed a problem, Alan Hilburg believes the company needs to shift to values- driven leadership. “All great organisations have common traits. Great brand trust. Great values. Great leadership with a clear view of their higher purpose. The value of great values is that those values guide every decision everyone makes everyday. Values-driven decisions and decision-making shatters organisational silos, biases, and the breakdown of transparency and sharing of knowledge,” he says, adding that “VW is experiencing a painful lesson in the high cost of low trust.” When a company’s brand has been contaminated by the company’s own decisions, Hilburg offers a number of important steps to rebuilding trust: RE-EXAMINE YOUR VALUES Do they reflect contemporary
behaviours or desired behaviours? Is everyone in the organisation fluent in the values?
REVISIT YOUR BRAND TRUST STRATEGY Understand how your brand ‘touch’ feels and how that feeling has been jeopardised by the recent events. Triple your investment to demonstrate you take customer trust seriously. RE-BOOT THE CUSTOMER EXPERIENCE VW has to take the three
elements of an exceptional showroom experience to a new level. (1. The Welcome. 2. The Connection. 3. The Close.) REMIND THE MARKET WHY THEY TRUSTED VW
Engineering excellence with flair. (Re-establish the high value of high trust.)
GORDON INSTITUTE OF BUSINESS SCIENCE
RESTAGE THEIR PROFILE Senior executives in every market need to establish a high profile where they speak on reversing the international crisis of distrust. (An opportunity to put their experience in a larger context to explain what one large company is doing about it.)
VW’s greatest challenge, according to Hilburg, “is that in retrenching and retracting in order to accumulate the cash and assets necessary to respond to the penalty of their decisions, they are diverting important resources from the recovery.”
DO WE REALLY CARE?
Hans Dieter Pötsch
Chris Moerdyk has a more nuanced – some might even say cynical – view: “It is important to balance [VW’s] seemingly guarded and often dismissive statements with the real effect this crisis will have on the consumer. One has to bear in mind that the software VW added to fool emission testing would have had the effect of allowing the affected cars to actually perform
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willing to bet that is very rare for any potential buyer to take that number into consideration when choosing a car. What they will look at seriously is fuel consumption and performance – and both of these are inhibited by stringent emission control. If one were to ask the average motorist whether they would prefer better emission controls at the expense of fuel consumption or performance, I am not in any way convinced they would choose emission controls.”
THE COST
Matthias Mueller
better when being driven and this would have appealed to what I believe to be the majority of consumers. Like most global car brands VW is undoubtedly aware of the fact that for the majority of drivers things like emissions and even safety do not really rate that highly.” Moerdyk recalls that many years ago, before countries began insisting on safety features, Toyota offered airbags as a optional extra on their cars, “not a single airbag was purchased worldwide. For many motorists, if they had the choice of all the safety features such as airbags, ABS brakes, collision control systems, dynamic suspension, etc., or a lower price – the majority, especially younger consumers, would probably opt for the lower prices.” He also thinks that VW not only knows this but has also taken it into account: “It is the only possible explanation for their shockingly bad crisis management performance.” Nonetheless, Moerdyk has no doubt that VW will bounce back “in spite of the horrendous cost of putting things right on all the cars affected by this technical skulduggery. Both in terms of money and reputation. I do not believe the consumer cares too much about this blot on VW’s reputation because the VW debacle has to be seen in the context of a business world today that is being continually found wanting in terms of ethical behaviour.” He adds that he doesn’t believe VW is alone in all of this, “because there is no question that most motor manufacturers believe that emission controls, particularly those in the USA, are far too harsh to the point of seriously inhibiting performance. All brands make a point of highlighting what they are doing in terms of emission controls and ‘going green’ but I suspect this is more for the benefit of legislators than customers.” Look at most motoring magazines, says Moerdyk, and “you will see a column on their model listings showing emission data. I am
While VW has provisioned in excess of €6.5 billion to cover the cost of recalled vehicles and also faces steep fines in both Europe and America, “it remains to be seen what a long-term impact on VW’s brand and sales will be,” says Coronation Asset Management’s emerging markets analyst David Cook. Writing in the October 2015 edition of Corospondent, the fund manager’s quarterly magazine, Cook notes that “Judging from similar cases in the past, market share losses will be short-lived.” He says VW has approximately “€25 billion in net cash on their balance sheet, should generate free cash flow of €4 billion to €5 billion per year, and thus should be able to weather the shorterterm tough trading conditions and pay the necessary fines and compensation…” At one point after the crisis broke, VW’s shares were down 41% – a drop of €33 billion in market capitalisation, but Cook believes “the sell-off is well overdone, and thus presents an attractive investment opportunity. We have been adding to the Porsche [VW’s holding company] positions in our funds.”
PROGRESS REPORTS
VW’s Wolfsburg head office has warned against expectations of any quick investigation, with Chairman Pötsch stating that finding's answers would take “some time”. However, it has already unveiled the preliminary results of its investigation into the scandal. At a news conference in early December last year, Pötsch admitted to “a mindset” in parts of the company that permitted rule breaking. He also confirmed that the decision to fit the socalled “defeat” devices to beat the emission tests had been taken because it had not been possible to comply with US standards “within the required timeframe and budget”. At the time of writing, a US law firm, Jones Day, is continuing its investigation into the scandal, although no names have surfaced so far. But, as any recovering alcoholic will confirm, the initial step to recovery is to admit there’s a problem in the first place. At least VW has done that
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PHOTO: GETTY IMAGES / GALLO IMAGES
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COMPUTER-BASED LEARNING TO IMPROVE MATHS AND SCIENCE SKILLS As the 2016 academic year kicks off, the country’s education system remains under pressure to ensure that it produces highquality school graduates who can contribute towards building South Africa’s knowledge economy. A key component of building a knowledge economy would be to develop adequate mathematics and scientific skills. The lack of such skills is one of the major impediments to attaining equitable social and economic development in South Africa. The country ranked last among 144 countries surveyed in the quality of
Mobile computer labs
mathematics and science education in the Global Competitiveness Report 2014 – 2015 of the World Economic Forum. Improving performance and proficiency in mathematics and science is one of the main goals identified in the National Development Plan (NDP) 2030. Chapter 9 of the NDP, Improving Education, Training and Innovation, has set a target of 80% of schools and learners achieving 50% in a standardised mathematics examination by 2030. The NDP further aims to increase the number of students eligible to study mathematics
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northern KwaZulu-Natal, it is dedicated to identifying and implementing innovative solutions to the health and social problems faced by young people in South Africa, especially impoverished youth living in rural areas. The DST partnered with the Department of Public Service and Administration (DPSA) to contribute R2 million each towards the computer-assisted learning project to support mathematics and science teaching in these rural schools. The project was selected through the DPSA’s Tirelo Bosha Public Service Improvement Facility. This is a grant facility that supports new ways of improving frontline service delivery in all three spheres of government. The Minister of Science and Technology, Naledi Pandor, handed over four mobile computer labs to the non-governmental organisation (NGO), Mpilonhle
and science at university to 450 000. If such targets are to be met, a Herculean effort will be required by all role players, including government, business, academia and society in general. The NDP also calls for innovative ways to improve educational performance, including engaging professionals from outside the Department of Basic Education to assist. While some of the NDP recommendations will take time to implement, including an improved teacher workforce and school infrastructure, there are several initiatives that could contribute immediately, such as computer-based interventions. The Department of Science and Technology (DST) has already invested in such initiatives with the launch of information and communication technology (ICT)-based pilot projects in rural areas such as Cofimvaba in the Eastern Cape. These programmes not only improve pupils’ skills in mathematics and science, but they also expose them to computers and tablets. When schools reopened for the 2016 academic year, the DST launched another computer-based initiative in the uMkhanyakude District in KwaZulu-Natal. Like so many rural areas, the region is impoverished and faces a number of challenges that impact on learning. In the 2014 Annual National Assessment, grade 6 learners in the uMkhanyakude District achieved an average percentage of 40,1% in mathematics. Grade 9 learners only achieved an average percentage of 9,2% in mathematics, versus 10,8% for the nation as a whole. This dire situation requires several interventions to improve mathematics and science performance.
The computer-based initiative makes use of educational software made available from the global Khan Academy. The organisation provides free world-class mathematics and science education to anyone anywhere in the world. The Khan Academy has a particularly rich set of instructional materials, with thousands of specific topics in mathematics and science, from basic elementary lessons (subtraction and addition) to advanced (calculus). These materials include instructional videos, in which the concepts are explained, quizzes in which learners can test out their knowledge – with hints and assistance to solve problems – and tests that grade proficiency. The computer units are ruggedised (hard-wearing), low-energy consuming, theft-resistant and mobile, and thus do not require a dedicated classroom. The units are supported and managed by computer “coaches”, who are recent graduates of local high schools and have computer training and literacy in operating Khan Academy programs. The Khan Academy curriculum is designed to be used on the Internet; however, an abridged version – KA Lite – is being used, which works offline. One drawback to this is that the lack of access to the Internet means that learners do not have access to the online version of the Khan Academy software, or the wealth of information and knowledge available on the Internet. Mpilonhle says this learning programme potentially provides a model that can be replicated at relatively low cost. Furthermore, it is aligned with a number of important social and governmental objectives, including improving mathematics. The NGO says the progamme’s sustainability is enhanced by using computer units designed for rural conditions and schools, staffing by local nonprofessionals, and the use of freeware, rather than the expensive proprietary educational software that is now being aggressively marketed
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The majority of schools in the uMkhanyakude District lack computer labs for learners. For this reason, the area was earmarked to benefit from the computer-based learning initiative. The project involves mobile computer labs erected at schools for a specific time period. The Minister of Science and Technology, Naledi Pandor, handed over four mobile computer labs to the non-governmental organisation (NGO), Mpilonhle. Each lab contains 40 computers.
For more information contact Zama Mthethwa
Mpilonhle is a South African community-based organisation founded in 2006. Based in the uMkhanyakude District of
E-mail: Zama.Mthethwa@ dst.gov.za • www.dst.gov.za
Department of Science and Technology Tel: +2712 843 6781 Fax: +27 86 681 0140
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BASHING BIAS Words Gert Scholz
Gert Scholz
Over the last two decades there has been a proliferation of academic and management literature on our decision biases and heuristics. How we think we are rational but are not. How we assume we have given an issue proper deliberation, but conveniently take shortcuts in our decision-making. Books by Dan Ariely (Predictably Irrational), Daniel Kahneman (Thinking Fast and Slow), and the entertaining You Are Not So Smart by David McRaney, have all added to the body of evidence of how full of foibles our choices are, and how we are, after all, not the rational beings our economics professors once taught us.
GORDON INSTITUTE OF BUSINESS SCIENCE
. . . WE ARE NOT HOMO ECONOMICUS, BUT HOMO HEURISTICUS . . . ” We anchor our judgements, are extremely averse to loss, in our effort to maintain harmony we fall prey to groupthink, we construe and confirm information to suit our preconceived ideas, and we err based on the way a question is framed. It turns out we are not Homo Economicus, but Homo Heuristicus when it comes to making decisions in life and in business. So the big questions are how can we make better decisions, and how do we beat our biases? Some experts are sceptical that we can even be aware of our biases, much less overcome them. But research and observational experience shows we can reduce and eliminate the effects of bias, and improve the outcomes of the decisions we make and directions we take. Here are four ways.
So you think you’re a rational being and can make equally rational decisions? Well, you may have to think again – but there are several ways around the problem.
INCREASE SOCIAL CALIBRATION
A study at Bell Labs investigated why the star performers had better idea flow than average performers. Bell Labs was known for its inventiveness and traditionally hired the best and the brightest. But only a few truly stood out for their brilliance and these individuals were not necessarily the smartest of the group. The researchers found that the star performers showed one huge advantage over others; they formed, maintained and tapped into diverse social networks. The stars used these networks for preparatory exploration and for assistance on new undertakings. They would bounce their ideas and potential decisions off many, and importantly, diverse people in and outside the company. Employees from other departments, in other functions and in different hierarchical levels and also customers and opinionmakers outside the company, all of which gave a rich diversity of perspectives before the ultimate decision was made and a new project embarked on. By increasing their idea flow past inside and outside sources, these stars would eventually be able to better calibrate and formulate their plans and decisions. The same effect was found in a similar study on a group of financial markets traders. Those that opened up their trades to scrutiny and took in the feedback showed returns on investments a mighty 30% higher than those that did not. Social calibration diffuses our herd instincts and (typically corporate) bias for immediate action, and it adds to the rich diversity of ideas which hones good decisions.
DELIBERATE (FAR) IN ADVANCE
Decision biases are, often at a subconscious level, based on emotional reactions to perceived threats and opportunities in those around us and in our environment. In its most basic form our fight or flight responses influence us when we instantly like
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or dislike another. Decision heuristics are decision shortcuts – patterns of thought that we conveniently apply when a situation appears familiar to us. In business we very often make a decision and choose a course of action under time pressure and stress, inducing and amplifying the need to use a decision heuristic or to rely on a thinking bias. Decisions made without deliberation and on the moment invite our more emotional predilections to steer us. Under the strain of deadlines we simply don’t have sufficient time or mental energy for the prefrontal cortex to assess and guide its own intuitive awareness and have much less capacity to override impulses. A tired and a stressed brain defaults to bias. So while the time may not yet call for it and the circumstances ultimately may vary, deliberate important decisions far in advance. Research has shown that early deliberation increases the ability to make strategic decisions later requiring sacrifices, it increases charitable giving in a future situation, it adds to the healthfulness of future food choices and contributions to retirement savings contemplated before it had to be made, and increased such contributions. In all these cases the decision was ultimately better because wayward impulses were anticipated and overridden in advance. Further studies showed early deliberation invoked a higher construal level mindset, which means that there is more focus on abstract (why) elements of a choice rather than immediate objectives (how). In other words the rationale of a decision is better judged and erroneous false starts are avoided. Deliberation in advance, without the visceral pull of being in the ultimate crunch situation, lessens emotive sway and stress-induced quick fixes.
PRACTICE CONSTRUCTIVE UNCERTAINTY
We all share and like certainty and the feeling of control that goes with it. We tend to feel ill at ease in risky and ambiguous situations and try to find an explanation or reason for it quickly to assuage the feeling that things may be out of hand and not controllable. We are often convinced that the more certainty we express or the more certain we feel about something, the more it is true. Yet the objective truth may lie elsewhere. This might be why smarter business school people tend to be more susceptible to biases than others. They are quicker to construct a mental reason or paradigm
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from a number of facts or phenomena and their intelligence convinces them they are correct in their view and decision. But staying within an ambiguity or anomaly for longer and accepting the uncertainty that goes with it is an effective way of negating the effects of bias and heuristics. By tolerating what may be contradictory views and facts, the impulse to grab a solution in order to quash the strain of uncertainty, is kept at bay and the final choice is more reasoned and deliberate. Simply stated, the more we are able to replace our exclamation points with question marks, the more we are able to see through the irrationality of our decision-making. By observing ourselves in thought action, we are more able to consider various perspectives and arrive at an optimal solution. We may think much about the outcome of our decisions but do we ever consider the process of arriving at a choice? Do we explore the void of contradiction long enough? It is sometimes surprising how little we consciously decide about how we are going to decide.
BROADEN YOUR THINKING
A common approach to a problem is to ask: What should I do?” This type of decision framing inevitably leads decision-makers to consider only one alternative; the course of action being discussed. A very simple and much better way of posing the question to a problem is: What could I do?’ This helps us think in terms of possibilities and moves beyond black and white and into the realm of grey. It prods us to consider alternatives to the choice we are making and in so doing reduces narrow bias in the evaluation of the problem and in the final decision reached. Often companies fail to apply this fundamental distinction. In an analysis of 160 big decisions made by businesses, 71% had been contemplated in terms of whether or not an organisation or a person should take an already chosen course of action. A simple change in language – using could rather than should – moves thinking into a broader band of possibilities. A further twist to the basic consideration of various outcomes is to consider the “vanishing options” approach. Assume once you have generated possible solutions to a problem, that you can’t use any of them and ask: What else could I do? This question will further open up thinking to exploration of previously unconsidered options. To beat what is perhaps the biggest bias of all – narrow thinking – broaden your thinking by using these two questions
A TIRED AND A STRESSED BRAIN DEFAULTS TO BIAS ”
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The Johannesburg City skyline
TURNING EGOLI INTO A POWERFUL METROPOLIS Johannesburg is one of the world’s most economically powerful cities, ranked 33 in the 2015 Global Financial Centres Index and recently upgraded in its long-term ratings by Fitch. But to optimise the City of Gold’s growth and retain its stature as an internationally competitive metropolis, its economic hubs need to be interwoven and capitalised by both public and private funding. This is the broad plan underpinning the City of Joburg’s (CoJ) new Economic Development Strategy. Seven economic hubs have been identified so far, most of them stretching north-east from the CBD and linked up via the Corridors of Freedom (the Perth-Empire, Louis Botha and Turffontein corridors). Soweto is also one of the economic hubs. By concentrating resources and efforts on a limited number of areas with high economic potential, more rapid
progress can be made for the development of the city as a whole. “Each economic hub is being developed according to its own focus, such as ICT in Braamfontein, media production in Milpark/Auckland Park, and tourism in Rosebank, aligned with the industries that have already clustered in these areas,” explains the Executive Director of the Department of Economic Development, Ravi Naidoo. Other hubs focus on financial services, transport and logistics, construction, retail, manufacturing, health/education services and exports. The CoJ is also running special programmes on innovation, ICT and green technology at the Green City Startup incubator in Milpark, a joint CoJ and University of Johannesburg initiative. “The idea is to come up with technologies that provide sustainable solutions for the city, focusing on energy, waste,
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Ravi Naidoo, Executive Director Department of Economic Development
water, transport and buildings,” says Naidoo, adding that Johannesburg is the only city in Africa that has raised a Green Bond, worth R1,45 million, to fund these projects. Buy-in from the private sector to realise these projects is key. The Johannesburg Centre for Software Engineering was launched last year with funding from Microsoft. The centre hosts the #HackJozi Challenge bootcamp to assist tech-savvy entrepreneurs in realising their ideas. “We are looking to pepper the city with as many entrepreneurial startups as possible, and with strong commitments like this from business, the roll-out of these incentives will quickly gain momentum,” says Naidoo. As the various economic hubs grow and consolidate, so the spacial distribution of economic activity will improve, creating more job opportunities in the city. “Presently there are pockets of high unemployment in the city. As mobility and technology improves, and the routes linking the hubs are densified, those living in poorer, outlying communities will be better able to access jobs and opportunities, addressing the unemployment problem,” says Naidoo. Meanwhile, the city’s roll-out of 1 000 free WIFI hotspots is nearing completion, with Braamfontein already enjoying complete coverage. A range of other services, from licensing and rezoning processes to water and electricity delivery, are also
receiving earnest attention to establish how they can better serve city businesses. “The city needs to benchmark and sustain service standards on the critical basic service needs of private business. We are meeting monthly with the Johannesburg Business Forum to understand and track the needs and expectations of the private sector and the shortcomings in service delivery for business,” says Naidoo. Incentivising business is an important element of the city’s economic development strategy, which proposes, among others, to fast-track all investment decisions concerning priority economic zones and offers tax incentives to property agents who rejuvenate old buildings in the CBD’s Urban Development Zone. “It’s about stitching together the pieces of Johannesburg’s economy, and making the city work as a powerful, unified metropolis. But it needs both public- and private-sector commitment for it to really come together,” says Naidoo
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Jorissen Place, 66 Jorissen Street, Braamfontein Tel: (011) 703 5522 Fax: (011) 703 5265 Web: www.joburg.org.za
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ATTRITION VS. THE BIG BANG Words Professor Nick Binedell
In a complex world of ever-changing markets, the heart of strategy is innovation, fuelled by dynamism and effectiveness.
Dynamism means energetically facing a set of constantly evolving conditions. Effectiveness means delivering impactful results and changing the destiny of a business and its performance. There are two frames of reference that may be useful in thinking about strategy. Although interconnected, we should consider them separately. I call them Attrition and the Big Bang.
GORDON INSTITUTE OF BUSINESS SCIENCE
ATTRITION
Most mature companies face a battle of attrition. Executives spend their time seeking innovations that might shift the competitive game or influence the market in a fashion similar to that of a judo or wrestling match. The market, the organisation and its rivals, hold each other in a tight competitive grip that has evolved over time. Tremendous energy and strength goes into maintaining the grip as a defensive posture in order to prevent the competition gaining the advantage. Good strategy is often the ability to change the game by shifting the locus of forces through a sudden release of energy that destabilises the opponent or, in business terms, engages with the market in a new way. Of course whether this shift, as in judo or wrestling, leads to a significant outcome or not, depends on how effective and creative it is. To change the dynamics between matched rivals suddenly is extremely difficult work, both in terms of active imagination and judging whether it will be successful, to say nothing of ensuring that the organisation is willing to make the move. The risk is that at the end of the move you are in a worse off position than when you started. That is probably why CEOs of mature companies take small bets rather than big ones. Consider the First World War, sparked by the 1914 assassination of Archduke Franz Ferdinand in Sarajevo. The brutal
Professor Nick Binedell
consequences, driven by a set of alliances and agreements – some secret and some public – unfolded like falling dominoes. Europe was suddenly embroiled in what many historians claim was an unnecessary war. German grand strategy in 1914 was to use the Low Countries (Netherlands, Belgium and Luxembourg) to avoid the French defenses in the Ardennes and to sweep through with a right hook to Paris. The Schlieffen Plan, as it was known, called for “…the Last Man on the Right [to] Brush the Channel with His Sleeve.” Paris was to fall in 31 days. It went wrong as many plans do. The Belgians fought more fiercely than was expected and the German assault was halted outside Paris. The French also had a plan, and it is useful to note that both plans were formulated after the 1871 Franco-Prussian War and had been updated regularly for more than 40 years. As historian Barbara Tuchman so clearly describes in her 1963 Pulitzer Prize-winning analysis The Guns of August, both armies, in spite of fully understanding each other’s plans and preparations, kept to their basic strategy and ignored each other. Each side launched a right hook and ignored each other’s main thrust. Tuchman called this the “revolving door”. After six weeks or so, with Paris under siege, the British and French pushed back and four years of dreadful trench warfare had begun. This was a war of attrition. Both sides poured men and materiel into a more or less stagnant frontline, borrowing constantly on new technologies and approaches as each side sought to find a better judo/wrestling grip in order to outmanoeuvre its opponents. As we know, the Germans were finally ground to a halt and an armistice was agreed to in November 1918.
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. . . WE HAVE NO ALTERNATIVE BUT TO SEEK OUR OWN DISRUPTION . . . ” What is often not understood is that the First World War was fought using technologies and methods that had never been used in combat before. These included the large-scale use of trains, advanced weapons including tanks and machine guns, as well as aerial combat, which was a novel form of military weaponry. Aircraft were used in the early phases of the war for reconnaissance and the pilots were armed with pistols should they come across the need for aerial combat. It took some innovative engineering to put a machine gun on a biplane and arrange the technology so that it fired between the propellers. The strategy of attrition is therefore a SLOW grinding process of constant innovation – an endless pushing and shoving against a matched opponent on unyielding ground.
BIG BANG
In business, the joy for winners and the pain for losers is that from time to time there is a novel application of new science or engineering that radically changes the nature of a category or creates a new one. Whether one considers Polaroid cameras, the Apple product range, the rapid evolution of Facebook or Airbus, the truth is that from time to time there is an innovation based on an invention that rewrites the rules and changes the market. It happens in warfare, too. In the late 18th century, battles were always about attrition, with both sides lining up to face each other and then opening fire with wildly inaccurate muskets. The side that scored the most hits was usually the winner. But in northern Italy in 1796/97, a young French general called Napoleon Bonaparte caused the strategic equivalent of big bang. Facing the supposed might of the Austro-Hungarian Empire, Bonaparte marched his troops at twice or three times the normal pace, often on empty stomachs, at night, over mountains or through marshes, to appear where the elderly Austrian generals least expected him. At places like Lodi, Arcola and Rivoli, he
scored stunning victory after stunning victory, chasing his opponents almost all the way back to Vienna. He also picked and promoted officers on merit, not on their aristocratic lineage. This was then unheard of in any of Europe’s armies, a radical innovation that gave him a pool of perhaps the most able commanders ever assembled at that point in history. Google is an excellent modern example of big bang – an innovation building a category, taking out its early rivals and establishing a form of hegemony or dominance that is the envy of many. By 2015 Google had over US$60bn of cash in the bank, as well as hundreds of innovative projects on the go, many of which may be considered only partly related to its core search engine enterprise. From the Internet to the jet aircraft, from steam turbines to solar, from time to time in all industries there is a form of startling innovation that rewrites the rules for everybody.
WHICH ONE TO CHOOSE?
If it is fair to say that attrition is the normal state of play in business and that big bang is something to which we all aspire, what happens next? Which one can we expect and which one should we work towards? Most futurists believe that we now live in an era which enjoys the highest level of social, economic, political and technological change in history. But many also believe that the fundamental science that is currently being developed will lead to even more drastic innovation over the next 20 years. If that view is correct, we will certainly observe more and more businesses emerging with a big bang innovation to severely disrupt those locked in the embrace of attrition. Therefore, as strategists, we have no alternative but to seek our own disruption before a Bonaparte or a Page and Brin come along and do it for us
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Kenya Generating Company, KENGEN's Ol-Karia IV power plant, the 8th largest geothermal power plant in the world.
FAIR WINDS FOR CLIMATE CHANGE Words Victor Kgomoeswana
If one event in 2015 ushered a golden era for investment in energy across Africa it has to have been COP 21 in Paris, in the first two weeks of December. For the first time it looks like the build-up towards a world of renewable energy might be the closest it has been to that elusive tipping point. If that be the case, sub-Saharan Africa stands to benefit the most and hike its access to electricity to more than the 45% as cited in the Renewables 2015 Global Status Report.
GORDON INSTITUTE OF BUSINESS SCIENCE
Could it be that the age-old fight against climate change got that far in France, after failing at previous meetings? Would the consensus among developed and developing nations at Le Bourget in the north-eastern outskirts of the French capital lead to sustainable action? Would the framework agreement grow some teeth to punish failure to achieve renewable energy targets? Too early to tell, but there are encouraging green shoots of a finally united global community in favour of renewable energy. This does not mean that all countries will reach the ideal “RE100” state, at which point they will source their energy 100% from renewables, namely, solar, geothermal, hydro, biomass, etc. Malcolm Gladwell, author of many seminal books, identifies three things that are required for anything to become a trend in his book Tipping Point. His model requires the fulfilment of three conditions, which he terms the three rules of epidemics. They are the law of the few, the stickiness factor and the power of context. I mulled over whether these prerequisites had been met as I listened to speaker after speaker, read countless announcements from and interviewed some of the participants at the two-week gathering.
THE FEW INFLUENTIAL EMBRACERS OF RENEWABLES
Germany is about as influential a member of the European Union (EU) as you are going to get. Its leadership in embracing
renewable energy was key in influencing fellow EU states to get cracking. The CEO of 50Hertz, Boris Schucht, told the inspiring story of the German company that covers at least 30% of the country’s grid. Its success resulted in the €750 million bond issued by parent company Eurogrid GmbH in October 2015 being oversubscribed. It is the few countries, like the influential Germany and the less influential yet impressive Iceland, that demonstrate to others that renewable energy is possible – and, most of all, financially viable. Iceland’s contribution was in narrating its 100% generation of electricity from renewables. Represented on one panel I facilitated by none less than President Ólafur Ragnar Grímsson, Iceland added to the Paris discussions the appeal of geothermal energy. It is out of the success stories of a few countries like Germany and Iceland, and the support of host François Hollande of France, that India’s Prime Minister Narendra Modi would have had the guts to launch the International Solar Alliance. This is a club of
IT TOOK A CLUTCH OF PIONEERS FROM ALL OVER THE WORLD TO CONVINCE THE REST TO EMBRACE THE TREND”
PHOTO: GETTY IMAGES / GALLO IMAGES
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120 countries that will probably take the game of the few over the precipice. Of course, Africa has its own few renewable energy trailblazers in Kenya and Rwanda. The former launched the world’s largest 140MW geothermal plant in 2014; and the latter made headlines with Africa’s quickest turnaround to inaugurate an 8.5MW solar farm. South Africa was not to be left out, with its 13 renewable energy projects added to the mix by Energy Minister Tina Joemat-Pettersson in 2015. Bearing in mind that Rwanda’s minor 8.5MW solar farm meant a $23-million investment for the East African country, it is not hard to appreciate what the COP 21 breakthrough could mean to Africa over the next half-century. However, it took a clutch of pioneers from all over the world to convince the rest to embrace the trend. Which brings us to the next of Gladwell’s three rules of epidemics: the stickiness factor.
THE ICON NAMED AKON
To make a trend stick in the minds of the masses, an icon usually comes in handy. COP 21 brought a gamut of environmental campaigners such as Jane Goodall and Kumi Naidoo through to hip-hop stars with a conscience. One of these was platinumselling, Grammy-nominated hip-hop star and investor Aliaume Damala Badara Akon Thiam. But who raps and sings his way to international fame and fortune with a name like that? No-one. So this massive investor, given to facilitating access to electricity for the majority of Africans, is simply known as Akon. More known to his fans for hits such as his 2004 single Locked Up and now Smack That and for his record labels, Konvict Muzik and Kon Live Distribution, Akon was not ranked 80th on the 2010 Forbes Power Rank and 5th on the 40 Most Powerful Celebrities in Africa list in 2011 for nothing. Through his Akon Lighting Africa initiative he has brought electricity to 14 countries on the continent, employing over 5 000 people in the installation and maintenance of solar power equipment. He is the most logical unofficial ambassador of renewable energy, which is why COP 21 needed the infusion of his hipness to turn the tide against climate change. He is a popular musician who invested proceeds from his craft in something politicians and industrialists should have done decades ago. The last of Gladwell’s three rules of epidemics is the power of context. Why did Paris suddenly deliver a deal after incessant failures at previous climate change summits?
THE WORLD IN UNION
The world is more closely knit than during the Cold War era. Global terror and unpredictable weather patterns leading to natural disasters are some of the forces that unite the post-Cold War global community. The realisation that we are one race is gaining some traction because information and communication technology broke down the barriers of ignorance and isolation. The other reason has been increasing penalties and lawsuits against companies guilty of pollution. This has forced shareholders and managers of multinationals to look more to
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renewable energy. This opens another avenue to generate sustainable return on shareholders’ equity. Even as COP 21 was underway, there were floods in Britain and drought in many African countries, among other indicators of the gravity of climate change – and more the reason to limit the rise in global temperatures to less than 2 degrees. Add to this another contextual difference between now and when climate change was seen as an issue for ‘tree huggers’: BRICS. Brazil, China and India are fast providing alternative cheaper renewable energy technology. They do this in their bid to build strong trader and investment relations with Africa. If the US and European countries fail to respond, they will simply be leaving a lot of money on the table for these new superpowers. That is why, among others, US President Barack Obama is so big on his Power Africa initiative to open channels for American investors to stay in the African energy game. This tussle for economic survival must have made a deal more appealing than the tap-dancing prior to Paris.
THE REALISATION THAT WE ARE ONE RACE IS GAINING SOME TRACTION . . . ” So, it is the few countries leading the way, icons and influencers who are embracing the environment and the context in which dynamic and industrialised economies are jostling for the African business bonanza that made COP 21 so significant. After Paris, sub-Saharan Africa is best positioned to take advantage of the investment flows from investors keen on the energy game. After all, it has abundant renewable potential: solar, geothermal, hydro and biomass, some of the critical renewable energy alternatives. Africa missed the opportunity to industrialise itself to the optimum level during the resources phase, when investment came in but raw commodities were exported, leaving a train of underdevelopment and conflict. We cannot miss this renewable energy bus. It is good that Kenya is on board with geothermal, Rwanda with its solar, Ethiopia for hydropower excellence and South Africa has Johannesburg making headlines for its global-first municipal green bond. There is no shortage of good examples of how Africa and the world can work together to increase access to renewable energy. The ball is entirely in our court. With renewables, we can shake off the dubious honour of literally being the Dark Continent; cleanly so
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NOT BUSINESS AS USUAL Words Dianna Games
In office for less than a year, new Nigerian President Muhammadu Buhari is under intense pressure and equally intense scrutiny. Can he deliver?
He has applied himself diligently to the three main platforms of his election campaign since being inaugurated in May 2015 – tackling corruption, rebuilding the economy and ending the Islamic insurgency in the country’s far north-east states. The former military leader’s no-nonsense fight against corruption has been effective in getting many Nigerians to change their behaviour by cutting back on conspicuous consumption or refusing to take part in corrupt actions for fear of being out of step with the new political order and the attendant consequences.
GORDON INSTITUTE OF BUSINESS SCIENCE
Buhari, a retired general, former military head of state in the 1980s and four-time presidential candidate in modern Nigeria, was voted in largely on the ticket of change by a nation tired of successive administrations hollowing out the country through inefficiency, poor governance and massive looting of the national fiscus. Former presidents have made similar promises to end graft but instead it has become worse, particularly under Buhari’s predecessor, Goodluck Jonathan. The scourge was pervasive, through the three tiers of government and across the federal nation’s bureaucracy. The citizenry was part of the problem. It became difficult to get anything done without being corrupt.
HEADS ROLL
Changing values in this large and complex nation is not easy but Buhari is giving it his best shot. He is leading by example, living a transparent and simple life, while simultaneously taking aim at high-level people and organisations to change attitudes and behaviour. Most prominent among recent high-level scalps taken was that of former oil minister Diezani Alison-Madueke. She fled to London after Buhari’s victory but was later arrested by the UK police on charges of bribery and money laundering.
Nigerian President Muhammadu Buhari
HE ONLY NAMED A CABINET FIVE MONTHS AFTER HIS INAUGURATION . . . ” Under her watch, dubious oil marketers stole trillions of naira of oil subsidy money. Former central bank governor Sanusi Lamido Sanusi in 2014 alleged that $20 billion of oil revenues had gone missing in Nigeria. Instead of the allegations being investigated, Jonathan fired Sanusi. The leader of the powerful Senate, Bukola Saraki – Nigeria’s thirdmost senior politician – is facing charges of false declaration of assets. Several former state governors, protected by the constitution from arrest while in office, are being investigated for corruption. Former national security adviser under Jonathan, Sambo Dasuki, has been charged with 19 counts of fraud and money laundering amounting to $68 million in a growing arms scandal allegedly involving phantom contracts for arms and the diversion of state funds allocated for fighting Boko Haram militants to Jonathan’s electoral campaign. Dasuki was involved in a controversial spat with South Africa, accused of involvement in opaque arms deals conducted by officials in private jets who flew into Lanseria Airport twice with large sums of cash – $9.3 million in one instance and $5.7 million in the other – to buy arms. The money was seized by South
PHOTO: GETTY IMAGES / GALLO IMAGES
The fear of Buhari is the beginning of wisdom, Nigerians are wont to say, referring to their leader, Muhammadu Buhari who has ruled the country since May 2015.
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African officials for being undeclared and above the legal limit for cash entering the country. Pretoria denied knowledge of the deals. The money was returned to the Nigerian government eventually but it dented bilateral relations for a while and cast doubt on the procurement methods of Jonathan’s officials.
CHASING THE CASH
One of Buhari’s first acts was to dismantle the board of the corrupt state oil agency, NNPC, and investigate missing revenues. He has also launched audits into key state agencies including Customs and Inland Revenue, and has changed key personnel in an attempt to stem revenue leakages. A single Treasury account has been established to centralise government spending, replacing the old practice of using multiple accounts held by commercial banks. Buhari’s crackdown is not just about tackling corruption; it is an attempt to stem the many revenue leakages in Nigeria as the country battles to find new sources of revenue as the price of oil, on which it depends for more than 90% of revenues, fell to new lows in 2015 and was still hovering at below $40 a barrel as dawn broke over 2016. Growth projections have been downgraded. The World Bank projected economic growth of 3.5% in 2015, growing slightly to 4% in 2016 and 5% in 2017. The Nigerian government is targeting 4.37% growth in 2016. Energy experts predict continuing low prices through 2016 in light of the global oil glut. Nigeria is not just grappling with how to raise revenues, but also how to manage the significant fallout from this extreme fiscal pressure.
NERVOUS ABOUT THE NAIRA
The currency continues to weaken despite the state eroding its reserve cushion to prop it up; inflation rose above 9% in November 2015 and there is a serious foreign exchange squeeze. In mid-2015, the central bank, in order to stem the outflows of forex in a country that spends about $6 billion a quarter on imports, banned the use of official banking channels for hard currency for a list of 41 products that it deemed to be unnecessary or which were – or could be – locally produced. Products on the list include rice, cement, margarine, meat, furniture, vegetables and even private jets. The restrictions prompted JP Morgan Chase & Co to remove Nigeria from its local-currency emerging-market bond indexes, tracked by more than $200 billion of funds, in September. The move triggered a sell-off of Nigerian assets. From 1 January 2016, commercial banks stopped customers from using their naira-denominated debit and credit cards abroad, a move that has proved unpopular, particularly among the elite who travel frequently to international capitals to shop. Foreign currency shortages have had a ripple effect through the economy with investors, including South African retailers with operations in Nigeria, pulling back on expansion plans as a result of the difficulty of sourcing currency for imports. This has exacerbated the problem they have in getting goods into
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the country from the congested port in Lagos – up to 40 days compared to the global average of seven days.
CONSUMER PAIN
The declining consumer spend in the wake of the economic difficulties is starting to bite consumer companies. Mobile phone companies, for example, are already seeing declining average revenues per user and some consumer companies have reported poor results in 2015. For example, Nestlé Nigeria’s second quarter profit was down by nearly 25%. In January 2016, the fuel subsidy was finally scrapped. The subsidy was a bone of contention in Nigeria, a country that, despite being a crude oil producer, relies on fuel imports after letting its refineries run down. Jonathan scrapped the subsidy in 2012 but the move sparked a national strike over fears of rampant inflation in the wake of the move. Nigerians see cheap fuel as their only benefit from oil. But the highly corrupt subsidy scheme was costing the economy up to $7 billion a year. Jonathan retreated and reinstated part of the subsidy.
INVESTORS NEED TO LOOK AT THE LONG GAME . . . ” Buhari, taking advantage of low prices for landed fuel, has taken a bold step, scrapping the subsidy entirely from January 2016 and putting in place a pricing mechanism that will keep the fuel price at current levels. The subsidy will be diverted to more productive spending, he says. The president, for all his good work, has many critics. The main complaint against him was his failure to move quickly on many issues, particularly given the crisis Nigeria found itself in. He only named a cabinet five months after his inauguration and it was six before they took up their posts. His excuse was the difficulty in finding “clean” candidates that would not compromise his anti-corruption crusade. But his slow start affected investor confidence and hampered efforts to tackle mounting economic woes. The cabinet was greeted with mixed feelings. The powerful job of finance minister went to a relative unknown – former banker and finance commissioner of Ogun State, Kemi Adeosun. Analysts expressed concerns about her inexperience and lack of profile. Okechukwu Enelemah, an investment banker hand-picked by the president to be Industry, Trade & Investment Minister, was better received. One of his first jobs was to deal with the negative publicity flowing from the massive $5.2 billion fine imposed on MTN by the regulator, the Nigerian Communications Commission (NCC), in late 2015. The fine related to MTN’s failure to cut about five million unregistered mobile phone lines, despite ample warning with
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IT BECAME DIFFICULT TO GET ANYTHING DONE WITHOUT BEING CORRUPT ” regard to unregistered lines by the NCC to all mobile operators as the state had evidence that such lines compromised state security. In the same week as the fine was imposed, Stanbic IBTC, Standard Bank’s subsidiary in Nigeria, ran into difficulties with the banking regulator that resulted in top management being suspended.
SWELLING THE COFFERS
The confluence of events was regarded as a signal not just of anti-South African sentiment by the new government but about the attitude of the new government to foreign investors. The two events were, in fact, part of a broader crackdown by regulators that included the imposition of large fines on Nigerian banks and other companies for alleged regulatory infractions. It was clear that the regulators were not only wielding the new broom sweeping the country; they were also raising money for the government. The MTN fine, which was later reduced, represented a quarter of Nigeria’s 2015 budget.
GORDON INSTITUTE OF BUSINESS SCIENCE
Despite an outcry about the unreasonable – and unprecedented – size of the fine from many quarters, the company’s failure to cut the five million lines despite due warning has led to accusations of arrogance. As South Africa’s flagship investor in Nigeria, attitudes towards MTN often colour those towards South African companies in general. Even as South African investment in and exports to Nigeria continue, there is a sense that the relationship has still not realised its early promise. This is not about the statistics. It’s about a lack of trust, the easy triggers for disputes at official and unofficial levels; the fact that 20 years after the start of formal diplomatic relations, citizens of both nations are still only getting three-month visas to visit each other; a lingering – but erroneous – perception that the low levels of Nigerian investment in SA are the result of laws preventing such investments; and that South African companies are exploiting Nigerian consumers, a view exemplified by MTN’s success. The latter view negates the millions of dollars – or in MTN’s case, billions – that South Africans have invested in the country, the number of jobs created, skills developed and improvements to Nigerians’ lives these investments have made. However, the change of government presents an opportunity for a new engagement with South Africa. In December, several ministers from his cabinet addressed South African business
people on the sidelines of the China-Africa summit, holding out the hand of friendship and asking for ideas on how the two countries could work better together. But Nigeria faces a rocky year. Although Buhari plans to spend his way out of trouble with an ambitious $30.6 billion budget – significantly higher than Jonathan’s $22.6 billion 2015-16 budget – concerns have been raised about the large increase in debt required to balance the books. The debt service cost is expected to increase by 42.8%, accounting for about 23% of the budget and raising Nigeria’s total debt profile to 14% of GDP. The budget is based on a benchmark oil price of $38 per barrel, compared to $53 per barrel in 2015, and a production estimate of 2.2 million barrels per day. Theft of oil and vandalism of facilities in the Niger Delta is being tackled by task teams to stem the loss of millions of dollars from the fiscus – one of the biggest revenue leakages in the current system.
AWAY FROM OIL
Buhari, unlike his predecessor, is focusing on building infrastructure as a catalyst for reviving non-oil economic sectors, with capital expenditure set to increase by more than 200%. More vigorous tax collection is also an area of focus. Nigeria’s economy is diversifying but it is not doing so quickly enough to reduce the dependence on oil for revenues. Domestic production is quickly absorbed into the large local market and exports outside oil are mainly services – and skills. Buhari has also failed to end the Islamic insurgency in the northeast of the country by the end of 2015 as he had earlier promised. There have been significant inroads into the activities and reach of Boko Haram, forcing the organisation to turn to suicide bombers to carry out its reign of terror. As the year-end deadline for victory against the insurgents approached, more than 50 people were killed by suicide bombs. Nigeria’s transition under Buhari is likely to continue apace in 2016. There is no doubt it will be a tough year for Africa’s biggest economy but there is certainly a determination to succeed by the government. Investors need to look at the long game. But vigilance is required as the rules of the game continue to change. It is not business as usual in Buhari’s Nigeria
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DOING BUSINESS IN CHENGDU Words Kate Whitehead
When it comes to big Chinese cities Chengdu is something of an anomaly. It’s known for its laid-back vibe and ‘tea house’ culture and yet it’s one of the fastest growing cities in the world. Even now, with talk of a slowdown in China and a big question mark hanging over China’s economic boom, Chengdu is pushing fullspeed ahead. The first thing to understand about Chengdu is that it’s in southwest China, far from the coastal cities that have driven China’s economic miracle for more than 20 years. While the world is well aware of the success of the big ones – known as ‘tier one’ cities – such as Beijing, Shanghai and Guangzhou, it is only just waking up to the savvy business wonder-child that is Chengdu.
GORDON INSTITUTE OF BUSINESS SCIENCE
Chengdu is the largest of the ‘second-tier’ cities and is best known for it delicious, fiery cuisine - UNESCO has made it a City of Gastronomy - and China’s favoured soft-power tool, the giant pandas. But it is also home to 283 Fortune 500 companies. Among its fast-swelling population of 14 million it counts at least 14 500 multimillionaires and 900 billionaires. People are certainly getting rich on the back of the city’s economic success. The big driver for Chengdu’s economic growth began following the inclusion of China in the World Trade Organisation in 2001. That same year, the central government invested US$300 billion in a massive Go West campaign that sought to expand the country’s manufacturing and business footprint beyond the coastal areas. Tax and investment incentives were offered to companies that joined the program me and developed facilities in the western region. Chengdu sits at the heart of this Go West policy not only because of its geographic location, but because of its historic position as the crossroads to the west of China.
FOREIGNERS WELCOME HERE
Foreign investment in Chengdu has grown substantially every year since the start of the 2001 campaign. According to the local statistics bureau, foreign investment in the city reached US$10 billion in 2014. At the same time, the city’s GDP passed 1 trillion yen (US$160 billion), 8.9% higher than in 2013. The key industries are technology and advanced manufacturing. Consider that one-third to half of iPads sold worldwide are assembled in Chengdu, or that the car industry alone employs 80 000 people and by the end of 2014 was home to 21 car-makers and 246 autoparts companies.
Anshun Bridge in Chengdu, Sichuan Province, China.
. . . THE CROSSROADS TO THE WEST OF CHINA” Nicolai Peitersen from Denmark and his Spanish business partner Christina Rebel are typical of the new wave of foreign talent. In late 2014, they founded Wikifactory, an online platform that allows users to make, modify and collaborate on 3D designs and hardware projects. Wikifactory has offices in London, Beijing and Chengdu. The decision to focus on China was simple – if it works in China it will
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impact the world. An office in Beijing was necessary to garner support on a national level, but it was Chengdu that jumped out as the obvious place where things could actually be made. Peitersen sees Chengdu as a place full of opportunities, the ideal place to start a business.
pledged significant investment – it is equally accommodating of small ventures. Larry Adamson is an American entrepreneur and bicycle enthusiast. In 2012, he and his business partner Jacob Klink were both living in Beijing and decided to set up a bike shop.
“Chinese government policies have done a lot to develop western China, it’s why we picked Chengdu. And the Chengdu government encourages innovation, which is what we’re all about,” says Peitersen, who left his job at JP Morgan in London in order to set up the business.
“We researched a bunch of cities and in the end chose Chengdu. It’s a really cyclable city, that was part of it, and we looked at the government’s plan for the area – Chengdu had a faster rate of growth, a lot of support from [central] government, the trajectory of the city was on the upward slope,” says Adamson.
YOU DON’T HAVE TO BE BIG
They used a consulting company to help with the paperwork, filing the application and registering the business, and applied for a WFOE – a Wholly Foreign-Owned Entity, the most popular
While the Chengdu government is set on attracting the big players, such as Intel, Dell and Tesla – all of which have recently
PHOTOS: SHUTTERSTOCK IMAGES
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. . . I’VE NOTICED A BIG ENTREPRENEURIAL ZEAL AMONG THE FOREIGNERS HERE . . . ”
BACKHANDERS?
And like most places in China, there is the thorny issue of corruption. Adamson says those running a WFOE, for the most part, are not expected to participate, but it does sometimes crop up.
form of foreign investment enterprise in China because it allows for the most freedom in business management. Within 11 months the business was up and running and three years on Natooke is a success. Adamson says the city’s economic boom has given the city a buzz.
“We don’t participate at all. Occasionally, when we’re importing goods, there is some dialogue with customs. But the customs rules are pretty clear and if they ask for something outside of that we’ll decline or not acknowledge it. That might result in delays, but we are willing to wait,” says Adamson.
“In the last six months I’ve noticed a big entrepreneurial zeal among the foreigners here, they are open to exploring business ideas. And there are a lot of young Chinese entrepreneurs, a lot of app developers and online game developers,” says Adamson.
Irishman Peter Goff founded the Chengdu Bookworm – a bookstore and restaurant – in 2006. While he was able to set up the restaurant as a WFOE, the bookstore needed to be established with a Chinese partner because it fell within the category of media, a tightly controlled area. He has founded stores in Beijing and Suzhou and says the Chengdu one was the easiest to set up. Over the last nine years, he’s marvelled at the city’s phenomenal pace of growth.
EDUCATION AND MORE EDUCATION
Many of the young Chinese entrepreneurs graduate from the local universities. Chengdu has the largest number of universities and colleges in western China, turning out 150 000 graduates and 100 000 technicians a year. Attracted by the business opportunities as well as laid-back lifestyle, many decide to stay on. Acknowledging the big part fresh graduates and entrepreneurs have to play, in February 2015 the city launched Entrepreneurial Tianfu, a programme that aims to encourage researchers from universities and colleges, fresh graduates and serial entrepreneurs to start businesses and boost the development of innovation and intelligence industries.
GORDON INSTITUTE OF BUSINESS SCIENCE
The main challenge for foreign-owned businesses is gaining the trust of the Chinese – something that that takes time, says Adamson: “Chinese people can be very scrupulous when looking at a new business – you don’t have that initial level of trust, you have to earn it.”
Giant panda bear cub in Chengdu, China
“When we opened, we were on the outskirts of the city, on the Second Ring Road, and now you can keep driving south for 40 minutes and it’s developed on both sides with enormous skyscrapers, including the Global Centre, which is the world’s biggest freestanding building,” says Goff. He believes talk of Chengdu being a laid-back city is overplayed – “The city has seen growth rates of 14% for several years, you wouldn’t see that kind of development if it was so laid-back” – but doesn’t doubt that the city has a special chemistry.
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Car Assembly Plant in Chengdu, China.
. . . THE CITY HAS A SPECIAL CHEMISTRY” “It’s got a great atmosphere. It’s hard to put your finger on it – it feels more open even though there are 14 million people here, so it’s not a small city,” he says. No surprise then that tourism is another big growth industry. In 2014, the city played host to 1.98 million tourists, 12% up on the previous year, and the growth is expected to continue. The vast majority of those visitors are tourists from within China, but more international tourists are expected in the coming few years and a luxury hotel boom is underway to accommodate them. Swire Hotels recently opened The Temple House hotel and the next couple of years will see luxury hotels from Hilton, Mandarin Oriental, JW Marriott, W Hotel and Fairmont. And there are now 71 direct international flights to Chengdu.
BUSINESS TIPS AND ETIQUETTE
Adamson advises anyone new to China to do their homework before they come and understand the basics of the Chinese business mind and how to operate. “You’ve got to know about aspects of Chinese culture as it relates to business, the importance of establishing relationships and building trust. There’s a lot to be said for face-to-face connections, eating together, forming a bond and establishing trust,” he says.
Many books have been written about two key Chinese principles – guanxi and mianzi – and although they are complex, they can be explained simply. Guanxi is not unlike the Western notion of “networking”. Basically, it’s about the relationships between people and often involves the idea of asking for and owing favours. While Westerners are often focused on transparency and ensuring everyone is thinking in the same way, for the Chinese it’s about group harmony. And mianzi – which translates as “face” – is about giving respect to others. The importance of not making someone lose face cannot be underestimated. It’s important, particularly on the first meeting, to leave a good impression. After that it’s about building up trust and this is usually done over big meals or long drinking sessions. “Typically in big business a foreign rep will be taken out to dinner and then the baijiu (a distilled liquor) comes out and no one remembers the rest of the night. Chinese people have a great appetite for that, a great way to establish relationships and trust,” says Adamson. Giving gifts can also go a long way to cementing a business relationship, but it’s critical to understand the customs. If uncertain, it’s worth asking a Chinese friend or colleague because getting it wrong could set the relationship back. “With gifts, it can be as simple as bringing fruit, it doesn’t have to be hong bao,” says Adamson. Hong bao – or “red packet” – is a monetary gift where cash is put in a red envelope. There is a lot of debate about this – whether it should be done and, if so, how much. One key lesson is that if hong bao is offered in a business setting where more than one person will receive a gift, the most senior person should receive the most
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TOP EIGHT THINGS TO SEE AND DO IN CHENGDU Words Kate Whitehead
GIANT PANDA BREEDING RESEARCH BASE
GORDON INSTITUTE OF BUSINESS SCIENCE
This research center, a 45-minute cab ride from downtown Chengdu, is home to more than 100 pandas, making it the largest of its kind in the world. Arrive when the park opens at 7.30am and you’ll not only beat the tour bus crush, but also see the pandas eating their breakfast of bamboo shoots. Scientists here study and breed the popular black and white giant pandas as well as their raccoon-like red cousins. The base includes a panda hospital and nursery where you can see newborn pandas in incubators and baby pandas.
JINLI STREET
The best known of the city’s “new old” walking streets, Jinli Street offers a chance to glimpse ancient Chengdu – with a good dose of modern-day commercial savvy. The street has a solid historic story – during the Shu Kingdom (221-263) it was the place to buy embroidered cloth and was known as the “First Street of the Shu Kingdom”. The old-style architecture was restored and recreated and in 2004 the pedestrianised alleyways were opened to the public. It’s hugely popular with visitors from all over China and a good place to pick up souvenirs.
PHOTOS: SHUTTERSTOCK IMAGES
EAT HOT POT
WUHOU MEMORIAL TEMPLE
PEOPLE’S PARK
DU FENG’S THATCHED COTTAGE
VISIT A TEA HOUSE
WALK ALONG THE RIVER
Sichuan is known for its cuisine and spicy hot pot is its crowning glory. It’s basically a DIY meal. A big pot of soup is put in the centre of the table over a gas stove or hot plate and small plates of raw vegetables and meats are served alongside it. The meat and vegetables are put in the boiling vat of soup to cook and then dipped in your personalised sauce. Hot pot is traditionally served spicy, so if you want anything other than numbingly warm make sure to say so when you place your order.
Built in 1911, this was the first public park in Chengdu and is the largest in the downtown area. It’s well worth spending an hour or so wandering around the (artificial) lake and gardens. Hang out with the locals, pull up a chair at one of the tea houses, immerse yourself in the chatter and watch people dance, sing and play chess. You can even get a back massage or have your ears cleaned – all while sipping your green tea.
The ‘tea house’ tradition is the cornerstone of Chengdu culture. Across the city you will see locals sitting outside – they much prefer sitting outside to inside – sipping tea and talking. This is about much more than having a cup of tea, it’s the hub of social life and offers a chance to relax and reflect. Well worth visiting is Yuelai Tea House (Huaxing Road) that is one of the most popular and also serves as a theatre, showing Sichuan opera performances.
Zhuge Liang, a respected minister and military strategist during the Three Kingdoms Period, was a hero of ancient China and after his death temples were built across the country in his honour. Chengdu’s is considered the best. After looking at the main temple, which includes 47 statues of Zhuge Liang and other officials, wander around the memorial grounds. There are old Cypress trees, a bonsai garden, a Zen-inspired park and plenty of historic monuments in the sprawling 37 000-square metre complex.
Du Feng was a Tang Dynasty (618 - 907) poet. He travelled from Xian to Chengdu where he built a small hut overlooking the river in what is now the west of the downtown area. He lived there for four years and apparently wrote 204 poems. Over the years the site has seen numerous renovations and expansions and today a replica of the cottage and a small museum sit surrounded by 200 000 square metres of parkland and is protected as a national cultural heritage site.
Jin Lin River cuts through the heart of the city and is picture postcard pretty. Stone bridges arc over the water and Ginko trees and Weeping Willows line the banks – it makes for a pleasant stroll. The locals make good use of this resource and you will see people fishing, old men huddled over Chinese checkers boards and groups of ballroom dancers. You might even spot the odd youngster on a motorised Airwheel. And if you work up a thirst, the Lan Kwai Fong bar district is right beside the river. It has a good range of bars and a mainly local crowd
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THE SULTANS OF SWIMSUIT Words Sean Christie
When Media24 cut SA Sports Illustrated from its magazine portfolio in 2012, many South Africans surely experienced a pang of upset, not because it signalled the end of the printed multimedia digest in these parts, but because, for 15 years, SA Sports Illustrated had been the vector for a supplement that was much closer to many hearts: the annual SA Sports Illustrated Swimsuit Issue. Wildly escapist and unapologetically sexy (but always just short of risqué), SI, as it was known in the industry, was the one printed artefact you might have considered swiping from the doctor’s waiting room, or the coffee table in your mates’ digs. If you regarded yourself a social lion or lioness, you probably debased yourself at some time trying to secure a spot on the guest list of the annual magazine launch, where the models walked off the page and down the catwalk in the seasons’ hottest bikinis. (The pronoun “you” is used advisedly here, because SI was always much more than a lad mag, an assertion supported by the fact that, from the first issue to the last, every single costume that was featured sold out.) The SI story on its own is worth telling, but it’s just one phase of a much bigger story. To get a grip on this little known business tale I sought out former models Alétha and Greg Carswell, in the Cape Town offices of their company, Netsport Media. “The story begins in 1996,” says Alétha, “the year I decided to end my international modelling career.”
GORDON INSTITUTE OF BUSINESS SCIENCE
“We had taken a decision to return from Europe, where we had been living for 12 years. I wanted to work in fashion, and since modelling leaves you with a taste for independence, I was particularly interested in business opportunities.” The Carswells soon noticed there was a un-sanctioned South African issue of Sports Illustrated being published by Touchline Media, a subsidiary of Media24. The magazine Alétha pulls from a neat bookcase makes us all smile. Cheap design and cheaper paper stock. A breath of the utilitarian 90s. The Carswells were struck by the fact that, unlike the US Sports Illustrated, the South African version did not publish a Swimsuit Issue, the iconic supplement conceived by Sports Illustrated editor André Laguerre in the 1960s to boost circulation figures during the slower winter months. Knowing nothing at all about publishing, they approached Touchline Media with the idea of doing a local version, stressing
Greg & Alétha Carswell
that they had the connections in the fashion world to make this happen. “They went for it,” says Greg, and we agreed to a 50/50 joint venture.” The Carswells further sugared the bargain when they paid from their own savings to ensure that the product was up to international fashion industry standards. “SA Sports Illustrated at the time was still a stapled magazine, printed on cheap paper. This was not how we wanted to start, so we made sure our first issue had a square back presentation and a glossy cover. Touchline Media liked it so much they adopted the improvements for Sports Illustrated from then on,” Alétha recalls. The Carswells might have lacked in business experience but they soon discovered they had a flair for structuring innovative advertising packages.
entrepreneurship
“We realised that in such a small market the traditional advertising formulas would not pay for large shoots in exotic locations,” says Greg. “To get around the problem we came up with a multi-tier formula, which enabled brands to come in at different levels and at different price points. The easiest way to understand our approach is to think of a major sports event – golf, let’s say – where you have your umbrella sponsor, which gets the headline in print and television exposure, and then you get subsidiary sponsorship: courtesy cars by BMW, say, single hole sponsors, longest drive sponsors, party sponsors, and so on,” he says. Spiced Gold signed on as Swimsuit’s first headline sponsor, followed, for many years, by Nashua. The major swimwear brands would typically buy a cluster of pages each, in which the models would flaunt their merchandise. Spiced Gold took ownership of the launch party. “In effect our brand partners were cross-subsidising the creation of additional platforms of exposure for SI and for the other advertisers,” Greg explains. “This enabled us to go to potential advertisers and say, ok, we’ll give you, for example, X-amount of pages at R100 000, but you will actually be receiving R200 000 worth of multimedia exposure,” says Greg. Advertisers embraced the model, helped by the fact that the supplement was immediately and sensationally successful.
Then came 2012 and Media24’s sudden cancellation of its license to print Sports Illustrated. TimeWarner offered Netsport an opportunity to continue producing their swimsuit version of SI under a new license although, “The contract we were presented with was fair in all but one critical regard: it would have capped our online expansion by limiting us to a .co.za, which we felt would be extremely inhibiting in the new digital media age” says Alétha. The couple decided to go it alone and create their own swimwear supplement, provisionally titled SA Swimsuit, for the sake of market recognition. “We kept the same basic logo, cover page and presentation, and our advertisers came across without blinking an eye,” says Alétha. “After two years we rebranded as World Swimsuit and changed things a bit, making the presentation a bit classier, a bit more in line with your top end architectural magazines, in terms of design and quality,” she says. This co-incided with the launch of the global World Swimsuit Youtube channel (to date over 5 000 000 views and 23 000 subscribers and the World Swimsuit website, currently generating between 50 000-70 000 page views per month). Netsport was supported in this by their new media partner, Cape Town-based publisher Highbury Safika Media, which sends the annual World Swimsuit issue out with its SA Rugby and SA Cricket Magazines (combined circulation of approximately 40 000).
In 2001, Netsport joined forces with Associated Media and the Cosmopolitan Lingerie issue, which was rebranded in 2014 as SA Lingerie so that it could be “bagged” with both Cosmopolitan and Marie Claire magazines. The ongoing success of this supplement goes hand-in-hand with an annual SA Lingerie show, which has grown into something of an institution – also referred to by the fashion industry as the “Victoria’s Secret Fashion Show of SA”. But SI was in a class of its own, and within a handful of years it had become a genuine force in the international fashion world, with a reputation for launching the careers of megastar models like Bar Rafaeli, Candice Swanepoel and Ana Hickmann. This burgeoning influence vexed TimeWarner, since their original SI was supposed to be “the arbiter of supermodel succession” (Slate Magazine). “Sabres were rattled,” says Greg, “and after a bit of horse-trading TimeWarner convinced Media24 to go legit and buy a license to print Sports Illustrated. But our SI had become such a winner for Media24 by this stage that they made it a condition that we be allowed to continue to produce a completely independent SI, exactly as we had been doing. That’s how we became the only officially sanctioned but totally independent producers of SI ever. I doubt whether many readers were aware of the distinction, but the fashion world certainly was.” By 2008, the supplement had grown to 128 pages, dwarfing its host publication. With the hype around the SI launch party and TV documentary at a peak, Netsport could justifiably claim they had created “the largest multimedia publishing event in Africa”.
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World Swimsuit SA Cover
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“HSM shares our belief that, as media platforms multiply, the quality of your printed magazine is more important than ever. The money might be elsewhere, but the magazine is still at the centre, the heart and soul if you like. Skimp on paper stock quality and other production values, and it will inhibit your ability to grow your other media channels,” says Greg. The greatest risk in disconnecting from the Sports Illustrated brand was, of course, that the new stand-alone brand would not have the same weight in the fashion industry, which would make it difficult to attract the right models at the right prices. “With SI we were never able to meet the fees of the top international models, but thanks to our reputation for launching and advancing major careers we always had world-class models queuing up to shoot with us at the prices we could afford to pay,” says Alétha. Impressively, the transition from SI to SA Swimsuit to World Swimsuit caused no turbulence in this regard. Genevieve Morton, easily one of the most successful swimsuit models of all time, featured on the cover of the inaugural World Swimsuit Issue in 2013. In 2014, an unknown Moldovan model called Xenia Deli walked into the Netsport offices without representation. Alétha recognised her ‘star quality’ immediately, and signed her on for that year’s World Swimsuit shoot in the Seychelles, launching a career which, in 2015, saw Deli cast in the starring role for the music video to Justin Bieber’s hit single, What do you mean? Solveig Mork was another unknown picked for the 2014 shoot, and she went on to book a rookie place in (the American) SI later that year, and to represent Guess in its 2014 Fall-Winter campaign – two of the biggest jobs in fashion.
GORDON INSTITUTE OF BUSINESS SCIENCE
“I think the thing that attracts models to World Swimsuit, as with SI, is the fact that the model’s name features on every page. Usually they’re anonymous, just faces and bodies representing a brand,” says Alétha. The exposure is particularly coveted by models the industry refers to (somewhat disparagingly) as “pocket rockets”– exquisitely beautiful women deemed too short to make it in fashion. These prejudices do not apply at Netsport, which has featured dozens of petite models in its supplements. Having established their personal brands this way, many of them have found the fashion industry suddenly singing a different tune.
WS Australia 2015 Cover
Netsport’s partner in this first international excursion is InsideSport, the premier multi-sport magazine in Australia and New Zealand. Talks are underway with a publisher in Hong Kong, too, and Netsport is partnering with former Touchline Media CEO Marc Blachowitz to drive the sale of once-off “content packages” to international publications looking to boost a particular issue’s circulation, and create additional advertising revenue. But most exciting of all for the Cape Town-based company is an imminent foray into e-commerce. “I can’t say too much at this stage,” says Alétha, “but we’re busy establishing an online swimwear and beach apparel shop, and obviously we’ll be driving sales through the platforms we already own, and leveraging the excellent relationships we have built over the years.”
“The photographers we work with are also big part of the draw,” Alétha adds. “Models want to work with the best fashion photographers, and vice versa, and we work with some of the most respected names in the business. Relationships build reputation, and reputation is the key to everything in our industry.”
When you consider that the Instagram followings of the 11 models who featured in World Swimsuit 2015 add up to just over 2 million, and that they all posted images from the shoot in the Maldives, as well as images of the published World Swimsuit magazine, the potential of the e-commerce prospect becomes immediately apparent.
Greg looks at his watch.
“It’s true, not many brands can count on that order of free publicity,” says Alétha.
“Relationships are the reason I have to board a flight to Sydney in a few hours, to attend the launch of the inaugural World Swimsuit Australia,” he says.
“You’ll have to come back for a second interview next year, because I think things are just about to get really interesting”
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Beyers Naudé Schools Development Programme (BNSDP) Matric Results 2015 Free State Thabo Mofutsanyana District
2015
2015
4094
85.37%
Learners who wrote the NSC exams
3495
Number passes
BNSDP Matric Pass Rate
599
Number of learners failed
1223
2014
Bachelors obtained
84.68%
1540
Diplomas obtained
715
Higher certificate obtained
8 BNSDP schools registered for matric examinations 71% of BNSDP schools obtained 80% and above
Class of 2015 Results National Pass Rate 70.7%
100%
Schools achieved
17 Schools achieved between 8 Schools achieved between 4 6 2 1
90% and 99.9% 80% and 89.9% 70% and 79.9%
Schools achieved between
60% and 69.9%
Schools achieved between Schools achieved between
50% and 59.9%
Schools achieved between 40% and 49.9%
84.2%
2 Gauteng
84.7%
1
81.6%
3
Western Cape
85.37%
BNSDP Pass Rate
Free State
Free State province placed 3rd in the country
Kagiso Trust’s Beyers Naudé Schools Development Programme (BNSDP) aims to strengthen the quality and increase the confidence of educators in rural communities, as well as encourage communities around the school to actively participate in the management of their school. The BNSDP sets about establishing good governance and management principles, to ensure the long term success of the schools affiliated with the programme. The programme has been successfully implemented in partnership with the Free State Department of Education from 2011 and to date over R200-million has been invested with over 100 000 learners benefiting across 166 schools in the Thabo Mofutsanyana district in the Free State Province. It is only through collaborative partnerships that we can amplify impact in communities, and for this reason we have partnered with the Cyril Ramaphosa Foundation to impact on a further 400 schools. If your organisation would like to partner with us or you would like more information about our programmes please contact Nontando Mthethwa, Corporate Affairs Manager, NMthethwa@kagiso.co.za, 011 566 1900.
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NOW HIRING – BUT DIFFERENTLY Words Dion Chang
Game changing technologies have spawned new, agile, start-up companies, which in turn have contributed to the collapse of traditional value chains in many industries. But very different skills are needed to run these nimble operations. A few years ago, Professor Richard Foster from Yale University noted that the average lifespan of a company listed in the S&P 500 index of leading American companies has decreased by 50 years in the last century: from 67 years in the 1920s to just 15 years today. He estimated that by 2020, more than three-quarters of the S&P 500 would consist of companies that don’t exist yet. Dovetailing this analysis is a prediction from America’s Babson Olin School of Business which said that 40% of today’s Fortune 500 companies would have disappeared in the next 10 years. In both cases, the analysis of how businesses operate in a new world order is proving to be prophetic.
GORDON INSTITUTE OF BUSINESS SCIENCE
Today’s new tech, start-up companies show a (previously unimaginable) growth trajectory within a short timeframe. YouTube went from start-up to a US$1.4 billion Google acquisition within 18 months. Similarly the seven-year-old AirBnB is now worth US$25 billion. Uber, the case study company for disruption, which only started operating in 2009, is now valued at US$50 billion. However, it’s not just the value of these start-up companies that is impressive; the age of their CEOs is remarkably young. Evan Spiegel, founder of Snapchat (worth US$19 billion), is 25, while the “elder” of Silicon Valley, Facebook founder Mark Zuckerberg, is 31 and steering a company that has a market value US$245 billion. Kevin Systrom, founder of Instagram, which was acquired by Facebook for US$1 billion, and now worth US$35 billion, is just 32. The rules have clearly changed, dramatically The biggest challenge for companies today is to remain relevant, and the new badge of honour for any company – big or small – is simply survival. It sounds dramatic, but it is the reality of doing business in a digital era. Thinking reactively has become the norm while being able to think and strategise proactively, has become somewhat of a luxury. The problem is that when businesses have the opportunity to strategise and plan ahead, they do so using the old rules. It’s like renovating a legacy project while sitting on quicksand.
Aaron Dignan, founding partner of the New York based digital strategy firm Undercurrent and adviser to PepsiCo, Ford and GE, recently wrote a thought leadership article, which should be prescribed reading for any business leader. In his article, The Operating Model That Is Eating The World, he provides valuable insights into how these new companies function and illustrates the stark differences between how companies were run in an oldworld order, versus the new, nimble and agile start-ups. He describes these start-ups as, “lean, mean, learning machines” and notes that, “they have an intense bias to action and a tolerance for risk, expressed through frequent experimentation and relentless product iteration. They hack together products and services, test them, and improve them, while their legacy competition edits PowerPoint. They are obsessed with company culture and top-tier talent, with an emphasis on employees that can imagine, build, and test their own ideas. They are hypersensitive to friction, in their daily operations and their user experience. They are open, connected, and build with and for their community of users and co-conspirators. They are comfortable with the unknown – business models and customer value are revealed over time. They are driven by a purpose greater than profit; each has its own aspirational “dent in the universe”, and concludes that, “We may simply refer to them as the first generation of truly responsive organisations”. In today’s world there are many companies who use the number of years they have been in existence as a tried and tested badge of honour, but how they should be measuring themselves today is the speed of their responsiveness. Is your organisation or company a “truly responsive organisation”? But while Dignan speaks about a responsive operating model of a company, the tools that allow organisations to become responsive are its people, and his advice on human resources flies in the face of conventional business wisdom. He writes, “What’s in flux today is what makes someone great. Legacy HR models tend to value “managers”: people with graduate degrees from prestigious business schools with years of experience leading initiatives in their chosen field. As a result, planning has become the work.
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To win in the marketplace, someone has to create and deliver exceptional products, services, and experiences – and planning won’t get us there”. He adds that, “In a Responsive operating system, the emphasis on people is all about making. ‘Makers’ are people who have skills (as opposed to credentials). They think by doing: experimenting, testing, and learning. Within these high-performance cultures management has evolved into something more akin to mentorship. If workers are capable of making decisions about their priorities and workflow, what’s left for the manager is skills development, knowledge sharing, and helping with roadblocks” – and therein lies the rub. Traditional recruitment techniques rely on assessing prospective employees by their academic qualifications and credentials. Like labour law and our current education system, these systems and means of assessment were all spawned and designed for a post-industrial economy. We now stand firmly in a technological, knowledge and metadata era, yet still try and apply the old rules to a new and different game. The argument of whether Uber drivers are employees or independent contractors is a case in point. The lines have blurred and we’re having trouble focusing. Last year, one global company decided to cross those blurred lines and set a new corporate benchmark. Accountancy firm, EY, announced in London that it would no longer consider degree or A-level results when assessing potential employees. EY’s managing partner for talent, Maggie Stilwell, said the new policy would “open up opportunities for talented individuals regardless of their background and provide greater access to the profession”. For one of the biggest multinational graduate recruiters to change its HR policy signals a shift, not only for the need for different skills required in modern businesses, but also the emergence of a cross-pollination of skills between unconnected industries. Last year, luxury group LVMH announced that it was hiring one Ian Rogers to head the conglomerate’s digital strategy. The news shocked Silicon Valley because Rogers is a guru of the online music revolution and had recently joined Apple as the CEO of Beats, a digital music streaming service, which Apple had acquired for US$3 billion. Rogers had just completed Apple’s online radio strategy before defecting to the world of luxury goods. Today, a master Instagrammer is probably better positioned to drive a retailer’s online marketing campaign than a traditional marketing manager. Add to the mix the prediction that 44% of jobs will be mechanised next decade and the number of jobs, as well as the kinds of jobs available, is in a rapid state of flux. It is estimated that currently 60% of students are actually chasing careers that soon won’t exist, which makes the #FeesMustFall movement deeply ironic: are the students picking the correct battleground if academic qualifications are increasingly going to be overlooked in favour of soft skills, adaptability, on-the-job experience and professional networks? In his book, Rise of the Robots: Technology and the Threat of a Jobless Future, author Martin Ford, cites a 2012 Citi Research
report, which found that incomes for young workers with bachelor’s degrees declined by a full 15% between 2000 and 2010, a decline that began well before the 2008 financial crisis. He added that, “Any recent graduate can tell you that we have entered the age of the degree-bearing barista: as many as half of new college graduates end up taking jobs that don’t utilise their education”. But while jobs will be lost, disruption causes displacement. New service industries sprout within those vacuums. If you’re recruiting, try fishing for talent in a different pond: today’s HR mantra is “fit versus qualification”. There’s a growing trend for companies to recruit the best minds first, and then only – after an induction process – decide what their role in the company actually is. The rules have clearly changed, dramatically
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CASTILIAN HEAT Words Caroline Hurry
A medieval village on a rocky hill between two rivers, Segovia offers twisting alleyways, cobbled roads, Alcazar Castle, the Plaza Mayor, and the Devil’s Aqueduct.
GORDON INSTITUTE OF BUSINESS SCIENCE
Segovia Castle
Ernest Hemingway never did explain why he blew up a bridge rather than the world’s largest aqueduct, in his novel For Whom the Bell Tolls, set in Segovia. Built during the first century, legend goes that the Devil offered to build a comely water-bearing wench an aqueduct before sunrise, in return for her soul. Thinking the feat impossible, she agreed, but on seeing Old Nick’s swift progress, had to call on the Virgin Mary to intervene. Catholicism still rules in Segovia, Castile, where the aqueduct loops across the red rooftops in a series of 158 arches. You can see the holes in the stones that enabled the Devil to pick them up. “Actually,” explains my husband, “hooks to move the stones into position caused the holes.” My husband doesn’t believe in the Devil. His idea of a miracle is the Roman engineering that enabled water to flow
Royal Palace of La Granja of San Ildefonso
uphill. As he painstakingly explains how the placement of the immense stones holds the structure together – without cement – I hastily change the subject by suggesting lunch at a cafe on the Plaza Mayor. Segovia is famous for its cochinillo, roast suckling-pig so tender you can slice it with the edge of a plate. I defy anyone to have a lousy meal in Spain. Invariably, a flamenco guitarist will serenade you, though any anguished wails are more likely to issue from the recipient of the bill, as meals for two can cost around €400. To get here, we drove an hour north of Madrid. Two tunnels under the Guadarrama Mountains provided the only respite from the hellish heat. We stopped at Real Sitio de La Granja de San Ildefonso en route, a royal residence until the 19th century. Treasures fill its ornate
Les Ferreres Aqueduct
rooms within 6km2 gardens festooned with fountains, statues, and waterfalls. We strolled around the lake and ate cherries under 100-year-old trees. In Segovia storks – hunched like robed priests – nest in the bell towers and belfries. Consecrated in 1618, the town’s Gothic cathedral, a UNESCO site, features tapestries, sculptures, and the sepulcher of 12-year-old Prince Pedro, who fell out of a window of the Alcazar in 1366. Built in the 12th century, the Alcazar was home to Ferdinand the Saint, Alfonso the Wise, and the venue for Prince Philip and Anne of Austria’s 1570 wedding. Cliffs and city walls that protected the city from Muslim infidels and barbarian hordes, still quarantine the historical town from the growing business centre, making Segovia a living monument and well worth a visit.
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CATALAN COOL Words Caroline Hurry
Founded during the reign of Roman Emperor Augustus (27BC-14AD), Barcelona is famous for its art and architecture. In the Catalan capital of Gaudí buildings and Gothic cathedrals, tourist time is well spent exploring Barcelona’s Las Ramblas, a theatrical thoroughfare that runs down to the beachfront. Buskers and human statues ply their trade along the shaded wavy-tiled, kiosklined walkway that segregates the dual carriageway of traffic.
light Barcelona’s streets, but his real break came when aristocrat Count Güell commissioned him to design the Parc Güell, a leafy, recreational paradise high above the city. With fairytale homes built around walkways, it’s a mosaic fantasy; the mark of a fertile mind obsessed with dragons, snakes, flowers, butterflies and other natural forms.
Barcelona epitomises architectural re-invention, yet underpinning all its triumphs is the work of one man, Antoni Gaudí. Start your Gaudí tour at the Sagrada Familia, his unfinished 134-year-old cathedral, where neither cranes nor scaffolding can dilute the impact of its eight spires twisting skywards. A religious hermit, Gaudí devoted the last 16 years of his life to the Sagrada Familia. Donating his vast fortune to the church – yet mistaken for a hobo when a tram killed him in 1926 – no doubt advanced his candidacy for Catholic beatification. Gaudí designed the wrought-iron lamp posts that still
A modernist, Gaudí eschewed classical geometric lines for curved walls and phallic mushroom-shaped structures, inspired by the hallucinogenic fungi he allegedly ingested to tempt his muse. Guess it beat those bland wafers!
Gaudí's Sagrada Familia
In Barcelona’s city centre, the undulating facade of Gaudí’s Casa Milà combines wrought-iron and stone but the best forms are on the roof: white marble chimneys, coloured glass, and surrealistic Darth Vader figures. The Fundació-Catalunya La Pedrera, which manages exhibitions, is housed within Casa Milà. The 14th century Cathedral de la Santa Creu i Santa Eulàlia towering Gaudí's Casa Milà
over the Gothic Quarter offers cool dark interiors, stained glass windows, archways, and honking geese in the cloister garden. The gaggle of 13 represent Saint Eulàlia’s age when the Romans tortured her to death. Her remains lie in the crypt. Original wall parts lend a musty medieval atmosphere to the shops and bohemian bars in the Old City, formed by the Gothic Quarter, Ribera, and Raval neighbourhoods. Ancient stones in the echoing alleyways seem to whisper tales of heroic resistance to the Spanish Inquisition’s persecution. Today, they keep the secrets of Catalonia’s ongoing bid for independence from Spain. Pablo Picasso and Joan Miró also hail from Barcelona and the Picasso Museum and Fondació Joan Miró in Parc Montjuïc, where the artists themselves donated most of the works – paintings, graphics, sculptures, and tapestries – are both a treat for art lovers
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Human statue in Las Ramblas
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THE FINER THINGS Words Cheska Stark
GORDON INSTITUTE OF BUSINESS SCIENCE
HIS CHECKLIST 1.
Shirt, R242, Old Khaki Whether you’re looking for a casual work look, on-trend tailoring or an everyday essential, this checked detail shirt ticks all the boxes. Mix and match the latest fashion pieces with your favourite shirt from Old Khaki. It’s all about basics and once you have those sorted, you can accessorise for your own personal uniqueness.
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Dr Martens canvas shoes, R1 299, exclusively available at flagship and selected Edgars stores The Dr Martens lace-up canvas shoes are all about style – the epitome of Dr Martens heritage and offering a high level of comfort. These shoes give you an urban, contemporary look.
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Fedora hat, R479, River Island A felt fedora hat is the style accessory that belongs in every man’s wardrobe this season. Popular from the 1920s to 1950s, these stylish hats have made a comeback in a big way.
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V-neck knit, R1 999.95, Tommy Hilfiger You can’t go wrong with a classic, navy V-neck knit. This versatile style piece is one that you need no matter what your job or weekend activities. Throw it on over your work shirt, or pair it with your shorts on a Saturday.
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Wallet, R349, Country Road We love this alternative to a leather wallet. And stripes in canvas add an interesting style element to your look.
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Tog bag, R4 000, Gant Get ready for a weekend away with your easy-to-pack, good-on-the-eye bag. It’s big enough to throw in everything that you need for time away but not too big to be a hassle. You’ll look the part with this nautical themed one.
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League of beers braai tongs, R149, Yuppiechef.com Braai in style and ease with these League of Beers braai tongs… seriously look the part and produce a great meal – what more could you want? FYI we love that they are locally sourced and manufactured.
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Belt, R349, Trenery This belt is made from durable two-tone cotton webbing and features a contrast leather trim. Although the majority of the belt is cotton, the trim is aesthetically pleasing.
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HER CHECKLIST 1.
Striped tee, R799, Trenery If you ask us you can never have too many nautical stripes in your wardrobe. This easy-to-wear top will fast become a favourite with its three-quarter sleeves and multi-tone stripes.
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Joli Rouge Lipstick in Bubble Gum Pink, R265, Clarins Give your look a pop of excitement with bright pink lips. Go easy on your eye make-up when you decide to wear a statement lip.
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Leather jacket, R2 399, Zara This jacket is possibly the easiest thing to wear – as you can layer it over pretty much anything. Also, the more you wear it the better it looks so don’t stress if it lies on the back seat of your car or gets crumpled.
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Handbag, R1 899, Guess We love this monochrome structured bag for the ultimate, on-the-go, working woman. It’s smart enough for work and cool enough for casual. It’s great because it’s big enough to fit pretty much anything in.
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Heels, R1 699.95, Ted Baker Make a statement in these killer heels. Ted Baker is known for the British style and tailoring but these heels take the coolness of the brand to a whole new level. Pair with pants to be taken seriously or a dress to turn heads.
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Watch, R1 999, Fossil Turn heads when you tell the time with this classic timepiece. The rose gold details are right on-trend while the tan leather strap is cool and classic.
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Scarf, R649,95, Dune London exclusively available at flagship and selected Edgars stores Every woman needs a touch of leopard print. Too afraid to embrace an entire dress? Then this scarf does the trip just as well, if not better. The soft, muted tones let the print speak for itself while the animal print is the perfect amount of naughty and nice.
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Jersey maxi dress, R699, Country Road Basically you can’t go wrong with a classic black dress. Laze about during the last of the summer days in this easy-to-wear, comfy dress. Never pair a maxi with heels, rather downplay the length with a pair of glam flats and an oversized bag.
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FORWARD MOTION Photographs Jacques Marais Words Jacques Marais and Stephen Smith
With or without an internal combustion motor, here are half a dozen ways to get ahead (and stay ahead) of the pack. Funky or fun. Far-fetched or absurd. Classic or alternative. Acumen’s motion maestros check out six incredible ways of having fun while moving from point A to point B …
GORDON INSTITUTE OF BUSINESS SCIENCE
HUMAN-POWERED
ON YOUR WRIST: TOMTOM MULTISPORT CARDIO WATCH
ON YOUR FEET: INJINJI RUN 2.0 MIDWEIGHT MINI CREW TOE SOCKS
WHAT IS IT: The new TomTom MultiSport Cardio is designed for those who are serious about their sport and outdoor activities. This striking wrist computer does everything from mapping your runs to recording your heart rate, and is a musthave tool to help you set all your physical training goals.
WHAT IS IT: The Injinji Run 2.0 Midweight Mini Crew Toe Socks are perfect for those who prefer a thicker sock with an extra layer of protection for long runs and demanding workouts. The mesh top enables maximum breathability while superior arch support and a snug cuff assure the sock won’t slip.
WHY DO YOU WANT IT: The TomTom Multi-Sport Cardio is a superb tool for any number of sports, specifically running, cycling and swimming. It can also work for free-style activities, and comes packaged with a built-in Heart Rate Monitor as well as a chest belt. The GUI software is intuitive and easy to use, and can be synced wirelessly with either your smartphone, or installed on your computer. You can race yourself, pace yourself or take part in set challenges to get the most out of your exercise session.
WHY DO YOU WANT IT: These cushioned toe socks are made to handle the impact of dirt paths and rocky trails while the double elastic cuffs keep out dirt and debris. The minicrew length rests just above the ankle, fully covering and protecting the heel. Your toes are separated, splayed and properly aligned so your weight is distributed evenly, thus allowing the entire foot to be engaged. As each toe is wrapped in sweat-wicking material, feet remain drier and toes are protected from skin-on-skin friction which can cause blisters.
ON YOUR BIKE: GIANT TRANCE 1.0 WHAT IS IT: The Giant Trance 1.0 is the lightest and by far most agile 27.5 (650B wheel format) mountain bike from the GIANT stable. This bike – with advancedgrade composite frame - is specifically built to go fast on technical trails, and as such was developed with input from a group of trusted pro-enduro racers. WHY DO YOU WANT IT: Whether you want to float up tough climbs or bang down rowdy descents, this highperformance trail machine is engineered to do it all. You get absolute control on steep, aggressive terrain, added power and speed on technical climbs and pure confidence on every type of trail. DESIGN USPs: The lightweight yet stiff advanced composite frame-set of the Trance 27.5 was designed specifically to optimise the performance benefits of the 27.5” wheel size. It is fitted with 140mm of proven maestro suspension in the rear, plus cutting-edge frame tech, such as OverDriver Steerer Tubes and PowerCore Bottom Brackets. No matter whether you are climbing, descending, pinning it at speed or crawling through technical terrain, Trance 27.5 will help you tame the trail.
DESIGN USPs: A rugged, waterproof design means you can use this anywhere, even in the ocean. An extra-large display, one-button control, indoor tracking and a battery life of up to 10 hours allows you to monitor your time, heart rate, calories burned, speed and distance … wherever you are.
DESIGN USPs: Only fibres that are durable, light and flexible to offer superior breathability are used, which means cool, dry and comfortable feet. Coolmax© Fiber provides moisture management and comfort while NüwoolTM is Injinji’s own Merino wool which is spun to provide durability and prevent itching. FiberLYCRA® Fibre is a premium-quality yarn with fibre stretch and recovery features.
GO GET IT : Available at Cape Union Mart and a range of other outdoor outlets – check out Tomtom.co.za
GO GET IT: Available at Sportsmans Warehouse and other leading sporting stores. Injinji.co.za
GO GET IT: Available countrywide from all Giant Performance dealers, or check out Giant-bicycles.com/en-za for dealer details.
PRICE: R3 499
PRICE: R180
PRICE: R65 995
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FOR THE HEAD
FOR THE HEART
FOR THE PLANET
MOTORISED On the motorised side, we look at three vehicles similar at first glance, but with many a difference under the hood and inside. Read on and see which appeals to your soul ... FOR THE HEART: VOLVO XC90 WHAT IS IT: The latest version of Volvo’s flagship is an utterly spectacular SUV. The new vehicle has been totally redesigned and is now at the very top of the luxury off-roader pile. With seven seats, highly advanced engines and interiors that dazzle with their elegant simplicity, the XC90 is now a firm contender in this competitive market segment. WHY DO YOU WANT IT: If you’re looking for a big SUV that has seven seats and offers the feeling of true luxury, but you don’t want to drive a Land Rover Discovery, BMW X5 or Porsche Cayenne, this is the answer. It’s as good as anything out there. DESIGN USPs: There are so many reasons to buy an XC90. Volvo means safety, and the XC90 lives up to this mantra. Thanks to world-first technology, including automatic braking for road hazards and driver alerts systems, the XC90 easily achieved a 5-star Euro NCAP rating and has won a few safety awards too. It’s far more than just a safe car, though. Inside there is a host of new technology, including brilliant turbo-diesel and turbo-petrol engines, and even a plug-in petrol-electric hybrid. GO GET IT: Prices start at R804 400 and reach R1 066 400. A 5-year/100 000km service plan is standard, as is a 3-year/100 000km warranty. Visit Volvocars.com/za for more information.
FOR THE HEAD: OPEL CORSA ENJOY 1.4 AUTO
FOR THE PLANET: VOLKSWAGEN POLO 1.0 BLUEMOTION
WHAT IS IT: Most of you probably have a picture of a Corsa Lite in your minds, that zippy little car that launched a thousand student drivers. Well, erase that picture. The new Corsa has become larger, more sophisticated and more technologically advanced. It’s now also available with an automatic gearbox.
WHAT IS IT: Let’s pretend that VW hasn’t just been bust for emissions scandals and instead look at their brilliant little Polo. ‘BlueMotion’ is the title VW uses for its most fuel-efficient, eco-friendly, ‘greenest’ models throughout their range.
WHY DO YOU WANT IT: The Corsa is a hot-looking hatch. In addition to being bigger, the new Corsa is much better looking and very well equipped. DESIGN USPs: There aren’t that many choices if you’re looking for an automatic car in this price or size range. The Corsa’s six-speed automatic gearbox, paired with a 1,4-litre engine that produces 66kW and 130Nm, sets it apart. The car also comes with features such as a Bluetooth and USB compatible audio system with steering wheel controls, air-con, LED running lights, six airbags, hill start assist, ESP and ABS brakes. GO GET IT: While Corsa prices start at R187 400, the 1.4 Enjoy Auto costs R218 700. It comes with a 5-year/120 000km warranty and a 3-year/60 000km service plan. Visit Opel.co.za for more information.
WHY DO YOU WANT IT: The Polo is a classy little car with a premium feel to the interior that other vehicles in its class battle to emulate. While there is a Polo for every occasion, from basic to exhilarating, this particular model promises frugality. DESIGN USPs: You choose the BlueMotion for its engine, a 1-litre, 3-cylinder unit that produces 70kW and 160Nm, but uses only 4,2-litres/100km. It’s a phenomenal achievement to match this sort of power output with this fuel consumption. Even better, the BlueMotion doesn’t feel sluggish in the real world. It also uses tyres with low rolling resistance, has Start-Stop to reduce emissions when the vehicle isn’t moving, and there are a few aerodynamic enhancements to further save fuel. GO GET IT: You pay a premium to be ecofriendly, but it’s not that bad. The price is R239 200, including a 3-year/120 000km warranty and a 3-year/45 000km service plan. Visit Vw.co.za.
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TECHNO Words Aki Anastasiou
PETCUBE CAMERA
Now even pets have access to the latest technology Price: $199 The annual Consumer Electrics Show held in Las Vegas every year is the springboard for the latest gadgets and appliances that will eventually make their way into our lives. It is the place where we get a glimpse into the future. In 2016 over 20 000 products were launched and 170 000 industry professionals attended CES. This year the Internet of Things and the connected home matured with hundreds of connected devices being launched. Healthcare took centre stage as devices that monitor and tell us more about our health on a constant basis featured across the show. 3D printers have become cheaper and they are starting to go mainstream. Televisions are settling on a 4K standard and streaming content is fast becoming the way we consume video. Virtual reality is being integrated into mainstream technology and the top vehicle manufacturers shared their latest self-driving technology pushing us closer to a future with driverless cars. Get ready for drones and robots around us doing all kinds of things from delivering goods autonomously to assisting in daily tasks.
If you are one of those people that really misses your pet while you’re at work or away, don’t stress. The Petcube Camera will allow you to stay connected and monitor your pet in real-time. The built-in camera allows you to watch them via the mobile app and the built-in speaker gives you the opportunity to talk to each other – don’t try this if you’re in an open plan office, it could be embarrassing. It even has a laser pointer so that you can play with your pet and make sure he’s getting the right exercise.
SAMSUNG FAMILY HUB REFRIGERATOR Is this what the future fridge looks like?
GORDON INSTITUTE OF BUSINESS SCIENCE
The fridge in the home is probably the most central point from which information can be dispersed to an entire household. Think of the reminder notes we place on the fridge door, the family photos, the school extramural activities, and the list of groceries we are running low on. This is what Samsung hopes to make easier with their Family Hub refrigerator. They have digitised the entire process by adding a 21.5-inch, full HD screen to the fridge door and connecting the fridge to your Wi-Fi network. The screen will display your calendar, notes, recipes, weather and even let you pin photographs. You can also watch TV and stream music. But the best part of this fridge are the three cameras on the inside of the fridge door. Every time the door closes they capture an image of what’s inside of your fridge and that is then displayed on your screen. You can literally look inside your fridge. How will this change your life you ask? Well, imagine you are at the supermarket and you are not sure if you have tomatoes for that salad tonight. Simple. Just log into Samsung’s Smart Home app and you can see exactly what’s in your fridge and who finished those leftovers you had your eye on! Even the traditional fridge magnet is in danger of the not surviving the digital disruption!
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PITPAT DOG ACTIVITY MONITOR A FitBit for dogs…
Just when you though the world had gone crazy with pet technology, comes the PitPat activity monitor for dogs. PitPat is an activity monitor that attaches to a dog collar so that you can track your dog’s activities and fitness and discover what they’ve done while you’ve been apart. It connects to an app, so on a daily basis you can find out exactly how active your dog has been. PitPat has more than 200 different breeds in their database so finding the correct exercise guideline for your dog based on age and breed is easy. Oh how times are changing... even dogs are now in on the latest tech trends. Now all we need is a pet Vitality programme!
SENNHEISER ORPHEUS
The world’s best headphones! When Sennheiser launched the first generation of their Orpheus headphones in 1991, they cost a whopping $16 000 and they sold 300 units. Twenty-five years later, Sennheiser has launched the latest generation of the Orpheus headphones after ten years of research. Audiophiles are drooling – understandably so. The new headphones are exceptional and one can understand why they are the best headphones in the world. I tried them on at CES in Las Vegas and the mind-blowing sound experience of listening to Hotel California is still floating around my eardrums. The new generation Orpheus consists of 6 000 components using only the finest materials and metals. A technical masterpiece with an audio range from 8Hz to more than 100kHz, and the lowest distortion ever measured in a sound reproduction system, nothing comes close. They are powered by a Cool Class A MOS-FET high-voltage amplifier which sits on a solid block of Carrara marble, the same stone used in Michelangelo’s Renaissance sculptures. The whole experience is extraordinary and so is the price. The Sennheiser Orpheus headphones will set you back €50 000 or just over R900 000 – soon a cool R1 million the way the rand is performing. You will have to wait though. There is a waiting list. The Sennheiser factory only produces one unit per day, and if you order now, your headphones will only be ready in 2017. Global recession… what global recession?
WITHINGS THERMO
Finally a useful gadget from CES! Price: $100 Withings have taken the traditional thermometer and digitised it by adding more functionality and making readings more accurate. The Withings Thermo has 16 infrared sensors to locate the heat being emitted and translate that into a reading. It measures this from the temporal artery on the side of the head. The patented HotSpot Sensor Technology takes 4 000 measurements in two seconds. It then runs the data through an algorithm before it displays your temperature. The information is then synced to an app on your phone and can also be monitored remotely by your doctor. One of the advantages of the Thermo is that all readings are logged on the app, so one can start identifying your health trends based on your temperature variances over time.
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BOOKS Words Chris Gibbons
THE LION AWAKES
GORDON INSTITUTE OF BUSINESS SCIENCE
ASHISH J. THAKKAR ST. MARTIN’S PRESS I R295 Ashish Thakkar’s story reads like a cross between Slumdog Millionaire and The Apprentice, liberally sprinkled with Disney fairy dust. As founder of the multinational Mara Group, he is one of the world’s youngest billionaires. But his family was booted out of Uganda by Idi Amin, only to return to Rwanda just days before the 1984 genocide. He – and they – survived, returning to Kampala where Thakkar dropped out of school aged just 15 to become a technology super-salesman. Travelling all over Africa before the age of 20, he spotted gap after gap to build his empire. The Lion Awakes could also have been scripted by Disney. Clean, polished, easy to read, selfpromoting and very smiley (apart from the bit about Rwanda), it’s much as you’d expect from an official autobiography. Don’t let that deter you from its central message, though: Africa is a fabulous place to do business. Thakkar details how he successfully approached apparently insoluble problems, like granting credit to Nigerians. He sets great store by his own personal integrity and honesty and says – in essence – that if you treat most Africans in the same way, you’ll reap the dividends. Now 30-ish, Thakkar hangs out in places like Washington and Davos with the good and the great, including new business partner, former Barclay’s CEO Bob Diamond. Nonetheless, he has the grace to appear as astounded by his meteoric success as we are. Clearly not done with business yet, Thakkar has a very long road ahead – I’ll watch with interest.
THE TAO OF COACHING
MAX LANDSBERG PROFILE BOOKS I R220 This is an updated version of a classic that has sold more than 200 000 copies and been translated into 14 languages. With good reason, too, because Landsberg tells a simple story in clean and easy fashion. We join his central character, Alex, who is waiting to hear whether or not he’s been appointed to his company’s board of directors. As Alex waits, he journeys back in time, reflecting on his career and his learnings as manager and coach. Landsberg keeps each step short, and uses them to introduce key coaching concepts, like Asking versus Telling, Finding Your Coaching Blocks, the GROW and Skill/Will models and so on. That’s not say say short equals easy – each chapter ends with one or two deceptively tough exercises which will force you to think hard not only about yourself, but the people with whom you work. If you want to manage people better using coaching techniques or to investigate the whole concept of coaching, this looks like a very good place to start. It gets a Highly Recommended tag.
BLACKOUT - THE ESKOM CRISIS
JAMES-BRENT STYAN JONATHAN BALL PUBLISHERS I R200 Prepare to be depressed. Blackout is a masterly study of Eskom, transformed as a power producer from world-class and low-cost to massively indebted and high-cost. Much of the story is wellknown: expert reports ignored and a huge failure to build new generating capacity at shatteringly high economic cost. But Styan reveals that at almost every turn, either government policy or Eskom management incompetence has compounded the problems. For example, Eskom has a critical skills shortage, with more than 3 700 staff positions vacant. Yet it has also announced plans to cut “an additional 3 000 highly skilled and experienced workers to enable the company to achieve higher targets for employment equity.” As it battles to maintain its ageing fleet of coal-fired power stations, this is insanity. Similarly, an insistence that new coal suppliers to Eskom be 51% black-owned means that vital investment in new coal mines is not happening in any way, shape or form. Those companies that are 51% black-owned simply don’t have the financial firepower to deliver new mines, which require huge upfront investment. So, in the years ahead, we may be sitting in the dark but at least we’ll be politically correct.
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GETTING (MORE OF) WHAT YOU WANT
MARGARET A. NEALE & THOMAS Z. LYS I PROFILE BOOKS I R350 This is a tough one to review. Its subject matter – the science of negotiation – is vital in both life and in business. In many respects, as consumers, managers, husbands, wives and parents, we find ourselves negotiating every day, so this should have been a fascinating read. Neale and Lys are acknowledged experts in the field and they take an approach that is based on economics and psychology. What is the value of the thing that you are trying to negotiate and what is going through your mind as well as the mind of your counterparty? (Their word, by the way, not mine.) What role is played by emotion? Should you threaten or display anger? Does this change if you are male or female? When should you make the first offer and when should you wait for your opponent? They have researched the field extensively – she is a Professor of Management at Stanford and he is a Professor of Accounting at Northwestern’s Kellogg School of Management. Together, they present a more-than-thorough guide to ensure that you get, as the title states, more of what you want. It’s a pity then, that this is such a dry text. Read it because you need it – we all do – but I can’t promise much fun as you go along. Sadly that also makes the overall content less memorable and therefore less valuable.
THE ECONOMIST POCKET WORLD IN FIGURES – 2016 EDITION
PROFILE BOOKS I R315 Quick – which country has the highest foreign debt? Or the largest agricultural output? Which country is the largest emitter of carbon dioxide or has the largest armed forces? If you need fast, authoritative answers, there is simply no substitute for The Economist’s Pocket World in Figures. This happens to be the 25th anniversary edition and its editors open with a short essay comparing the world then and now. It’s interesting to note that 25 years ago, the USA was the world’s biggest economy – it still is today – but China, which wasn’t even in the Top Ten in 1988, is now very firmly in second spot, ahead of and almost double the size of third-placed Japan. China also happens to be the answer to the four questions posed at the start of this review and it tops many another table, too. The second half of the book consists of the equally valuable Country Profiles – a two-page snapshot of every country in the world, bar North Korea, with details on the number of people, the economy, structures of employment, energy sources, health and education and so on. Simply put, this is an invaluable point of reference.
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THE SILO EFFECT
GILLIAN TETT I LITTLE, BROWN I R360 Highly respected and multi-award winning financial journalist, Gillian Tett began her career as a cultural anthropologist and it’s partly through that lens that she examines how silos in large organisations arise, the damage they cause, and how others avoid them. Tett cites the decline of Sony, the neardemise of Swiss mega-bank UBS and the 2007-2008 Financial Crisis itself as disasters caused by silos, and when she throws in the example of the ‘London Whale’ trades in 2012, which cost JP Morgan Chase $6.2 billion, she reminds us that we don’t learn from past mistakes. That was caused by a tiny and virtually unknown part of JP Morgan which was supposedly in charge of managing risk, of all things. In that particular case, a hedge fund called BlueMountain Capital had been watching the markets very carefully for evidence of a big player displaying silo – and therefore irrational – behaviour. When its traders spotted JP Morgan’s ‘Whale’, BlueMountain pounced, taking the other side of the trades. By the time everything had been unwound, BlueMountain had generated more than $300 million profit. Most importantly, Tett devotes much space in the book to companies like Google, and organisations like the New York Fire Department and Chicago Police, that broke their silos down to great effect.
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CLASSIC INVESTING BACKING DIFFERENT HORSES Words Professor Adrian Saville
When constructing your investment portfolio, you need to pay special attention to diversification. Without it, you’re effectively backing a single horse in a single race. The experience in the South African investment landscape at the beginning of December last year reveals the valuable principle of asset allocation and diversification. The announcement of the replacement of the Finance Minister shocked capital markets and led in the subsequent two days to major sell-offs in the South African equity and bond markets, with each losing about R250 billion, collectively equal in size to just over 10% of the South African economy. The fact that both markets moved in the same direction and in response to the exact same piece of news points to the importance of diversifying your assets. What a diversified asset does is offer investment protection when one part of your portfolio is responding or reacting to bad news. This other part, representing a diversified asset, behaves in a
. . . YOU’VE BECOME THE BENEFICIARY OF A FANTASTIC WINDFALL”
GORDON INSTITUTE OF BUSINESS SCIENCE
different way. By the same convention, when one part of your portfolio is basking in the glory of some event, it means that this other part might be on the sidelines and watching from a distance – but ready to step in to take up the running or provide protection when needed. Essentially, diversification brings into play what we call noncorrelated assets. A good example of non-correlated assets is provided in the December 2015 market reaction to the firing of Finance Minister Nhlanhla Nene. In the ensuing sell-off, one part of the South African equity investment landscape that came under acute pressure was the financial cluster, made up of banks, insurers and other financial services firms. This is because the cluster is very sensitive to currency moves, consumer price inflation and interest rate changes, and all three factors were compromised in the decision to replace the finance minister. But in the exact same breath, another part of the equity market that did exceptionally well was the resources cluster. This segment of the market has been widely ignored in recent times because of depressed commodity prices, falling productivity and
rising regulatory pressure, amongst other things. As a result, this part of the equity market has really been struggling to paddle its own canoe. Yet, when the rand collapses from R13.60 to R16.00 and you’re selling commodities in US dollars, guess what? Suddenly you’ve become the beneficiary of a fantastic windfall! As a result, whereas the financial cluster in the equity market fell 15%, the commodity sector gained value with the collapse of the rand when Nene was recalled. The net result was that the South African equity market only fell 3%, whereas the bond market fell 10%. What helped the South African equity market is that the market itself is a somewhat diversified asset. It contains domestic-facing businesses, such as banks and retailers, that came under tremendous pressure. Yet, offsetting that pressure is the market’s exposure to outward-looking businesses, such as SABMiller and Richemont along with resources, which did the real lifting in the rand sell-off. When you’re making any investment – whether it’s in a specific asset class like equities, or across asset classes, a point to emphasise is diversification, because if you don’t have diversification, you essentially have a concentrated bet, in which case you had better be right. Finally, whether you are thinking about building an investment portfolio that is exposed to South Africa only or that is international, where you have diversification, you need to recognise that the diversification can be inside an asset class or across asset classes. An example of diversification inside an asset class is the one I’ve given above: the South African equity market, with local-facing financial companies complimented by international-facing resource businesses. By the same token, diversification across asset classes means that if you’ve got South African equities in your portfolio you could complement that asset class by diversifying domestically into cash, which behaves very differently to equities. And if you want to diversify internationally, then perhaps you would want to invest in US government bonds alongside South African equities, because those also behave very differently to South African equities.
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Always ask yourself “How would this make my portfolio look different from what I have?” The answer to that will give you a sense of your diversification
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PHOTOS: SHUTTERSTOCK IMAGES
ALTERNATIVE INVESTING SNAPPY PRICES Words Paul Perton
Rare and unusual cameras have become an important niche investment. A camera is for photography, right? Well, no. If you fall into the collector category, it could be a serious investment. But then we’re not really talking about your run-of-the-mill Nikon or Canon. These are cameras that are generally bought for their ability to deliver an appreciable increase over the purchase price and might never even be taken out of their packaging. Heaven forbid that they should be used to take photographs. Such is their potential for return that buyers take their new prize(s) home unopened and leave them that way for decades, or at least until the potential for sale at a significant profit is seen. Unsurprisingly, it’s the Japanese who seem to be the most dedicated collectors. The choice of camera is quite broad, it’s usually film only and mostly focused on the Leica rangefinder, although the medium format cameras made by companies like Bronica, and to a lesser extent Hasselblad, are also collectible. Lenses are a vital accessory, but attract much less attention than the camera itself, which in many cases has been produced in a bewildering list of variations to suit specific customer needs. For example, to mark the 60th anniversary of the Peoples’ Republic of China, Leica produced a gold Leica model MP body with red leather inserts and matching gold 50mm Summilux lens. Of the 60 that were made, one occasionally surfaces. The most recent was seen in the Leica store in San Francisco at an asking price of $50 000.
Leica 0-Series Camera
Of 50 IIIc K series bodies that were made, the latest price indication is $12 671, while a similar body with 50mm and 135mm lenses is listed on eBay at $31 399 – or just over R450 000. Meanwhile, digital cameras are beginning to draw collectors’ attentions too – a Leica M9 prototype is expected to fetch $13 575 and a more recent special edition Titanium Leica M9 (Ti body and lens set) will doubtless be snapped-up at $29 000, while a similar presentation set was recently seen on Amazon for $60 000. Like anything else, scarcity combined with age can see values soar. In May 2012, a Leica-0 Series, from the very first 1923 preproduction test run of about two dozen cameras, was auctioned for €2.160 million – around R33 million. Not a bad return on someone’s investment!
I doubt it has ever been out of its red satin-lined hard wood presentation box.
Reality check – I recently sold my late father’s small collection of English coins. It was his dream to have complete date sets of coinage from the humble penny, to crowns and even specially minted presentations. He didn’t quite succeed, which was a shame.
The armed forces were great users of Leica cameras; a Leica IIIb Model G made for the Luftwaffe between 1938 and 1946, with the original screw mount, will fetch anything from $2 750 up to double that. Interestingly, the Luftwaffe model is in such high demand that a burgeoning market has developed for fakes, most originating from clever forgers in Russia – be warned.
A shame because he didn’t reach his goal. And a blessing because when examined by a specialist, the value of the coins turned out to be not much more than their face value. For example, since the late 40s, silver coins are struck in cupro-nickel and not the metal of their name. Those early examples would have fetched twelve times their face value.
Staying with the forces, an RAF-marked IIIb body is currently on sale at Collectiblend for $3 035 and a Royal Navy IIIc model under offer at $6 110.
Pennies? “£2 a kilo and I’ve already got a cupboard full at that price,” said the dealer. That was the truth; he showed me as I left with the £200 he’d paid me for my father’s decades-long efforts
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WINE Words John Maytham
Acumen’s wine expert picks three of the best at three different price points: Everyday, Dinner Party and Out To Impress. EVERYDAY The profusion of new wine producers is both daunting and exhilarating. Daunting because the absence of track record can make buying a lottery; and exhilarating when a purchase is more than one hoped for. Doran Vineyards provided such an experience recently. Irishman Ed Doran is a sports tourism specialist who loves rugby and wine, and so South Africa is a natural home for a venture he started in what’s called the Voor Paardeberg (near Wellington) with old friend and Constantia wine route pioneer, André Badenhorst. They say they are just ‘two old buggers having fun’ but the evidence of their four harvests to date suggests there is a lot of hard work and creativity alongside the fun. The happy purchase was of the 2015 Arya, a Swartland-type unwooded blend of 57% chenin blanc, 22% grenache blanc and 21% rousanne. Pear, apple and orange on the nose, a lovely creamy texture on the palate with a nice heft to it, and a solid finish that includes more peach and some honey – despite a bone dry technical analysis. And the price puts an even broader smile on the face – under R60.
DINNER PARTY Samantha O’Keefe’s story is among the more interesting in the South African wine world. The California native arrived in South Africa with a husband, a child and a dream. The husband has gone; there is another child; there were times when the dream came much closer to being a permanent nightmare. But she persevered, she fought off the banks, she worked bloody hard and bloody clever, and now the dream is an ongoing reality. A dairy farm on the foothills of the Sonderend Mountain Range outside of Greyton has been turned into a pioneering example of how vines can perform in what was, before Samantha, virgin wine territory. A good story, though, is not sufficient. The wines must be good as well. And Lismore wines are growing an ever increasing reputation for excellence. The viognier has for several years been recognised as a leading local example of the cultivar; the shiraz is steadily attracting admirers, and the latest release of Sam’s wood-matured sauvignon blanc (2014) was one of my favourite white wines of 2015. It is full of elegance and weight and floral intrigue, with a signature mineral base and a complexity that often escapes this sometimes onedimensional grape. Beautiful by itself, sublime with food. R150.
GORDON INSTITUTE OF BUSINESS SCIENCE
OUT TO IMPRESS There is a new bubbly-maker in town, making waves that MCC fans are catching with great enthusiasm. Paul Gerber of Le Lude. That’s the name of a village in the Loire that pleased the property’s owners, Nic and Ferda Barrow. Nic is an attorney with interests in the hospitality business, and also a founder of the KKNK. He loves Franschhoek, and he loves bubbly, so he bought a piece of land close to the Monument, and hired Paul to make his wines. Paul loves bubbly, and he also loves maths – he came to winemaking via a B.Sc in maths and chemistry and a stint teaching maths at SACS before the career change took him to Stellenbosch’s Oenology Faculty. Unsurprisingly, his approach to winemaking is mathematical and, well, geeky. He speaks with huge passion about things like bubble burst rate – something that, verily, is the subject of extensive academic research. The bigger the bubble, the more aggressively it bursts, and the more aggressive is its CO2. So one of Paul’s Holy Grails is the perfect ratio, the Fibonacci number for sparkling wine. Less geeky is his focus on the core characteristics that he prizes in champagne and tries to replicate in his wines – elegance, finesse, structure, freshness and acidity. They are elements that are present in spades in his maiden releases, a Brut and a Rosé. And there are bottles fermenting in his laboratory, I mean cellar, that show that the debut is a sign of much greater things to come. R190
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RAY PHIRI'S UNFINISHED STORY Words & Pictures Victor Dlamini
Ray Phiri may have long left the bright lights of Johannesburg for a quiet life at his farm on the outskirts of Nelspruit, but the music of the urban landscape still burns deep within him. His playing still has that urgency of the ‘township jive’, his voice at once gruff like that of a hardened street corner hustler, the next note a charming falsetto. His performance at the Joy of Jazz this year was a reminder, if any was needed, that Paul Simon’s Graceland would have been poorer had it not been for Phiri’s lilting guitar.
But his greatest style has been the way he has forged a sound that is at once very deep but accessible. Looking back at the success of Stimela, it’s difficult to understand how he ever got so many people to party to music that is clearly not ‘commercial’. The theatrics may partly explain how Phiri was able to enthrall so many with music that railed with such intensity against apartheid.
Phiri still defies physics and biology with the way he dances. He can contort his body like a magician, weaving and bobbing like a lightweight boxer, his guitar echoing the sounds of Marks Mankwane, Jimi Hendrix and Johnny Fourie. Those who have followed Phiri’s career know that he is endlessly inventive, and that he long ago discarded as artificial categories that limit musicians through labels like jazz, mbaqanga or rock. On some of his albums , you’ll find him featuring an accordion player, alluding to the sounds of the herdsmen of Lesotho or the Karoo farmer.
When Phiri walked onto the stage, playing Unfinished Story, one of his enduring classics, you got a sense that this deeply layered song is an apt metaphor for his own career. Here is a musician who was around in the late 60s, already making new music. In the 80s his Stimela was making the new sounds of freedom, with songs like Whispers In The Deep, unofficial anthems to the war for freedom. It’s impossible to believe that Phiri has been in music for nearly 50 years. But he is still at it, that sly smile still a hint of this genius of our music who knows how to reflect both South Africa’s torment and her joy.
Phiri has always been a man of great style. In the 80s the jackets were sharp, made from the finest wool, and if you ever see the making of the Graceland video, as you see him walk across Manhattan towards Central Park, you’ll know here’s a musician who belongs in the world.
Ray Chikapa Phiri may be entering his golden years, but it’s clear that his voice is one of the most important in South Africa’s music. He may not fill a large stadium anymore but his sound captures the vast vista of the country’s musical landscape.
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CAVEAT EMPTOR Words Sam Cowen
You can find reviews on anything nowadays. With the advent of social media as a platform on which to rant, and consumer-response driven websites overtaking traditional advertising, the voice of the individual has never been stronger or louder. The web is the ultimate consumer service hotline. There are Facebook pages dedicated to naming and shaming. There are blogs and websites where you can rate a hotel or find one to stay in, rent a car or complain about the one you actually get. Tripadvisor.com is the place to go to find out what people who actually paid for their hotel stay really think, as opposed to the writers of the glossy brochures who get to stay for free.
GORDON INSTITUTE OF BUSINESS SCIENCE
The amateur reviewer feels no need to dress anything up. “Awful kids’ menu and no fence around the pool” is far more useful to me than ‘child-friendly’, which is PR-speak for “we’ll let the little buggers in”. Some posts are objective, some are fury-fuelled rants published at two in the morning, see Hellopeter.com, but they tend to follow a trend and then it’s up to you to decide whether or not to try it out for yourself! Something I’ve never considered trying out for myself is hiring a prostitute. Yet there are review sites for this as well. I was alerted to this by a dear friend who found one ‘by accident’ while surfing porn sites ‘for the first time’. Punternet.com is a report-back service on ladies-of-the-night (and in many cases, the day as well) as written by, well… punters. Some people take their reviewer status very seriously. User COLL has taken the time to post 227 reviews from 2001 to 2012. Now that’s commitment. His most recent experience is with Daniella who
works in Holborn. “Her breasts and bum are lovely and firm and she has a superb figure.” That’s high praise indeed from someone who rates Molly from South-West London as “okayish but I’ve had better...” and managed not only two encounters but two reviews on Boxing Day last year “to get away from Christmas shopping”. Well, we’ve all been there, haven’t we? Punternet is aimed at the straight market but if you’re a chap who likes chaps there’s Maleescortreview.com that claims to be a worldwide service. It doesn’t seem to have a South African branch (yes, I’ve checked) but if you’re ever in New York, GustavoBrazil couldn’t come more highly recommended. (See what I did there?) Adriano46 who is “a middle-aged businessman who travels the world, is in his late 50s, overweight and discreet”, waxed lyrical about Gustavo’s abilities and the size and shape of his …. talent. I spent a pleasant evening at home surfing these sites and others like them. There really isn’t anything you can’t review or criticise. Food, sex workers, travel, gyms – everything seems to be covered. For the most part, submitters fall into two groups. The first is complimentary in the extreme. They are thrilled by every experience, from the hotel where the pool is soooo warm to the buffet which was amazeballs, to the prostitute who enjoyed it JUST as much as they did! They’re as excited by clean toilets at the Bergview rest stop as they would be by caviar served off a Russian stripper.
The other group are the kvetchers. They wouldn’t be happy with the parting of the Red Sea if it didn’t fall within school holidays. They know if breakfast was five minutes late, housekeeping was five minutes early and whether the hooker’s breast augmentation looks “too fake”. They also out-write the satisfied ones almost every time. It’s great to read people’s opinions, whether good or bad, of something you intend to experience. The downside is that spontaneity and excitement is lost when you know exactly what you’re getting. As much as forewarned is forearmed, sometimes you just want to be surprised. Well, maybe not always, as was the case of one poor client who had an issue with décor. No, this wasn’t on Tripadvisor. com or Hellopeter.com. “Flat itself isn’t that nice. The room was small and rather cramped. Clothes went on the floor.” Imagine if he’d known beforehand? He’d have saved himself 130 pounds. And possibly fleas
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