KOOS BEKKER
MEDIA MASTER, PRACTICAL LEADER
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Issue 16 • Second Quarter, 2016
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contents Issue 16 • Second Quarter, 2016
Issue 16 • Second Quarter, 2016
features
P.22 KOOS BEKKER
ADAPTING TO THE FUTURE Koos Bekker, in conversation with Chris Gibbons.
MEDIA MASTER, PRACTICAL LEADER
Issue 16
NANOSATELLITES SA’S POCKET-SIZED SPACE TECH XOLANI NDZABA A MILLER OF NOTE
R39.95 incl vat
• Second Quarter, 2016
SA UNIVERSITIES WHY FACULTY IS STILL TOO WHITE
ON THE COVER
P.30
Photo: Morné van Zyl
FACULTY AND RACE IN SOUTH AFRICA
Prof. Helena Barnard explores whether or not university faculties are too white.
GORDON INSTITUTE OF BUSINESS SCIENCE
P.50
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.
TO A BAG OF ORANGES, FROM THE CEO, WITH THANKS GIBS EDA graduate Xolani Ndzaba tells Mandy Walker the story of Lethabo Milling.
P.52
NANOSATELLITES: SA'S HIGH-TECH OPPORTUNITY
Science writer Sarah Wild reveals South Africa's prowess in the field of nanosatellites.
P.34
et cetera
P.02 Contents P.04 Contributors P.08 From the Editor P.10 Network
opinion
P.16
GIBS Dean Prof. Nicola Kleyn asks if business schools know and teach enough about Africa.
Teaching for Business in Africa
p.18 The fine line between
Co-operation and Capture
Trudi Makhaya asks when lobbying goes too far.
p.19
Doing It Differently
Dan Moyane says that if we want different results, especially in education, we need to do things differently.
Dialogue p.20 Flying’s not for Sissies Comair CEO Erik Venter lifts the lid on a most difficult industry.
South Africa
p.26 What is Social Entrepreneurship?
Kerryn Krige gives her insight into the importance of social entrepreneurship.
p.32 South Africa: New
Leaders Needed!
GIBS leadership experts Shireen Chengadu and Charlene Lew say South Africa requires new styles of leadership.
p.34 Getting Unstuck Harvard Business School Prof. Richard Vietor on how to boost SA’s economy. p.36 Workplace Violence: The Tip
of the Iceberg
Threat assessment expert Prof. Gerard Labuschagne warns that workplace violence is much more widespread than most people imagine.
P.70
P.46
p.38 The Business of Ballet Photographer Marc Shoul and writer Cara Bouwer go behind the scenes at Joburg Ballet.
entrepreneurship
p.44 The New Wave Dr. Alex Antonites tells Cara Bouwer about an exciting new wave of MBA entrepreneurs. p.46 King of the Hill Eugene Yiga profiles Alistair King, one of SA's most successful ad men.
general management
p.55 Integrated Value: Beyond
Social Responsibility and Shared Value
Prof. Wayne Visser introduces a new concept that focuses on integration and value creation.
p.62 The Rising Power of
renew
p.82 Just Deserts & p.83 Doha Days Travel expert Caroline Hurry explores
Qatar and its capital, Doha and then heads over to Egypt's Western Desert.
p.84 The Finer Things Brogues for Him; a camel coat for Her and new TAG Heuer watches for both. p.86 Forward Motion Acumen's motion maestros Jacques Marais and Stephen Smith test the new Ferrari California T and the Giant Anthem SX MTB. p.88 Techno Aki Anastasiou looks at 3D printing and Samsung’s Galaxy S7.
Agnostic Brands
p.90 Books Greg Marinovich on Marikana; Jeffrey Pfeffer on Leadership BS and Clem Sunter on Flag watching.
dynamic markets for market potential
p.92 Classic Investing Prof. Adrian Saville expands on the need to diversify your assets.
Doing Business in Malaysia
p.93 Alternative Investing Mandy Walker licks a few stamps.
Marketing expert Prof. Sandra Vandermerwe unlocks the power of brands that neither believe nor disbelieve.
p.66 Looking beyond size and growth
p70
The GIBS Dynamic Markets Index 2016. Kate Whitehead investigates the complexities of business life in Malaysia.
p.74 Top Eight Things to See and Do
in Malaysia
And when the business is done, Kate Whitehead has the inside track on where to go and what to see.
p.76 Get Ready for Interesting Times
James van den Heever meets the machine that might be your new boss.
p.80 The Rise of the Machines Ace trendspotter Dion Chang looks at the current use of robotics and machines.
p.94 Wine Wine expert John Maytham picks another three winners. p.95 Voice in the Key of Our Time Victor Dlamini compares Nduduzo Makhathini with Bheki Mseleku and Abdullah Ibrahim.
looking backwards
p.96 Aircon Wars Sam Cowen takes control of the office air conditioner's remote.
4
contributors
DION CHANG is an
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.
PROF. GERARD LABUSCHAGNE
is a Director at L&S Threat Management, a company providing training and consultation in threat assessment and management. He is on the editorial board for the Journal of Threat Assessment and Management and has been a regular speaker at Threat Assessment conferences in Europe and Canada. He holds two Masters degrees (Clinical Psychology & Criminology) and a PhD in Psychology, and an LLB degree.
SHIREEN CHENGADU
is the executive director of the Centre for Leadership and Dialogue and Enterprise Development Academy at GIBS. She is also an adjunct faculty member and teaches, researches and consults in the Women in Leadership area. She is currently reading for a PhD at UCT GSB focusing on the influence of economic investment in women.
VICTOR DLAMINI
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.
in Teaching Award at GIBS on nine occasions since 2007, and in 2012 was nominated for the Economist Intelligence 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.
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.
JAMES VAN DEN HEEVER writes for a
PROF. ADRIAN SAVILLE is Professor of WAYNE VISSER is
the Transnet Chair of Sustainable Business at the Gordon Institute for Business Science and Director of the think-tank Kaleidoscope Futures.
Economics and Competitive Strategy at GIBS, and Chief Strategist at Citadel. He has lectured and taught widely in both South Africa and around the world, and has received the Excellence
range of clients, including the Institute of Directors in Southern Africa, the Ethics Institute of South Africa, the South African Institute of Professional Accountants and Ernst & Young. He was formerly editor-in-chief of Systems Relationship Marketing, a custom publisher with blue-chip clients and editor of Computerweek. He also worked as a media liaison in the corporate world.
TAG Heuer Boutiques; Sandton City & V&A Waterfront. Also at selected fine jewellers nationwide. For further information please call 011.669.0500. www.picotandmoss.co.za
TAG HEUER CARRERA CALIBRE 1887
Ayrton Senna is celebrated as the most influential driver in the history of Formula One. He was never intimidated by the expectations of others, because his were even higher. He forever embodies the TAG Heuer motto – Don’t Crack Under Pressure.
6
contributors
of Organisational Behaviour and Strategic Leadership Decisionmaking, and has a passion to explore, through research, the intra- and interpersonal behaviours that determine strategic organisational outcomes.
editor Chris Gibbons Gibbonsc@gibs.co.za managing editor Zenzile Hlongwane HlongwaneZ@gibs.co.za cover photography Morné van Zyl
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.
layout and production Contact Media and Communications (Pty) Ltd designer Quinten Tolken proofreader Angie Snyman
EUGENE YIGA graduated with distinctions in financial accounting and classical piano but his career then took an interesting turn when he spent two-and-half years working in branding and communications at two of South Africa’s top market research companies. He also spent over three-and-a-half years working at an eLearning start-up before dedicating himself to his business as a full-time awardwinning writer. Eugeneyiga.com
publisher Sean Press Pressman@contactmedia.co.za Contact Media and Communications (Pty) Ltd 011 789 6339 advertising sales Damian Murphy Damian@contactmedia.co.za 082 888 1137
contributors Aki Anastasiou Prof. Helena Barnard Cara Bouwer Dion Chang Sam Cowen Victor Dlamini Caroline Hurry Adrian Kitimbo Prof. Nicola Kleyn Kerryn Krige Prof. Gerard Labuschagne Trudi Makhaya Jacques Marais John Maytham Dan Moyane Xolani Ndzaba Liezl Rees Prof. Adrian Saville Stephen Smith Cheska Stark James van den Heever Prof. Sandra Vandermerwe Prof. Wayne Visser Mandy Walker Dr. Lyal White Kate Whitehead Sarah Wild Eugene Yiga 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
PROF. SANDRA VANDERMERWE is an
GORDON INSTITUTE OF BUSINESS SCIENCE
extraordinary professor at GIBS, specialising in customer-focused transformation. Her academic work is based on ongoing, applicationdriven research and collaboration with well-known thinkers and practitioners and has been published by leading academic journals.
Brought to you by:
CARA BOUWER is a
DR. CHARLENE LEW is
a senior lecturer at GIBS. She teaches on the doctorate, MBA and corporate programmes in the areas
freelance 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
DOUBT IS THE DISEASE, LEADERSHIP IS THE CURE Words Chris Gibbons
It was Salman Rushdie, the Indian-born English author, writing in 1989, who said that “Doubt, it seems to me is the central condition of a human being in the twentieth century.” He clearly hadn’t yet encountered the world as we know it today, where doubt has forcefully allied with uncertainty, distrust and incomprehension to create some of the most difficult times in the recent history of mankind.
GORDON INSTITUTE OF BUSINESS SCIENCE
Refugees flee in waves from the strifetorn Middle East towards a Europe that doesn’t want nor know how to handle them; their tragic march is punctuated by the awful drumbeat of terror attacks. Economies around the world stubbornly refuse to respond to the ministrations of central bankers and their learned advisors; far from rising into prosperity, the evidence shows that many people are becoming poorer. And many of them face replacement by robot. At the time of writing, it seems well nigh certain that Hillary Clinton and Donald Trump will contest the US Presidential election later this year. It is hard to imagine two less suitable candidates to lead the world’s most powerful nation: the scaly former First Lady, viewed by many as dishonest to her core, versus the flaky property billionaire, politically rabid and possessed of a hair-trigger temper. Whoever wins will have to stare at yet another severe problem called Vladimir Putin, the new Czar of Russia, and a political adventurer – some would say warmonger – of note. This is not a script designed to produce a peaceful night’s sleep. Here at home, affairs are little better, what with dismissals of finance ministers,
a collapsing currency, threats of ratings downgrades and a President who lurches from one corruption-linked crisis to another. Sadly, we appear to be no different from the rest of the planet. That is a pity because it is in times of crisis like these, countries and the businesses that operate in them need a firm hand on the tiller – or, to put it more bluntly, good leadership. A leader that keeps the ship as steady as possible and more or less on course and someone who is trusted to do just that by the crew. There are many, many definitions of leadership, to say nothing of thousands of books, but one of the best and most-often quoted is from the late Peter Drucker: “Management is doing things right; leadership is doing the right things.” Koos Bekker did many right things during his tenure as CEO of Naspers, including his legendary investment in Chinese Internet company Tencent, which made his company one of the best performers of the last two decades on the JSE and himself a billionaire. But those are not the only reasons Bekker, now Chairman of Naspers, is on the cover of this edition of Acumen. Many of those celebrated books on leadership devote much time and space to the leader as
visionary, as someone who, unlike his or her colleagues, somehow has the ability – the vision – to forecast the future. Bekker is not that kind of leader. In fact, by his own admission, he’s exactly the opposite. During our conversation at Babylonstoren, his enchanting wine estate near Franschhoek, Bekker told me that he realised very early on in his career that his forecasting was – like the rest of us – woefully inadequate. But he also understood that the key to overcoming this shortcoming was, once the new trend or development was apparent, to be able to react extremely quickly to it. Koos Bekker certainly didn’t invent the Internet, but he realised immediately its importance and potential in China, acted accordingly, and kept the Naspers ship on a steady course when a first attempt to capitalise on the Chinese opportunity fell flat and expensively on its face. That’s believable, trustworthy and highly competent leadership. Not someone who claims to have all the answers, nor hides behind dogma, nor pretends that problems don’t exist when they are plain for all to see. It’s just the kind of leadership that South Africa and the rest of the world need more of right now
.
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10
network
NETWORK Words Acumen Contributors
Our regular look at GIBS’ events and guests.
BUDGET 2016
As Finance Minister Pravin Gordhan was delivering his 2016 Budget to Parliament, cartoonist and visual communicator James Durno
worked at breakneck speed with a GIBS team to capture the key elements. The process was live-streamed to great acclaim.
GORDON INSTITUTE OF BUSINESS SCIENCE
LEADERSHIP EXPERT DR. NGAO MOTSEI JOINS GIBS New faculty member and lecturer Dr. Ngao Motsei has become part of GIBS’ Leadership Cluster. She is also Founder and CEO of Leadership Emporium (Pty) Ltd. Prior to founding Leadership Emporium, she served in various executive and senior management positions in both the public and private sectors in South Africa. These include Group Executive and Executive Director: Strategic Human Resources and Transformation for MMI Holdings and Head of Change Management at the SA Reserve Bank. Dr Ngao Motsei
Ngao also has broad international experience, including being part of the
organisational restructuring of Deloitte & Touche, Canada, assisting in a business unit re-engineering for Philips in Budapest, Hungary and being part of a team development and effectiveness intervention at the University Hospital in Singapore. With a PhD (Organisational Behaviour) from the University of Pretoria, and further degrees from Cornell and UCT, Ngao is a thought leader on workplace bullying in South Africa. She has already been invited to contribute an article on that topic for the next edition of Acumen.
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TANYA VAN LILL JOINS BOARD OF EXECUTIVE MBA COUNCIL Tanya van Lill, Director: Academic Programmes at GIBS, who is responsible for the delivery of the Business School’s flagship MBA as well as postgraduate and diploma programmes has been appointed to the Executive Master of Business Administration Council (EMBAC) board of trustees, effective from January 2016. Alongside other board members, van Lill will lead the association’s education and training, resources, networking, and advocacy efforts.
Tanya van Lill
Alastair Macduff
IS BUSINESS RESCUE WORKING? It’s now more than five years since South Africa’s new Companies Act ushered in the concept of Business Rescue, but there remain a number of fundamental questions about whether or not the process is working as intended. That was the broad consensus at a recent GIBS conference on Business Rescue, endorsed by the Turnaround Management Association of Southern Africa (TMASA).
EMBAC, the global voice of the Executive MBA industry, is a professional academic association that serves as a facilitator of best practice sharing and knowledge dissemination, and fostering a community among high-quality programmes. Since 1981, the organisation has dedicated itself to advancing the cause for EMBA to improve executive education worldwide through its
research, partnerships, conference, and outreach activities. “Tanya’s appointment to the EMBAC board is a substantial achievement for the School as well as the continent. The exposure to new trends and research, as well as the creation of new partnerships, will enhance our MBA as well as other academic offerings. We congratulate Tanya, and we have no doubt that she will make a significant contribution to the EMBAC board,” remarked Dean of GIBS, Professor Nicola Kleyn. Commenting on her appointment, van Lill said “I am honoured to be appointed to the board; I aim to fulfil the organisation’s mission as well as enhance my knowledge on the executive MBA globally through interaction with my peers from other international business schools.”
Rory Voller
Despite the fact that the nascent industry had had “a bumper year” with “a flood of rescues”, there were still not enough black Business Rescue practitioners, said TMASA CEO Alastair Macduff. He also pointed to “too many unscrupulous practitioners” and “poorly conceived and badly written Business Rescue plans.” Acting Commissioner at the CIPC, Advocate Rory Voller, told delegates that of the 2 100 companies that had applied
for Business Rescue since inception of the process, “the majority had gone into liquidation. This is not what was intended by the Companies Act … We need to understand how we make this better.” Voller also expressed his concern about the amount of time companies were spending in Business Rescue: “It has to be a quick ‘in’ and a quick ‘out’. The longer you stay in rescue, the more the company fades.”
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network
A SEASON OF BOOKS
GIBS has been the venue recently for a number of book launches or debates about books.
SOCIAL ENREPRENEURS REINVENTING BUSINESS AND SOCIETY
Also just launched at GIBS, The Disruptors: Social Entrepreneurs Reinventing Business and Society, by Kerryn Krige and Gus Silber. Krige, who heads up the Network for Social Entrepreneurs at GIBS, says, “We are often asked if business can change the world? Or can the world change business? But for a new breed of social entrepreneurs, striving to build and grow enterprises that fight social ills, foster opportunity, and help to improve society, the answer is not can, it’s must.” For more on this topic, see What is Social Entrepreneurship, by Kerryn Krige, p. 26
GORDON INSTITUTE OF BUSINESS SCIENCE
GIBS MBA RABINOWITZ LAUNCHES SECOND NOVEL
“I left school with dreams of being a writer that soon fell prey to a career in IT, which led me to start a business that wasn’t doing so well by 2004, when I ended up doing an MBA at GIBS reluctantly, and completely by mistake,” confides Adam Rabinowitz. “A friend wanted to enroll, and dragged me kicking and screaming to the Open Day one Saturday afternoon while our wives were sitting around a pool somewhere over a bottle of wine. I ended up getting accepted, and my friend didn’t, so I spent the next two years learning what I’d been doing wrong in my business for the past 20 years.
WHAT IF THERE WERE NO WHITES IN SOUTH AFRICA?
“I figured out why I was selected when I ended up in class with all these high-powered CEOs, COOs, Chief-of-this and Head-ofthat in the classroom. I was the only rogue, self-employed, failing entrepreneur among the applicants!”
“Tolerance for racism is absolutely not okay. Anti-racism has to be personal and atomised in our homes, workplaces and communities,” she said
One of the country’s most influential journalists, City Press Editor-in-Chief Ferial Haffajee drew a full house to a January Forum at which she debated her new book What if there were no Whites in South Africa? with Professor Iain Edwards. South Africans had to develop a complete intolerance for racism, and isolate racist comments and views, she cautioned.
.
Rabinowitz says the year after the MBA, he improved his business cashflow by 1 200% (that’s not a printing error), and transformed a failing enterprise with 200 customers in 2005 to a thriving business that now requires no more than 15 minutes of his attention a day and serves 1 000 customers. “Somewhere along the MBA path, I was reminded that once in my youth I had kindled a passion for writing, and I reconnected with that in 2013, when I published my first novel, Lost Soul – Immortality. I completed Porter’s Rule: Slave to the City in 2015. There are two more novels in the pipeline, and a long-awaited non-fiction work (finally) for entrepreneurs.” Rabinowitz describes himself as “Chief Imagination at Imagin8”, where he focuses “on creating insane value out of data.”
Ferial Haffajee
14
advertorial
HYDROGEN FUEL CELL TECHNOLOGY IS TAKING OFF IN SOUTH AFRICA
From left to right: Mrs Naledi Pandor, Minister of Science and Technology; Dr Michael Lototsky, Key Technology Specialist at HySA Systems Competence Centre; Mr David Makhura, Premier of Gauteng; Mr. Petrus Mhlari, Member of the Mayoral Committee (MMC) for Roads and Transport (City of Ekurhuleni) at the launch of the South Africa's first prototype hydrogen fuel cell forklift and refuelling station at Impala Refineries, Springs .
Local hydrogen fuel cell technology (HFCT) development holds the promise of boosting manufacturing capacity and competitiveness in South Africa. These kinds of technologies have been identified by Government’s Nine-point Plan as initiatives that could facilitate diversification of the economy in support of beneficiation, thereby adding value. Although the hydrogen fuel cell was developed by William Grove in 1839, it only received global attention in the 1980s, when greater awareness arose among researchers and scientists of the negative impact of climate change and the depletion of fossil fuels. HFCT has been identified as a clean and reliable alternative energy source to fossil fuels. The fuel cell enables hydrogen to produce electricity onboard a vehicle, while only emitting water and heat. This type of vehicle has power that is equivalent to that of an ignition combustion engine, with the added benefits of zero noise, a significantly
greater range than electric vehicles that run on conventional batteries, a recharging time of only a few minutes, and no toxic emissions. Government embarked on the HFCT programme in 2008 with the launch of Hydrogen South Africa (HySA). The vision was to add value to our Platinum Group Metals work. At the time it was realised that HFCT is a nascent industry and that, globally, people are trying to grow knowledge in this field. In addition, it is also a source of alternative energy. Three centres of competence (CoCs) were established through the Cabinet-approved HySA Strategy. The CoCs drive research and development (R&D) in HFCT technology. The first CoC was established at the University of Cape Town and Mintek to do research into catalysis; another was established at the University of the Western Cape to focus on hydrogen and fuel cell system integration and technology validation; and the third
advertorial
15
is a joint CoC hosted by the Council for Scientific and Industrial Research and North-West University, focusing on infrastructure for hydrogen production, distribution and storage. This was a three-phase programme, starting in 2008 and, like the Fluorochemical Expansion Initiative programme, the first phase started from scratch by establishing R&D capabilities. The DST provided the infrastructure, which included supporting postgraduate students to do the research. The second phase, which runs from 2014 to 2019, focuses on technology demonstration and testing, as well as delivering products to the market. Creating jobs and establishing spinoff companies is another by-product of phase two. Already results from From left to right: Mrs Fahmida Smith, Fuel Cell Coordinator at Impala Platinum; Mrs Naledi Pandor, Minister of Science this phase can be seen in the mining and Technology; Dr Michael Lototsky, Key Technology Specialist at HySA Systems Competence Centre. industry. In March, Minister Naledi Pandor unveiled an HFCT-powered forklift and refuelling station for local this technology provides an important opportunity for South industry. These technology demonstrators were launched by Africa to play a role in reducing global greenhouse emissions, the DST, together with Impala Platinum (“Implats”) in Springs thus diminishing urban pollutants and contributing to reduced and HySA Systems, based at the University of the Western Cape. healthcare costs and an improved quality of life.” Implats will use the locally developed HFCT components for all their underground utility vehicles. The above knowledge-led developments are exciting and bode well for the future, particularly since the third phase of the HFCT The fuel cell-powered forklift and the 200-bar refuelling station programme will focus on sales, the number of jobs created, (comprising a compressor with a metal hydride extension tank export revenue and the market share created. developed by HySA Systems) have been in operation at the Impala Platinum Refinery since October 2015. The project is an exciting According to the Annual Fuel Cell Review 2015, the total revenue one that showcases HFCT in an industrial application. The metal of companies operating in the HFCT sector was just short of hydride compressor and direct hydrogen feed make this a very US$200 million in 2013, which corresponded to global fuel cell unique system, which could be replicated in other materialsshipments of 67 200 fuel cell systems. As far back as 2014, global handling industries. fuel cell shipments grew to 104 900, which was projected to grow to 158 600 in 2015. Research also shows that the platinum-based Over the last three years, Implats has sponsored R6 million catalyst market is expected to be worth US$555 million by 2020. towards the development of the prototype forklift and refuelling Capturing 25% of this market would result in revenue of US$139 station and plans to use HFCT as its main source of energy for million for the country. materials handling and underground mining equipment.
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For Implats’ Platinum Group Metals programme, the demand for platinum provides additional avenues for beneficiation. In addition, Implats’ development support for fuel cells is aligned with the group’s strategy to use “green” technologies to improve the environmental and safety conditions of all its operations. Implats CEO, Terence Goodlace, comments, “Developing a viable fuel cell industry in South Africa has several advantages for the country, such as economic development, sustainable job creation and social good. As the world’s largest platinum supplying region, there is a guaranteed supply of the metal, as well as the potential to increase global platinum demand. In addition, industrialisation and South Africa’s overall competitiveness would be increased. The development and implementation of
For more information Contact Zama Mthethwa Tel: +2712 843 6781 Fax : +27 86 681 0140 Email: zama.mthethwa@dst.gov.za Web: www.dst.gov.za
16
dean's note
TEACHING FOR BUSINESS IN AFRICA Words Professor Nicola Kleyn
Do South Africa's business schools – GIBS included – really teach what is needed to conduct business successfully in Africa?
GORDON INSTITUTE OF BUSINESS SCIENCE
It’s a question that came up in a discussion with an MBA alumnus who is running the country operations of a large South African multinational in West Africa. When asked about how well the MBA prepared him for his role he started off by waxing lyrical about the many benefits he obtained from the degree. But then the conversation took a different turn. “Why, Nicola,” he asked, “did you not provide more in the MBA on the specifics of what it takes to successfully run a business in multiple regions on this continent? Why were topics like withholding tax, the management of expats and how to really think about staying ethical when surrounded by ongoing requests for facilitation fees not addressed in more detail?” This alumnus is an archetypal GIBS MBA if ever we have one. His ascent to a GM role has been rapid, he’s an Afro-optimist, committed to building a responsible business that does well and good. And we had not given him all he needed. As a school that is proudly “close to business”, our faculty engage with practice, regularly and deeply. This has enabled us to make strides in developing a deep appreciation of the managerial problems our students and delegates face in their operating environments. But we cannot just focus on identifying the problems – our students and clients come to us to not only make sense of their world, but to improve their individual and organisational performance by navigating the rigours they face. Of course many of the challenges faced by organisations are global in nature. How to satisfy customers who increasingly demand more? How to unlock the benefits of ever-evolving technology? How to respond to the growing requirements of regulators across
the globe? As scholars, there are a plethora of theories, diagnostic tools and normative models into which we can delve in order to provide answers. Where we do face serious issues in accessing scholarship, is when it comes to the nuances of management in our African context. Relative to other continents, the number of scholars and journals focusing on empirical research in the African context is minute and in its infancy. There is no cohesive body of literature on managing within and across Africa. Misconceptions also abound. During a review process for an article for the Journal of International Business, a GIBS faculty member was given reviewer feedback that “the notion that South Africa has … stable institutions is laughable”. I see no humour in the low awareness demonstrated by this reviewer who was no doubt appointed as reviewer on the basis of a sterling track record in research on international business. Some may argue that management challenges in Africa are not substantially different to other contexts, and can thus be addressed by implementing solutions developed in other parts of the globe. Our on-the-ground experience suggests differently. We believe that there are important environmental influences that must be taken into account when designing and implementing strategies, developing operating models and leading and managing stakeholders in the multiplicity of countries and sub-regions that make up the continent. Scholars of management across the globe have been accused of producing research that is increasingly rigorous but irrelevant to practitioners. We cannot afford the luxury of trading one for the other. If scholarship on managing businesses
in Africa is weak, it must be our role as African educators to focus not only on teaching, but also on generating thought leadership that is both rigorous and relevant. Whilst we might be ahead of some international competitors in our gritty understanding of the problems faced by managers, our task is to collaborate, as business and as academia, both in the continent and beyond, to develop the thought leadership that solves our vexing management problems
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opinion
THE FINE LINE BETWEEN CO-OPERATION AND CAPTURE Words Trudi Makhaya
GORDON INSTITUTE OF BUSINESS SCIENCE
Just how ought business make its views known to government? Yet this toenadering is at risk of being characterised as state capture. Take for instance the delegation of highpowered corporate leaders, including representatives from Barclays Africa, Goldman Sachs and Investec that met with President Jacob Zuma after the Nene debacle. This delegation was credited with contributing to the President’s change of heart. Though widely reported in the media, this would probably not have attracted any controversy, until the Guptagate storm hit town. Allegations emerged that members of the Gupta family had influenced cabinet appointments (including job offers to candidates) and ordered senior civil servants to do their bidding. This unleashed counter-arguments that ‘white business’ had been shaping government policy from the days of Codesa to the latest interactions over the finance ministry and the country’s credit rating. In its March National Executive Committee meeting, the African National Congress resolved to investigate the claims of state capture and to draw up a code of conduct for politicians doing business with the state. In a mixed economy, ties between government, politicians and business are necessarily complex. Business is subject to myriad laws and regulations, and would naturally want to influence these. This advocacy could be motivated by public spiritedness, as business might believe that it has developed knowledge
and insights about the impact of various government measures on the economy and society. It could also be motivated by narrow self-interest, with business lobbying to maximise profits. Where the private sector is invited to provide goods or services to the public or government, individual companies will try to sway procurement decisions in their favour. All this might muddy the waters for wellmeaning executives and business owners who want to work with the state but are afraid of crossing the line into crony capitalism. It is obvious what constitutes illegal and immoral behaviour like bribery or bid rigging. But what of aggressive lobbying? On this question, it seems a lot rests on how government leaders and officials conduct themselves. Individual businesses will inevitably fight hard for their corner. It is up to government to invite diverse viewpoints and to resist capture by the most conniving. To remain on the right side of the line, executives, especially those who operate in industries with high levels of government regulation or procurement, such as finance, telecommunications, mining and construction, need to ensure that they have clear policies on how they advance positions to the state in a transparent and ethical manner. On broader policy issues there is safety in numbers. Advocating through an association with diverse members, who may even have competing business
interests but a common interest in issues such as stable macroeconomic policy, is likely to steer clear of questionable exchanges. Before the notion of state capture grabbed the national imagination, many businesspeople preferred behind-thescenes discussions with government. Some might have thought this would be discreet and avoid the embarrassment of confronting the state in public and the media. However, transparent and open engagements are prudent for all involved. Transparency International assesses the strength of a country’s regulations on lobbying along three dimensions: transparency, integrity and equality of access. Ideally, policy should direct lobbying activities to be open to public scrutiny. They should be governed by rules or norms of ethical conduct that would preclude special privileges and corrupt exchanges. Finally, opportunities to engage with policymakers should be open to all concerned parties to maximise the richness of insights available to government and to reduce bias. South Africa does not have explicit regulation of lobbying activities. It’s up to business to put in place mechanisms to ensure that lobbying and other engagements with public power stay on the right side of the line. Trudi Makhaya is CEO of Makhaya Advisory.
opinion
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DOING IT DIFFERENTLY Words Dan Moyane
The world is facing a new economic order and we have a chance to be part of the advancement. At its 2016 Davos meeting the World Economic Forum (WEF) discussed the Fourth Industrial Revolution that is set to change economies and skills needs profoundly. However, in order to benefit from this revolution, we need to change a number of things.
One of those is to instil more pragmatism in how we deal with the current economic environment. We need to be more practical in our approach and less ideological. No single sector will resolve our difficulties. The recent rapprochement between government and business is to be encouraged and it needs to be based on what is in the interest of improving the lives of all South Africans.
education and training system. Out of this process we will realise that all of us – government, NGOs, labour and business – must invest in education differently from how we have been doing in recent years. Billions of rand are spent annually in education. So money is not the problem. The issue at hand is how we implement things to ensure impact and positive outcomes.
It is time for us in South Africa to establish pragmatic and sensible private-public partnerships that are driven by a common vision underpinned by policy certainty. Business or government or labour in isolation cannot deal with the education, skills development and jobs challenges that the current economic environment and the Fourth Industrial Revolution are bringing. Effective public-private collaboration will become ever more essential in future.
The development of appropriate skills has to begin from the primary level of the education system. The right kind of skills will help to reduce unemployment, which over time will go a long way to close the inequality gap and diminish poverty.
Another practical action step that we should consider taking is to clearly define and agree what our country’s diversified economy should realistically look like in the future. Finding common ground will not be easy but the National Development Plan offers us a basis. Once we have agreed on what our future economy should look like, we can then begin to understand what kinds of skills will be required to be produced by our
It is undeniable that South Africa needs to urgently build appropriate skills for a future diversified economy. Suitable skills are essential to enable the youth to take advantage of new opportunities and create employment for themselves and others. Emerging economies, like ours, are facing tough times. It is at such times that skills become highly mobile and driven by demand. They go where they can best be accommodated, further developed, rewarded and recognised. One of the questions that needs looking at in the short to medium term is whether or not South Africa is able and willing to attract the right kind of skills from elsewhere in the world.
The growth potential of South Africa can be compromised if we don’t significantly upgrade our education system that will drive the development of the right skills. As China’s slowdown hammers commodity prices, the big resource producers that absorbed lots of labour are closing or modifying business. Unemployment figures continue to grow. Quite a bit of work is being done worldwide around changes and trends in the types of skills that we will need in the future, given all the disruption and changes in the broader environment. The need to build diversified economies, particularly in Africa, has never been as acute and urgent as it is now. South Africa’s future economy must be diversified. A diversified economy will require new, different and appropriate skills and this means that our education system has to be different from what it has been in the past. We must do different things to achieve different results. We need not only a diversified economy, but one that creates value in different places and different ways, requiring different skills. Education practices and skills development must change its focus now to be ready for the new economy
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20
dialogue
FLYING’S NOT FOR SISSIES Words Erik Venter, in conversation
Erik Venter
with Chris Gibbons
GORDON INSTITUTE OF BUSINESS SCIENCE
One of the challenges has been the legacy proliferation of stateowned airlines coming up against the private sector. This is true not only in South Africa but in many countries around the world. As soon as you have a private sector competitor trying to compete with a state-owned legacy enterprise, you always have a clash. It’s the private sector’s entrepreneurial approach and funding competing with, typically, a very staid, government-run organisation, that has little accountability and almost unlimited resources, including no threat of going bankrupt. So you tend to find state-run airlines that typically have a poor customer service ethic, giving away too much product at too low a price in order to protect their market share from the more innovative private sector. It creates a depressed profit margin environment. If you consider how capital intensive aviation is, it should be generating pretty substantial returns. Globally, we have something like US$3 trillion invested in aircraft, yet in the medium term, over an average ten-year rolling cycle, the aggregated profit is typically zero. I can’t think of many industries that have destroyed as much equity as aviation. Of course there are always exceptions. Comair has been consistently profitable for 70 years.
SOUTH AFRICA IS A PARTICULARLY GOOD EXAMPLE OF THE PROBLEMS?
Absolutely. South Africa’s air space was deregulated in 1990, with a specific policy created to encourage the private sector to enter the aviation industry. This contained a lot of restrictions on SAA, including a clause that said SAA would not be supported financially by government in any form as long as private airlines had to raise their own funding. There were also a whole lot of provisions to prevent anti-competitive behaviour by SAA. But none of that has been adhered to. In fact, it’s been a case of real
anti-competitive, dominant carrier-type conduct – SAA started by buying out the private airlines and shutting them down, then evolved to illegal anti-competitive conduct, and finally to just not increasing its fares when costs rose, like the price of fuel. Flitestar, Phoenix, Sun Air, Nationwide, Intensive Air, Velvet Sky, 1time have all fallen victim. When you have an assurance of not going bankrupt, you don’t have to worry too much about your commercial practices and you can rather focus on getting rid of competitors.
COMAIR ORIGINATED AS A FAMILY COMPANY. DOES THAT PRESENT SPECIAL CHALLENGES TO MANAGEMENT? Until a few years ago the family that was originally involved still ran it as a family business, even though it was listed on the JSE. More recently the family involvement has diminished. However, culturally we still make a lot of effort to try and retain a “Comair family” culture. That’s more about seeing our employees as members of the Comair family and keeping the culture of a small business, as opposed to the specific owners or shareholders in the company being family.
COMAIR HOLDS A BRITISH AIRWAYS (BA) FRANCHISE AND BA IS ALSO A SHAREHOLDER IN COMAIR. HOW DO YOU MANAGE THAT RELATIONSHIP?
Fortunately, BA is about 11 hours away by aircraft, which has its benefits! First, we don’t overlap on their operational territory. Originally, they had about 11 franchises, but most of those were in Europe and actually overlapped on BA’s own doorstep. Now they’re down to just two – us in South Africa and Sun Air in Scandinavia. The second benefit from that 11-hour gap is that they’re not always looking over our shoulder and we can get on with running the business as we wish to. And we run it entirely independently of them – it’s really just a branding relationship. As long as we’re upholding the brand values, we can get on with running the business in the best interests of Comair.
KULULA HAS BECOME A PARTICULARLY SUCCESSFUL BRAND. WHERE DID THAT IDEA COME FROM AND HOW DIFFICULT WAS IT TO ESTABLISH IT?
Low-cost airlines had been around for quite a while before Kulula – SouthWest Airlines, RyanAir – so there were a lot of other carriers to model Kulula on and we didn’t have to come up with a
PHOTO: GETTY IMAGES / GALLO IMAGES
From Howard Hughes to Richard Branson, it seems that every tycoon in history has wanted to be in the airline business. Yet it’s hard to think of an industry with such high failure rates and low returns on investment. So what is it that makes airlines around the world, including South Africa, so difficult to run? Acumen put that question to Erik Venter, CEO of South Africa’s most successful commercial airline, Comair, which operates both the British Airways franchise and low-cost carrier kulula.com.
dialogue
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completely new concept. At the time, there was a lot of interest in South Africa. We started hearing rumours that Richard Branson and Virgin would be arriving to start up a low-cost airline, so we thought we’d better beat them to it. Just four months after we’d had the first meeting about establishing a low-cost carrier, we launched Kulula. It was quite a quick process, but fortunately we already had a complete airline operation to use as a backbone for the launch, so it wasn’t that difficult. And in those days, the environment was quite different when it came to capital investment – you didn’t have to worry too much about operating costs and focused instead on the fixed costs of aircraft. Today, that’s completely reversed. Consumer behaviour then was also much simpler – for example there was no social media back then and distribution systems were much simpler. It was a lot of work but in the end it wasn’t that difficult, really. However I am not so sure that we would want to do it again today!
same extent that you look after your staff. So everything starts with trying to do the best that’s practically possible for our staff.
TO MANY PEOPLE, WORKING FOR AN AIRLINE CAN SEEM VERY GLAMOROUS, ESPECIALLY AIR CREW. THE REALITY MEANS LONG, HARD HOURS, OFTEN IN CRAMPED CONDITIONS AND WORKING WITH MEMBERS OF THE PUBLIC, SOME OF WHOM CAN BE DEEPLY UNPLEASANT. HOW DO YOU MANAGE YOUR TEAMS – ESPECIALLY THE ONES ON KULULA, WHO ALWAYS SEEM TO BE UPBEAT AND SMILING?
LOOKING AHEAD, HOW DO YOU SEE SOUTH AFRICA’S AIRLINE LANDSCAPE DEVELOPING – WHAT ARE THE KEY CHALLENGES?
As I mentioned earlier, we’re still trying to keep the family culture within the company. Our philosophy is very much driven by the belief that your staff will only look after your customers to the
We do put a huge amount of effort into company culture. We believe there are three components to the business: equipment, skills and culture. Interestingly enough, the first piece – equipment – is actually the easiest to deal with, yet most businesses put the most effort into the equipment. The second – most difficult part is skills – typically, a lot of effort goes in there, but not to the same extent as equipment. And then businesses tend to leave the culture behind and say, well, we’ll put out a statement of corporate conduct and that will be our culture. At Comair, though, we have found the hardest part is really maintaining the culture. It’s a huge amount of work, but at the end of the day, for us, it’s the biggest competitive differentiator. To a large extent it has been our key factor in staying in business and being effective as a competitor.
Some of the real challenges we’re facing now revolve around skills in the regulatory bodies and the state-owned service providers to the aviation industry. It is an extremely regulated industry and requires very strong experience in developing and applying regulations. A number of experts have left the industry and we’re hoping that the level of expertise in the Department of Transport, Air Traffic Control and the Civil Aviation Authority will begin to rebuild, because you can’t just apply an academic, tick-box approach to these things
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JUMP THE QUEUES
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south africa
Koos Bekker
ADAPTING TO THE FUTURE GORDON INSTITUTE OF BUSINESS SCIENCE
Words Koos Bekker, in conversation with Chris Gibbons
The transformation of the world is more rapid than it has been for any decade in his life and there’s no reason to think it will slow down, says Naspers Chairman and media maestro Koos Bekker. He adds that in the Internet world, most good concepts are developed by people under the age of 35, so if you talk to young people, you’re more likely to get something useful than talking to someone of his age.
IS THE INTERNET RADICALLY CHANGING THE WAY WE CONSUME MEDIA AND ALSO THE WAY ADVERTISERS APPROACH CONSUMERS?
Yes, but advertising has always been part of the media landscape. I’m not sure advertising as an institution is much different from
when, let’s say, you were advertising your wine in the forum in Rome, back in Cicero’s time: “My Spoleto wine, vintage when Marius was Consul, that’s the greatest brand the world has ever seen.” That was a verbal conversation in the marketplace. Later, by the 1800s, newspapers had developed, with advertising often
south africa
carried on the front page – the most important part of the paper. And when radio started, the model by which it would be funded was unclear. Some jockey clubs, for instance, relayed horse races and thought that was the way to make money. In Johannesburg, there were six dance halls that clubbed together to broadcast music. They had one band serving six dance halls and that was their way to monetise radio. Gradually, composite models developed: advertising and subscription for TV and advertising only for radio. Advertising forms an integral part of conversation in any democracy. It’s deeply embedded in the way we live – you find it in magazines, newspapers, radio, TV, everywhere, and it works. There’s no reason to think advertising will play a lesser role in the future than it does today.
IS THERE TOO MUCH MEDIA?
Probably not. You need a slight over-clutter in the market so that the weaker can disappear, and if there’s just enough you can be sure that more will be added.
HOW DO YOU SEE THE YEAR AHEAD FOR THE ADVERTISING INDUSTRY?
The year will be hard but you could be in a worse industry. Advertising has this benefit: it is perceived to be free. It’s not really free, because the consumer is paying with his time, but he’s not conscious of that. As money gets tighter, a lot of services offered for compensation might shift to an advertising model because it’s perceived to be cheaper. Advertising is not the worst slot that you could be in during an economic contraction.
WHAT’S THE BIGGEST CHALLENGE FACING THE ADVERTISING INDUSTRY IN THESE TOUGH ECONOMIC TIMES?
Sort out how you deal with the Internet and how you reach the consumer. And we as a company have discovered a lot in the last year – just the services where we previously used a shotgun approach, we’ve started to narrow and focus more. There are more ways of connecting to people now than there ever were. For an advertiser it’s immensely exciting, because your client doesn’t really know how to do that. The client grew up in the old world, but the new world is opening up and as an advertising industry you can guide the client into it in a way that’s extremely valuable.
SOUTH AFRICA’S MEDIA LANDSCAPE FACES MULTIPLE CHANGES. ONE IS THE INTRODUCTION OF DIGITAL TERRESTRIAL TELEVISION (DTT). WHAT DOES THAT MEAN FOR VIEWERS AND ADVERTISERS?
What we saw in the rest of Africa, which of course is far ahead of us in DTT, is that it opens up a new TV market for lower income people. DTT does not require a dish. It’s a simple, normal antenna and it gives you 20 or so channels depending on configuration. Suddenly even the lower income levels of society have multiple channels available. That changes the world. It’s also an exciting advertising opportunity for that market and it allows you to target more.
WHAT ABOUT RADIO?
Personally I like radio. Once a year I do interviews with financial analysts, and I always find the newspaper interviews a little boring. They’re dominated by figures and it’s hard to get any personality across. But radio is delightful. If you have a sharp
23
analyst talking to you, it’s really interesting and you get some personal flavour into it. Radio is less threatened by Internet than TV because radio specialises in the times of day, like morning and afternoon drive, which Internet doesn’t reach. Radio has already conceded things like fiction – our parents used to listen to dramas on Springbok radio, for example – and the Eight O’Clock News at night and that sort of area. TV is much more vulnerable, where Internet will cut in and say, okay, instead of waiting for the next episode of Game of Thrones, and watching it sequentially on TV, I want to watch it in almost a pig-like feast; bring my friends over and watch eight episodes in a single day. In that respect, TV is more threatened by Internet than radio.
YOU NEED A SLIGHT OVER-CLUTTER IN THE MARKET SO THAT THE WEAKER CAN DISAPPEAR . . . HOW HAS WECHAT BEEN RECEIVED?
In China, where it’s called Weixin, but is the same thing, astonishingly well. It’s a rich environment so it’s not only getting a quick message across, it’s forming groups, it’s almost elements of social network, it’s a payment system. The Chinese have the habit that during Chinese New Year you give this cousin ten rand and that auntie a hundred rand and so on. It’s called the Red Envelope. Now you can use WeChat to transfer a Red Envelope to your auntie – free. It’s a rich, deep and diverse system. In Africa we’re still fighting because WhatsApp is No.1. WhatsApp is much narrower, basically a message transfer service. It doesn’t have the richness of WeChat, but WhatsApp is No.1, so we have a battle.
TALKING OF BATTLES, WHAT ABOUT NETFLIX, JUST LAUNCHED IN 130 COUNTRIES AROUND THE WORLD, VERSUS NASPERS’S SHOWMAX? A POSSIBLE BATTLE OF THE TITANS?
Netflix is a bigger Titan than us and clearly the gorilla in the room. Not in total scope, but in terms of our television operations they’re considerably bigger, and by far the biggest in the world. It does create an interesting change; in the past we competed with South African companies. Now we compete with an American company that’s well funded with brilliant engineers. I hope one consequence is that our regulatory authorities realise there’s no point in trying to set up a Netflix in South Africa because you’ll just be clobbered. We try to think of ourselves as continental, serving all the countries of sub-Saharan Africa, and in the process we battle Netflix. So when the next great sports rights come up, or a blockbuster movie, we’re going to bet against Netflix. And that’s definitely a tough battle.
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south africa
Koos Bekker
DOES PRINT STILL HAVE A FUTURE?
I think so, although you can’t predict for eternity. Print will lose certain things. For instance, in conveying quick news, it’s always been inferior to TV, but it’s now also inferior to the Internet. Finding the cricket score in print is not the logical way to do it. But it has certain benefits. The first is that you spend more time with a newspaper than any other media, typically 20 minutes or so versus two minutes for an Internet news site interaction. The second is quality of audience – the audience is definitely older, which is in some ways a negative, but in some ways a positive, because they tend to have more spending power. And then for democracy, the newspaper is still the place where corruption gets exposed. Internet is rather fast and superficial and TV doesn’t deal well with complex subjects. So print will lose, especially on the young audience side, but there is a depth-of-engagement and quality-of-audience argument they can put across for quite a while.
GORDON INSTITUTE OF BUSINESS SCIENCE
YOU’VE IDENTIFIED E-COMMERCE AS ‘THE NEXT BIG THING’, BUT AREN’T JEFF BEZOS AND AMAZON AHEAD OF YOU?
Amazon wasn’t the first. E-commerce started many years before, when people used telephone lines to connect things. The telegraph, which goes back to the end of the 19th century, was a form of e-talking with e-commerce components. France had an advanced e-commerce system called Minitel in the early 80s. But Bezos was on the job reasonably quickly, and remember it’s not important to be the first. You need to be there with a good, adequate product and then invent faster than the competitors can catch up. Bezos is very good at that. He’s hugely competitive and he keeps improving. So Amazon is possibly the greatest force retailing in the world today. They’re doing superbly in the US, very well in Britain, Germany and so on. In India, we compete with them via an investment in Flipkart and we’re still slightly bigger than Amazon there but it’s tough. The only market they’re not really succeeding in is China, which is, in some ways, already ahead. In some Chinese cities, e-commerce deliveries happen three times a day. You order by 8am, they don’t just deliver today, they deliver before 12 noon. That’s astonishing, it can’t happen in the US.
THE KEY TO E-COMMERCE IS EXECUTION?
It is, and execution falls into a few parts. Firstly, product selection, and then pricing; you need to be cheapest, it’s very price sensitive. Then the most difficult is delivery to the home with unexpected and sometimes nasty consequences. Take what happened to fashion in Germany: they start, huge success, Germans love buying at home. Then they introduce a return policy, which in some countries is driven by the regulator and some by just the company wanting to provide superb service. The result: today, every second dress sold online in Germany is returned, causing a number of problems. First, the return path is much more expensive than the out path. The out path you can schedule. But you don’t know who’s going to return on which day, so collecting is much harder. Second, once that dress comes back, you can’t sell it for new, so you’ve got to ship it off to Ukraine and sell it at 30% of the price. E-commerce has a great deal of complexity and just getting into it is half the fun. Sorting out the problems is much harder. But when it’s done well? In Britain for example, grocery delivery is astonishing. You order today, you have a slot at 10 o’clock tomorrow morning, Waitrose stops in front of your doorway with a black truck, and there are two compartments, the dry compartment, “Can I place it on your kitchen table, madam?” “Yes, for sure.” And then the wet compartment, “Can I put this in your fridge?” The delivery is so superb that many British housewives don’t go to supermarkets anymore. The hard choice for a retailer is do you anticipate that future and change your shop and try to compete in an e-commerce way, or do you accept that you’ll be shrunk back?
YOU STEPPED DOWN AS CEO OF NASPERS, HANDED OVER THE REINS TO BOB VAN DIJK BUT YOU’VE COME BACK AS CHAIRMAN. SOME EXPERTS ARGUE THAT AN EX-CEO SHOULD DEPART COMPLETELY AND CLEAR A WAY FOR THE SUCCESSOR.
Many governance rules are written by people who’ve never run a company. Consider how companies typically go bust. Very few fail because of a governance problem, or that the CEO’s been there
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too long. Or that board members have a previous association with the company. Most companies fail because the competitor is better and provides a superior service, you run out of money, you go bankrupt. The first challenge in business is just surviving and making a profit, so having had extended exposure to an industry has great value. Malcolm Gladwell writes about the 10 000 hours that he thinks are necessary for expertise. Some of that’s true about management. When you’ve been in an industry for a couple of years, you sit there and someone spins you a proposal. You close your eyes, you listen to it and say, but I’ve seen this movie before, right? The crook is under the chair, stage left, lift up that curtain, there’s the villain! A novice stumbles in and makes mistakes. What a board needs is some element of distance from management. But deep experience of a sector and of a specific company is in my view priceless. Rules like every director having to resign after nine years are completely idiotic … I mean, to say Raymond Ackerman can’t serve in Pick n Pay after nine years? Or Christo Wiese? Completely nuts!
WHEN YOU BECAME CEO OF NASPERS YOU DECIDED – VERY PROFITABLY, AS IT TURNED OUT – TO TAKE ONLY SHARES AND NO SALARY. SHOULD MORE EXECUTIVES DO THAT?
I’m uncertain. In my case, I initially made some money when we created MTN, and later MultiChoice. So when I got to Naspers in ’97, I said to the board, I’m not sure I want to work in a big company, but it’s an exciting company so if I do, how about this: you give me shares, you give me no salary? The first five years were a complete disaster because I started early in ’98 and the Internet bubble burst two years later. Although I thought I had worked pretty hard for five years, at the end of it, the Naspers share price was lower than when we started. So my compensation for five years was nil. Some board members said, look, let’s just give him something. I said, no, I’ll double up, let’s have another go for five years. And that proved more profitable because the starting base was more reasonable, and we could build and so on. So certainly it causes shareholder alignment. When you sit in the bath at night, you have one thought. Not how much bonus I can make this year – answer none. But how I can build the stock over five years. Because if you don’t build the share price, no-one pays the Woolworths account. That’s the end of it. Why I say I’m a little bit hesitant is that it’s a hugely risky proposition. If you’ve not been lucky early enough to put away a
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nest egg to fund that, it’s pretty hard to live without any income for five years, with the risk that there’ll be nothing at all to show. I do think that an alignment of executives and the company in terms of shares is a very valuable one. We as a company certainly try to do it. So, if we have someone running, let’s say, a classified site in Portugal, we want to be sure that this guy’s main wealth in life sits locked up in this company. Where your money is at stake is where your thoughts are in your spare time. That’s the most valuable time. Obviously at 9 o’clock in the morning everyone concentrates on their jobs, but that’s not where you make money. It’s really at 9 o’clock at night when you sit back, close your eyes and think about the world. You want to think how can I build this business? It’s best suggested by an alignment of interest.
WHAT WILL BE THE NEXT BIG THING FOR SOUTH AFRICAN MEDIA? It will be the same thing as hits the world. We’ve followed all the global trends, so if Twitter breaks in the US, it’ll be here in a few months. And that time period of lag is less and less. So our future is the world’s future. What will it be? Well, when I was young, at university, I had an immense belief in my own abilities to forecast. I wrote scenarios. And most of them were wrong. So I’ve reconciled myself to the fact that you can’t forecast the future. What you can do, as the future unfolds, is adapt pretty fast. Here’s a simple illustration. In the 1970s conventional wisdom was that the art of writing would disappear. Who wants to write? You have a telephone, you watch TV, and writing, per se, is boring. Now I have kids in their 20s and I cannot get them to take a telephone call. They couldn’t care less and say, send me an email, send me an instant message. The art of writing is completely dominant again because it’s more convenient. If someone invites you by phone for Saturday evening, you have to respond. You could be embarrassed; you could make the wrong decision. If that person sends you a text message, you have time to check with your partner, get out of it more elegantly and so on. So the art of writing has returned in a way that no-one could have forecast in the 70s. Many of the things we anticipate by a linear extrapolation of trends will never happen. Initially it irritated me that I’m so often wrong, and then I thought, well, another way to look at it is make peace with it, and just say, okay, as the world develops and I notice a trend taking shape I’ll adapt quickly. And as a company that is what we try to do
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. . . IT’S NOT IMPORTANT TO BE THE FIRST ”
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WHAT IS SOCIAL ENTREPRENEURSHIP? Words Kerryn Krige
The dictionary definition is easy: Social entrepreneurship – Achieving social and economic growth. What follows, however, is hard in the extreme. The ongoing collapse in South Africa’s societal fabric has not gone unnoticed but there is a paralysis as to how to arrest it. The figures are hard to ignore: We vie with Brazil for top spot on the GINI Index as the country with the greatest gap between its rich and poor people. Our unemployment is at 25% but the ticking bomb of youth unemployment sits at 50%. In 2014 the United Nations ranked us alongside Syria and one above Iraq on its Human Development Index, an international measure of the basket-of-things that make a society strong – its education, life expectancy and standard of living. It is, though, the Global Competitiveness Index (GCI) and its ranking of 144 countries that gives real insight into the scale of the disconnect and cause of our paralysis. That’s because although the social indicators are typically gloomy – we’re almost bottom for quality of education (140/144), health (143/144 for TB prevalence) and labour relations (144/144) – our financial system is world class. South Africa is first for both auditing standards and the regulation of our securities exchanges, second for protection of minority shareholders and third for efficacy of our boards and our ability to access finance through the equity market.
GORDON INSTITUTE OF BUSINESS SCIENCE
What the GCI shows us is that our focus on building strong financial anchors to our economic growth has been done well – extremely well – but it has happened in isolation, and we’ve left our people behind. The reasons are myriad: social development is government’s problem, business builds business, civil society exists as a societal broom, to sweep up what business and government can’t do. But as we reel week after week from social unrest – #FeestMustFall, #endoutsourcing – and try to look for common sense solutions per event, we forget that the issues are all pervasive. And will continue to flare until we marry the two spheres of social and economic development, so that they occur hand in hand. Only then will we be able to create a healthy, competitive work and living environment and move past Syria and Iraq on the Human Development Index, two countries better known for their ongoing tensions and fleeing populations. This is not about corporate social investment, which simply is a separation of social development from business purpose, and an easy way to counter arguments for businesses’ social engagement. Instead we see the emergence of entirely new ways of doing business, which blend the best of both worlds: the social purpose and values-driven approach of civil society organisations with the institutional strength, accountability, financing options and structure of business.
Kerryn Krige
This is social entrepreneurship, a phrase which is catching fire in South Africa because of the promise it holds. Social enterprises are organisations that meet a social need and earn an income at the same time, reinventing the classic charity model which struggles to fund itself. For business, social entrepreneurship introduces values and a focus on society as a purpose of business, rather than an addon. It connects, very intuitively, two disconnected worlds of impact and income which in the words of Oxford University’s Stephan Chambers is a “business imperative”. Social entrepreneurship suits South Africa’s context, because the opportunities are linked to market failure, and ours clearly are substantial. So, ironically, it works in environments where there is high inequality – where the haves and have-nots rub shoulders, and where there is constraint – where access to markets is weak and education low. This makes social entrepreneurs Super Entrepreneurs – able to work in environments business often regards as difficult, impractical and not cost-effective.
EXAMPLES OF SOCIAL ENTREPRENEURS
South Africa’s social entrepreneurs are numerous and can be plotted at different ends of the spectrum – some are businesses with a social purpose, others are civil society organisations with a business mantle. The classic social entrepreneurs and their enterprises sit in the middle of the spectrum. Claire Reid started Reel Gardens as a teenage school project and has grown it to a million rand business, and an option to scale to North America. Claire saw her opportunity in making it easier for people to grow their own food, particularly in areas with poor water, soil and knowledge of what to do. She developed her pre-fertilised seed strip, with diagrams rather than written instructions so they are easily used in schools and communities. Her work is funded by a blend of sales online and in specialist retail stores like Johannesburg’s Thrupps Centre, and grant funding.
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Sitting towards the social-purpose business end of the spectrum is Spark Schools, started by GIBS MBA graduates Stacey Brewer and Ryan Harrison. They responded to a challenge in their MBA class to tackle quality of education in South Africa, developing their low-fee, high-excellence schooling model. They encourage self-learning with technology, have lengthened the school day, use all physical space at all times, and have a strict recruitment and training policy for teachers. As a result the pair offer primary education that costs no more than a government school, but with outstanding results. Launched with a venture capital grant, the pair have a profit model based on school fees and in 2014 entered into a R28 million partnership with Pearson Education. Also sitting closer to business than civil society is Durban’s Kovin Naidoo, CEO of the Brien Holden Vision Institute. The company is a multinational that has as its primary purpose the provision of basic eye care to people who can’t afford it across the African continent, and as far afield as Cambodia, Vietnam, Pakistan and the Middle East. More than three million people have received spectacles and eye screening through more than 400 sites managed by the Institute. Their social vision is funded through research and patents for contact lens technology. Sitting closer to civil society is Port Elizabeth’s Neil Campher, who set up a waste recycling initiative in the township of Helenvale, which sits out on the far reaches of the automotive capital. Helenvale is a microcosm of South Africa, with a youth bubble, high unemployment and household income well below the average. Its nickname is Katanga after the war-torn province in the Congo. With grant funding from the Premier’s office, Neil worked with the community to set up waste recycling initiatives, earning no-fee schools R600 a month as sort-and-collection points. The understanding of the gap in the market, the needs of clients, and the transparency of the work are models he adopted from his career as a financier in Johannesburg.
WHAT DO THESE ORGANISATIONS HAVE IN COMMON?
Because there is no legal structure for hybrid organisations it can be hard to spot social enterprises in South Africa, but they are connected by two things: They are there to do good. Their motive is not shareholder value, or pure-profit maximisation. The mission of the organisation is,
in the simplest terms, to do good. These organisations – whether they be closer to civil society or business in their approach, all have a strong sense of the community they connect to and working relationships with them. These organisations are not always small, operating million rand budgets in areas often regarded as difficult for business. They earn an income. This seems contradictory, but there is a golden thread that connects income and impact. The social enterprise must earn at least 25% of its income, which creates a virtuous circle of supply and demand: if there is a need for the service, people will pay for it. And the more people you reach through your service, the greater your impact. This is a dramatic shift away from the alms-to-the-poor benevolence we typically associate with charity, where recipients have little choice in the service they receive or its quality.
WHAT IS THE FUTURE FOR SOCIAL ENTREPRENEURSHIP IN SOUTH AFRICA?
As we head into another period of turmoil, of hash tag campaigns and post-election debate, the connectivity between our social and economic development is becoming more pronounced. The lesson from social entrepreneurship is that business can connect to society in a way that is both meaningful and profitable. And the statistics tell us we have to. We have tried focusing on economic development as the approach that if done right, will naturally lead to an improved life for South Africans. But our ranking alongside war-torn Syria shows this hasn’t happened – we’ve deepened the divide rather than bridged it. It is foolish to continue with business as usual, because it is cannibalistic – we weaken the health of the business environment, crippling our social context and making it difficult to thrive. Isolated CSI programmes and disconnected involvement with society is not the way forward. Social enterprise and social purpose businesses are not models that are far out of reach and the change required isn’t dramatic. All it takes is a repositioning of how for-profit organisations view society, to find the strategic benefit to improving the livelihoods of others. From here it is a process of connecting impact and income in a way that has meaning and scale
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GORDON INSTITUTE OF BUSINESS SCIENCE
SOCIAL ENTERPRISE SOCIAL VALUE
HYBRID APPROACHES TO SOCIAL AND FINANCIAL VALUE
TRADITIONAL CHARITY
GRANTS DONATIONS ENDOWMENTS
FINANCIAL VALUE
TRADITIONAL BUSINESS
MARKET REVENUES MISSION DRIVEN PROFIT PROFITS REINVESTED IN ORGANISATION
Adapted from CAF Venturesome, J.Kingston Venturesome, EVPA
PROFIT-INCOME MAINSTREAM INVESTMENT
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FACULTY AND RACE IN SOUTH AFRICA Words Professor Helena Barnard
Are the faculties of South Africa's leading universities still too white? And if so, why and what can be done about it? These are key questions which still confront the country's academic community 20 years after the end of apartheid. “I’ve had so many conversations with MBA students who ask me why I’ve left corporate to join the academy,” said Dr. Ngao Motsei, previously Group Executive: Strategic Human Resources and Transformation for MMI Holdings. “Especially black students. I need to explain to them that this is a career with a tremendous amount of freedom and the chance to make a difference in people’s lives.” Dr. Motsei joined GIBS after her supervisor, Prof. Stella Nkomo of Economic and Management Sciences at the University of Pretoria, pressed her to consider an academic career and wrote an introductory letter to GIBS. Before interviewing, Dr. Motsei had contacted another long-standing colleague to ask him what it was like to work at GIBS. Morris Mthombeni had joined GIBS after serving on the same board and exco as Dr. Motsei (he had been CEO of Momentum Investments) and was able to explain to Dr. Motsei what working at GIBS was like.
GORDON INSTITUTE OF BUSINESS SCIENCE
As the three were joking about their connections, I was reminded of when I was doing my PhD in the USA. The South Africans there formed a close-knit group, and were keen to help each other navigate what sometimes appeared like a very opaque set of rules. Do the “rules” of the academy appear similarly opaque to black South Africans, I remember wondering? As I started researching the racial transformation of faculty, the answer became clear. More than twenty years after the end of apartheid, academia is still a largely white domain.
. . . MANY SKILLED BLACK PEOPLE DO NOT EVEN CONSIDER ACADEMIA AS A CAREER ” 1 2
Professor Alan Kirman of University Aix-Marseille and Professors Robin Cowan and Moritz Mueller of University of Strasbourg http://www.che.ac.za/sites/default/files/publications/Full_Report.pdf
THE SAME OLD SONG
Inside the leading South African universities, the conversation about the racial transformation of academics has been following the same path for about two decades: employment equity and what it can and cannot do, how much a skilled black person can be paid by a university versus elsewhere, and the concern that many skilled black people do not even consider academia as a career. It was with this in mind that I embarked on a research project with a group of Europe-based scholars1 to better understand the racial transformation of South African faculty. As my fellow scholars developed mathematical models, I reviewed research about faculty at South Africa’s universities since the end of apartheid. A long-standing and ongoing concern has been how the “leaky” pipeline of black students negatively affects the supply of black faculty. The Council for Higher Education estimates that only five out of 100 black Grade 1 students will successfully complete an undergraduate degree2. The pipeline does not widen as students progress and only a small proportion of those students will continue to doctoral level. Because doctorates are increasingly a requirement for academic appointments, there is indeed a small supply of possible black faculty.
STRUCTURAL SHIFTS
Not only supply matters – demand matters too. Affirmative action and employment equity are attempts to structurally shift demand. By mandating the appointment of black faculty, a greater demand for them is created than what had previously existed. Yet for long, universities were requested rather than required to hire black faculty. The slow rate with which black academics have been entering academia is changing this, but in the meantime an additional consideration has become clear: psychological. ‘Homophily’ is the well-documented tendency for human beings to prefer their own type. Birds of a feather flock together, the saying goes, and this can be true along multiple dimensions –
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race, of course, but also gender, body type, industry, and so on. Individuals differ in the degree to which they exhibit homophily: one MBA student may stand at the door of the classroom and identify someone who looks as similar as possible to himself, while another may choose to start a conversation with a fellow student with an unusual outfit and hairstyle. But under threat, most people close ranks and become more homophilous. The anxiety of white academics in the immediate post-apartheid years was real. Seeing themselves – rightly – as custodians of academic quality, but with a limited understanding of how their homophily was shaping their behaviour, white academics often imposed higher quality requirements on black than on white academics. This differential requirement was found at all levels. In hiring committees, homophily meant that a white applicant who was making good progress with a PhD would be appointed, while a black applicant needed to already have the PhD. Once they were hired, black academics were often limited to teaching undergraduate rather than honours or masters classes. In one study Prof. Beverley Thaver from the University of the Western Cape gave the example of a senior black faculty member who championed a research project on Indigenous Knowledge Systems. The idea languished until a white faculty member endorsed the project! Thus, although the intent of employment equity legislation was to structurally shift demand, in practice homophily essentially led to the maintenance of the status quo. Moreover, this psychological dimension of demand also influenced the supply of academics. With the very slow racial transformation of faculty, there have been very few black academics who could serve as role models for future generations of academics. Prof. Angela Byars-Winston, a professor visiting GIBS from the University of Wisconsin, specialises in why minorities choose – or not – certain careers. She explains that we all look for people like ourselves when we consider whether or not to pursue a career. Lacking people with whom we identify, we disregard a possible career as a viable option.
SUPPLY
DEMAND
Figure 1.
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Pipeline of black candidates weakened by inadequately functioning primary, secondary and tertiary education system
Potential black academics perceive limited occupational opportunity in the field and choose other careers
Affirmative action / employment equity regulations encourage hiring of black academics
Homophily results in white incumbents preferring to hire other white academics, reinforcing the status quo
STRUCTURAL FACTORS
PSYCHOLOGICAL FACTORS
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These various elements can be summarised into a simple model (Figure 1). The structural dimension of both the supply of, and demand for, black academics has long been recognised as important, but the psychological dimension has not always been acknowledged. The effects of those psychological mechanisms are profound; they result not only in (overwhelmingly white) appointment and promotion committees being less likely to hire and promote black faculty members, but also in gifted black students being less likely to consider an academic career.
BUT UNDER THREAT, MOST PEOPLE CLOSE RANKS AND BECOME MORE HOMOPHILOUS ” WHAT CAN BE DONE?
As it stands, we have made lamentably slow progress in the racial transformation of faculty at the leading universities in the two decades since the end of apartheid. Structurally, government is best placed to respond, and has started doing so. For example, targets for the employment of black academics are now much more clearly specified than in the past. However, arguably the most important and the most difficult element is to improve the supply of potential academics through a better-functioning educational pipeline. But the psychological processes are best dealt with by the universities themselves. The best way to counter the exclusionary effects of our psychological processes is by having black faculty in positions of power. Black faculty need to be on hiring committees, in front of classes, on selection panels for graduate students and more. By virtue of their mere presence, black faculty members can counter not only deliberate discrimination but also its far more insidious counterpart, “implicit” discrimination3. Black faculty members can, as the experiences of Dr. Motsei suggest, serve as role models and inspire other black students to consider an academic career. Playing such a prominent role places an additional burden on black faculty members. While it can serve a real transformative purpose, work on committees can also easily become hidden. It is important for universities to find ways to acknowledge the work of black faculty members in ensuring fair decision-making processes. Finally, as long as white faculty members are in a majority, work will be needed to ensure that they are aware of their own psychological processes. A heightened awareness is needed of how the decisions of white faculty members are shaped – consciously or not – by their psychological processes, as well as of the culture of the institution and the more general rules of academia. What is at stake is both the quality and the legitimacy of the South African university system
See the work of Bertrand, M., Chugh, D., & Mullainathan, S. (2005), Implicit discrimination, the American Economic Review, 95(2), 94-98.
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SOUTH AFRICA: NEW LEADERS NEEDED! Words Chris Gibbons
South Africa is in a tough place right now. The economy is faltering, politicians are squabbling, ratings downgrades are threatened and business confidence is at an all-time low. Two experts at GIBS believe the time has come for a new kind of leader and a new style of leadership.
GORDON INSTITUTE OF BUSINESS SCIENCE
“Leadership in South Africa is at a crossroads, and the old traditional model of hierarchical leadership is definitely out,” says Shireen Chengadu, Executive Director of the Centre for Leadership and Dialogue and adjunct faculty at GIBS. She refers to the old command-and-control model where the leader makes all the decisions, adding “we’ve seen some recent examples of this at macro and institutional levels, where individuals making bad leadership decisions have cost institutions and the country dearly.” Her colleague is Dr. Charlene Lew, a senior lecturer at GIBS, who teaches in the area of organisational behaviour, which includes leadership and strategic decision-making. Lew believes that South Africa “needs somebody that can show us vision, that can show us a dream, and that can help us deal with all the sensitivities that we’re facing at the moment.” The context of a society at a given point in time affects the kind of leader needed and the kind of leader that emerges.
A FADING DREAM?
“It’s quite obvious that there are a lot of racial debates, questions around universities, where students are challenging the status quo and that obviously raises a lot of questions for us about the ideologies that are present in our country, and about where we’re going as a country. Can we get back to the place where we see a dream for South Africa, the type of dream that Nelson Mandela showed us?” asks Lew.
Shireen Chengadu
She disagrees that the celebrated rainbow nation was a shadow. “I don’t think it was a shadow, I think it was a vision and a passion but I think people have started capitalising on people’s fears because they’ve not seen the necessary change that they would have liked,” says Lew.
DISTRIBUTED LEADERSHIP
Lew articulates the challenge: “As much as the leader determines the followers, the followers determine the leader as well. Right now, South Africa has two things that it needs to deal with. On the negative side, I’ve started noticing a sense of desperation. That could have quite a negative impact on the type of leadership that emerges. On the other hand, on this continent we have a special African-ness, a collective way of thinking, and if a leader could tap into that, that ability to stand together as a collective and drive change, I think that South Africa could practice something that we call “distributed leadership”. This is where groups and pockets of people start driving change, and the leader just co-ordinates – like the conductor of an orchestra.”
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. . . INDIVIDUALS MAKING BAD LEADERSHIP DECISIONS HAVE COST INSTITUTIONS AND THE COUNTRY DEARLY ” “We need the type of leader who can work across diverse situations and integrate various viewpoints. The type of person that can see South Africa’s unique context but can also think in a global way,” she continues. Shireen Chengadu agrees. “There is a right leader for the right time. And the right leader will emerge. Sometimes that right leader may be nominated or come into power by virtue of a nomination or a voting process. There are leaders who are not put into a position of power through a process, but who emerge given what is happening in that context. And I think that is what we’re seeing playing out in society, in business, and in government,” says Chengadu, making specific reference to the re-emergence of Finance Minister Pravin Gordhan last December.
COLLABORATIVE LEADERSHIP
She says that working with both business and government in the early part of this year, she has seen “a huge move towards a collaborative, responsible leadership model, a partnering strategy.”
WOMEN
An equally important dimension for Shireen Chengadu is the role played by women in leadership. She believes 2016 will be ‘a defining year’ and cites three examples: “Angela Merkel became the first woman on Time magazine’s cover in 30 years. After Ban Ki-moon, the United Nations is considering a woman as Secretary General for the first time. And Hillary Clinton. Say what you want about her, but she may emerge as the leader of the world’s biggest economy. Now that is surely a shift in leadership direction and style. For sure, it’s time for women.” However, Chengadu is concerned that South Africa still holds a patriarchal view of women leaders. She and her colleague Dr. Caren Scheepers are conducting research for a book on women leadership models in emerging markets: “South Africa is one of the biggest laggards in this area.” This she ascribes to “a treble bind” that includes not only the country’s historical legacy, as well as the patriarchal mindset, but also the fact that “women may not have the ambition to put their hands up and say ‘I’m good, I deserve this, I can do the job.’ And when they’re in that position of power, to take other women along with them.” Cometh the hour, cometh the man – or in this case, woman – according to the old proverb. The GIBS academics are in absolute agreement about the new kind of leader needed by South Africa at the moment. To use Charlene Lew’s words, “A true leader is not somebody that only enables him- or herself, a true leader is somebody that enables others.”
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Collaborative leadership is about teamwork, explains Chengadu. “There’s no ‘I’. There is openness about knowledge sharing, collaborating, and working through a number of ideas before the right one is chosen. Ultimately the leader is responsible and accountable, but collaborative leaders put together the right kind of teams, people who are stronger than them in some ways and who will push the team’s thinking. Through that process – it might be about brainstorming, or enabling teams to reach their full potential – they reach the optimal solution.” Collaborative leaders are also authentic, says Chengadu. “They’re not afraid to be vulnerable in the presence of a greater leadership team. They’re not afraid to say, ‘I don’t know all the answers’. That’s a big shift, where previously the hierarchical leader was assumed to know all the answers, and now it’s moving towards ‘I don’t know that, but I know I can ask, I can listen carefully, and I can empathise’, whether it’s with internal stakeholders or external.” Charlene Lew amplifies this theme, referring to Ubuntu, which she describes as “one of the most wonderful qualities that is, in a way, uniquely South African. Ubuntu is about caring for ‘us’ rather than ‘me’. ‘I am because we are.’ And if we could subscribe to that type of sentiment, imagine the power unleashed by people standing together to drive change. It’s about us, it’s not about grabbing for self, and it’s about enabling one another.”
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Dr. Charlene Lew
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Prof. Richard Vietor
GETTING UNSTUCK Words James van den Heever
Is South Africa “stuck in the middle” – and, if it is, how can it power itself out of trouble to deliver desperately needed growth? Harvard Business School’s Professor Richard Vietor says improved productivity is one of the essentials.
GORDON INSTITUTE OF BUSINESS SCIENCE
For Professor Vietor, case studies are an important teaching aid – not for providing answers, but rather the basis for asking questions. He was recently in South Africa collecting information to update his 2011 case study, South Africa: Stuck in the Middle?1 Although the new study is tentatively titled South Africa: A Fractured Rainbow, it’s clear that South Africa remains stuck in the middle. The notion is derived from the writing of Michael Porter, who in his book, Competitive Strategy, said that companies derive competitive advantage in three ways: Overall cost leadership based on scale, experience and control of overheads. Differentiation based on some unique element, be it a brand, particularly high quality, an efficient dealer network, durability or design. Focus on a particular customer segment, a product line or a geographic market. Porter argued that corporate strategy should concentrate on one of these three areas, or risk being “stuck in the middle”, trying 1 2
to be all things to all men. Following Porter’s line of thinking, a successful strategy derives its power from its single-mindedness. Professor Vietor argues that the same basic principle holds good for countries; that South Africa Inc. is as likely to be stuck in the middle as Acme Industries Inc., the casualty of an unfocused strategy. To compete for a bigger share of world trade and global business, countries need to follow a defined strategic direction. In the context of global trade, perhaps the most common options are becoming a low-cost exporter, like China (goods) or India (services), or an exporter of high-value goods or services, like Singapore (with a gross domestic product per capita in 2015 in excess of $75 0002), Hong Kong, Taiwan and Korea.
WHAT’S THE NATIONAL STRATEGY?
A much larger group of countries occupies the uneasy middle ground. Typically, they are primarily engaged in producing commodities or assembling goods that are “manufactured” elsewhere. This group, Professor Vietor says, includes not only South Africa but Turkey, Mexico, Brazil, Malaysia, Chile, Colombia and Argentina. They are the countries that need to come up with a clear strategy.
Richard H Vietor and Diego Comin, South Africa (A): Stuck in the Middle? (Harvard Business School Case Study), April 2011 (revised May 2013), available at http://www.hbs.edu/faculty In purchasing power parity.
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. . . SOUTH AFRICA REMAINS STUCK IN THE MIDDLE ” Professor Vietor uses both Turkey and Colombia as useful comparisons for South Africa. These types of comparison are extremely complex and, in the end, seem most valuable as a way to highlight issues and suggest new ways of thinking, rather than specific “silver bullets”. South Africa’s current economic challenges are the result of a complex web of factors that somehow need to be understood as a totality. Just fixing certain levers will not yield the systemic, sustained results we need.
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be more feasible for an advanced economy. However, he points out that the strategy would need also to address the country’s pressing issues around inequality and unemployment – it is the worst performer globally on both counts. He links this to Professor Vietor’s consistent emphasis on the need for countries like South Africa to think innovatively when assessing how to break out of the middle into profitable growth. Thus, while it is true that South Africa’s natural endowment remains a strength, resources cannot remain its default fall-back position. Other sectors, like tourism, ICT, pharmaceuticals, defence, financial services and automotive manufacturing are all strong sectors – many similar countries simply don’t have the options that these strengths confer.
One way to break this impasse, Professor Vietor suggests, is to acknowledge what factors have led to South Africa becoming stuck in the middle and, more importantly, to look at the strengths it could use to pull itself out of the mire.
Another important plus is the existence of several large and globally competitive companies with large treasure chests to invest – if they are reassured about the economic potential of the country. In fact, outward investment by South African corporates is high, not something that is inherently problematic, Professor White points out, unless it is seen as a way to remove capital from a South Africa perceived to be too risky.
Dr. Lyal White, Director: Centre for Dynamic Markets at GIBS, believes that Professor Vietor’s diagnosis of South Africa as stuck in the middle is correct. He says that one of the key takeouts from Professor Vietor’s interactive sessions with various audiences at GIBS was the overriding importance of productivity, irrespective of the strategy ultimately chosen.
While corporate South Africa may have money to invest, as a country South Africa has an exceptionally low savings rate, making its economy extremely reliant on foreign capital. Low personal savings combined with low productivity, Professor Vietor argues, distinguishes South Africa from the Asian bloc, in particular.
THE PRODUCTIVITY GAP
DOWN MEXICO WAY?
The fact of the matter is that South Africa is one of the least productive countries in the world, something that probably constitutes a serious structural constraint. This is something that cannot be fixed quickly because ultimately it depends on the skills of the workforce. As is all too apparent, one of the unintended consequences of attempts to transform the educational sector is to make it dysfunctional. South Africa’s capability to deliver productive workers is thus gravely lacking. “Fixing the educational system is both complex and timeconsuming,” Professor White observes. “Over the short to medium term, though, Professor Vietor argues for the need for the labour market to be reformed. South Africa is probably the only country in the world in which unions are entrenched in the political establishment – many countries have strong unions, but this is something really out of the ordinary. As a result, South African wages have grown much faster than its GDP, putting us in the same category as Brazil.” Clearly, one should not underestimate the difficulty of labour reform, given the complex political and racial dynamics that have to be taken into account. These dynamics also probably mean that the option of cost leadership is not one that South Africa Inc. could or should consider – founding the economy on low wages paid to a workforce that is black would simply be politically unacceptable. Of the remaining two strategic alternatives, Professor White argues, focus would seem to present the best strategy based on South Africa’s existing strengths. Differentiation seems to
Mexico, Professor White believes, is another of the “stuck in the middle” countries that offers useful inspiration for South Africa. As early as the 2000s, the Mexicans realised that they needed to find ways of getting the most benefit from their proximity to the United States, with which they also had a free-trade agreement. In essence, they reverse engineered their economy to provide what they believed the US economy wanted. The point here is not what the Mexicans did, but the thought process they followed. As many noted in interactions with Professor Vietor, the rest of Africa, with its continuing high growth rates, could be seen as the United States to South Africa’s Mexico. “How can we leverage our strengths to provide what Africa wants and needs?” Professor White asks. “We are poorly connected to the rest of Africa, which is a wasted opportunity.”
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Whatever the strategy, though, productivity remains the fundamental lever of competitiveness – something we can and must move to remedy, whatever the political complications
. . . SOUTH AFRICA IS ONE OF THE LEAST PRODUCTIVE COUNTRIES IN THE WORLD . . . ”
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WORKPLACE VIOLENCE: THE TIP OF THE ICEBERG Words Prof. Gerard Labuschagne
Wherever there are people, there will be conflict. Conflict is a natural part of human interaction, in some instances the outcome of the conflict can be an improved relationship, in extreme situations it can lead to lethal violence. While most conflict will be resolved by the parties involved, or defuse naturally over time, some conflict can lead to long-term psychological and physical harm. The workplace is no exception to this rule when it comes to human interaction as people spend the majority of their waking day in the workplace. Workplace violence or threats can be spontaneous, such as a customer who perceives he/she is receiving poor service, or they can be more planned, as in a person who intentionally sends threats to an organisation. Typically there are four categories of offenders against employees; strangers, customers, other employees, and intimate partners of employees. But what do we mean by ‘violence’? In the field of threat assessment, we typically define violence as any actual, attempted or planned violence towards another. It includes communications or behaviours that cause others to fear for their safety, and also includes sexual violence and workplace bullying.
A recent South African study showed 80% of respondents had experienced hostile behaviour in the workplace. In another study 78% of employees confirmed that they had been bullied or victimised at least once during their careers. A third local study showed that 31.1% of the sample had experienced workplace bullying. More recently workplace violence has also been affected by terrorism: think only of the Mali hotel attack, the Kenya Mall attack, and the more recent San Bernadino attack in the USA. Threat assessment and management has been growing in the Americas, Europe and Asia, but to date Africa (the only continent without an Association of Threat Assessment Professionals) has been slow to take up the banner. Prof. Gerard Labuschagne
The Occupational Health and Safety Act (No. 85 of 1993) states that an employer has certain duties towards employees. These
PHOTO: HERMAN VERWEY MEDIA24
GORDON INSTITUTE OF BUSINESS SCIENCE
When I start to speak about workplace violence, I often get the response “we don’t have that in our company” or alternatively I receive a very blank look. I then start to ask if they have ever had a dissatisfied customer who threatened employees? Or an employee whose soon-to-be ex-boyfriend or husband constantly harasses her at the workplace, or threatens staff whom he believes are having an “affair” with his partner/spouse? Or a soon-to-be dismissed employee who makes comments like “you will all regret this”. Or managers, directors, CEOs, COOs who receive direct or veiled threats via email, telephone, text message or mail? Usually, if the person works for a large organisation, the response is “Oh we always get those happening.” – Workplace violence.
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duties include providing and maintaining a working environment that is safe and without risk to the health of those employees. Duties also include taking reasonable steps to eliminate or mitigate any hazard or potential hazard to the safety of health of employees, before resorting to personal protective equipment. The spirit of this Act can be interpreted to include the psychological and physical safety of employees in respect of violence and threats of violence. Employers face civil actions from employees who are injured in the workplace, especially when there was some prior indication that violence could be a possible outcome. While many threats, thankfully, don’t lead to lethal violence, it doesn’t mean that there are no physical, psychological and workplace consequences. Employees who feel safe in their work environment will be more productive. By an employer acting proactively when employees feel threatened, before any violence takes place, employees experience a positive attitude towards their employer, whom they perceive as caring about their well-being. Anxious staff are not productive and are more likely to book off sick with anxiety-related problems, or to seek alternative employment. Helping identify warning signs for potential violence allows for actions to be put in motion to avoid such violence taking place, and allow staff to feel safe and secure and protected by their organisation. However, training and experience is required to effectively and responsibly assess a potential threat and develop a strategy to prevent the violence from happening. The core goals of threat assessment are to enhance personal safety, manage fear, restore productivity and promote well-being. When such issues arise, the typical response from management is either “it’s part of the job, deal with it”, or management ignores the issue hoping it will go away (while the threatener may stop making threats, the effects on staff do not dissipate). Ironically, if receiving threats is “part of the job” then there is even more of an onus on the employer to be proactive and have a plan in place. On the other side of the spectrum, employers may go overboard and when the inkling of a threat is perceived, hiring more security guards, close protection staff, physical checkpoints and the like might be taken on board, at a high price. But the question remains: is there a genuine threat? For how long does one keep these costly measures in place? Is the increased response even enough to deal with the possible threat? Without a proper threat assessment, physical security measures can only serve to define where the violent act will start (i.e. a security checkpoint). Even the most protected person in the world, the President of the United States of America, has an extensive ‘protective intelligence’ capacity (the Secret Service) who are considered leaders in the field of threat assessment.
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. . . 80% OF RESPONDENTS HAD EXPERIENCED HOSTILE BEHAVIOUR IN THE WORKPLACE ” Existing in-house security staff may weigh-in with an opinion and these are usually very experienced ex-police members, often detectives with years of service. However, threat assessment and management is not a skill that you magically possess because you were previously in law enforcement, in the same way that by mere virtue of one being a psychologist doesn’t make you a threat assessment expert, either. Threat assessment and management is a skill that needs to be learnt through formal training. Additionally there is a growing body of research and threat assessment tools that are relied upon by threat assessment professionals. Indeed a background in policing brings a certain advantageous skill set to someone who is going to be trained in threat assessment, in the same way that being a psychologist brings a certain advantageous skill set to someone who is going to be trained in threat assessment. In an ideal world, threat assessors would have both law enforcement and psychological training. A threat assessment is never a static “yes” or “no” response, and anyone putting themselves forward as a threat assessment expert who gives such a reply doesn’t understand the dynamic process of threat assessment. Someone who is a low threat today might be a high threat in two months’ time as circumstances in his (or her) life change. Threat assessment professionals should always advise a client what to be on the lookout for that could indicate an increased, or decreased, level of threat. There should also almost always be a management plan provided so as to help reduce the level of threat, and typically a threat assessment case is never closed, due to this dynamic nature. Therefore the solution should be companies starting to train their staff (HR personnel, managers, ethics officers, in-house security) in the basic principles of threat assessment, and others in the organisation whose responsibility it is to provide professional services of such a nature can receive more in-depth training, with external consultants being used in select cases that are either complex in nature due the nature of the threat or those involved. Workers also need to inform management that these are issues that they are faced with and that they expect management to be able to effectively deal with such scenarios when they arise
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ANXIOUS STAFF ARE NOT PRODUCTIVE . . . ”
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THE BUSINESS OF BALLET Words Cara Bouwer Photographer Marc Shoul
How does a ballet company survive in a modern-day world of instant gratification, online reach and global superstars? With difficulty. But not without passion; as time behind-the-scenes at Joburg Ballet shows.
GORDON INSTITUTE OF BUSINESS SCIENCE
This is perhaps the reason why this classically Western, Eurocentric art form has managed to stay alive in modern South Africa despite funding challenges. Iain MacDonald, the Company’s Artistic Director and one of six founder members, came from a glossy time in the art’s history, when PACT Ballet was government funded and the State Theatre in Pretoria put on glittering performances. This year, Joburg Ballet will be running three major productions: Giselle (8-17 April), Romeo and Juliet (15-24 July) and Cinderella (30 September-9 October). “Our audience asks for something different,” admits MacDonald, “they have seen Giselle and Romeo and Juliet. But rights are expensive.” This is why, explains Ballet Mistress and former soloist Lauren Dixon-Seager, most ballet theatre-goers have seen Giselle more than once. “Because the works are out of copyright, more money
can be injected into other productions for the season (in this case Romeo and Juliet).” It’s about stretching an already tight budget while still appealing to traditional supporters and trying to entice youngsters (at R80 a ticket) to experience ballet’s beauty and exuberance.
NEW MARKETS
Africa too represents a potential market for growth, although MacDonald notes that “we are only now stepping into Africa. What is stopping us taking the Company to Namibia, Lesotho and Zimbabwe?” he asks. Well, funding. “Travel is expensive, and we need resources to get there.” That is not to say the Company is not without financial benefactors and friends, but MacDonald is mindful that the Company is fighting for funding in an economy battling very real needs and social problems. As such, many sponsors prefer to focus on development programmes. However, this “leaves the Company out to dry and, if there is no Company, then there is no foundation on which to build.”
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Above: Members of the Joburg Ballet perform for a diamond corporate in Botswana. Left: Development dancer Nkosikhona Sibanda and students from the Joburg Ballet School, Level 1, attend classes at the National School of the Arts.
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It’s a catch-22 situation made worse by the perception that ballet has been slow to transform. But that, notes MacDonald, is just a perception. The Company has produced many successful black dancers; unfortunately most have taken up more lucrative contracts overseas. “We have produced the likes of Andile Ndlovu,” says MacDonald of the talented Sowetan. “But he is now at the Washington Ballet.” He and a dozen other black dancers plying their trade overseas would probably return home if they could make a better living, but “how could I offer them R35 000 p.m. and medical and not everyone else?” asks MacDonald.
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A principal dancer at the Company earns about R19 000-R20 000 p.m. That’s top rate. A member of the official Company earns R8 000 p.m before tax, not including pension or medical aid. A dancer can
Top Left: Principal Dancer Shannon Glover takes a rehearsal. Bottom Left: Nozipho Mhlambi and Edgar Moagi at work in Joburg Ballet’s offices in Braamfontein. Right: Students from Joburg Ballet School, Level 1, attend classes at the National School of the Arts.
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spend three to four years in the corps de ballet on this salary. Junior corps members begin at R3 000 p.m.
to educate parents and kids about the arts as a career; not just on stage, but behind-the-scenes too.”
MacDonald notes that the meagre starting salary often causes family to encourage youngsters to quit. Development programmes like the Air Products Alexandra Development School introduce more township kids to ballet, get them off the streets and teach them valuable life lessons such as discipline and team work, says MacDonald. But this has to follow through to a viable career.
MacDonald adds: “We have to appeal to corporate sponsors, the City, the Lotto. We have to make this a financially sustainable career. Passion is not enough. The next Margot Fonteyn or Rudolf Nureyev could be sitting in the townships; we just have to give them the chance to fulfil their passion.”
Keke Chele, former dancer and now Joburg Ballet School Administrator, says it’s imperative to change the mindset of parents and grandparents around a career in the arts. “We have
There is certainly potential out there, says Chele. “But it is hard for us to cultivate it. We don’t have enough ballet teachers available to go to the schools, for example. Once kids in townships are exposed to ballet they understand [what it is about] and the schools want us to come back.”
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YOUNG BLOOD
Even with greater opportunities, the life of a dancer is hard, as Megan Gerber (17), who became a full member of the corps de ballet in 2015, can attest. Home-schooled and doing matric over two years, Gerber’s day runs 8:30am-5pm. Time in between must be found for Pilates, physio and studies. “Nobody knows what goes on behind the scenes,” she says. Dixon-Seager adds: “To assume you will have a lengthy career is a mistake, so we encourage dancers to study and do Unisa degrees.”
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A prime example is Principal Dancer Juan Carlos Osma, from Cuba. Just before rehearsing the second act of Giselle with Principal Dancer Shannon Glover, he admitted to being injured. “But I have to deliver on the opening night. You learn to dance on top of the pain.”
Osma and fellow Cuban, Dayana Acuña, add an exciting international flavour to the Company, which has certainly rubbed off on the younger dancers. He believes the Company can certainly learn from the Cuban take on this Eurocentric classic. “Ballet is Eurocentric, but [in Cuba] we view it as an art form,” he says. “In Cuba, dancing is cool. Here, not so much; it is more about sports.” Cuba has created a strong school for dancers, says Osma, and it has taken on a distinctly Cuban flavour. “South Africa needs to make ballet more African,” he says. MacDonald agrees: “We want to do an African ballet. I’d like to take a traditional story and put it into a ballet.” While it is easy to focus on the financial constraints, MacDonald remains upbeat. “It might sound like doom and gloom, but there
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Left: Cuban dancer Dayana Acuña limbers up for a performance at the Linder Auditorium in Johannesburg. Top Right: Corps de ballet members Kelly Roberts and Megan Gerber warming up at the Joburg Ballet studios in Braamfontein. Bottom Right: Joburg Ballet's tools of the trade. A professional ballet dancer can go through between 100 and 120 pairs of pointe shoes in a single season.
is a reward that goes with this life. I’m passionate about Joburg Ballet and we have amazing sponsors. I hope they feel it is a worthy return.” The question remains, of course, how to monetise ballet. “You can’t have banners around the theatre like you do at Ellis Park,” laughs MacDonald. He stresses that Joburg Ballet is run like a business: “Corporate governance is important to us. The board is very strict about this.” He would like to see more recognition of the arts and less necessity to make cuts when money is tight. Pointing to the threadbare costumes for Giselle in her office, DixonSeager admits that “at PACT, we had new costumes for every production and we never danced to recorded music. A lot of our dancers have never danced with an orchestra, which is a pity.” Challenges aside, a passion for the art form and its future is palpable throughout the Company. Dancer-turned-administrator Chele highlights just how important an art form like ballet is to the national psyche: “The medical profession can heal your wounds, but only an artist can heal your soul. We give you the best we can; we dance our hearts out on stage.”
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MacDonald agrees: “A country without a soul is lifeless. We need to keep the soul of Africa alive by supporting the arts”
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THE NEW WAVE Words Cara Bouwer
GORDON INSTITUTE OF BUSINESS SCIENCE
South Africa may be sitting on an exciting new wave of entrepreneurial endeavour. Two years ago Dr. Alex Antonites noticed a subtle change in the GIBS MBA cohort’s approach to entrepreneurship; and the class of 2016 is solidifying his view that a gamechanging generation is coming through. Alex Antonites, GIBS adjunct faculty and also Department of Business Management at Pretoria University, is more than just an academic theorist when it comes to business start-ups. With 17 years’ experience under his belt Antonites divides his time between GIBS, lecturing on entrepreneurship and running his own businesses. Believing that business is “always about helping someone; there must [however] be profit and money in it”, Antonites appreciates the current sea change in the latest MBA intake of some 320 students; over 85% of whom, he believes, are predisposed to engaging in entrepreneurial activities post-MBA. After eight years teaching the same module, Antonites has seen how his focus has had to shift based on the dynamics of the
group. “The first four years were very corporate,” he recalls. “They just wanted to learn entrepreneurial thinking and would always ask why they had a module on entrepreneurship in a management course. So my focus was really on thinking like an entrepreneur within a corporate, looking at examples like Discovery.” Then, this year and last, Antonites began to see a shift in thinking. “The entrepreneurial orientation in the MBA is changing; especially this year,” he says. “It is something different in terms of feasibility. It is creative. They speak to me about when they should start, and they want to start now. That is new. I always tell them: ‘Finish your MBA.’ Starting a business is hectic, it is not romantic. But work on your idea, and we will assist you.”
PHOTO: PIERRE VAN TONDER PHOTOGRAPHY
Roaming Grind Coffee Company set up shop for the day at GIBS on 19 March 2016. Pictured, from left, barista Suko Ndlovu and founders Gerhard de Clercq, Dewyk de Clercq and Anje de Clercq.
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STARTING A BUSINESS IS HECTIC, IT IS NOT ROMANTIC” THE COFFEE CASE
Antonites praises this crop of MBAs for innovative ideas such as biotech solutions (both healthcare devices and services); unique mobility platforms (across an array of industries); food security (“there are some really exciting food and organic value chains”) and a number of customer convenience outsourced services (“for instance shopping services for busy MBAs”). But when it comes to being one step ahead of the pack he singles out Dewyk de Clercq, who founded the Roaming Grind Coffee Company with his wife, Anje, and brother, Gerhard, in 2015. Using a portion of Anje’s voluntary retrenchment package they embarked on a gentle startup process. With a full-time job and the demands of an MBA on Dewyk’s lap, it is Anje who has the day-to-day management of the nascent business; a mobile coffee unit operating from a converted tuk-tuk. Establishing a traditional bricks-and-mortar coffee outlet comes with high costs, De Clercq told Acumen, but mobile operations are more affordable. Mobile set-up costs would be 10 times less than a fixed outlet and an owner-operator would need to sell about 80 cups a day to break even, he says. A single prototype is already operational, and De Clercq’s vision is to ultimately have 300 to 400 tuk-tuks serving coffee. The concept centres on running the tuk-tuks from a central App, à la Uber and the United States’ DoorDash restaurant delivery service. Like Uber, De Clercq favours a model that empowers owner-operators and creates a number of small businesses under one umbrella. “It’s great to work for a corporation, but oligopolies and big business won’t solve our unemployment problem,” says De Clercq, but buying into an idea for R200 000, receiving support, training and mentorship, can make a difference. And the De Clercq’s initial year in operation has already highlighted opportunities in office parks, private schools, Gautrain stations and private events such as weddings and sports days. “GIBS opens your eyes to look at those opportunities,” admits De Clercq, who has been paired with Cape Town-based Yoco as part of his GIBS business model development process. Yoco, which processes payments via iPhones, obviates the need for a card machine and 3.5% is simply levied on each transaction. The business was started by a former Accenture employee, Katlego Maphai, in 2012 and is now moving in the Johannesburg market. Being able to move from idea to execution under the guidance of Antonites is a huge benefit, believes De Clercq. “You learn by doing,” he says. “What is different (for me) is that we have started the business already.” Antonites is upbeat about having a ‘live’ case study, “which was not the situation in last year’s MBA.” Referring to the Roaming Grind Coffee Company concept, Antonites notes: “The job creation potential is huge.”
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THE SOCIAL IMPACT ELEMENT
This drive to do good in society is another interesting dynamic shown by the class of 2016, notes Antonites, who calls it a ‘social entrepreneurial sub-trend’. “These guys really want to start social impact businesses. I’ve seen it in education, and apps for education, ideas tackling poverty alleviation. Previously it was money, money, money and now these guys want to push social impact.” De Clercq agrees: “This group of MBAs wants to be in South Africa. Yes, GIBS is an international MBA but everyone in the class wants to make it here. We are looking for solutions here.” One reason for this social focus could be the demographics of the class, notes Antonites. “This MBA class has more women than men; that’s been the case for the past three years, actually. My gut feeling is that their customer service is better and their communication is better.” Antonites believes older, more educated entrepreneurs may prove pivotal in turning South Africa’s poor rate of entrepreneurial activity around and fostering a dynamic business start-up sector. “MBAs shouldn’t have a problem with capital,” he notes of the allimportant need for funding. They also come with vital corporate and business experience; making it easier to secure funding and navigate the red tape plaguing business start-ups in South Africa. “These MBAs will start sexy businesses. They understand business, markets, user experience and expectations, customer behaviour,” he says. “If you look at an MBA they are the perfect person to start a business: they have collateral and their risk averseness is in the decline phase.” Whether this is a nationwide business school trend or a generational trend is something Antonites will continue to monitor; but it won’t be the first entrepreneurship ‘cluster’ to emerge in the country. Already South African entrepreneurship is benefitting from the start-up friendly regions like Cape Town. Comments Antonites: “There was a group from Erasmus University Rotterdam (Netherlands) here a few years ago and, when I asked them why, they said they were looking for programmers. They were off to Cape Town to find them; they are cheaper than India and much better quality.” If the likes of De Clercq are evidence of a ‘new wave’ of entrepreneur, then Antonites is optimistic about the future. “I also teach in Austria and I’ve learnt that in that market they read and they travel. It’s the same with these MBAs. These guys have travelled (often across Africa), and that is new and wonderful. And they read. That makes a difference in the type of opportunities they perceive; these are globally oriented and scalable. That’s what we want. Not the micros, not the lifestyle businesses, but something that will create jobs”
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THESE MBAS WILL START SEXY BUSINESSES ”
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GORDON INSTITUTE OF BUSINESS SCIENCE
Alistair King
KING OF THE HILL Words Eugene Yiga
It’s fair to say that Alistair King was always destined for a life in a creative field. From a young age, he was happiest inside his head, imagining pictures and making up stories. He almost studied genetics at Wits University but, on the day of registration, had a change of heart. He opted for an arts degree instead.
they had and do strong brand work that serious marketers would notice. And notice they did. “I think there are two main factors that have contributed to our success,” King says. “First, my partnership with James has been successful. We don’t tread on each other’s toes and we seldom disagree about what we stand for as a company. That’s rare in an industry in which business and creative are often at odds with each other. I also think our early commitment to building a connected group of multi-discipline agencies has led to us having the model of integration that is working so well for us today.” Of course, owning a company is not for the faint-hearted. But King has learned that rolling with the punches and managing your own emotional state are essential career survival skills. He’s also learned to stick with business principles that are simple and timeless: put substance before hype, be a workhorse and not a show pony, and pick your clients as carefully as they pick you. “Every time I’ve felt like we were underperforming, I’d ignore the drama around me and just try to turn the brief that’s right in front of us into something remarkable,” he says. “Great work changes everyone’s mood and the effect is immediate and long-lasting. Great work always makes problems go away.”
BEYOND MAD MEN
Producing great work in the 21st century isn’t easy. Gone is the romantic ‘Mad Men’ era of advertising. Yes, King still believes that the industry is a massive amount of fun (minus the martini lunches and three-piece suits), but it’s also a serious business and much more complex. “The ‘Mad Men’ era was all about selling,” he says. “Now brands have to think about reputation, social conscience, and a myriad of other factors that determine whether that sale happens or not.” But even though much has changed, the rules today are the same as they’ve always been. Ad blockers might be more obvious online or with the aid of PVR, but they’ve always come pre-installed in every consumer’s mind. “The case for creative innovation has never been stronger,” King says. “If you create wallpaper, it will be blocked one way or another. Create something powerful, interesting and worth sharing, and nobody wants to ignore it.” “My interest in advertising followed when I spent a day with a great copywriter named John Smeddle,” he recalls. “He was an adult doing everything I loved as a child. There were no ad schools in those days, so a mate and I started a club at Wits called Adfactor, specifically so we could learn more about advertising directly from the agencies themselves.” The club steered a lot of Wits University students into advertising. One could say that it also steered King to create, in partnership with James Barty, King James Group, an 18-year-old agency now made up of seven specialist companies and divisions that work in tandem. Growth wasn’t always spectacular. Indeed, for the first ten years, King describes it as being steady and unremarkable. Because growth wasn’t the goal, they were happy to focus on the clients
Still, it’s hard to produce great work at a time when clients are squeezing costs while also demanding that agencies participate in both profit and loss. Furthermore, the measurement criteria for many of these new models are not always transparent, making them open to abuse. “We have so many different clients that we have to be flexible with our model of remuneration,” King says. “We’ll consider any model if it’s fair [but] squeezing your agency beyond what is fair is not the foundation of a good relationship. In our experience, the good clients are always reasonable and they understand that if they aren’t prepared to pay for talent, they’re unlikely to get it.”
THE TRUE VALUE OF AWARDS
Proving that King James is worth paying for is something that should be easier after its performance at last year’s Loeries, the
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. . . BE A WORKHORSE AND NOT A SHOW PONY . . . ” most prestigious creative industry and brand communication awards for Africa and the Middle East. Not only did it win Top Creative Agency but King himself won the award for Top Chief Creative Officer. Sanlam, one of the agency’s big new clients, also ranked as Top Brand for 2015. “That is one of my proudest career moments,” King says. “To take Sanlam from relative Loeries obscurity to the number one spot in our first year is more than I could have hoped for. We also did well on Santam, Bell’s, Johnnie Walker, and SABC, so it was an all-round good effort from our team. But I’m not about to start hunting awards for awards’ sake as it can only compromise my agency and change our priorities. We’ll always push our clients to make innovative work because we believe that’s what it takes for brands to be seen. If that work goes on to win awards, then we’ll enjoy and celebrate that too.” As someone who’s been in the business long enough to know that sometimes agencies do great work and that sometimes they don’t – not always for reasons within their control – King has come to know whether or not creative work will be effective long before awards come around. Great advertising gets noticed and talked about. It also attracts hungry, competitive talent that in turn attracts clients with great ambitions for their brands. Incidentally, both of these elements are crucial for making advertising a fun career.
GORDON INSTITUTE OF BUSINESS SCIENCE
“The best creatives I’ve ever met have an extraordinary work ethic, coupled with a certain degree of insecurity,” King says. “They don’t stop working until they have something remarkable on the page in front of them.” Because creativity is a choice, King believes that only hard work will bring it out. Even the people with innate talent need to practise to develop their intuition and skills. It’s the reason he seeks out everything that enriches him and avoids whatever saps his energy. It’s also the reason he believes that humour is the greatest achievement of humankind. “Once you choose to spend your life being measured by the originality of your ideas, you are pushed into a particular lifestyle where you seek out the unconventional,” he says. “Because your imagination is your livelihood you actively have to feed it.”
THE ADVERTISING EVOLUTION
So, what’s next? While there’s no doubt that the digital era has changed the industry forever, King believes that debating who the future belongs to is a pointless exercise. The fighting talk of the digital agencies a few years ago has all but faded out now that most
of them have been absorbed into traditional agency networks. Instead, what has emerged is a different breed of agency. “We are witnessing a significant evolution in advertising that will also change how brands reach and speak to their consumers,” he says. “There’s a lot being said about integrated marketing, but there is no question that the agency of the present (never mind the future) needs to be medium-neutral. Have a great idea and explode it into whichever media make it stronger. That’s the new game.” As global networks continue their aggressive acquisition drive in Africa, locally owned agencies will have to stand their ground and claim their stake in the continent. But King James has chosen to keep independent for the simple reason that they’d prefer to follow their own instincts and not second-guess those of someone else. “Our company is an expression of James and me and the many great people and partners we’ve gathered along the way,” King says. “That’s infinitely more satisfying to us than representing another’s culture… We didn’t regard King James as a business that needed to be built, made successful, and sold; we just saw it as how we wanted to spend the rest of our lives.” King also considers it great not to have to pursue someone else’s agenda, whatever that might be. And while he doesn’t begrudge anyone who chooses a different path, he makes the case that independent agencies sometimes appeal to clients because, when the owners are in the company, they know exactly who they are partnering with. “Rivalry over billings is not our game and size is no indication of the quality of an agency,” he says. “We’re happy to let big players zoom past us. We’re happy to stay in our lane, operating on our own terms and to our own timeframes. We’d rather a client pick us for the work we do than for the systems we have in place.” For the last 13 years, the Cape Town-based agency has had an offshoot in Johannesburg called King James II. They’re on the cusp of great things and, with much growth expected, will invest in equipping that agency with all the skills and talent it needs to be a fresh and formidable force. “We’re in a purple patch right now and we intend to make the most of it,” King says. “Momentum is hard to achieve and now that we have it we will do everything we can to maintain it. We’ve made a few acquisitions to bolster our offering and that will play out in the short term. Expansion into Africa remains an appealing idea to us. We’ll remain independent, though. Other than that, we’ll keep on keeping on.”
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advertorial
ENGAGING STAFF – IT’S ALL ABOUT FLOW In order for companies to be successful, leaders must ensure their employees remain motivated. While this idea is obvious in theory, exactly how leaders consistently achieve this is less clear. One approach that explores positive experiences and employee engagement is the idea of “flow”.
Research shows that only 13% of employees are engaged at work. This suggests that organisations are likely to face significant costs associated with disengaged employees. These costs can be as a result of individuals who have outgrown their jobs and therefore do not give their full attention to their work, or they may arise from individuals who are disengaged as a result of the challenge being too great for them. So, how exactly can leaders ensure that their employees remain engaged and “in flow” with their work?
CLARIFYING ORGANISATIONAL GOALS
Clear communication networks should be established to ensure that every employee understands what the organisation is aiming to achieve and how their unique contribution assists the organisation to get there.
CLEARLY COMMUNICATING PERFORMANCE GOALS
Well-communicated organisational goals are not enough for people to be fully engaged. They also need to know precisely what needs to be done, how well they need to be doing it, and where their discretion is expected.
BEING OPEN WITH PERFORMANCE
Obtaining and providing feedback is vital. Its absence leads to an absence of learning and growth.
HIRING FOR FLOW
People should be hired to match the complexity and capability requirements of the role, to ensure that they are optimally suited to their roles, and will experience flow and engagement. The requirements of the position and the level of capability of the person should be assessed to ensure as good a match as possible between the two.
PROVIDING OPPORTUNITIES FOR CONCENTRATION
Constantly switching between tasks over short periods of time breaks concentration, and creates stress, especially when the
SCALE OF WORK CHALLENGES
The experience of flow can be described as the state when challenge and skill are equal. A sense of anxiety is produced when challenges are greater than the individual’s skill or ability. Alternatively, boredom is experienced when skills are greater than the challenge of the task.
PERFORMANCE OF THE ORGANISATION AND ITS PEOPLE Inappropriate decisions - assets yield far less than their potential return
D
R
SC T UL
Assets not yielding enough. Costs escalating.
S RE : S OW ES FL SIN IN BU SN Just acceptable, O
Assets just earning their keep - people slightly stretched.
I
IS EC
cost contained.
ED
Constant promise, constant dissapointment.
V TI C E
F
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TE EA
Assets wasting, cost escalating. People bored.
RANGE OF CAPABILITIES disruption is externally induced. Interruptions from technology devices can have a similar effect. Effective outcomes arise when individuals immerse themselves as fully as possible in the task at hand, and are not made to feel guilty when they resist barriers to this.
ALLOWING CONTROL OVER JOBS
Control refers to giving skilled individuals the latitude to decide how to reach the goal. When this happens, individuals experience a sense of having a choice about how to perform their job in the best possible way, and that they are trusted to come up with the best possible solution. Individuals who are more likely to be “in flow” are also more likely to be engaged and focused on delivering on outcomes. When a flow state exists, it creates productivity benefits for the organisation, as well as motivation for the individual
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Contact Details : Info@bioss.com www.bioss.com 011 450 2434 24 Lucas Lane, Bedfordview, 2007
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entrepreneurship
TO A BAG OF ORANGES, FROM THE CEO, WITH THANKS Words Xolani Ndzaba, in conversation with Mandy Walker.
Polishing off the sandwiches I ordered is one famished miller and CEO, Xolani Ndzaba. His company – Lethabo Milling – is the first 100% black-owned maize meal company in South Africa. It operates from a plant of refurbished silos next to the N1 in Ventersburg, creating 40 job opportunities – the majority of which are held by women. He’s appeared on the cover of the Financial Mail and on Morning Live. And when he’s not building his business, motivational speaking, negotiating maize prices or helping government get community maize plants operating again, he’s also pretty good at storytelling.
GORDON INSTITUTE OF BUSINESS SCIENCE
I was born in Soweto, 51 years ago, the only boy of eight children. And by the time I was eight had started my own business. On my eighth birthday, my dad bought me a bag of oranges to share with my friends. I ate some, gave a few to friends and sold the balance at school. It was 1973. A few years later, with the Soweto Riots, my parents sent me to the Eastern Cape to stay with relatives, so I could continue my studies uninterrupted. During 1977 I was told my father had died. This was four weeks after he was buried. He worked on the mines and had been a leader in the Unions. It was a state assassination. The “accident” that caused his death, happened in the mining kitchen – and, to this day, no-one knows exactly what happened. Later that year I was sent to Carolina, Mpumalanga to live with my grandparents – there were still disruptions in Soweto. I spent three years there. On Saturdays, I’d buy a box of oranges or apples to sell that evening at the Community Hall, or on Sundays, at soccer games. And between three and five pm and all day on Saturdays I worked as a gardener, earning about R3 a month. On return to Soweto and until I matriculated, I sold fruit on the trains from three in the afternoon to eleven every night, with a group of boys. We agreed with our school principal that we’d stop if our marks suffered. It was tough, but helped my mother – a domestic worker – put food on the table and my sisters through school. At that stage we weren’t allowed to own a house in Soweto, and stayed with family and friends. It was the time of the pass laws, and I remember every house member’s name had to be on a permit hanging behind the dining-room door. We used to hide when the “Black Jacks” (the police) arrived. If found, we’d be arrested. We couldn’t get a municipal pass due to my father’s political history.
Xolani Ndzaba
After matriculating in 1984, I worked as a “daka boy” (cement mixer) on a Southern Sun/Sun International construction site situated behind the SA High Court in Joburg City. After two years I was employed by Southern Sun as a steward in their stores department to oversee the transport and packing of stock. In three months I was fired as my boss disapproved of me studying a Damelin production and supervision diploma instead of working on a Saturday morning. I then joined SAB as a labourer and worked my way up to management. After five years I left to become plant manager at National Sorghum Breweries which was then owned by Professor Mohale Mahanyele, a BEE pioneer. My career progressed with a brief return to SAB; followed by a position at Pepsi Cola, Bromor Foods in factory management; and yet another return to SAB as a brewery manufacturing development specialist. During this time I Iearnt the art of brewing and became an expert in processes. And also enjoyed learning to taste beer and appreciate the importance of getting the brewing process right the first time, quality-wise. After we
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Many experiences made me tough and taught me to take the good out of an adverse situation. I told myself I would own a business like this one day – back when I milked cows and learnt to plough fields in the Eastern Cape – using a manual planting implement with oxen. And with an old man standing behind me holding a sjambok, to ensure I guided the cattle straight on the line. I’m now at the point where I’ve been on TV a few times and invited by the DTI to present Lethabo Milling to parliament twice. I've also been asked there to explain what I’d do to ensure food security in South Africa, plus how to bring change to the industry and create more black millers. I’m also working with the Eastern Cape and Mpumalanga governments on a programme to normalise the industry and also to get 12 existing plants back in operation and run by the nearby communities. For this to happen, we need to upskill these people. I also hope to enrol these farmers in the GIBS EDA programme as they’d benefit from it.
Lethabo Maize Meal
won Brewery of the Year, I moved into sales, as sales manager based in Rustenburg. An opportunity at Brandhouse then arose, followed by another at Papa Super Maize Meal. Nine months after joining this industry and at the end of a four-year journey – consisting of doing presentation after presentation to access funding – I started Lethabo Milling. Funding came from ABSA on condition that we signed an offtake agreement with Massmart (which guaranteed sales, if we met their quality requirements). Massmart also requested me to complete their supplier development programme which is linked to the GIBS EDA (Enterprise Development Academy) programme. I enrolled in the EDA in 2014 and completed the full year’s course, graduating top student. I attended the course one week of every month and worked the other weeks of the month. It was great that I was already a practicing businessman/owner so could look at every model of the course, from manufacturing, sales, marketing and HR with genuine interest and dedicate equal focus to each. Especially as I knew every bit of the knowledge imparted would enhance my business. Not only did the course confirm what I’d learnt before – in an MDP in Leadership and Entrepreneurship at UNISA – but crucially, it helped me implement these learnings. So that by 2014 I was able to refurbish the Lethabo Maize Meal silos and the plant was declared “foodsafe” at first audit in 2015. I also decided to place women (maize meal end-users) at critical points in the process – checking quality issues like colour and fineness, to get the brand intrinsics right. Have there been challenges? Sure… drought and maize price increases impacted us and supply and pricing remain an issue – but I tend to prefer a “SWOT” approach. Asking ‘What’s the SWOT here?” and how can we turn the situation into an opportunity by looking at what we can better utilise/do.
Lethabo Millers
Wondering why I entered this market? – Firstly, to give consumers a bigger choice in terms of a quality product. Secondly, as it’s an open and growing industry that can thrive, even in a struggling economy, since more people eat staple foods. Thirdly, until now, SA hasn’t had a black miller, even though over 90% of maize consumers are black. Also, my agenda is clear. I want to advance black ownership and participation in the mainstream economy in the post-apartheid era. There are now BEE codes in place allowing us to venture into diverse markets we never thought we’d be part of. And the Competition Commission has rules that now govern how industries and markets operate in SA and new opportunities abound. Lethabo Milling’s logo (a seed sprouting between two leaves) epitomises this and is a call to action: to stop complaining and instead embrace the new opportunities that’ve existed in SA since 1994
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general management
NANOSATELLITES: SA'S HIGH-TECH OPPORTUNITY Words Sarah Wild
By the beginning of this year, more than 400 CubeSats had been launched. Despite their diminutive size, these spacecraft are becoming increasingly popular globally with thousands expected to be blasted into orbit in the next few years. CubeSats, a type of nanosatellite, are 10cm cubes that weigh no more than 1.3kgs, and up to six of these cubes can be stacked together to create larger satellites. Different payloads, such as sensors and transmitters, can be fitted to the CubeSats, allowing them to perform science in space for a fraction of the cost of a larger satellite.
PHOTO: CUBESPACE AND STELLENBOSCH UNIVERSITY
GORDON INSTITUTE OF BUSINESS SCIENCE
A South African-built satellite is, at this moment, orbiting Earth with the same amount of energy it would take to power a 5W light bulb. Called a CubeSat, it is the size of a splayed hand and is beaming signals back to South Africa.
general management
SMALLER = CHEAPER
“The cost of a big satellite can run into hundreds of millions of dollars,” says Prof. Robert van Zyl, director of satellite engineering systems at the Cape Peninsula University of Technology (CPUT).
weather beacon. This beacon emits a high-frequency signal, which is received by seven receivers in Hermanus, the home of the South African National Space Agency’s space science directorate.
“A CubeSat can be built for about $100 000 and launched for much the same, depending on the complexity of the mission. For this reason, CubeSats were initially used to train students for the aerospace industry, but now these small spacecraft can be used to track and trace aircraft and vessels at sea.”
By modelling what happens to this signal as it travels through space and our atmosphere, space scientists are better able to understand what is happening in the ionosphere, a charged upper layer of our atmosphere. High-frequency radio, which is still used extensively on the continent, involves “bouncing” radio signals off this atmospheric layer.
Government – namely the Departments of Science and Technology, and Trade and Industry – have highlighted satellite production as a high-technology manufacturing niche for South Africa, but the lack of skills in the country and the high barriers to entry in this market have consistently tripped up companies wanting to get a foot in the door. Training was a major motivator for South Africa’s involvement in the CubeSat development. The continent’s first CubeSat, named Tshepiso (TshepisoSAT) which means “promise” in Setswana and Sesotho, was the work of more than 40 postgraduate students, and took about 30 000 man hours to develop. The 1.2kg cube was produced by French South African Institute of Technology (F’SATI) CubeSat programme at CPUT. “Capacity building for the space industry is constrained by the high cost of traditional satellites and supporting infrastructure,” Van Zyl says. “CubeSats are, however, winning over the youth to the space sector. From being cheaper to build and launched to space, they provide a cost-effective platform for training and research, especially for countries where heavy investment in a space industry has to be weighed against more immediate needs such as health and welfare.”
PHOTO: CUBESPACE AND STELLENBOSCH UNIVERSITY
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Van Zyl says that F’SATI’s CubeSat programme has graduated more than 60 postgraduates over the past seven years, “all of whom are employed in the high-tech and ICT industries, as well as the emerging South African space industry.”
THE IONOSPHERE
But there is more to South Africa’s CubeSat programme than training. Launched in 2013, TshepisoSAT carries one instrument: a space
But the difficulty is that this layer is fluid (distorts), responding to the whims of the sun. This is why ionospheric research is an important focus area for the South African National Space Agency.
SELF-DESTRUCTION F’SATI’s programme is not the only one working on CubeSats in South Africa. Thirty minutes away, as the car drives, at Stellenbosch University, a team of researchers is helping 50 spacecraft destroy themselves. The QB50 project, funded by the European Commission’s seventh framework programme, aims to facilitate access to space, and brings together more than 20 countries, including South Africa. A Stellenbosch University-affiliated company, CubeSpace, will be
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building the control systems for some of the satellites. The bulk of the CubeSats will be launched later this year. They will have sensors to “measure all the essential elements in the lower part of the ionosphere, [the charged upper part] of our atmosphere”, says Prof. Herman Steyn, head of satellite engineering at Stellenbosch University. One of the CubeSats’ scientific missions will be destroying themselves. According to space laws, which South Africa has ratified, any spacecraft launched into space has to destroy itself or fall out of orbit after 25 years. This legislation is driven by the need to address the sheer quantity of “space debris” in orbit around the Earth. The United States’ National Aeronautics and Space Administration estimates that there are half a million pieces of space junk travelling at up to 28 000km/h – a serious threat to present and future spacecraft, as well as the International Space Station.
Part of QB50’s mission is to understand how objects disintegrate when they tumble through the atmosphere. It will enable scientists and engineers to “get better models for satellites when they re-enter and burn out in the atmosphere. You can predict, if any parts of the satellite are left, where they will fall to Earth,” Steyn says.
GORDON INSTITUTE OF BUSINESS SCIENCE
CONTROL SYSTEMS
CubeSpace’s contribution is its controlling system. “Up until now, most CubeSats have been uncontrolled, randomly tumbling in orbit. It is difficult to position your antennas to the ground station, your solar panels to the sun, your camera to Earth,” says Steyn. “There are not many companies – fortunately for us – that supply control systems for CubeSats.” Mike-Alec Kearney, a graduate of Steyn’s research group and co-founder of CubeSpace, says that their control boards have sensors that determine a CubeSat’s orientation relative to the sun and the Earth. This is linked to a system that, via magnetic fields, controls how the small spacecraft spins. CubeSpace, which aims to spin-out into an independent company later this year, is building the attitude control systems for 15 of
the QB50 satellites, as well as for other international CubeSat missions. “Business is steadily increasing,” Steyn says. Through Stellenbosch University, South Africa will contribute a two-cube nanosatellite, ZA-AeroSat, to the project. “All satellites must be ready for delivery by the end of June 2016 for final integration of the science sensors,” Steyn says. This, South Africa’s second CubeSat, will be deployed from the International Space Station, along with the other QB50 spacecraft. CPUT is also gearing up to launch its next CubeSat, ZA-Cube2, next year, with a constellation of CubeSats planned for 2018 and 2019, Van Zyl says. “With the constellation, we will establish a local manufacturing capacity on par with the best in the world.” Asked if there was collaboration between Stellenbosch University and CPUT, Steyn says that both institutions will be developing components for the other’s CubeSat. Van Zyl says that Stellenbosch University is CPUT’s key partner for its CubeSat missions, although it also has local and international industry partners. “By ensuring that Africa produces its own engineers and scientists, and by playing our part on the global stage, the continent will have taken another step towards the democratisation of space for its people,” Van Zyl says
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PHOTO: CUBESPACE AND STELLENBOSCH UNIVERSITY
“If there are more collisions due to previous collisions, it could make it impossible to make use of satellites and space for communications,” Steyn says.
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INTEGRATED VALUE: BEYOND SOCIAL RESPONSIBILITY AND SHARED VALUE Words Prof. Wayne Visser
Integrated Value, or IV, is an important evolution of the corporate responsibility and sustainability movement. It combines many of the ideas and practices already in circulation – like corporate social responsibility (CSR), sustainability and creating shared value (CSV) – but signals some important shifts, especially by focusing on integration and value creation. More than a new concept, IV is a methodology for turning the proliferation of societal aspirations and stakeholder expectations – including numerous global guidelines, codes and standards covering the social, ethical and environmental responsibilities of business – into a credible corporate response, without undermining the viability of the business. Practically, IV helps a company to integrate its response to stakeholder expectations (using materiality analysis) through its management systems (using best governance practices) and value chain linkages (using life cycle thinking). This integration is applied across critical processes in the business, such as governance and strategic planning, product/service development and delivery, and supply and customer chain management. Ultimately, IV aims to be a tool for innovation and transformation, which will be essential if business is to become part of the solution to our global challenges, rather than part of the problem. IV is a concept and practice that has emerged from a long tradition of thinking on the role of business in society. It has its roots in what many today call corporate (social) responsibility or CSR, corporate citizenship, business ethics and corporate sustainability. These ideas also have a long history, but can be seen to have evolved primarily along two strands – let’s call them streams of consciousness: the responsibility stream and the sustainability stream.
TWO STREAMS FLOWING INTO ONE
The responsibility stream had its origins in the mid-to-late 1800s, with industrialists like John D. Rockefeller and Dale Carnegie setting a precedent for community philanthropy, while others like John Cadbury and John H. Patterson seeded the employee welfare movement. Fast forward a hundred years or so, and we see the first social responsibility codes start to emerge, such as the Sullivan Principles in 1977, and the subsequent steady march of standardisation, giving us SA 8000 in 1997, ISO 26000 in 2010 and many others.
general management
The sustainability stream also started early, with air pollution regulation in the UK and land conservation in the USA in the 1870s. Fast forward by a century and we get the first Earth Day, Greenpeace and the UN Stockholm Conference on Environment and Development. By the 1980s and 1990s, we have the Brundtland definition of ‘sustainable development’, the Valdez Principles in 1989 (later called the CERES Principles) and the Rio Earth Summit in 1992, tracking through to standards like ISO 14001 in 1996.
WEAVING TOGETHER A PLAIT
As these two movements of responsibility and sustainability gathered momentum, they naturally began to see their interconnectedness. Labour rights connected with human rights, quality connected with health and safety, community connected with supply chain, environment connected with productivity, and so on. The coining of the ‘triple bottom line’ of economic, social and environmental performance by John Elkington, and the introduction of the 10 principles of the UN Global Compact in 1999 reflected this trend. We also saw integration start to happen at a more practical level. The ISO 9001 quality standard became the design template for ISO 14001 on environmental management and OHSAS 18001 on occupational health and safety. The Global Reporting Initiative and the Dow Jones Sustainability Index adopted the triple bottom line lens. Fair Trade certification incorporated economic, social and environmental concerns, and even social responsibility evolved into a more holistic concept, now encapsulated in the seven core subjects1 of ISO 26000.
THINKING OUTSIDE THE BOX
GORDON INSTITUTE OF BUSINESS SCIENCE
At every stage in this process, there have been those who have challenged and advanced our understanding of the scope and ambition of corporate responsibility and sustainability. Ed Freeman introduced us to stakeholder theory (in 1984), John Elkington to the ‘triple bottom line’ (1994), Rosabeth Moss Kanter to ‘social innovation’ (1999), Jed Emerson to ‘blended value’ (2000), C.K. Prahalad and Stuart Hart to ‘bottom of the pyramid’ (BOP) inclusive markets (2002), and Michael Porter and Mark Kramer to ‘creating shared value’ (2011). There is a lively academic debate about Porter and Kramer’s shared value concept, including criticism that it is unoriginal; it ignores the tensions inherent to responsible business activity; it is naïve about business compliance; and it is based on a shallow conception of the corporation’s role in society. Nevertheless, shifting to the language of value, rather than of responsibility, is important, as is the emphasis on a more strategic and integrated focus. Typically, all these new conceptions build on what went before, but call for greater integration and an expansion of the potential of business to make positive impacts. For example, Hart’s ‘sustainable value’ framework (1997) incorporates pollution prevention, product stewardship, base of the pyramid (BOP) and
clean tech. Emerson’s ‘blended value’, much like Elkington’s ‘triple bottom line’ looks for an overlap between profit and social and environmental targets, while Porter and Kramer’s ‘shared value’ focuses on synergies between economic and social goals. Most recently, in 2013, the International Integrated Reporting Council published their International Integrated Reporting Framework and their chairman, Mervyn King, wrote a book called Integrate: Doing Business in the 21st Century. Another major development is that the International Organization for Standardization issued guidance in 2014 on integrated management systems as part of its ISO Directives (in Annex SL).
. . . LEADERS NEED TO STEP UP AND CREATE TRANSFORMATIONAL GOALS . . . ” THE ‘HOW TO’ OF INTEGRATION IV takes inspiration from all of these thought pioneers that have gone before and tries to take the next step. IV is not so much a new idea – as the long-standing trend towards integration and the ubiquitous call for embedding of standards testifies – but rather an attempt to work out the ‘how to’ of integration. When companies are faced with a proliferation of standards (StandardsMap.org alone profiles over 160 sustainability standards, of an estimated 450+) and the multiplication of stakeholder expectations, how can they sensibly respond? We have analysed some of the most important global guidelines, codes and standards covering the social, ethical and environmental responsibilities of business – such as the UN Global Compact, OECD Guidelines for Multinational Enterprises, ISO 26000, GRI Sustainability Reporting Guidelines (G4), IIRC Integrated Reporting Guidelines, SA 8000, UN Business & Human Rights Framework and Dow Jones Sustainability Index. What we see are large areas of overlap in these guidelines, codes and standards across what we might call the S2QuE3LCH2 issues, namely: • S2: Safety & Social issues • Qu: Quality issues • E3: Environmental, Economic and Ethical issues • L: Labor issues • C: Carbon or Climate issues • H2: Health and Human rights issues
A longer, fully referenced, academic version of this article appeared in the Journal for International Business Ethics, Vol.8 No. 1, 2015. 1 It is interesting to note that the revised ISO 14001 being planned for release in 2016 includes a life cycle perspective for all aspects of operations including product design and delivery.
PHOTO: GETTY IMAGES / GALLO IMAGES
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THE SUSTAINABLE VALUE PORTFOLIO
FIGURE 1
TOMORROW
TODAY
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CLEAN TECHNOLOGY
BASE OF THE PYRAMID
POLLUTION PREVENTION
PRODUCT STEWARDSHIP
Is the sustainability of our products limited by our existing competency base? Is there potential to realise major improvements through new disruptive technology?
Where are the most significant waste and emission streams from our current operations? Can we lower costs and risks by eliminating waste at the source or by using it as useful input?
Source: Adapted from Hart. S 1997. Beyond greening: Strategies for a sustainable world. Harvard Business Review, January-February: 66-76
Does our corporate vision direct us toward the solution of social and environmental problems? Does our vision focus us on serving the unmet needs at the base of the economic pyramid?
What are the implications for product design and development if we assume responsibility for a product's entire life cycle? Can we build reputation and legitimacy by engaging a broader range of stakeholders?
INTERNAL
EXTERNAL
Our experience of working with business shows that most companies respond piecemeal to this diversity and complexity of S2QuE3LCH2 issues (let’s call them SQuELCH for short). A few large corporations use a management systems approach to embed the requirements of whatever codes and standards they have signed up to. Even, so they tend to do this in silos – one set of people and systems for quality, another for health and safety, another for environment, and still others for employees, supply chain management and community issues.
One of the most exciting transformational agendas right now is the Net Zero/Net Positive movement, which extends the ‘zero’ mindset of total quality management to other economic, social and environmental performance areas. For example, we see companies targeting zero waste, water and carbon; zero defects, accidents and missed customer commitments; and zero corruption, labour infringements and human rights violations. These kinds of zero stretch goals define what it means to be world class today.
KNOCKING DOWN THE SILOS
STEPPING UP TO CHANGE
IV, therefore, is about knocking down the silos and finding ways to integrate across the business. In short, IV helps a company to integrate its response to stakeholder expectations (using materiality analysis) through its management systems (using best governance practices) and value chain linkages (using life cycle thinking2). This integration is applied across critical processes in the business, such as governance and strategic planning, product/ service development and delivery, and supply and customer chain management. And what about value? Most crucially, IV builds in an innovation step, so that redesigning products and processes to deliver solutions to the biggest social and environmental challenges we face can create new value. IV also brings multiple business benefits, from reducing risks, costs, liabilities and audit fatigue to improving reputation, revenues, employee motivation, customer satisfaction and stakeholder relations.
PURSUING TRANSFORMATIONAL GOALS
Our experience with implementing and integrating existing standards like ISO 9001 and ISO 14001 convinces us that, in order for IV to work, leaders need to step up and create transformational goals. Without ambition ‘baked in’ to IV adoption, the resulting incremental improvements will be no match for the scale and urgency of the global social and environmental crises we face, such as climate change and growing inequality. 2
In practice, IV implementation is a 7-step process, which can be described as: 1) context analysis, 2) stakeholder assessment, 3) leadership review, 4) risk assessment, 5) breakthrough analysis, 6) process redesign, and 7) systems integration. Of course, the process must also remain flexible enough to be adapted to each company context and to different industry sectors.
WORDS COUNT, ACTIONS MATTER
To conclude, we believe IV is an important evolution of the corporate responsibility and sustainability movement. It combines many of the ideas and practices already in circulation, but signals some important shifts, especially by using the language of integration and value creation. These are concepts that business understands and can even get excited about (whereas CSR and sustainability tend to be put into peripheral boxes, both in people’s heads and in companies themselves). More critical than the new label or the new language is that IV is most concerned with implementation. It is a methodology for turning the proliferation of societal aspirations and stakeholder expectations into a credible corporate response, without undermining the viability of the business. On the contrary, IV aims to be a tool for innovation and transformation, which will be essential if business is to become part of the solution to our global challenges, rather than part of the problem
Organisational governance, human rights, labour practices, environment, fair operating practices, consumer issues, and community involvement and development.
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advertorial
CITY OF JOHANNESBURG A CITY AT WORK
Councillor Mpho Parks Tau, City of Johannesburg Executive Mayor
The city of Johannesburg
City of Johannesburg Executive Mayor, Councillor Mpho Parks Tau is the second democratically elected leader of Africa’s wealthiest metropolitan municipality. He leads a city with the highest population in South Africa, at about 4.8 million people. Mayor Tau, who is a University of London alumnus with a Masters in Public Policy and Management, has a credible track record that clearly demonstrates the impact of his leadership since taking up office in 2011. Under his leadership the City of Johannesburg has become a leader in developmental governance and can be placed on par with global cities like New York. Mayor Tau is a member of the C40 Climate Change Network Steering Committee and Co-President of the Metropolis network, which seeks to build resilient and sustainable cities amid the pressures of urbanisation and climate change. He shared his vision for Johannesburg in a recent interview…
CONGRATULATIONS ON THE CITY OF JOHANNESBURG ACHIEVING A SURPLUS OF R3.9 BILLION FOR THE FINANCIAL YEAR 2014/2015. TO WHAT DO YOU ATTRIBUTE THIS IMPRESSIVE ACHIEVEMENT?
In my opinion it’s due to being focused and dedicated to prudent financial management in accordance with the objectives of our financial development plan and infrastructure capital expenditure. We set out to invest R100 billion in infrastructure over 10 years. The city financed part of that through the management of our capital budget. Our cash coverage ratio is very important and we keep a close eye on it.
IN THE LAST FINANCIAL YEAR, THE CITY SPENT 94% OF ITS RECORD R10.1 BILLION APPROVED CAPITAL BUDGET. THIS IS TRULY INDICATIVE OF A CITY AT WORK. HOW DO YOU ENSURE THAT CAPITAL PROJECTS ARE IMPLEMENTED WITHIN THE FINANCIAL YEAR OF THE ALLOCATION?
We adopted a medium-term capital investment budget three years ago whereby we allocate capital budget on a three-year term, and roll it out in subsequent years. This has enabled greater certainty in terms of planning and project preparation, especially with projects that are on a larger scale. Investments we’re currently making, such as in the M1 and the M2 highways for example, will take about 18
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months to two years to complete. If the department has greater clarity it can confidently allocate resources and have the time to prepare better. Of course, increasing our capital budget from the initial R3.6 billion when we started in 2011 to the R10 billion that we’re talking about now, meant the city needed a lot of scaling up. The institution itself had to build the capacity to be able to spend that sort of money. We realised when departments struggled to spend the money that a 100% increase on the capital budget required an increase in staff and a whole lot of specialised skills. Two years ago we established a centralised office for capital investment planning. It serves as a centre for engineering excellence with a team of experts who are able to project and ensure adequate preparation, and even provide support to the departments. This has worked well for the city.
WHAT ARE THE SIGNIFICANT ACHIEVEMENTS DURING YOUR ADMINISTRATION IN THE PAST FIVE YEARS? We’ve focused a lot of our attention on spatial transformation. On the agenda is the Corridors of Freedom initiative which is a
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very complex exercise in restructuring the city through building urban efficiencies to increase density. A city that functions better, where people spend less time in cars and are in closer proximity to amenities, like schools, shops, entertainment, etc. in an urban system, improves the quality of life – and that’s what we’re really trying to achieve through the Corridors of Freedom. A higher density city also means that for every kilometre of pipe you lay more people are supplied, which lowers costs. Achieving that level of efficiency is very important from a city management point of view. Corridors of Freedom have been concentrated in areas such as Empire and Perth Roads, in Turffontein and Louis Botha Avenue, and we’re currently applying for development around Patterson Park. You’ll observe more and more of these developments. The fact that Corridors of Freedom is firmly on the agenda and is being implemented is telling of our intentions. In addition, we’ve mobilised international finances. A grant from the Global Environment Facility (GEF) has been received and they’re bringing in international experts through a United Nations programme.
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Rea Vaya bus at a station in Braamfontein
Also on board are the CSIR (Centre for Scientific and Industrial Research), the World Bank and the Development Bank of South Africa. We have both local and international support helping us to define the programme. We are especially excited as we’ve spent time in the past two years with UN-Habitat (the United Nations Human Settlements Programme) that also provided technical expertise. Even Jos Claus, the Head of UN-Habitat, bought into transforming our urban landscape and has dedicated his time to the Johannesburg team.
WHAT IMPORTANT MEASURES HAVE YOU PUT IN PLACE TO STRIVE TOWARDS CLEAN ADMINISTRATION AND TO ACHIEVE THE HIGHEST STANDARDS OF CORPORATE GOVERNANCE?
We have a fraud hotline that’s administered by an independent auditing firm. It’s very important that an auditor with the mandate and capacity to make the necessary inquiries determines whether a report is worth following up on, and not a staff member. It increases the accountability of our institution. We’ve also introduced a local Office of the Ombudsman, which isn’t adjudicated by any political representative and serves as a public protector in Johannesburg. The office is independent and has direct access into the institution. It was established in terms of a by-law, and to create institutions that increase accountability has been an important milestone.
ANYTHING YOU WOULD LIKE TO EMPHASISE ABOUT THE CITY OF JOHANNESBURG TO ATTRACT NEW BUSINESS TO THE CITY CENTRE?
The city centre is currently experiencing a major regeneration. Think about Braamfontein 10 years ago compared to what it is now as a major attraction. It’s a youthful precinct so we even established a wire-mesh that enables free Wi-Fi connectivity in the area. The Main Street precinct, Maboneng and other parts of the city are also beginning to experience development. Today alone in stakeholder meetings we had three investors saying they’ve taken over buildings. This is very exciting, but what’s also exciting is the public sector investment, such as the bus lanes, improved infrastructure and sidewalks. We’re currently in discussion with informal traders about dedicated trading spaces so that we’re able to create better sidewalks for people. We also have CCTV cameras that we plan to upgrade with smarter cameras enabled with the technology to carry out face recognition.
WHAT IS THE SIGNIFICANCE OF THE RECENT FITCH UPGRADE TO THE CITY OF JOHANNESBURG?
The upgrade was very exciting considering that in November and December 2015 we had a difficult period as a country which caused not a downgrade, per se, but a negative outlook. Our rating as a sub-national government authority is always linked to the sovereign credit rating, so the fact that Fitch said we can increase or improve our credit rating gives a stable outlook and is indicative of a lot of faith in the city. For us it was affirmation that our commitment to prudent financial management is yielding results. The report itself attests to the fact that we’ve been focused in the implementation of our 15-point financial development plan for the city. When we need to tighten belts, we’re not afraid to tighten
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belts. We manage our finances in a manner that’s expected of us by our residents and those who have investments in the city.
WHAT WAS THE C40 AWARD THE CITY RECENTLY WON ABOUT?
The C40 Cities Award in December 2015 was in recognition of the first municipality in the world to list a Green Bond – an initiative we did jointly with the Johannesburg Stock Exchange. We met with the JSE and gave them a proposal saying we wanted to introduce a new instrument, which was the Green Bond, to finance climate change resilience and also climate change adaptation initiatives. In a broader sense we looked at programmes such as investing in converting sludge at sewerage treatment plants into electricity. We now generate electricity from sludge in our sewerage plants, and we’ve started a conversion programme of our Metrobus fleet, of which 80 of them are now on a duel fuel system of compressed natural biogas and diesel. The vision is to completely convert to biogas so that we’re able to create local fleet stock and biodigesters at local level. When we went to the JSE and said we wanted them to take this instrument, these are the programmes we tabled. Corridors of Freedom is also very important because if you bring people closer to where the opportunities are, then you lower the carbon footprint. We had to justify the nature of the specific programmes for the Bond Fund. What the C40 did was to give Johannesburg recognition for its financial and development model. This was the first prize of a Green Bond by a city – and this is amongst C40 members that include New York and London.
WHAT OPPORTUNITIES ARE THERE FOR THE YOUTH OF JOHANNESBURG TO BE PART OF ALL THIS DEVELOPMENT? In June 2015 the city launched a youth programme called Vulindlel’eJozi, which is designed to break down barriers to
Metropolitan buildings of the business district in the City of Johannesburg
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opportunities for up to 200 000 young people in entry-level job placement, online education and entrepreneurship skills development. This is to ensure that while we develop as a city, we don’t leave our youth behind. A number of corporates have already come on board and, as a result, 45 000 opportunities have been secured so far and are being matched to suitable beneficiaries. About 3 000 youths are already registered on the city’s Massive Open Online Varsity (MOOV) centres in six Johannesburg public libraries across our regions. We’re aiming to open 11 centres in total. The programme has also partnered with the South African Maritime Safety Authority (SAMSA) to identify career opportunities for youth in this sector. Ten young people from Orange Farm, in the far south of Johannesburg, recently completed training and took to the ocean at the end of March. Vulindlel’eJozi is being rolled out in partnership with Harambee Youth Employment Accelerator, a non-governmental organisation that specialises in matching unemployed youth to on-demand job opportunities. More than 140 000 youths have registered for Vulindlel’eJozi to date on its mobisite, Vulindlela.mobi – and our aim and commitment is to assist them to reach their full potential. Johannesburg is certainly a city where the young lead the call for transformation, demanding the opportunity to work, to improve their lives and become the best they can be. This city knows our youth aren’t the challenge some perceive them to be and that, with just a little help, they can be our greatest asset
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Contact details 158 Civic Boulevard, Braamfontein, 2000 Johannesburg, South Africa Joburg.org.za
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general management
THE RISING POWER OF AGNOSTIC BRANDS Words Prof. Sandra Vandermerwe
A colloquial definition of an agnostic is someone who neither believes nor disbelieves. Here it means brands which are neutral, with no vested interest in specific products or services they make or stock. Their sole purpose? To optimise customer outcomes.
Today most agnostics are digitally based, driven by new technology. But, as the examples will show, the technology doesn’t just provide the data. It leads to more intelligent decisions that enable customers to act differently. The result is superior experiences at lower cost for customers. And for agnostics rapid, profitable scaling, rather than the commoditisation inevitably resulting from just making and moving stuff. Power comes from unlocking value using the principles discussed below, which feed a virtuous cycle.
1) WASTE IS CONVERTED TO VALUE
Inefficiencies or wasted resources (time, money, energy or space) are uncovered and monetised. Most people would have shuddered at earning income by strangers living in their homes. Airbnb altered this perception, changing unutilised space into value, matching customers looking for accommodation with owners who have it spare. For a transaction fee of two euros, France’s BlaBlaCar uncovers waste from empty seats in cars, which it fills for 20 million customers in 18 countries, ridesharing long-distance. The same principle is used by business carrier operator Australian Freight Exchange, which finds unutilised space on trucks and sells it to shippers via its online platform. Waste turned to value can also come from high charges and unnecessary customer time and effort spent. Peer-to-peer lending and equity speaks to this, as do over 800 000 South African stokvels which offer 12 million customers alternative, collaborative saving and buying schemes, freeing up their time and resources.
2) BRANDS ARE MADE SMART
Agnostics are good at knowing things, not just producing and selling things. Through app-based platforms, BlaBlaCar or Uber know who can pick up and who needs a ride, in real time. The more drivers, the more trips, the smarter the system.
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Agnostic smart is owning the data and converting it into an intelligent algorithm, not necessarily owning the assets. Uber owns none of the cars, which in nearly 70 countries belong to people who are partners, not employees.
3) WAREHOUSES CROSS BRAND, PRODUCT & PRICE POINTS
Whether physical (Amazon) or virtual (Google), agnostic warehouses carry multiple brands, products and services. Variety provides the backbone for comprehensive customer solutions. From Amazon comes products, irrespective of price points. From Google, any information. From IBM’s Watson mega-computer almost everything known about oncology. Airbnb, now in 34 000 cities in 190 countries, offers accommodation from simple rooms for a night, to elaborate villas for months. Netflix’s website has everything, including its own productions, to cover taste gaps.
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4) CHOICE IS MADE PARAMOUNT Agnostics strive to offer choice, so customers are not locked into something that is not optimal. Unwedded to any particular movie (even its own), through a continuous flow of stock seen from any device, anywhere, immediately, Netflix streams entertainment experiences to 70 million-odd customers. Hong Kong start-up ConneXionsAsia repurposed employee benefits, creating a new consumer asset, namely “personal currency”. No longer trapped in a standard system, employees choose what to keep and what to trade (like a car allowance or child support), in or across companies.
AGNOSTICS MAKE MARKETS OPEN AND TRANSPARENT . . . ” 5) OFFERINGS ARE RANKED, RATED AND RECOMMENDED
Beyond choice, some agnostics rank, rate and recommend. Harnessing the wisdom and preference of crowds, they match like-minded individuals. Netflix knows what customers prefer and how their profiles fit others, so they can recommend movies. The multi-bank trading platform Germany-based 360t revolutionised how banks, brokers and corporations buy foreign exchange. Gone is having to negotiate with banks across the world, because 360t provides the best global deal at that moment in time. This accelerating trend is already in multi-airline and multiplecar dealerships, obviating customers hopping from one supplier to another.
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easy for customers because the App and experience is userfriendly and seamless. * Entering (or creating) new market spaces: Uber has diversified into many new scheduling opportunities, by matching demand and supply, like massage and ice-cream vans. And in the USA, UberEats speedily delivers local food to customers. * Upgrading the platform: Platform capability and the ease and low cost of upgrading makes it a lucrative asset to leverage continuously. Take for instance UberCOMMUTE which pairs people on the same route, saving on costs, congestion and carbon emissions. * Entering new geographies: Digitalisation makes cross-country expansion easy, likely to accelerate as laws increasingly are revisited (see for example; Single Market Strategy (EU), National Land Transport Act (SA), California Labour Commissions (USA), Home Sharing Legislation (San Francisco), The Banking Act (Kenya)).
7) MARKETS ARE MADE OPEN AND TRANSPARENT
Agnostics make markets open and transparent, exposing gaps that generate new value. e-Toro tracks the performance of investments and investors to help others become better at it. High performers and their strategies are exposed and relayed to customers to improve their investment decisions, using the e-Toro platform for a transaction fee. A virtuous cycle is triggered accelerating demand, because the better the decisions made by customers, the smarter the algorithm becomes at creating value, so the more attracted customers are to the brand, pulling in still more suppliers, in an ongoing positive loop.
8) SUPPLIER AND CONSUMER QUALITY IS MANAGED
Data is elevated from predictive (how the average customer may behave in the future) to prescriptive (what should happen now to a given customer).
Agnostics thrive by being inclusive. That’s what drives scale. Uber does not exclude regular metered cabs or casuals, as long as they use smartphone applications.
From objectivity comes the relevance that makes rating, ranking and recommending possible. Agnostic reviews dictate Netflix’s recommendations. In 2015, Amazon took legal action against more than 1 000 reviewers who faked them.
However, scale isn’t only what matters.
6) SCALE IS ACHIEVED AT LOW OR ZERO MARGINAL COST
When digitally based, once the initial investment is made, agnostics enjoy low or zero marginal cost. This fuels fast scale especially if economies are passed back in full or part to customers. This fast, low-cost scale is achieved in several ways: * Acquiring more customers: Uber ramps up by increasing supply, thus demand, and more supply, and so on, daily, making it easy for drivers by negotiating special bulk car deals for them, and
To gain and maintain confidence, agnostics must ensure the quality of both their providers and customers, i.e. their supply and demand base. Airbnb has service, safety and trust departments to screen and veto hosts and occupants, thereby ensuring viability and reliability. Uber rates taxi drivers and customers. It also makes sure that drivers have liability and third party insurance from a reputable firm in case of an accident. Agnostics finely balance uniqueness for individuals (Uber offers different tiers of cars for example), with standard experiences customers can anticipate. This requires both provider and consumer to adhere to strict quality standards, with appropriate checks and balances in place.
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THERE IS NOTHING TO STOP TRADITIONAL ENTERPRISES FROM BECOMING AGNOSTIC ” 9) MONETISATION FOLLOWS GROWTH
Most traditionalists insist on covering costs of goods early, and getting a return on their investment for them before they grow the business or category. Agnostics have a different perspective. They don’t have “cost of goods” to recover. What they do is invest initially in order to grow the demand and supplier base, to be able to deliver superior customer outcomes. They don’t try and recover quickly. Instead, they concentrate on becoming indispensable in the daily lives of customers. Then they scale, becoming infectious and finally indigenous to a wider population. And once this tipping point is achieved, rewards become exponential, because growth is viral coupled with zero-based economics.
10) EXPERIENCES ARE INTEGRATED AND HYPER-PERSONALISED
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Part of the value equation for agnostics is the ability to land an integrated, personalised experience. This doesn’t come only from variety and choice – it comes from the connectivity that brings about an outcome that is both co-ordinated and customised. A case in the making is start-up 22seven. Many South Africans may not be making the smartest financial decisions, it reckons. With a freemium-based model (nothing charged upfront), its primary objective is to improve the financial health of individuals, irrespective of what bank or card they use. Customers are given an aggregate view of their on-going buying, which is categorised to see where they are spending on what, and how these patterns compare with others like themselves. Financial literacy is improved by better budgeting showing where and how money can be saved by switching providers, for example, a mobile phone account. As many of the cases describe, agnostic brands are hyperpersonalised – 22seven knows what each person is spending, how and where, in real time. It has no vested interest, except to give each customer a better money result both immediately and in the longer term. Stokvels will buy in bulk for members to get better deals, from say Jumbo (Massmart). But each individual customer gets goods packed and delivered to destinations that suit them.
IMPLICATIONS AND FUTURE Agnostics shift power to customers enabling them to make better decisions and act in a way that achieves enhanced outcomes. Rising in numbers and market power, they are a significant disruptive force, undermining traditional business models. With a different set of principles they go against the conventional marketing grain. They cut across target segments appealing to affinity groups. They span product and price points and are consultative rather than relying on conventional promotion and selling tools. Once up and running, investments become an asset which can be leveraged over long periods of time, rather than a cost to be amortised quickly. And they can be updated at minimal cost. With no cost of goods or supply chain costs, agnostics work with zero-based marginal economics growing and globalising fast, propelling them further faster. They disrupt negatively and positively. Uber is a threat not only to public transport, but to the automobile industry (who needs a car?), and its ecosystem including car financing and small parcel courier. And next maybe groceries? But when Airbnb provides accommodation close to the 2016 Olympic games in Brazil, the entire tourism ecosystem is likely to be positively disrupted. We also see from the examples that agnostics create employment, extra sources of revenue for people, in an era when the technology could eliminate whole job categories. There is nothing to stop traditional enterprises from becoming agnostic. IBM famously went from making and selling computers to advising and recommending on what machines enterprises should buy in order to leverage cognitive computing. Many traditionalists have the data, but they fail to use it appropriately. Adopting agnostic principles will require reframing what they know, transforming it into customer value producing outcomes, instead of perpetuating outdated minds and models which push product agendas. They have no choice in our new global economy
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dynamic markets
LOOKING BEYOND SIZE AND GROWTH FOR MARKET POTENTIAL GORDON INSTITUTE OF BUSINESS SCIENCE
Words Dr. Lyal White, Liezl Rees & Adrian Kitimbo
The GIBS Dynamic Markets Index 2016 Institutions play a critical role in advancing the competitiveness of countries. They are behind the enabling environment that drives economic growth and leads to social and political prosperity. In their famous book Why Nations Fail, Daron Acemoğlu and James Robinson emphasise the importance of strong political institutions as a precursor to strong economic institutions and ultimately real socioeconomic progress and development. With this in mind, beyond conventional economic criteria, the rule of law, sociopolitical stability, security and efficient bureaucracies, among other institutional components are typically linked to improving economic performance of countries over time. Despite their importance and a growing body of literature and evidence to
support the role of institutions in building economic prosperity, there are few tools that accurately and comprehensively measure the institutional evolution behind competitive performance of countries. A deep evaluation of the inner workings of the political economy of countries, that seeks to better understand what enables or hinders their competitiveness, is lacking. This generally means that problems are misdiagnosed, resulting in policies being misdirected and, in the case of business, investments often misplaced.
THE NEED FOR AN INDEX
Recognising the need for a robust index that would measure and compare the performance of countries and the progressive
PHOTO: SHUTTERSTOCK
Dynamic Markets, only two African countries, Mauritius (pictured) and Botswana, make it into this esteemed category.
dynamic markets
change of their institutional structures, the Centre for Dynamic Markets (CDM) at the Gordon Institute of Business Science (GIBS) developed the GIBS Dynamic Markets Index (DMI). The DMI provides insights into the key attributes of the inner workings of countries by measuring their institutional evolution and progressive structural change. The inaugural DMI was launched in 2014, and measured the institutional change of 133 countries over a seven-year period, from 2006-2012. As a bi-annual study, the second report was launched in 2016, measuring 144 countries from 2007-2014. One limitation common in constructing indices of this nature is incomplete data sets for countries lacking regular reporting or with limited data available. These countries were omitted from the Index. When data does become available they are then included, as in the 2016 DMI where 11 countries were added to the Index. The Index is a global study of six enabling ‘pillars’ of market dynamism. These include: Open and Connected, Red Tape, Sociopolitical Stability, Justice System, Macroeconomic Management and Human Capital. Each pillar is made up of a rich array of measurable variables.
COUNTRY CATEGORIES
Countries fall into one of four categories, based on their performance: “Catch-up Markets”, countries with very low levels of institutional development during the base year (which is 2007 in the 2016 Report) but have made considerable progress in improving their institutional structures. “Dynamic Markets”, characterised by sophisticated institutions in 2007, and have continued to improve through to 2014. “Adynamic Markets”, typically countries that have stagnated or regressed from their existing base level of reforms and institutions since 2007. And “Static Markets”, which had relatively high dynamism in 2007, but have stagnated or made little-to-no institutional progress up to 2014. Two important features distinguish the GIBS DMI from other similar indices with comparative measures. First, the GIBS DMI focuses on institutional change over a period of time, not a single static measure. Second, the index relies almost entirely on hard data results as opposed to opinions, sentiments and surveys. Moreover, the notion of Dynamic Markets differs from mainstream country-market paradigms and categories. This is an effort to measure and understand the inner workings of countries regardless of the category in which they fall – emerging or mature, developed or developing. The Index thus affords a unique and fresh perspective on economic performance and prospects rather than an effort to create a new categorisation of countries. In regions such as Africa, where basic structures, rates of growth and levels of development are vastly different, the GIBS DMI offers invaluable insights into where countries are in terms of their institutional development. This is especially important to technocrats seeking ways to bolster their countries’ competiveness. It is also vital for understanding contextual issues, especially for businesses looking to expand internationally.
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TROUBLED TIMES
The period of analysis of the GIBS DMI 2016 was a disruptive one. For instance, the global financial crisis saw many countries regress on the institutional progress they had made since the 1980s, while others faltered on the market-led reforms that were already underway at the time. This was most evident in countries like Ireland, Iceland, Greece and Spain, which stagnated over this period as a result of poorer macroeconomic management and monetary policy constraints in response to tighter austerity measures. More extreme cases like Argentina and Venezuela saw backsliding and outright regression as domestic issues amplified the negative effects of the global financial crisis and lower commodity prices in the years that followed. Following the global financial crisis, the Arab Spring antigovernment protests, which engulfed North Africa and the Middle East in 2011 and ushered in dramatic political changes and prolonged violence, impacted several countries in the region. Ongoing social unrest and civil wars have halted economic activity and have had a profound geopolitical impact in and beyond the region. Syria and Yemen are two of the poorest performers, with the former demonstrating the most drastic decline of all as the very last ranking country in the 2016 DMI. After more than 10 years of hype around the BRICS, believed to be the fast-growing leaders of the emerging world, the excitement seems to have come to an end. South Africa, under questionable economic decisions by its government, has battled slow growth over the last few years, high debt and a tumbling currency. Brazil and Russia have been in economic decline for the past two years and are still regressing following further downgrades by credit rating agencies. India is performing better now than it did some three years back, but is still labouring to put in place the necessary economic reforms required to take it to the next stage of economic advancement. And China, the world’s second largest economy, is grappling with a slow-down (its slowest economic growth in 25 years) that has sent shock waves throughout the world and was largely behind the global sell-off of commodities. The varying levels of progress among the BRICS are well captured in the DMI 2016. Brazil and South Africa are Static Markets, Russia, while seemingly in decline, shows that it is slowly ‘catching up’ and India and China make it into the ‘Dynamic’ fold of countries, following a bounce back in India in recent years and notable institutional improvements in China over the period of analysis. As some of these larger emerging economies are slowing, a number of second-tier markets are gaining competitive traction and capturing the interest of international investors. The DMI 2016 shows that between 2007 and 2014 several smaller economies have made significant institutional progress. These include a range of emerging market minnows from Latin America like Colombia, Costa Rica and one of the larger hopefuls, Mexico, to the small African island nation of Mauritius. The increase in the number of terrorist attacks during the period of analysis shook the security apparatus of several countries, and delivered a critical blow to crucial sectors in these economies. Kenya’s tourism industry, for example, has been crippled as a result of Al-Shabab attacks in East Africa, which
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dynamic markets
Catch-up Markets, notable examples include Rwanda, Albania (pictured) and Vietnam
have left hundreds dead and a nation deep in paranoia and fear. Meanwhile, Boko Haram in West Africa continues to terrorise Nigeria and hamper regional commerce. In France and Belgium a series of devastating attacks, in 2015 and 2016 respectively, linked to the Islamic State of Iraq and al-Sham (ISIS) have left Europe in a constant state of fear that the terrorist group could potentially hit other big cities.
AFRICA
A more positive trend saw Africa grow 2% faster than the global average between 2007 and 2014, averaging over 5% growth during this period. In the last decade, the combined GDP of subSaharan Africa’s 11 largest economies expanded by more than 50%, more than double the global rate of 23%. Despite the global financial crisis, 2003 to 2013 was undoubtedly the best growth period on record in Africa.
GORDON INSTITUTE OF BUSINESS SCIENCE
Growth did allow for some structural reforms in many African countries, bringing better governance, greater democratic accountability and a more secure economic environment. But the end of the commodity boom in 2014 revealed that while some African countries had implemented necessary structural changes extensive enough to encourage some industrialisation and greater diversity, others – and arguably most – still rely on the export of basic commodities with very little value-add. Average economic growth in Africa has slowed substantially since 2013, which does not bode well for a continent where population growth and urbanisation are on the rise. The results of the GIBS DMI 2016 suggest that those African countries that have put in place the necessary measures and institutional changes will start realising the substantial economic potential that has lain dormant across the continent for so long.
WINNERS & LOSERS
Dynamic Markets, characterised by a reasonably solid foundation of institutions and policies between 2007 and 2014, accounted for 21.5% of the 144 countries measured. They are spread predominantly across Europe (largely Eastern Europe), Asia and Latin America. Only two African countries, Mauritius and Botswana, make it into this esteemed category. Largely concentrated in Africa and Eastern Europe, Catchup Markets, at 29.2% of the total countries measured, make up the majority in the DMI 2016. These typically showed a
strong improvement in their socio-political stability and macroeconomic management. Notable examples include Rwanda, Albania and Vietnam. Static Markets, comprising 28.5% of countries measured – including South Africa – demonstrated lacklustre performance in areas such as red tape, which significantly contributed to their stasis and decline over the period of analysis. Adynamic Markets, accounting for 20.8% of the total, are scattered predominantly across Africa and the Middle East. The large majority of these markets performed very poorly when it came to being open and connected and in terms of their justice systems. An important caveat to bear in mind is that many countries falling in the Static and Adynamic folds have already undergone significant structural reform and are regarded as well-established and, in many cases, highly competitive economies. But, during this period they failed to advance and improve their competitive performance relative to their global peers. Examples sare Singapore, Chile and South Korea. Countries such as Angola, Kenya, Syria, Argentina and Venezuela have not only failed to improve their institutions and general operating environment over the period of analysis, but have also stagnated and regressed in several areas. These countries will need to make a concerted effort to reform and improve their overall dynamism relative to their competitors around the world. The results of the DMI 2016 not only reveal the progress and improved dynamism of those countries that are now categorised as Dynamic Markets, but also expose those markets that have stagnated or regressed in terms of their relative institutional dynamism and competitiveness. This second iteration of the Index highlights the importance of implementing sustainable institutional changes, which are all-important for the ongoing competitive performance of countries seeking long-term growth and development. Dr. Lyal White is the Director of the Centre for Dynamic Markets (CDM) at GIBS. Liezl Rees is the Manager of the CDM. Adrian Kitimbo is Senior Researcher at the CDM. They are the authors of the GIBS DMI 2016
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WHEN THE GOING GETS TOUGH, THE TOUGH MUST GET CREATIVE AND COLLABORATIVE In the current challenging economic climate, everyone is feeling the pinch, and companies in most industry sectors are under pressure to cut costs wherever they can. For many businesses, the solution is to seek cost savings across the supply chain. Imperial Logistics Chief Business Development Officer Cobus Rossouw cautions, however, that simply pushing suppliers’ prices down and negotiating lower cost contracts is not the answer. “In tough times, forcing suppliers to offer their services for the lowest price possible will yield only short-term results. Organisations going this route will get better prices, but at a cost. They will also get fewer quality service providers and less investment in the right resources,” he stresses. While acknowledging that cost pressure is a reality, Rossouw says that optimising supply chains in order to maximise returns in today’s testing economy is not about simply cutting suppliers’ prices. “The solution lies in a mindset change. We need to start looking at supply chains in terms of total value rather than total cost, and companies and their service providers need to engage differently than on lowest price. Service contracts in which suppliers are paid as little as possible, are based on the misconception that a lower price automatically translates into a lower cost,” he expands. “In fact, focusing on price is not a smart approach to reducing supply chain costs and optimising efficiencies.”
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Cobus Rossouw, Imperial Logistics Chief Business Development Officer
more efficient and reduces activities might actually end up being paid less by his client, so why would he choose to become more efficient? No business is going to actively pursue advances that could reduce their revenue.” Rossouw believes that companies failing to recognise the benefits of creating performance-based partnerships with their service providers do so to their detriment. These win-win relationships between companies and their suppliers can yield supply chain improvements, innovations and cost reductions, he says. “There is no one-size-fits-all model, but companies must start thinking about how they can do things differently in terms of how they work with and pay their outsourced service providers. How can payment be structured differently; how can both supplier and client be rewarded for meeting performance targets, or having more availability on shelf, or turning trucks around more quickly?” Rossouw explains that performance-based partnerships also open up new opportunities for continuous improvement. “A structured intent is needed to do things differently – together. Once on this transformative path, companies and their service providers can work together to identify opportunities for continuous improvement, pursue them and implement them. The essence of this model is that if I help you to do things better, and you help me to do things better, then we should share the benefits in a continuous improvement structure.
Rossouw urges executives and MBA graduates to get creative and collaborative in order to identify and exploit opportunities to drive supply chain efficiency and reduce costs. “In order to build resilient, agile, efficient and cost-effective supply chains in today’s testing economy, there must be collaboration across business functions. It is critical that multidisciplinary teams are talking and working together on supply chain optimisation, because a clear view of the bigger picture is needed.
“Times are tough, but for companies prepared to look at things differently, there are opportunities to weather the storm, and even prosper. These opportunities are not to be found in confrontations with service providers about lower prices, but in re-conceptualising the commercial terms under which companies and suppliers engage, in order to mitigate the economic strain on everyone, and create an environment in which innovation and continuous improvement can thrive,” Rossouw concludes
“Collaboration with service providers is also crucial,” he advises. “If a company’s relationship with its service providers is purely price driven, and they are just paid for each activity that they perform, what incentive do they have to become more efficient, to improve their service, to innovate or come up with creative ways to cut clients’ costs or drive clients’ competitiveness? In some transaction-based models, a service provider that becomes
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DOING BUSINESS IN MALAYSIA GORDON INSTITUTE OF BUSINESS SCIENCE
Words Kate Whitehead
There is no pussyfooting around the issue – Malaysia has been making headlines for all the wrong reasons. The corruption scandal that rocked Prime Minister Najib Razak’s government has cast a shadow over the country and it will take some time for the dust to settle and investor confidence to be restored, but looking at the big picture there are still good reasons to be optimistic. “I still see foreign companies venturing into Malaysia despite the political headlines because relative to some other countries where the politics may be worse at least here it’s still peaceful, we have no unrest. We live in a diverse, multicultural society so there is a certain tolerance of each other,” says Celine Chan, Managing Director TMF Group, Malaysia, which provides corporate services to support businesses opening in the country. Tan Sri Rastam Bin Mohd Isa, Chairman and Chief Executive of the Institute of Strategic and External Studies, expects this year to be a challenging one for many Asian economies, Malaysia
included. The global situation – the fall in oil prices and sluggish global trade from weaker demand for imports – will inevitably impact the country and while he sees the long-term future as bright, real challenges lie ahead. “If you look at the fundamentals of the Malaysian economy, it’s still strong. The central bank reserves are slowly coming down, largely as a result of exchange rates, but there are worries. Government is already giving the signal that it is conscious of difficult times ahead and sensitive to the needs of the business community,” says Bin Mohd Isa.
PHOTO: SHUTTERSTOCK
Petronas Twin Towers in Kuala Lumpur
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BEWARE THE RED TAPE
The challenge when it comes to setting up a business in Malaysia is the local compliance regulations – there are many and, to the outsider at least, they are complicated. Much of the red tape is designed to protect the local Malay people – they are accorded bumiputera status (literally “son of the earth”) and make up about 60% of the population. “The big issue Americans and Europeans always ask about is local compliance matters – how to set up and attain a license in compliance with Malaysian law. In terms of setting up local entities, you need at least one bumiputera director,” says Tracii Soh at TMF Group, Malaysia.
A MAJOR PLUS FOR FOREIGN INVESTORS IS THAT BUSINESS IS CONDUCTED IN ENGLISH . . . ” Foreign companies need to take on a local partner in industries that are highly regulated – largely the oil and gas, banking and cars: “They are on the national agenda and are considered of national interest,” says Soh. But if outside those industries, then companies can be 100% foreign owned and run.
Malaysia has come a long way since the 1970s when its economy was dominated by the production of raw natural resources such as tin and rubber. Today it has a diversified economy and is a leading exporter of electrical appliances, electronic components, natural gas and palm oil. Like most economies in the region, it was impacted by the 1997 Asian financial crisis, but it recovered fast and from 2000-2008 recorded average annual growth rates of 5.5%. It bounced back fast after the 2009 Global Financial Crisis, posting growth rates of almost 6% for the next five years. That has dipped in recent years, but the predicted GDP growth for this year is still a fairly strong 4%-4.5%. The population of about 30 million is made up largely of Malays, Indians and Chinese, each ethnicity holding onto their traditions and rituals while respecting those of others. It is a harmonious cultural melting pot. A major plus for foreign investors is that business is conducted in English – that extends from legal documents and contracts to the language of the courts. Even street signs are in English, which makes it easy for foreigners to adapt. “The number of foreign investors has risen considerably over the last decade and the country is now much more open and liberal in terms of doing business. Malaysia is now ranked among the top countries in terms of doing business, which suggests that the socalled entry problems are not that great,” says Dr. Yeah Kim Leng, Dean of the School of Business at Malaysia University of Science and Technology.
Bee Wong is an entrepreneur who returned to Malaysia after 10 years in Singapore and founded the investment advisory company MalaysiaBiz Advisory to help foreign investors. She cautions investors not to be in a hurry to register their business, but to spend time researching the market to avoid any nasty surprises. “There are a lot of potential pitfalls in the beginning – not realising the requirement of local involvement or that they need certain compliance. For example, one industry – say the Ministry of Trade – may allow you to be 100% owned, but another division may require you to have a local director. That kind of thing can come as a shock,” says Wong. She also sees the shortage of low-skilled workers as hampering some businesses, especially those in agriculture. In February, Malaysia and Bangladesh signed an agreement for 1.5 million Bangladeshi workers to come to Malaysia over the next three years. This is just one in a line of recent moves to help boost development.
FOREIGN INVESTMENT
The country has seen considerable foreign investment in the last two decades. Much of this thanks to the government initiative launched in 1996 to attract global technology companies and support the local Information Communications Technology (ICT) industry. The Multimedia Super Corridor (MSC) covers an area of 750 square kilometres from the Twin Towers in the north to Kuala Lumpur International Airport in the south. Among the treats in the foreign investment goodie bag are 10-year tax
PHOTOS: SHUTTERSTOCK IMAGES
DIVERSIFICATION
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. . . SPEND TIME RESEARCHING THE MARKET TO AVOID ANY NASTY SURPRISES ” holidays (known as “pioneer status”) and no limitation on hiring foreign skilled labour. Within a short time the MSC had attracted dozens of leading multinational IT companies, including Motorola, Intel and Dell. In large part thanks to the MSC, Malaysia is the third favourite place in the world for outsourcing after India and the Philippines, according to A.T. Kearney Global Services Location Index. The Index has been running for seven years and Malaysia has held third spot throughout.
AN ASIAN COMMON MARKET
Amid the turmoil of the corruption scandals in government, there was some good news. The ASEAN Economic Community was launched last year, drawing together 10 Asian countries to create a single market with the free movement of goods, services, foreign direct investment and skilled labour. The concept is a little like that of the European Union and has been on the cards for a long time.
And she sees the AEC as an opportunity to further expand the halal industry. Halal is an Arabic word that means “permissible according to Islamic law” and there are strict guidelines that control how halal food and goods can be produced. Malaysia is the global hub of the halal industry and has institutions that deal with issues of standards and certification. “There is a big demand for halal products outside of Malaysia as the Muslim community increases in other countries,” says Chan. Dr. Yeah is optimistic about AEC and its prospects for Malaysia. He believes the grouping will help, at least from a policy perspective; give private sector entrepreneurs and investors greater confidence in undertaking cross-border trade and investments. And importantly, to strategise their business as a regional operation, a single common market. “We can see Malaysia as a gateway, as a springboard, for businesses that intend to look at the whole of southeast Asia as one market. When the AEC gels together more intensely in the coming decades, we should see regional economic development being one of the key drivers of the respective country’s growth opportunities,” says Dr. Yeah. He sees the biggest challenge for the country as the need to further develop its technology sector and “move up the value chain” by focusing on producing higher quality products. “Our industries are still labour intensive with a strong reliance on cheap foreign labour. We have to move away from these labour intensive industries that are now competing with some of the places where there is abundant cheap labour, such as Vietnam,
GORDON INSTITUTE OF BUSINESS SCIENCE
PHOTO: GETTY IMAGES / GALLO IMAGES
Chan sees the AEC offering two big advantages. Firstly, it will give Malaysia a bigger platform – an important consideration, particularly for a country that is just a quarter the size of South Africa.
“As a small country, Malaysia may be lacking in certain labour skills, it can tap across the border for the sharing of resources,” says Chan.
Containers are loaded onto a ship for export at North Port in Port Klang, Selangor
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PHOTO: GETTY IMAGES / GALLO IMAGES
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The Sime Darby Bhd. West Oil Mill stands in Pulau Carey, Selangor
WE HAVE TO MOVE AWAY FROM THESE LABOUR INTENSIVE INDUSTRIES . . . ” Myanmar, Laos and Cambodia. Intensifying competition is one of the key challenges,” he says. The big foreign players at the moment are coming from the Middle East and China, says Wong. The Middle Eastern investors tend to focus on IT businesses, manufacturing and property while the Chinese investors are largely involved with government infrastructure projects. “Chinese investment only started last year, but it’s huge, they have too much money. The next wave of investment will be Chinese entrepreneurs, we haven’t seen them come in yet, they are most likely waiting for the political crisis to settle down, but the political issue is just temporary,” says Wong.
BUSINESS ETIQUETTE
Malaysia is a multicultural country. The three main ethnic groups are the native Malays as well as large populations of Chinese and Indians. Each ethnic group keeps its own customs and religions and it is important to understand the basic ways of each culture to avoid accidentally offending.
Malaysia is a Muslim country so be sure to take account of religious sensitivities and not offer or consume alcohol or pork. Physical touch between sexes might also be inappropriate so men should not try to shake a Malay woman’s hand but rather wait to see if she extends her hand. If she doesn’t, bow slightly with your hand placed over your heart to show respect. When shaking hands with Chinese business partners a light handshake is appropriate – there’s no call for a hearty hand squeeze. And wait for Chinese women to offer their hand first. Indians will shake hands, but often a nod and a smile are sufficient. Malays, Indians and Chinese share the concept of “face”; all try to avoid shame – both publically and privately. Openly criticising someone, insulting them or putting them on the spot can all make them lose face, so this should be absolutely avoided. Never lose your cool or challenge someone. Instead remain calm and courteous and if someone has done something wrong take them aside for a quiet word. It’s also important to be familiar with the way names are used between the ethnicities. The Chinese traditionally have three names – the surname is first followed by two personal names (Chan Mei Ling). Many Malays do not have surnames, instead men add their father’s name to their own name with the term “bin” which means “son of ” (Abdul Rahman bin Rasyid). Women use the term “binti” meaning “daughter of ”. Traditionally Indians do not use surnames and instead place the initial of their father’s name in front of their own name, but an increasing number of Malaysian Indians are switching to the Western naming style and to avoid confusion are using their father’s name as their last name. (Aryan the son of Vellupillai becomes Mr. Vellupillai)
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TOP EIGHT THINGS TO SEE AND DO IN MALAYSIA Words Kate Whitehead
GORDON INSTITUTE OF BUSINESS SCIENCE
One of Kuala Lumpur’s top landmarks, this art deco style building was built in 1928 as a wet market and served that purpose until the early 1980s when it was transformed into a handicrafts centre. This is the place to pick up souvenirs and gifts to take home: think batik prints, paintings and fabrics. For more edgy art, check out the Annexe on the top floor of the market’s small auxiliary building.
BATU CAVES
Deep inside a limestone hill 11 kilometres north of Kuala Lumpur are a series of incredible natural caverns – three huge ones and several smaller ones. Cathedral Cave, which reaches 100-metres high, is the largest and most popular one and houses several Hindu shrines. At the foot of the hill are Art Gallery Cave and Museum Cave that are filled with Hindu statues and paintings. Wear comfortable shoes – there are a lot of steps.
PHOTO: SHUTTERSTOCK
CENTRAL MARKET
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ISLAMIC ARTS MUSEUM
LITTLE INDIA
PETRONAS TWIN TOWERS
CHINATOWN
SULTAN ABDUL SAMAD BUILDING
JALAN ALOR
Once the tallest building in the world, the 88-storey – 454-metres high – Twin Towers were built to house the headquarters of Malaysia’s national petroleum company, Petronas. Completed in 1998, it held the “highest” title until 2004 when Taipei 101 was unveiled. It’s worth visiting the Sky Bridge and observation deck on the 86th floor, but book tickets online in advance to avoid the queues.
Built in 1897 and named after the reigning sultan of Selangor, it is a wonderful example of early Moorish-style architecture. With its shiny copper dome and clock tower, it is a stunning landmark, particularly after dark when lit up. During the days of the British in Malaysia it was used to house a number of government departments and today houses the Supreme and High Courts.
Brickfields is a mid-sized town just outside Kuala Lumpur’s city centre and is where the Indians first settled. Known as “Little India”, it’s worth spending a couple of hours exploring the bustling streets. Expect to see hawkers selling glass bangles and stacks of colourful saris. For a quick bite try the local banana leaf rice – rice, vegetables and meat served on a banana leaf – washed down with a fresh mango lassi.
The absolute heart of Chinatown is Petaling Street, a long, pedestrianised street that absolutely never sleeps. This is where you come if you want to do some serious bargain hunting – DVDs, T-shirts, watches and shoes. Two notes of caution: it can get very crowded and keep an eye out for counterfeit goods. Other than that, you’ll have a ball. It’s best to visit in the evening when the place is really buzzing, and there are plenty of great Chinese restaurants.
Located in the heart of the city, this is where you come to eat local food with the locals. It’s foodie heaven. Don’t bother coming in the day, this place comes to life at night when makeshift tables and chairs fill the street. Popular dishes included grilled chicken wings, satay, chilli crabs, laksa (curried rice noodle soup) and char kuey teow (fried fat noodles). Some stalls have menus in English or else just point at something you’d like to try
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PHOTOS: SHUTTERSTOCK
Situated beside a botanical garden, this outstanding museum boasts one of the world’s best collections of Islamic decorative arts. There are more than 7 000 artifacts, from jewellery, carpets and textiles to pottery and calligraphy. Don’t miss the architecture gallery which houses models from mosques around the world including a huge one of the Masjid al-Haram in Mecca. The big tour groups tend to skip this museum, which makes a visit all the more enjoyable.
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GET READY FOR INTERESTING TIMES Words James van den Heever
Automation has always threatened blue-collar jobs, but as machine intelligence grows, white collars are looking increasingly vulnerable. The nature of work, and with it society, is set for big change – and South Africa isn’t ready. Frank Herbert’s celebrated 1965 Dune series of novels lack that staple of science fiction: robots. They take place subsequent to an inter-planetary revolt against “thinking machines”, memorably called the Butlerian jihad1. Herbert had already foreseen the threat automation and artificial intelligence ultimately pose for humanity – and one likely response.
GORDON INSTITUTE OF BUSINESS SCIENCE
There are signs that the conditions that provoked the Butlerian jihad will soon exist. We are moving from smart algorithms to truly intelligent software powered by the massive resources of the cloud, enabling “machine learning”, or software that can learn and improve itself. Already, for example, Forbes and other media outlets are using software to generate a news story in 30 seconds, and Google has a patent on software that generates “personalised” email and social media responses. WorkFusion is an intelligent software platform that almost completely manages the execution of previously labour-intensive projects.
. . . WE SHOULD CONSIDER POSITIONING SOUTH AFRICA AS AFRICA’S TECHNOLOGICAL HUB ”
Klaus Schwab, characterises it as a “fusion of technologies that is blurring the lines between the physical, digital, and biological spheres.”2
CRYING WOLF?
One could imagine this is all simply the early stages of a hype cycle but the data makes a convincing case. Much of the heavy spadework has to be credited to Martin Ford, a software entrepreneur based in Silicon Valley and the author of The Rise of the Robots. Ford has looked beyond the conventional squeals of welcome technological advances typically provoke, to see a future dystopia that requires serious thought now. Ford argues that increasing machine intelligence will usher in a new economic order characterised by systemic mass unemployment. He provides convincing data that this process is already well on its way – and here perhaps is one explanation for the puzzling and persistent jobless growth that so bedevils South Africa. Initially, he says, technology complemented human workers, leading to continuing productivity gains and rising wages: the American Dream. This Golden Age of work ended during the 1970s, when wages and productivity decoupled. By 2013, writes Ford, “a typical production or non-supervisory worker earned about 13 percent less than in 1973.”3
And then there’s IBM’s Watson, which won Jeopardy! in 2011 and is now being used for medical diagnosis (among other highly skilled tasks). Even more telling, perhaps, is the recent 4-1 victory of Google’s Deep Mind over a Go grandmaster. (Go is a notoriously complex and abstract strategy game.)
The gradual loss of unskilled jobs to machines is well understood; less evident is the mounting evidence that increasingly smart software is encroaching on jobs previously thought to be beyond the reach of mere machines. The examples given above offer a taste of the kind of impact artificial intelligence will make – doctors, accountants, lawyers, journalists, lecturers … much of what these highly trained people do can or will be performed by software sometime soon. (Disclosure: this article was written on a machine by a human.)
No wonder then that the World Economic Forum made Mastering the Fourth Industrial Revolution its theme for this year. In a long and thoughtful article, its Founder and Executive Chairman,
A 2013 study at Oxford University found that occupations accounting for just on half of all US employment were vulnerable to automation within the next two decades.
The name ostensibly commemorates Herbert’s friend, Frank Butler, who organised a community protest against an expressway. Surely, though, the real Butler is Samuel Butler, the 19th century author who introduced the concept of machines supplanting mankind in his article Darwin amongst the machines (1863). “Butler goes on to suggest that all machines be immediately destroyed to avoid this outcome,” says Wikipedia. Klaus Schwab, The Fourth Industrial Revolution: what it means, how to respond, 14 January 2016, available at http://www.weforum.org/agenda/2016/01/the-fourth-industrial-revolution-what-it-means-and-how-to-respond. 3 Martin Ford, The Rise of the Robots. Technology and the Threat of Mass Unemployment (London: Oneworld Books, 2015), p xi. 1
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A general view of IBM's 'Watson' computing system.
CAPITAL RULES, OK?
There are a number of corollaries to this steady growth in the share of work done by machines. One is the growing dominance of capital over labour. As wages have dropped, the number of workers declined and productivity has risen, corporate profits have soared. This is demonstrated by the rise in corporate revenue per employee: $420 000 in 2011 as compared to $378 000 in 2007. Corporates are investing in more plant, but it is not translating into more jobs because, Ford argues, the machines are just doing more of the work. In fact, he argues that profitability may become an inverse of staff size. Google, for example, had $14 billion in profits in 2012 with 38 000 employees – a far cry from General Motors, which employed 840 000 workers to generate profits of $11 billion in 1979 (figures adjusted for inflation).4 Conventional wisdom would say that while this is true, the Internet and the new business models it is spawning, such as the collaborative economy (see A New Business Model or Slick Costume Change? in Acumen 13), offer new opportunities. But, ripostes Ford, such jobs are all informal in nature and, he fears, the Internet economy tends to be a “winner takes all” game, rather than the vibrant ecosystem of mutually dependent small businesses we all fantasise about. Technology confers freedom, but using it to generate a regular income is hard. His rather bleak conclusion is that the traditional middle class, with secure jobs and high amounts of disposable income, is dwindling. The world is becoming a more unequal place, in other words, with more and more wealth concentrating in the hands of those who run or own the big companies – and here we are squarely in Piketty country, although the demise of the bourgeoisie would presumably not perturb him too much (see Job Creation the Key to Reducing Inequality in Acumen 15). 4 5
Ford, op cit, p 78. PWC, Digitisation and robotisation require Employagility (January 2016).
Pursuing automation is the rational choice for capital, Ford argues, and it’s hard to refute him. Machines are not only more productive, they have fewer overheads, and they do not strike, need motivating – or burn down factories. Capitalists will always go for what makes the best business sense, but it does seem as though market logic is set to become a driver of social and political dysfunction on current showings.
WHAT NOW?
The logic is compelling and it is backed up by strong data, but it’s worth reminding oneself that these changes are occurring at varying rates. PWC is surely correct to say that old- and newstyle business will run in parallel for some time, even in the same organisation.5 And we do have choices. As Klaus Schwab puts it, “Neither technology nor the disruption that comes with it is an exogenous force over which humans have no control.” BMW South Africa’s Edward Makwana puts forward a common corporate view, which is that machines support skilled workers by taking on “ergonomically unfavourable work procedures” and improving quality. Human creativity and problem-solving will remain unrivalled for a long time to come, he says, not forgetting
MACHINES ARE NOT ONLY MORE PRODUCTIVE ... THEY DO NOT STRIKE ... OR BURN DOWN FACTORIES”
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FORBES AND OTHER MEDIA OUTLETS ARE USING SOFTWARE TO GENERATE A NEWS STORY IN 30 SECONDS . . . ” the ability to connect with customers. In fact, BMW has often found that introducing new devices or robots has led to increased headcount. However, Ford argues that human-machine collaboration is going to be limited; the long-term trend will be for the machines to keep taking on more work. The question is what we should be doing now – particularly in South Africa where unemployment is already critical and jobless growth seemingly established. One of the common responses is to emphasise the need for education to prepare workforces for the coming changes. More important, says Jeff Chen, Strategic Advisor to the Digital Disruption Programme at GIBS, is improving the human ability to think. “The more we train machines to think, the better we have to train humans – not just leaders – to do so.”
GORDON INSTITUTE OF BUSINESS SCIENCE
Chen argues that as artificial intelligence takes hold, companies with deep pockets will be advantaged. The only way for smaller companies to outsmart them will be for executives to master the art of disruptive thinking, and be prepared to embrace innovation. At least in the short to medium term, better education and skills training are imperative. And employers and employees will need to become highly responsive to change – “employagility” in PWC’s coinage. Governments have a key role to play in ensuring young people are adequately prepared for this seismic change, and to help older workers adapt. The challenge, as the National Planning Commission’s Ashraf Karriem correctly says, is to deal with the past without becoming like it. He recognises that even traditional big employers like agriculture and mining are already automating. However, it has to be said that there are scant signs that the South African government or people, if current debates are anything to go by, have the will to take their eyes off the past and look to the future. Specifically, the implications of increased automation and robotisation seem not to be in the room, let alone on the table – the Department of Science and Technology, the alleged custodians of this topic, were unable to offer any comment.
Frans Cronjé, CEO of the South African Institute of Race Relations, points out that the swing away from labour-intensive industry has been underway in South Africa since the 1950s, so it’s “no surprise”. He also points out that the perceived difficulty of employing labour is accelerating this trend at present – but that this short-term focus should be balanced by the social instability protracted unemployment causes. South African business is too focused on the short term, he says. The Institute recently noted that the country’s rate of labour market absorption has been slipping since 2001, with black South Africans most negatively affected. The solution, Cronjé says, is not to turn back the clock to create a nation of peasant farmers; rather, we should consider positioning South Africa as Africa’s technological hub. That will mean fixing our educational system as a priority, which should be fairly easy because it is so broken, he adds. The elephant in the room is, of course, demography. It has been too little remarked how effectively business has flipped previous concerns about over-population on their head – rising populations are now (quite mistakenly for anyone who takes the long view) seen as good, and the “demographic dividend” is as axiomatic as anthropogenic climate change. In reality, though, isn’t a logical response to the economy’s long-term inability to create jobs to reduce the labour supply? That may not drive wages up, but it will make the problem more manageable. Ford has a definite vision for how to deal with structural unemployment: a guaranteed income for all who need it. It’s perhaps a surprising solution from a Silicon Valley capitalist, but, he argues, we must see the economy as a resource that needs to be renewed by consumer spending. South Africa with its social grants, and the long-mooted Basic Income Grant, could be ahead of the game here. Perhaps we should be tackling today’s unemployment crisis by consolidating the labyrinth of social grants into a single guaranteed income for the out-of-work – but for that, we need to make today’s economy work. One thing is for sure: we do not have a hope of coming up with a solution to the dystopian future if we cannot craft one for the dystopian present. Anyone for a bit of machine-bashing?
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THE RISE OF THE MACHINES Words Dion Chang
The threat of automation and mechanisation has become a reality for almost every industry. Given the current use of robotics, perhaps the Machines have already risen. If you look at classic science fiction movies like Blade Runner, Terminator and iRobot, there are elements in all of them which today seem very familiar. Even in the world of trendspotting they are not so much visions of a near future, but more like tomorrow’s tipping point. And perhaps because of Hollywood’s depiction of robots, and the dystopian world that inevitably follows, we seem pre-programmed to fear the Rise of the Machines and distrust anything that looks like the humanoid forms that these movies have presented.
GORDON INSTITUTE OF BUSINESS SCIENCE
The truth is not all robots will take on a humanoid form: in fact, it is very difficult to design a humanoid robot that is able to move like a human. So, (for Star Wars fans) most of the robots we will be coming across will look more like R2D2 than C3PO. Take for example the OSHbot, a retail service robot that was already “employed” in 2014 in an Orchard Supply Hardware store in San Jose, California. OSHbot looks utilitarian rather than humanoid: it moves around on wheels. It stands about shoulder height and will greet you when you enter the store, and can converse in English or Spanish. It will ask you what you are looking for – and if you have a sample, like a specific nail you’re looking for, it will ask you to place it in its viewfinder screen, which it then scans – and then it will guide you to that item in the store. The viewfinder screen also doubles up as a handy inter-store video communication channel, bridging old and new functionality. A more pragmatic retail bot is called Tally, made by San Francisco-based Simbe Robotics. This cloud-based, autonomous robot simply roams the aisles of supermarkets ensuring that shelves are fully stocked using sensors that can capture data such as low-stock, out of stock or misplaced items. It then sends the data to a cloud, making recommendations for the retailer, which they can access via an app. Over in China, slightly more humanoid-looking service bots (top half humanoid, and bottom half on wheels) are being used to assist in busy restaurants. A human waitron will load the service bot with plates of food, which the robot then takes to specific tables. It’s become less of a gimmick and rather a more efficient way to get the hot food to customers. One tech-loving couple
even dressed up one of these service bots as a “bridesmaid” that carried their wedding rings at their wedding ceremony. However, Japan – arguably the world leaders in robotics – has long started moving from service bots to “personal robots”. A company called SoftBank Robotics has been using a robot named Pepper in their mobile stores for some time now, as part of their “meet and greet” staff. These bots introduce themselves to the public, answering questions and giving directions, also with the aid of their built-in tablet screens, much like the OSHbot. Last year the company started selling Pepper to the public as a household companion, advertising it as “the world’s first personal robot that can read emotions”. The company claims that Pepper can not only read and react to human emotions, but has the ability to exhibit its own emotions. This is what makes the Luddites very nervous. Machines that assist with routine jobs are one thing, but machines that can think and react bring the untested boundaries of Artificial Intelligence (AI) into play. The first batch of Pepper robots sold out in seconds and since then, monthly batches of 1 000 have sold out within a minute every time and Pepper is poised to go on sale internationally this
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year. Anyone who has seen the movie iRobot will no doubt be raising an eyebrow. If you’ve watched the movie Robocop, then welcome to the tipping point of robotic law enforcement. Robots are already being used to disable or detonate bombs, but autonomous and mobile surveillance robots will make their appearance within the next two years.
IN SOUTH AFRICA, THE USE OF DRONES IS QUITE ADVANCED” A Silicon Valley company called Knightscope is busy testing a prototype robot designed to detect and monitor criminal activity, much the way a patrolling police officer would. K5 is a 5-foot tall autonomous robot that could soon be roaming around your neighborhood. It doesn’t carry any weaponry, but it has sophisticated software and sensors that includes thermal imaging, license plate scanning (it can scan 1 500 plates per minute), facial recognition and the ability to capture audio with 360-degree video vision. It can also test the air for chemicals, maps its surroundings with 3D radar and laser, and is programmed to continually learn to distinguish “suspicious activities” from normal activities. These robots will soon be recording people’s actions and conversations in public places, so personal privacy issues will be taken to another level. But robot law enforcement is not restricted to Silicon Valley. Last year, Dubai police announced that they would have Robocops on the beat by 2017. The intentions sound benevolent. Colonel Khalid Nasser Alrazooq explained at the announcement that “The robots will interact directly with people and tourists. They will include an interactive screen and microphone connected to the Dubai Police call centres. People will be able to ask questions and make complaints. But,” he added, “they’ll rapidly get more intelligent.” Anyone wary of AI will no doubt join the raised eyebrow brigade. Most people assume that advancements in robotics lag behind on the African continent, but in the DRC’s capital, Kinshasa, robot traffic officers are already part of daily life. In 2013, traffic authorities installed a rudimentary humanoid robot that could regulate traffic at a pedestrian crossing on one of the city’s main boulevards. This imposing (2.5-meter tall), traffic-bot has been so successful that the city now has 5 traffic-bots, which are now not only solar powered, but also have video cameras built into their eyes that send footage back to a central office. But robotic law enforcement is not restricted to ground-based Robocops. With drone technology rapidly evolving, concepts like the Skunk Riot Control Copter, designed to monitor and control unruly crowds are also appearing. The remote-controlled drone is
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able to fire up to 20 paintball or pepper spray rounds per minute from each of its four barrels, and has additional features like strobe lights and lasers designed to disorient protesters. The fact that this riot control drone is made by a Pretoria-based company kills the notion that we lag behind in this type of technology: we in fact pioneer it. In South Africa, the use of drones is quite advanced. We already use drones to fight rhino poaching and the imminent rise of data driven agriculture – using drones to improve the management of crops and livestock – will start shifting negative perceptions about the Rise of the Machines. However, in the long run it’s not so much the fear of the robots themselves, but that turning point when AI is embedded into these robots. Stephen Hawking and Elon Musk (along with over 1 000 engineers) signed a letter last year warning about the negative consequences of AI and the natural evolution of autonomous warfare. But the first sign of AI encroaching into one’s personal space is not coming from these working robots but rather a more benign source: your children’s toys. Creeping onto the shelves are smart toys, programmed with speech-recognition and cognitive abilities to create an interactive experience. Dino the Dinosaur and Hello Barbie are two examples of toys that can not only listen to your child’s conversation, but also reply with an appropriate response in real time. Hello Barbie is optimised to respond to children between the ages of 3 and 9 and can have a conversation involving up to 200 exchanges between child and doll. So while parents are understandably concerned with smart toys, they’re set to get even smarter. Last year, Google published a patent for an Internet-connected teddy bear that uses facial recognition as well as voice recognition, meaning it’s able to identify the gaze of whoever’s looking at it, and then respond. Equipped with sensors, cameras, microphones and a wireless Internet connection, this toy will also be able to turn on a connected media player (eg: play music). In essence, it taps into the Internet of Things and can become connected with the rest of your home appliances. Parents will be relieved to know that this toy is not commercially available – yet – but it did prompt a concerned mother to leave the following message on a blogsite, “I’m not sure how many times I’m supposed to repeat this: ‘Dear engineers, you are not supposed to use dystopian fiction as a design guide’.”
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Her comment will resonate with many people who fear the Rise of the Machines, but I hate to add that it’s perhaps too late. The machines already walk amongst us
. . . IN THE DRC’S CAPITAL, KINSHASA, ROBOT TRAFFIC OFFICERS ARE ALREADY PART OF DAILY LIFE”
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JUST DESERTS Words Caroline Hurry
Egypt’s Western Desert has stark landscapes reminiscent of a sci-fi movie set.
An egret
GORDON INSTITUTE OF BUSINESS SCIENCE
In Egypt, the heat greets you like a lovelorn drunk, so setting off into a desert that stretches across Libya and the Sahara wasn’t my idea. My husband, on contract in Ain Sukhna on the Red Sea, wanted a change of scenery. We caught a bus from Cairo and spent the night swatting mosquitoes at the El-Beshmo Lodge Hotel in Bahariya, an ancient sun-scorched town on the southwestern desert highway. Here, stunted palms wave from the parched earth, children peep around ramshackle doors, and goats root among the rubble. Nearby is an oasis, where egrets dart through the foliage like white napkins on the wing and you can pluck ripe dates from the palm trees. From Bahariya, a 4x4 Land Cruiser replaced our bus to drive us with lethal abandon – wrenching heartfelt prayers from the staunchest of infidels among us – to the Black Desert, so called because of the iron pyrite pebbles peppering the surface like burnt toast crumbs; the result of volcanic eruptions thousands of years ago.
The Black Desert
Our hyperventilating “Cruiser” wheezed to a standstill halfway up the dunes. Told to climb out “to ease the weight load” – more incentive to behave around the pastries – the persistent wind pulled at my clothes like a Giza Pyramid hawker. I wrapped my scarf around my face but sand particles still stung my eyes and nose. Back in the vehicle we lurched over the shifting sands until we came to Crystal Mountain, an “exhumed cave” complete with stalagmites and stalactites. Thrust upwards by earth movement, it lost its roof to erosion over time. Calcite and glittering quartz crystals lie scattered around it, marking the start of the White Desert. Another 40km on and huge islebergs – rocks sculpted by winds over millennia into surrealistic shapes – pierce the firmament. In the fading light of dusk, the strange, dramatic landscape resembles a sci-fi film set. Our Bedouin guides cooked supper for us – chicken with pitta and cucumber
Islebergs in the White Desert
– before breaking out the drums. We clapped them on in the skittering firelight. The Bedouins can survive for years in the harshest terrain, bowing only to Allah and the crescent moon. Earlier, we came across such a nomad traversing the sea of sand in the middle of nowhere. To prevent his camels escaping he had tied their front legs together, making them prance like dressage horses. Out in the open we climbed into our sleeping bags, counting so many shooting stars in the celestial canopy we ran out of wishes! I shivered most of the night when the desert really does freeze, before a yawning dawn palmed the stars, bathing the landscape in pinks and mauves. But, what’s the point of a pristine landscape if you can’t keep it clean? Creeping behind an isleberg to spend a penny, I found old loo paper and cigarette butts dotting the sand. And I wanted to weep. Is nowhere sacred, anymore?
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DOHA DAYS Words Caroline Hurry
Qatar offers souks, sultry camels and soaring skylines. It’s night as we fly into Doha. Lights glitter like stars beneath our Qatar Airways Boeing 777. Flashing motorways zigzag towards the glinting monoliths lining the crescent-moon curve of the Corniche, a 7km walkway around the bay. Since any alcohol found in your suitcase gets confiscated on arrival, I imbibed freely of the fermented grape on board. Some Doha hotels do serve wine, but prices start at R400 for a glass of mediocre red. Only tumbleweeds, scorpions, traders and pearl fishermen lived in Qatar until oil on the west coast was discovered in 1939. When technology allowed natural gas to be liquefied and transported by tanker ship in the 1990s, Qatar – protruding into the Persian Gulf like a raised thumb – became second only to Lichtenstein in wealth. Less than 20% of the 1.5 million population is local. The remaining foreigners are here to build the mega malls and high-rise hotels; sentinels against the encroaching desert. Nine Islamic Arts museum
artificial islands, each with a private beach, adjoin The Pearl, a multi-billion dollar development along 32km of reclaimed West coastline. Snazzy SUVs hurtle from one airconditioned destination to the next but just outside the city, the wrecks of discarded models rust on the roadsides. Now redundant as transport, camels are used for meat, racing, and – get this – beauty competitions. I ponder the ignominy of winning Miss Sultry Eyes one week and ending up under a slice of onion the next. The Museum of Islamic Art’s superb collection of artefacts includes the white jade pendant worn by the Mogul emperor Shah Jahan – of Taj Mahal fame – to cure his heartache, along with Syrian glassware, Persian carpets, bejewelled daggers, incense burners, and Koranic calligraphy dating back to the 6th century. At the Souk Waqif market you’ll find ceramic knick-knacks, the silver ankle bracelets of Bedouin brides and racks of The Corniche
curved daggers with handles carved from (our endangered) rhino horn. Carpetbags and camel blankets are on sale along with birds, kittens, rabbits, and even dogs crammed into cages, animal welfare being heartbreakingly low on the Middle Eastern agenda. Mingling like chess pieces in the narrow lanes, men in white dishdashas and women in black abayas haggle over bolts of fabric, perfumes, spices, or pistachios from Iran. I invested in a burka – “special price for you, Madam” – good for bad hair days and dodging pesky hawkers. Shopping serves as entertainment here and the City Centre is the Middle East’s largest mall while the Villaggio Mall with its ice rink, boutique-lined Venetian canal, gondolas, and trompe l’oeil sky, is as authentic as our own Montecasino. Qatar also offers 4×4 “adventures” over knife-edged desert dunes. The drivers are mad, if not suicidal. It took me ages to stand up again without wincing and clutching my back, so don’t say I didn’t warn you!
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The Villaggio Shopping Mall
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THE FINER THINGS Words Cheska Stark
GORDON INSTITUTE OF BUSINESS SCIENCE
HIS CHECKLIST 1.
Blazer, R 5 999.95, Tommy Hilfiger If you don’t have a well-fitting blazer, it should be the first item on your shopping list this season. A great tailored blazer is a must-have essential for any man’s wardrobe – paired easily for any occasion.
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Knit, R1 999.95, Ted Baker Cooler weather is coming, so you will probably end up wearing a knit everyday. We like the subtlety of this Ted Baker one – the colours are easily worn with any item, including to work.
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Shirt, R450, Old Khaki Any man should have at least one striped shirt in his wardrobe. This shirt is a great choice because it is an interesting colour combination and will add a bit of uniqueness to your look.
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Satchel, R799, River Island Messenger bags are a style staple, both practical and cool. This one is big enough to fit in all your most-used possessions – diary, laptop, books etc. Don’t worry when it starts to look old as it makes it that much more loved.
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Brogues, R2 499,99, Ted Baker We love how this dark brown suede leather Scottish classic has been redefined for modern day, everyday wearing. In fact, this shoe is one of the most versatile out there – you can wear these with just about anything from simple jeans to chinos and, due to their timeless appeal, even with a suit.
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Mug, R199, Le Creuset at Yuppiechef.com Don’t lie! We know you drink at least three cups of coffee a day so you may as well look the part while doing it. Choose a classic: Le Creuset is a well-known brand name for home goods and we think their new colour, Mineral Blue, is pretty cool too.
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Leather belt, R299.95, Dow Jones, exclusively available at Edgars A belt is no longer just a belt but can be a serious style statement. The stitching on this one adds an interesting detail which will totally up the ante of your look.
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TAG Heuer Carrera Calibre Heuer 01, R85 000 The new TAG Heuer Carrera Calibre Heuer 01 is all about new casing, construction, design and calibre. The supremely clean, new design reveals the chronograph controls and the open-worked date disc on the dial side. On the case back, its red column wheel – a bold visual anchor – the skeleton chronograph bridge and the black weight also draw the eye into the mechanism.
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HER CHECKLIST 1.
Wrap, R899, Country Road Blanket wraps are bang on trend – basically the bigger the wrap, the better. This item is all about luxury, while still being cosy and dressed for the cooler weather.
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Jeans, R459, Zara Classic, easy-to-wear jeans are on every woman’s wish list. We love this blue denim pair from Zara for their slim line and cool rough tears. Remember, jeans can be dressed up for a night out with girlfriends or a hot date or down for a lazy Sunday with sneakers.
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Striped sweater, R699, Forever New The thing about stripes is that they never go out of style. An ode to Coco Chanel, the striped sweater is a simple, comfy and easy way to look effortlessly stylish.
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Flats, R899, Witchery Suede brogues should be on every woman’s wish list this winter – easy to wear yet totally on trend. The cool metallic detail at the front takes this Witchery pair to a whole new level.
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Coat, R6 499.95, Ted Baker This camel long button-down wrap coat by Ted Baker is British tailoring at its optimum. We like the sophisticated lines while the high collar gives the coat a dramatic effect. Camel is right on colour trend – a basic, classic colour that’s easy to pair with anything. And more interesting than black.
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Shopper, R4 099.95, Radley This oversized handbag is what every working woman needs – throw all your essential possessions in it, from make-up and iPads to laptops and diaries. Any woman on the move will love this cool colour while its shape is sophisticated and easy.
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Scarf, R699.95, Tommy Hilfiger The thing about a great scarf is that you can throw it in your handbag, bound to use it at some point in the day. Looped around your neck or slouched over your shoulders is the way to go with this cool print. Remember, for winter the more the merrier – so layer up, girls!
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Aquaracer Lady 300m in full ceramic, POA TAG Heuer is launching the very first collection of watches made entirely from ceramic with several new versions of the famous Aquaracer Lady, guaranteed to appeal to any stylish woman. Why ceramic? It is incredibly hard – yet soft to the touch. Highly scratch-resistant, it keeps its original colour, fresh as the day it was made, and does not oxidise. It is hypoallergenic, lighter than steel and comes in white or black.
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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 …
HUMAN-POWERED
ON YOUR BODY: GIANT RIVAL SHORTSLEEVE JERSEY WHAT IS IT: With modern, clean graphics the Giant Rival short-sleeve jersey will fit into your cycling style, whether racing snake or Sunday pedal pusher.
GORDON INSTITUTE OF BUSINESS SCIENCE
WHY DO YOU WANT IT: Constructed with TransTexturaTM fabric offering UPF 30 sun protection, Rival is a full-zipper shortsleeve cycling jersey with a club fit and raglan-sleeve cut for ease of movement, while three rear pockets offer ample storage space. DESIGN USPs: TransTexturaTM is a moisture transfer technology featuring larger yarns next to the skin and finer yarns on the outer surface. Capillary action transfers moisture away from the skin to the surface for evaporation and quicker drying. GO GET IT : Available nationwide from Giant Performance Dealers; for a list of national stockists, check out Giant-bicycles. com/en-za for details. PRICE: R990
IN YOUR HANDS: TOMTOM BANDIT CAM WHAT IS IT: The new Bandit by TomTom is a lightweight action camera with a host of exciting and user-friendly features housed in a neat, aerodynamic capsule design. WHY DO YOU WANT IT: The Bandit is cable-less, easily mounted and waterproof to 40m with a waterproof lens cover. The Bandit companion App for your mobile device allows you to edit hours of footage in minutes and best of all, simply shake your device to edit, then share instantaneously, on social media – no more hours and hours of editing or having to download the original footage first. DESIGN USPs: This dynamic device, while simple to operate, records at 4K ultra HD and is integrated with G-force, speed, rotation and altitude sensors that capture highlights that can be integrated into your footage. GO GET IT: Available at selected retail stores nationwide and online, or visit Tomtom.com for more info. PRICE: R5 799
ON THE TRAIL: GIANT ANTHEM SX 27.5 2 MOUNTAIN BIKE WHAT IS IT: The Giant Anthem SX 27.5 2 is a proven SC slayer with a trick up its sleeve. Fast up the climbs, even faster on aggressive, technical trails. WHY DO YOU WANT IT: At the core of this race-bred rocketship is a 27.5-specific ALUXX SL frameset – the lightest alloy fullsuspension bike Giant has ever produced. Radically hydroformed and using the latest lightweight Maestro co-pivot design, the Anthem 27.5 frameset pushes aluminium full suspension technology to new limits of weight, strength and performance. DESIGN USPs: ALUXX SL-grade aluminium frame, Fox 32 Float Performance Elite 120mm fork, Shimano Deore/XT 2x10 speed drivetrain, Giant Contact SL Switch-R dropper seatpost, Shimano SLX hydraulic Disc Brakes, Shwalbe Nobby Nic / Racing Ralph EVO folding tyres. Colour: black/green GO GET IT: Available from Giant Performance dealers countrywide. PRICE: R44 490
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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: FERRARI CALIFORNIA T WHAT IS IT: A convertible with 2+2 seating, the California T is the epitome of sporty elegance, characteristics that have been synonymous with California models since the 1950s. WHY DO YOU WANT IT: Who doesn’t want to own a Ferrari? In fact, even just driving one of these Italian beauties is on many peoples’ bucket lists. The California T is one of the sexiest of them all, and is coupled with a sensational turbocharged V8 engine. DESIGN USPs: The California T is really about the scintillating turbocharged V8 engine that produces 412kW and 755Nm from its 3 855-litres, all with virtually zero turbolag. This means 0-100km/h in just 3.6 seconds and a top speed of 316km/h. If you’re not about speed, the svelte curves are just as alluring, while nothing demands attention like something from the stable of the Prancing Horse. Everything is controlled from an F1inspired steering wheel, from start button to gear changes, indicators, windscreen wipers and even drive mode (Comfort, Sport or ESC Off), so your attention is never diverted from the enjoyment at hand. GO GET IT: Prices start at R4 335 000. A 7-year maintenance plan is standard. Visit Ferrari.co.za for more information, or just to feed your lust.
FOR THE HEAD: VW CADDY MAXI TRENDLINE WHAT IS IT: It may be based on a commercial vehicle, and it might have the same boxy shape, but the VW Caddy Maxi minivan is actually a superb option for the growing (or grown) family. WHY DO YOU WANT IT: Reliability, comfort, practicality and good resale value are all combined in a handsome, newly refreshed package with triedand-tested engines and gearboxes. It’s a winning deal. Power comes from a 2-litre turbodiesel engine in either 81kW/250Nm tune with a 5-speed manual gearbox or 103kW/320Nm tune with a 6-speed automatic transmission. DESIGN USPs: Available in either shortwheelbase or long-wheelbase (Maxi) models with either 5 or 7 seats and a big boot, the Caddy offers an amazing amount of usable, practical space. And if you buy the long-wheelbase 7-seat version, you can still remove the rear row of seats should you need extra luggage space. There are also handy storage compartments all over the place, including a handy shelf above the driver’s head! GO GET IT: Caddy prices start at R358 200 and escalate to R407 200. It comes with a 3-year/120 000km warranty and a 3-year/60 000km service plan. Visit Vw.co.za for more information.
FOR THE PLANET: BMW 320D WHAT IS IT: I expect you’re wondering how a ‘normal’ turbodiesel can be good for the planet. Well, once you’ve taken into account things like the lifespan of the batteries in electric cars, the mains power needed to charge them, and the energy taken to make them initially, some say that a good old diesel is more environmentally friendly. And not many full-sized executive sedans are as efficient as a BMW 320D. WHY DO YOU WANT IT: Fuel-efficient (a claimed 4.0l/100km!), sporty to drive (140kW and 400Nm, with wonderful 6-speed manual or 8-speed automatic gearboxes), luxurious and with bags of status appeal, the BMW 320D ticks all the boxes. DESIGN USPs: The evergreen 3 Series has just been given a mid-life facelift that has made it sharper and more modern than ever. It remains the choice for driving enthusiasts with great handling and smooth, free-revving engines coupled with fantastic gearboxes. In short, it’s hard not to love. GO GET IT: You get what you pay for, and nothing with the whirring propeller badge from Bavaria is cheap – the 320D starts at R472 000. The price incudes a 3-year/120 000km warranty and a 5-year/100 000km maintenance plan. Visit Bmw.co.za
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TECHNO Words Aki Anastasiou
FITBIT BLAZE
Is it a smartwatch, is a fitness device? No, it’s a Fitbit! Price: R3 999 The Fitbit Blaze is a fitness device disguised as a smartwatch. I say this because while wearing it, many people asked if it was an Apple Watch – it does have a similar square face and it does the basic notifications on the screen when you get a message or your phone rings. Under that exterior though, the Blaze does fitness, and it does it really well. The Blaze features a colour screen, and Fitbit’s Pure Pulse Heart Rate which means it is constantly monitoring your heart beat and your activities throughout the day. What I liked about this fitness device is the multi-sport selection. You can choose from a wide selection that include running, cycling, treadmill and even weights. It doesn’t have a GPS but it can track your routes if you have your phone with you. Another unique feature is the on-screen workouts. Fitbit has devised short, high-intensity workouts on the go, displaying the exercises you need to do on the watch face along with a countdown. There’s a 7-minute workout routine as well as a 10-minute abs routine. The best part about the Fitbit Blaze is the battery life – five days! Now back to my abs… they really do need serious attention.
XYZ DA VINCI 3D PRINTER
An affordable 3D printer that delivers
GORDON INSTITUTE OF BUSINESS SCIENCE
Price: R10 000 3D printers are one of those segments in technology that create magic. Watching an actual 3D object being printed out of plastic in front of your eyes is quite astonishing. A game changer in fact. Up to now the price of 3D printers has kept them out the realm of consumers. But new entrants like XYZ create competition and this is slowly pushing down costs and making them more affordable. The Da Vinci does 3D printing and has a 3D scanner built in making it very versatile. It also has a generous print area of 20 x 20 x 20cm making it really useful for hobbyists to print unusual things. It is incredibly easy to set up and there are hundreds of objects available to print from websites like Thingiverse.com. Does it have a place in your home? When I unpacked it, I thought to myself what on earth am I going to print? But in the last two weeks, I’ve had a washing hose clamp that broke, my GoPro casing needed replacing and I printed a battery holder for my batteries – all using the Da Vinci printer. If you are a hobbyist, a designer or you just love dabbling and bringing your creations to life then the Da Vinci 3D printer will enthral you.
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VIRTUAL REALITY – THE NEXT BIG THING? Samsung and LG to take VR mainstream
The truth about smartphones is that innovation has stifled and plateaued. They have become commoditised and let’s face it, there is nothing new or groundbreaking that they offer. Yes, they are getting faster and cameras are improving, but is that true innovation? So what is the next big thing? In the last few weeks, I have been blown away by the reaction from friends and work colleagues after being exposed to virtual reality for the first time. I have been covering technology for almost three decades and the amazement at this new technology I have rarely seen. The last time I saw this kind of reaction and wow factor was when people held the first iPad. Both LG and Samsung are launching virtual reality headsets with their new flagship devices. One of the pioneers Occulus, now owned by Facebook, is also developing content and applications at a blistering pace. The VR experience is unbelievable: once you put the headset on, you get lost in a virtual world with 360-degree views that make you feel that you are right there. Don’t believe me? Next time you see a headset, try it for yourself and then ask if this will be a game changer? It took the smartphone 10 years to go mainstream. At the pace that technology is moving, VR will have a faster adoption rate. Right now they are clunky and the video quality is average yet they still elicit the wow factor. The technology will improve rapidly and soon they will be as small as a pair of sunglasses.
SAMSUNG GALAXY S7 AND S7 EDGE Great phone, beautiful design but at a price Price: Starting at R14 000 Samsung’s Galaxy S7 and S7 Edge are a refinement on the previously successful S6 design. One has to look really closely to see the differences. A faster processor, a fantastic camera and now support for extra memory via an SD card. They have also smoothed the edges, making the S7 Edge even slicker. It is now waterproof which means you can actually shower with your phone – you laugh, but sadly I know someone who reads emails in the shower. If you’re a fan you will love the new Samsung flagship device. But be warned: it is expensive!
Research group Digi-Capital are predicting that this market will be worth $30 billion by 2020.
LG G5
Beautifully redesigned with some interesting innovation Cost R14 000 LG’s latest flagship model the G5 has been completely redesigned and is a phone that has many people talking. LG have opted to go for an all-metal design with smooth rounded edges. It has a removable battery that slots in and out like a printer cartridge making it modular. This will appeal to heavy users who run out of battery life during the day. They have also incorporated a fingerprint scanner behind the device that works really quickly and accurately. It also has an excellent wide-angle camera, which allows you to capture more than the average in a single shot
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BOOKS Words Chris Gibbons
MURDER AT SMALL KOPPIE – THE REAL STORY OF THE MARIKANA MASSACRE
GREG MARINOVICH PENGUIN I R250 South Africa is a nation that has had a small number of great books written about it, among them Cry the Beloved Country and Long Walk to Freedom. Greg Marinovich’s Murder at Small Koppie joins that short but very distinguished list with immediate effect. It is one of the finest pieces of investigative journalism I have read and it uncovers the awful chain of events leading up to 16 August 2012 at Marikana in chilling detail. Thirty-four miners died that day, preceded by a smaller number of their colleagues, two police officers and two mine security officials.
GORDON INSTITUTE OF BUSINESS SCIENCE
Marinovich is in no doubt that – at the very least – the deaths of the 34 could have been prevented. In fact he takes it a stage further and assembles compelling evidence to prove that the 17 who died at the foot of the hillock known as Thaba, near Marikana, were forced directly into a death trap set up by the police; he is equally convincing when he demonstrates how the other 17, killed in a completely separate spot – the ‘Small Koppie’ of the book’s title – about 20 minutes after the first shooting, were simply executed after many of them had surrendered, again by the police. This in itself would have been sufficient to earn Marinovich high praise, but what makes this book remarkable is the way in which he takes us into the minds of Lonmin’s angry rock drillers. He describes their phenomenally hard working conditions as well as their lives, brutalised by a system of migrant labour devised long before apartheid was born but which remains embedded in South Africa’s mines to this day. He is also scathing in his portrayal of Marikana’s owner, Lonmin, as well as the
ruling ANC and the Zuma government, including now-deputy president but then-Lonmin director, Cyril Ramaphosa. That Lonmin was determined to break the strike at all costs is clear, and that it used Ramaphosa to pressure government into stringent and subsequently deadly action is beyond doubt. A key component in the lead-up to the strike was also the system – known as The Arrangement – whereby the mining houses pay the salaries of all the key trade union officials on the mines. It takes no great leap of imagination to work out whose side they’re on, and, flowing from that, why ordinary miners are so distrustful of the unions and so angry. But the absolute villain of this piece is the SAPS, in its many manifestations at Marikana. By the time the order to open fire was given, some 900 police officers were present, among them members of the Public Order Policing unit, the Strategic Task Force and the Tactical Response Team, also known as the amaBerete, from their distinctive dark-blue berets. Most of these are units trained in things like counter-terrorism
and hostage rescue, not in crowd control. Marinovich suggests with great force that they had been brought to Marikana with one sole purpose – to kill the strikers. He also provides evidence that at the highest level, SAPS Commissioner, General Ria Phiyega and North West Police Commissioner, General Mirriam Mbombo – both subsequently suspended – are guilty of incompetence, bowing to political pressure and of an attempted cover-up. The generals on the ground at Marikana – Mpembe, Annandale and Naidoo – face similar criticism – deservedly so – and it remains both a scandal and a great shame on this nation that not one single police officer has been charged with murder. The Marikana Massacre remains the greatest tragedy to befall the new, democratic South Africa. On a par with Sharpeville in the apartheid era, to analyse its genesis, as Greg Marinovich has done, is also to examine the most deep-seated and intractable problems of our new society. Marinovich has done us a great service, for which he deserves our thanks.
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LEADERSHIP BS
JEFFREY PFEFFER HARPER COLLINS I R545 Jeffrey Pfeffer is a Professor of Organisational Behaviour at Stanford Business School, but this book is not one calculated to endear him either to his colleagues or to the broader business school community. His basic thesis is that leaders fail themselves, their shareholders and their employees and more often than not get away with it, exiting with a golden parachute. Much of this failure occurs despite what Pfeffer calls “all the leadership-development efforts, training programs, books, TED talks, and so forth.” He is blunt, saying, “The leadership industry has failed.” He is particularly scathing about current fads like inspirational and motivational speakers, as well as calls for authentic and modest leaders, reminding us that no-one could possibly have called Steve Jobs or Jack Welch modest – let alone a Donald Trump. Another problem in Pfeffer’s gunsights is the fact that “There are no barriers to entry” into the leadership industry; no credentials, rigorous research, knowledge of the relevant scientific evidence, or anything else required to pass oneself off as a leadership expert.” Would we take a health problem to a similarly unqualified individual claiming to be a ‘doctor’, he muses? This is a very tough read, especially for anyone currently studying or working at a business school, but it goes a long way to explaining why, again in Pfeffer’s words, around the world “Workplaces are mostly horrible”.
FLAG WATCHING – HOW A FOX DECODES THE FUTURE HOW TO MAKE YOUR POINT WITHOUT POWERPOINT
DOUGLAS KRUGER PENGUIN I R220 Somebody should give Douglas Kruger a medal. In his new book, he says what so many people know deep in their souls to be true: the ubiquitous presentation tool PowerPoint sucks! As a professional conference MC I can attest this, having sat through more bad PowerPoint presentations than any human being deserves. In fact, I may physically harm the next person who stands up at a conference I’m involved with, squints at a slide completely covered in tiny words, and says “I know you probably can’t read this…” Happily there may be no need, because, as its subtitle suggests, Kruger’s book offers no less than “50 ways to present effectively”. It is, in fact, a pithy and effective guide to public speaking and contains a great deal of very useful advice. Even this old dog – I’ve been speaking in public in one form or another for over 50 years – picked up a couple of tips. Trust Douglas Kruger on this: he’s won the Southern African Championship for Public Speaking a record five times and truly knows his subject. Allow him to help you ditch PowerPoint forever and you will become a much, much more effective communicator.
CLEM SUNTER TAFELBERG I R260 Sunter’s career as a scenario planner from the late 1980s to the present has been a fascinating exercise in reinvention and refinement of an idea. From the High Road/Low Road scenarios which brought him fame while still an Anglo American director, via his Fox vs. Hedgehog work, he has arrived now at flag watching. “Flags to a scenario planner are what clues are to the detective,” he says. To paraphrase, flags are the absolutely vital beacons which link the past to the future and enable someone like Sunter to develop plausible scenarios. Therefore the skill of a truly great scenario planner, and Sunter richly deserves that epithet, is to know which flags are of vital importance and which should be ignored. Like a master musician, Sunter has discarded the rest of the orchestra and distilled his technique to playing just the essential notes – the flags. Having explained his technique, he then reveals an extensive list of flags for the world and South Africa. Some are familiar and obvious like the ageing of the global population but others, like Europe’s refugee crisis and South Africa’s corruption and crime, are far thornier problems in need of deep consideration.
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Thoughtful, provocative, sometimes worrying but never dreary, Flag watching is highly recommended
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CLASSIC INVESTING WHICH HORSE TO BACK? Words Professor Adrian Saville
So, we are clear that diversification – backing different horses – is a vital investment strategy1. But how do you decide which additional horses to bet on? Should they even be on the same race day or at the same race track? Start by recognising that different assets have different capabilities. For instance, if your investment time horizon is very close, as in a year or two, then you don’t have the latitude to take on volatility. People often construe volatility as risk, that is to say, prices move up and down, and down movements are perceived to be too dangerous.
GORDON INSTITUTE OF BUSINESS SCIENCE
But volatility is only risk when an investor is forced to sell in a down market and realise losses. Otherwise, volatility is just part of a normal pricing process: company prices bump up and down with business cycles, and if the most powerful asset classes include companies and real estate, they are not only powerful in terms of the returns that they deliver, but they are also powerful in terms of their ability to generate bumpiness.
AN EXCEPTION TO THIS RULE IS WARREN BUFFET, DEEP INTO HIS 80S, BUT STILL INVESTING LIKE A 30 YEAR OLD” For these reasons, if you have a very near-term horizon, you don’t really have the latitude to take on these bumpy assets, regardless of their power to deliver returns. Thus, diversification with a close horizon should lean in the direction of assets with low price volatility or so-called “stable” assets. The most stable of those low-risk investments is cash. The only bumpiness you get in cash is a change in the interest rate. The cash value itself doesn’t change. But, by the same convention, the ability of cash to generate gains in real wealth is feeble.
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See Acumen 15 – Classic Investing – Backing Different Horses.
Then, as your investment horizon goes out, you gain the latitude to take on bumpier assets in increasing volume. These volatile assets will bump you around but, by the same token, they will give you much greater lifting power in terms of investment returns and growth in wealth. Younger investors can hold much riskier, bumpier portfolios, than people a number of years into retirement. To illustrate what the lifting capability of the different assets classes looks like, consider the real returns generated by equity and real estate in South Africa over the last 25 years – around 10% per year. Allow for the power of compounding and this means that, at 10% per year, the value of the asset after inflation doubles every seven years. Whereas cash and government bonds, which are much more stable assets, have returned closer to 1% and 3%, respectively, in real terms. The time to double the value of the asset is therefore much, much longer – 70 years to double the value of your cash holding and about 25 years to double the value of your bond holding. So someone in their 20s, 30s, or 40s has lots of investment runway ahead and should be filling their portfolio with the bumpier assets not just to beat inflation, but to allow for the full power of compounding to take effect. An exception to this rule is Warren Buffet, deep into his 80s, but still investing like a 30 year old. That’s a wonderful position to be in, because he has plenty of downside protection. Buffet doesn’t really have to worry about bumpiness because his private wealth runs into tens of billions of dollars. Sitting behind Buffett is what he calls ‘moats’, in the form of the old castle moat that protected you with an expanse of water to keep raiders out. Buffett has a very wide moat around his investment portfolio because his wealth of about $65 billion amounts to thousands of times his annual cost of living. He could easily withstand a spectacular market sell-off and not have any impact on his standard of living. Whereas, for the rest of us, our moats are much narrower, and many of us have no moat at all. This is why we need to be so mindful about asset allocation as we start to call on our portfolios for income or capital. But that’s a topic for another edition.
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PHOTO: GETTY IMAGES / GALLO IMAGES
ALTERNATIVE INVESTING PHILATELY – FOOLISH OR FORWARD-LOOKING? Words Mandy Walker
You can tell your philanders from your philatelists … and may’ve licked a couple of stamps in a past life but probably haven’t considered stamp collecting... Me neither. Until I stumbled across Dr. Ian Matheson of the SA Philatelic Federation: academic, collector and leader of a team tasked with discovering what non-members want from organised philately. The main take out: investors and stamps generally go together like oil and water. This is specialised terrain with no short cuts and few sure bets. So why is this old-fashioned pursuit alive and well?
HERE’S THE LOW-DOWN FROM DR. MATHESON: “There’s a renewed interest in fairs. These happen a few times annually across SA. We’ve 800 email addresses from the Durbanville stamp fair. People arrive with stamps and get a chance to question experts. “Abroad, the Philatelic Society of London is probably the most elite society in the UK. They’ve just reported 2 000 members – so it’s now bigger than ever before in its 150-year history. “Most collectors do it for academic interest – for example, ten people write daily into the Edenvale Philatelic Facebook page asking what’s this? Where’s it from? It could be from Eastern Europe in 1917 – and there’ll be someone on the site who can tell them what happened in Eastern Europe in 1917, for example. And for social reasons. Stamps are a medium of conversation. People make friends through them and yes, many collectors are elderly plus live alone. This you can do at home thanks to the Internet.”
DON’T: • See stamps as an investment. Steer away from companies/ auction houses offering to build you an investment portfolio. They’ll sell to you high and take a 15-20% handling fee. Rather, research and buy directly from a reputable seller. Then hold onto the stamp and build the historical story supporting why it’s a relevant collector’s piece. Aim ideally to eventually resell abroad. Unlike in SA right now, some countries have zero inflation. Savvy stamp collecting means you can capitalise on this and sell at a premium.
A Page of Triangular Capes Nos. 20-25', c1890, (1944). Stamps from Cape of Good Hope, South Africa.
DO:
• Remember values in catalogues (Stanley Gibbons & Scots in the UK and the SA Colour Catalogue) are based on a perfect copy of the stamp and show the price they’ll sell these to you at. Auction houses hold billions of dollars in stock which don’t equate to hard cash. They need to recover the depreciation of stock, so will charge you a premium for a stamp. Only when it comes to world rarities is the catalogue value real. • Understand supply and demand. Central African countries issued so many non-relevant stamps in past decades – what they featured had no relevance to social, political or environmental history. These never became fashionable again. Each Arab Emirate (except Dubai) also issued too many stamps. The SA Post office did too. So understand which SA stamps become iconic and why (like the woodblock Cape triangular stamp from the 1850s worth £50 000 each). Asia’s got it right – they print specialist, varied and enticing subject matter (e.g. Korea did a series on pre-penicillin medicine last year for example). • Specialise in a topic that interests you and study it intensely to find out something about the stamps and area others haven’t. Tell your story and you’ll become known as a collector. • Get help from someone at a fair/society and check out dealers. All SAPDA (South African Philatelic Dealers Association) dealers are ethical but there are some dealers who choose not to be on SAPDA (they don’t want to be dictated too) who are ethical too. Anyone thrown out of SAPDA isn’t. • Store and mount your stamps properly to prevent foxing etc. In today/tomorrow’s digital (virtual) world, stamps could well disappear. Who knows, in 50 years they may be something everyone wants to hold onto. Van Gogh didn’t sell a single painting in his lifetime and look what happened then
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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 “Ex Africa vinum terrum semper aliquid novi” to misquote Pliny the Elder. There is a wonderful restless energy in the Cape wine industry – it seems that every day brings a new label, a new and intriguing blend or an innovative iteration of a familiar grape. That’s very exciting for the industry and industry followers like this scribe, but it can have the effect of fetishising novelty. There is a risk that a disproportionate amount of attention gets paid to new producers and the familiar fall off the radar; established brands get ignored in the media scrum to be the most breathless about a new 1264
bottle production release of a Riesling made from a forgotten vineyard in the Swartland. And those established brands continue to deliver great value and reliability to successive decades of consumers. Like Nederburg – dare I call it the Toyota of the local industry? And perhaps the Baronne is the 1.3 Corolla? This smooth and fruity blend of cabernet sauvignon and shiraz has been providing inexpensive enjoyment since the maiden vintage in 1973, and does exactly that in the latest release from the 2014 vintage. ARP R50.
DINNER PARTY A new label that is causing great excitement amongst the cognoscenti is Patatsfontein. The wine is made by Reenen Borman of Boschkloof. The grapes come from a farm near Montagu bought in 2010 by the father-in-law of one of his partners, Fritz Schoon, of Schoon De Companje in Stellenbosch. Fund manager Henk Kotze is the third partner. The first release, last year, was a 2014 chenin blanc, and the 2015 version of this wine has been even more rapturously received by the critics. They’ve added a
second offering this year – a strikingly good blend of (90%) colombard and chenin called Patatsblanc. Colombard is generally seen as a workhorse variety, used more often than not in box wine blends and in brandy. But this version is really very pretty. It’s bone-dry (RS 1,8) and full of flavour and texture with a fine acidic line underpinning the sumptuous fruit. This will definitely be seen as a trailblazer by other winemakers. Expect greater use of colombard in a fine wine setting in the future. R135.
GORDON INSTITUTE OF BUSINESS SCIENCE
OUT TO IMPRESS In 2001 writer Tim James first conducted a poll of local wine folk to establish a Top 20 list of wine producers. The exercise has been repeated six times in the intervening years. As Tim says, the polls “have fascinatingly and sensitively charted the changes at the top end of the wine industry”. Some of the top five wineries in that original poll are no longer even in consideration for the current top 20; and three of the current top five (Mullineux, Sadie Family, Kanonkop, Boekenhoutskloof and Alheit) had not released any wines in 2001. The only name that has featured in the top five in every poll is Kanonkop. And that stellar consistency rests on the year-after-year excellence of three wines, a cabernet sauvignon, a pinotage
and a red blend, the Paul Sauer. The 2012 vintage of the blend is a fabulous wine. It’s cabernet sauvignon dominated (70%) with smaller amounts of cabernet franc and merlot, and it is a quintessential example of a top-class modern red wine. It’s beautifully structured and complex, with lashings of the aromas and flavours you’d expect from a Bordeaux blend – blackcurrant, cassis, cedar and cigar box. It’s fabulous now, and will continue to develop in the bottle for at least another ten years. If you can hold onto it for that long. It’s expensive – around R500 – but you’ll really struggle to find a wine from France or Australia or California that offers this much quality for that price
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VOICE IN THE KEY OF OUR TIME Words & Pictures Victor Dlamini
Nduduzo Makhathini has clearly been drawing from the same ancient well as Bheki Mseleku and Abdullah Ibrahim. Makhatini plays the piano with the same depth of feeling, his arrangements always a delight to the ear. When you listen to his song Lagos Blues you hear that same deep wisdom that both Mseleku and Ibrahim paint with just one note. On the album Listening To The Ground Makhathini’s music is restless, searching, yearning, reaching beyond the the merely technical to the spiritual. Those who’ve been following his career can see now that what seemed like promise just five years ago has blossomed into solid mastery. At the recent Cape Town Jazz Festival, Makhathini played with some of the musicians he has collaborated with over the years. Tellingly, the band he put together for the weekend of the festival was called Nduduzo Makhathini’s Listening To The Ground Project, featuring Eddie Parker. Parker, with whom he shares an affinity for the music of Mseleku, plays with the wisdom of a musician who knows that music is a bridge between the real and the ethereal . The second song of the evening For You was written for Bheki Mseleku, whose influence on Makhathini is as profound as it is personal. But as Makhathini said before playing the song, it is also a tribute to Abbey Lincoln and Busi Mhlongo. This multiple tribute not only calls to mind the mutual admiration between Abbey Lincoln and Bheki Mseleku, but is also a reminder that the jazz tributaries have always flowed into the same ocean. South African jazz belongs in that large family of those who treasure music that draws so heavily from the experience of the African diaspora.
Nduduzo Makhathini
There’s no doubt that Makhathini has decided to go all out to realise his creative vision. Three albums have poured out of him in quick succession. Sketches of Tomorrow and Mother Tongue both came out in 2014. Then, in 2015, he released Listening To The Ground. Even for those who follow his career, it's difficult to keep up with his creative output. He is already one of the hardest working jazz musicians in South Africa. He is a full-time music teacher, a performer and composer. His playing tells you that he has listened to the masters of the piano. Those who know
Pietermaritzburg well will not be surprised that this small city has given us such a fine musician. Often mocked for being a sleepy hollow, this city has a rich musical heritage. On the album Listening To The Ground is the song King Fela, written for Fela Kuti. But more than that it is testament to Makhathini’s own sense of the connections between Lagos, Joburg and Durban that affirm that when we listen to the ground, the ancestral spirits whisper the kind of wisdom that makes all of us better human beings.
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looking backwards
AIR CON WARS Words Sam Cowen
It's the curse of the modern Cubicle Farm, more properly known as ‘the Openplan Office’: who guards the air conditioner remote? And as Juvenal wrote in his Roman cubicle back in the 1st century, who guards the guardian? Some things at my place of work I’ve come to take for granted. Things like free coffee and tea, limitless paper for scanning, faxing, printing and ‘utilising’ to complete a child’s left-to-the-last-minute project. (No raised eyebrows please, you know you’ve done it too.) We’ve even got doubleply toilet paper and free condoms in the toilets, so you can be both comfortable and safe/prepared for drinks across the road at the local pub after work. But the singlemost important thing, especially in this climate, is air conditioning, that assured burst of cold air that makes summer bearable.
GORDON INSTITUTE OF BUSINESS SCIENCE
Sometimes however, that cold air becomes just a little less bearable, if, like me, you’ve ever had the misfortune of sitting next to or underneath the unit. You start the day in shirt sleeves or a dress and end it wrapped like a Bedouin against Arctic winds that, by the time they’ve made their way to people four desks down, feel like the cool caress of a sea breeze under an azure Mauritian sky. Now, however, there’s a new app that can change all that. It’s called Comfy and it’s supposed to keep the office temperature exactly that. Lindsay Baker, VP of research at Building Robotics, Comfy’s maker, says temperature is the number one complaint office workers have about their work space. Comfy will allow employees to tell it when they are too cold or too hot and the air conditioner will send a blast of cold air to their part of the office. (Or hot air but in this weather, who wants that?) There’s no detail yet on how this communication will happen but the app is out there and ready to solve this pressing First World problem.
I am not confident that it will. There was already so much clandestine temperature adjustment at my office that after much debate, and oh boy, was that a productive day, one person was trusted to be Keeper of The Remote. This lady now physically changes the temperature, based on a poll among the people who are overheating compared to those who are not. It’s a huge responsibility: someone is always unhappy. The Keeper has to remain implacable in the face of any minority whining. The majority vote carries every time. With the arrival of Comfy, all this goes underground. Now employees can sneakily bypass Remote Woman and change the temperature themselves. Who knows where this kind of independent action could lead? Imagine the power of climate change in the hands of one lowly worker? You would be the China or the US of the office! With one click, you could turn a room to ice! Anonymously! I know I would be drunk with power. And why stop there? Why not create an app that allows you to control the time people spend at the coffee machine? One click and the dispenser would freeze. You could stop that wanton consumption of sugar, which we now know is the new tobacco. Plump Sheila with her three sugars and milk? No more for her! Let’s not forget the microwave and the selfish ones who warm their food for hours at a time. Who wants an awkward conversation with Mike from accounts, asking how long he’ll be as you watch him set the timer for 9 minutes to warm up his frozen ready meal, when you have 2-minute noodles and a meeting in 8. No more of that.
In fact, with enough apps, you’d never have another office confrontation. You could go about your daily business, secretly changing the whole work area to suit yourself. The flip side of that, though, is that with apps freely available, everyone else would be doing the same thing. And you’d never know who it was because it would always be covert. All conversation would be reduced to exchanges like this: “Did you stop the microwave?” “No. Did you change the temperature?” “Absolutely not.” You’d always be asking yourself whether it was a friend or a foe shifting the climatic goalposts? Suspicion would abound as to who was telling the truth and who was lying to keep things exactly as they wanted them.
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Mind you, how would that be different from any other day in the office? I’d hazard a guess that for most of us, it would not
*Benjamin Franklin - Serial Failure and Perpetual Winner
Economic Empowerment Youth Employment Child Development By any objective measure our achievements are game-changers. So after 10 years, why aren’t we better? We don’t know but we will. We’re failing forward.
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