Acumen Edition 17

MOGOENG MOGOENG COMETH THE HOUR…

Issue 17

REIGNITING GROWTH WHEN YOUR COMPANY STALLS THE NEUROSCIENCE OF STORYTELLING WHY YOUR BRAIN LOVES A GOOD TALE R39.95 incl vat

• Third Quarter, 2016

LORD MERVYN KING NO MORE FINANCIAL MAGIC

Internet connectivity in Africa is growing fast. In fact, it has the world’s fastest-growing rate of internet penetration with 20 per cent of the continent expected to go online by the end of this year 1, an increase of 10% over the past six years. For African businesses, however, this rapid rate of growth does not come without associated risks. South Africa in particular ranks as the top target on the continent for cyber crime in 2016, according to Control Risks’ research, with more than ZAR2 billion a year being lost to cyber crime.

The constantly evolving business-threat landscape, coupled with a phenomenal increase in connected mobile devices, social networking and a growing reliance on cloud computing, mean that South African businesses will find themselves ever more vulnerable to cyber attacks. This growth in cyber risk and new regulations such as the South African Cyber Crimes Bill are focussing the spotlight firmly on cyber security in every organisation.

One of the biggest threats to today’s business within the cyber sphere is undoubtedly the mind-set that many business leaders still foster: the belief that protecting against cyber crime is an exclusive IT issue. Whilst this is true for some of the technical mitigation measures, the best virus software will not be able to protect your business against the threat from within.

Globally, 55%2 of cyber attacks are estimated to stem from malicious insiders or inadvertent actors.

This is just one fact that illustrates why the crucial first step in protecting against cyber crime is to ask yourself: Who is targeting me how and why (i.e. what do they want to gain)?

These questions need to be summarised in an initial external threat and risk assessment which will enable you to: Focus your finite time and money on protecting the critical assets, against the most likely threat actors, with mitigation measures tailored to help prevent the most likely types of attacks. It might be very difficult to make your organisation 100% secure, so better spend your resources wisely in areas where they have the most positive impact.

Knowing where you are most vulnerable will accelerate and adjust the immediate crisis management and investigation of the incident in the event of a breach.

Organisations must take a proactive approach when it comes to cyber security management. Cyber security must be escalated to board-level, and the Chief Information Security Officer (CISO) must have a strong understanding of wider strategic organisational objectives and align cyber security measures accordingly. In light of the fundamental business risks facing many South African organisations today, those that do not keep up are susceptible to serious financial, reputational, legal and regulatory damage. Ultimately their boards will be held accountable.

1 2

http://www.africanbrandlink.com/cyber-attacks-rise-south%C2%A0africa https://securityintelligence.com/the-threat-is-coming-from-inside-the-network/

For more information, please contact

cyber@controlrisks.com

C Y B E R T H R E AT I N S O U T H E R N A F R I C A ACTORS AND TARGETS INFORMATION AS OF JULY 2016

GLOBALLY THE NUMBER AND IMPACT OF CYBER ATTACKS INCREASED

18%

56%

100%

INCREASE IN AVERAGE IMPACT OF CYBER ATTACKS

INCREASE IN NUMBER OF POLITICALLY MOTIVATED CYBER ATTACKS

INCREASE IN NUMBER OF CRIMINAL TARGETED ATTACKS

IN SOUTHERN AFRICA GOVERNMENT AND FINANCE WERE ESPECIALLY TARGETED - SECTORS TARGETED (% TOTAL ATTACKS)

MOST WIDELY USED CYBER ATTACK METHODS IN SOUTHERN AFRICA:

SPEAR PHISHING

SQL INJECTION

(employed to leak data online and to deface websites)

28% GOVERNMENT

6% PHARMACEUTICAL

17% MANUFACTURING/ENGINEERING

5% TELECOMMUNICATIONS

17% FINANCIAL SERVICES

5% MINING

11% OIL AND GAS

11% OTHER

DISTRIBUTED DENIAL OF SERVICE (DDoS)

All data is sourced from Control Risks’ Cyber Threat Intelligence reporting.

GLOBALLY A BROADER RANGE OF THREAT ACTORS WILL TARGET INDUSTRIAL CONTROL SYSTEMS (ICS), WITH A GREATER IMPACT. (AVERAGE THREAT SCORE FOR CYBER ATTACKS TARGETING ICS)

BY THE END OF 2016 WE EXPECT A

4.0 2014

6.7 2015

9.2 2016

(WORST CASE FORECAST)

37% RISE

IN THE SEVERITY OF CYBER ATTACKS

TA R G E T I N G

ICS

C O M PA R E D WITH 2015

contents Issue 17 • Third Quarter, 2016

Issue 17 • Third Quarter, 2016

features

P.20

LORD MERVYN KING No more financial magic.

MOGOENG MOGOENG

COMETH THE HOUR…

Issue 17

THE NEUROSCIENCE OF STORYTELLING WHY YOUR BRAIN LOVES A GOOD TALE

P.27

R39.95 incl vat

• Third Quarter, 2016

LORD MERVYN KING NO MORE FINANCIAL MAGIC REIGNITING GROWTH WHEN YOUR COMPANY STALLS

MOGOENG MOGOENG Cometh the hour…

ON THE COVER Photo: Gareth Jacobs

P.64

REIGNITING GROWTH When your company stalls.

GORDON INSTITUTE OF BUSINESS SCIENCE

P.72 ACUMEN IS ALSO AVAILABLE AS AN APP for your iPad or iPhone in the Apple App Store, as well as in the Google Play store for your Android device.

THE NEUROSCIENCE OF STORYTELLING Why your brain loves a good tale.

P.27

et cetera

p.04 Contents p.06 Contributors p.10 From the Editor p.12 Network

opinion

p.16

A Public Commitment to Ethics

GIBS Dean Prof. Nicola Kleyn looks at how to shift the status quo surrounding corruption and unethical behaviour.

p.18 New Business Models Forced

to Confront Racism

Trudi Makhaya joins Airbnb and opens the door on racism.

p.19 The Rights Stuff

Dan Moyane believes the Bill of Rights

needs to be taught in SA's schools.

South Africa

p.32

Gideon Pogrund tells James van den Heever about the new GIBS Ethics and Governance Think Tank.

Making Ethics Real

p.34 Does Responsible Tourism Pay?

Eugene Yiga looks at the business case

for responsible tourism. p.40 Is the Suit Finally Dead?

Acumen's fashion expert Cheska Stark

examines a growing trend for men and

the reverse for women. p.44 From the Playground to

the Boardroom

GIBS lecturer Dr. Ngao Motsei investigates the ugly phenomenon of workplace bullying.

p.49 Beware the Digital Sweatshop!

Prof. Helena Barnard explores the perils

of freelancing online.

P.82

P.76 p.51

Big Spending Aussies

Sarah Wild compares how South Africa and Australia weigh up in the areas of science and research.

p.56 A Complex and

Difficult Gestation

Shoks Mnisi Mzolo examines South Africa's slow progress towards national healthcare coverage.

general management

p.70 In the Mirror, Through

the Window

Prof. Dave Ulrich tells Acumen about the relationship between HR and great leadership.

dynamic markets

p.76 Remembering the Zeros at

the Zimbabwe Stock Exchange

Photographer Lisa King and writer Sean Christie go behind the scenes at the ZSE.

p.82

Acumen's South America expert Tom Hennigan reveals why Uruguay is called the Switzerland of South America.

Doing Business in Uruguay

p.88 Top Eight Things To Do & See

in Uruguay

And when business is done, Tom Hennigan gives you the inside track on where to relax.

p.90 Gender Neutral Toilets and the Business of Positive Change.

Ace trendspotter Dion Chang examines

how businesses are being forced to

become "value driven" rather than

"sales driven".

entrepreneurship

renew

p.94 Slow in Gozo & p.95 Peaceful Greece

Acumen's travel expert Caroline Hurry

visits Malta and then heads over to Greece.

p.96 The Finer Things

A Ted Baker messenger bag for Him; a

Poetry leather jacket for Her. p.98 Forward Motion

Jacques Marais goes barefoot, while

Stephen Smith sinks into Mercedes luxury. p.100 Techno

Tech guru Aki Anastasiou looks at a couple

of top-line notebooks and a cellphone with

a Leica camera inside. p.102 Books

Lord Mervyn King on the future of banks

and banking, Cal Newport on Deep Work

and Jeremy Miller on Warren Buffett. p.104 Classic Investing

Prof. Adrian Saville says that because we're

all living longer, we need to change the

way we invest. p.106 Wine

Wine expert John Maytham tastes

Brampton's award-winning pinotage, a new

Swartlander and the elusive Paper Kite. p.107 Cassandra Wilson Owns

the Songbook

Victor Dlamini worships Cassandra Wilson.

looking backwards

p.108 Porky Power p.92 Entrepreneur-at-Law

Sam Cowen wonders if it is ever OK to

Sean Christie discovers a new model for

tell a little white lie?

the legal industry.

6

contributors

LORD MERVYN KING is a former Governor of the Bank of England and Chairman of its Monetary Policy Committee.

Prior to that, he was Professor of Economics at the London School of Economics, as well as a visiting Professor at Harvard and MIT.

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.

TRUDI MAKHAYA is PROF. ADRIAN SAVILLE is Professor of

VICTOR DLAMINI

PROF. DAVE ULRICH

is one of the most respected names in HR and leadership studies. The Rensis Likert professor of business at the University of Michigan’s Ross School of Business, he’s been ranked No. 1 Management Educator and Guru by BusinessWeek, selected by Fast Company as one of the 10 most innovative and creative leaders and named the most influential thinker of the decade by HR Magazine.

freelancer, he has contributed to titles such as Destiny, Finweek and the Mail & Guardian.

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.

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 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.

JAMES VAN DEN HEEVER writes for a

SHOKS MNISI MZOLO

DION CHANG is an

innovator, creative thinker and visionary. He is a sought-after

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.

is an independent writer and researcher whose newsroom background is steeped in business and financial journalism. He honed his business reporting skills at I-Net Bridge, where he first arrived as a corporate researcher and also wrote for the Financial Mail. As a

GERT SCHOLTZ

works in the banking sector.

His involvement with GIBS includes guest lectures, he is an external examiner and has co-developed an MBA Elective course. He has also lectured at SBU and PBS. Gert holds BCom, LLB and MBA degrees.

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.

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TAG HEUER CARRERA CALIBRE HEUER 01

Chris Hemsworth works hard and chooses his roles carefully. He handles pressure by taming it, and turning it to his advantage. #DontCrackUnderPressure was coined with him in mind.

8

contributors

DAN MOYANE is a seasoned

broadcaster with 35 years of experience under his belt, having worked as a news reporter, editor and presenter. His broadcasting credentials include Radio Mozambique’s English Service, BBC, Talk Radio 702, SABC and eNCA. Currently he anchors Morning News Today on eNCA on weekdays from 6 to 9am. He has been responsible for corporate communication and corporate social investment at MMI Holdings since 2009.

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

editor Chris Gibbons Gibbonsc@gibs.co.za managing editor Zenzile Hlongwane HlongwaneZ@gibs.co.za cover photography Gareth Jacobs layout and production Contact Media and Communications (Pty) Ltd designer Quinten Tolken proofreader Angie Snyman publisher Sean Press Pressman@contactmedia.co.za

JAMES ALLEN is a senior partner in Bain’s London office and a co-leader of the firm’s global strategy practice and co-author of The Founder’s Mentality: How to Overcome the Predictable Crises of Growth (Harvard Business Review Press, forthcoming).

CHRIS ZOOK is a partner in Bain & Company’s Boston office and a co-leader of the firm’s global strategy practice and co-author of The Founder’s Mentality: How to Overcome the Predictable Crises of Growth (Harvard Business Review Press, forthcoming).

Contact Media and Communications (Pty) Ltd 011 789 6339 advertising sales Damian Murphy Damian@contactmedia.co.za 082 888 1137

contributors James Allen Aki Anastasiou Prof. Helena Barnard Dion Chang Sean Christie Sam Cowen Victor Dlamini Tom Hennigan Caroline Hurry Lisa King Lord Mervyn King Prof. Nicola Kleyn Trudi Makhaya Jacques Marais John Maytham Dr. Ngao Motsei Dan Moyane Shoks Mnisi Mzolo Prof. Adrian Saville Gert Scholtz Stephen Smith Cheska Stark Prof. Dave Ulrich James van den Heever Sarah Wild Eugene Yiga Chris Zook 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

Brought to you by:

GORDON INSTITUTE OF BUSINESS SCIENCE

SARAH WILD is a freelance

DR NGAO MOTSEI is a

member of faculty at the Gordon Institute of Business Science GIBS. She is also Partner: Leadership Consulting at Heidrick & Struggles.

Prior to that, Dr. Motsei was Founder and Chief Executive Officer of Leadership Emporium (Pty) Ltd, a Leadership and Organisational Effectiveness consulting company.

science journalist, specialising in South African science, technology and innovation. She has worked as science editor at Business Day and the Mail & Guardian, and in 2015, she won the CNN-Multichoice African Journalist of the Year Award for innovation.

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.

15520

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editor’s note

LOTS OF POTENTIAL, WORTH THE HASSLE Words Chris Gibbons

South Africa remains in a difficult place, politically and economically.

So does that mean we should just give up and walk away?

In a recent article by international political economy researcher Desné Masie, an unnamed investment advisor in London describes South Africa: “lots of potential, not worth the hassle”. As Ms. Masie observes, it’s a pithy phrase and it was also one quickly picked up by a number of leading publications.

GORDON INSTITUTE OF BUSINESS SCIENCE

However, unlike investors living in places like London, New York and Tokyo, the average South African – that’s you and me – does not have the luxury of switching investments to friendlier or more attractive destinations. We’re here for keeps and that applies to most of our families, too.

For us, then, South Africa has to be worth the hassle. We have no other option and we owe it to ourselves and to future generations to make it that way.

In other words, each and every one of us has to do as much as we possibly can to drag the nation back onto a more profitable and sustainable course.

Charting that course will mean different things to different people and also involve robust political and economic debate, but there are several things that we can all agree on and implement immediately.

The first is an absolute commitment to ethical leadership. In this edition of Acumen, we highlight that by featuring South Africa’s Chief Justice Mogoeng Mogoeng as our cover story. An appearance by the Chief Justice at GIBS a month or two back was met with a standing ovation. I interpret this as a deep longing by members of that audience for ethics to be once again front and centre in our business lives.

It’s also why we feature GIBS’ new Ethics and Governance Think Tank, led by Gideon Pogrund. This is a bold venture, although timely. The Think Tank will foster dialogue and discussion, some public, some private, and aims to make ethics a corporate leadership commitment.

Ethics, if it's not already in place, is something that we can implement immediately, both as individuals and as companies.

The second requires a little vision and a lot of leadership.

Science writer Sarah Wild tells us that our colleagues in Australia are outspending us by far when it comes to Research and Development (R&D). That’s true in

absolute terms, but also as a percentage of Gross Domestic Product. What’s more, in Aussie, it’s business leading the way in R&D, not government. In South Africa, it’s the other way round.

This needs to change. If corporate South Africa wants a future here, it must demonstrate a commitment by increasing spend on R&D. If you don’t develop your own tomorrow, you’re actually placing your future in someone else’s hands.

Third, many of our companies need to regain the zest they once displayed as owner-led start-ups. That’s why we’re delighted to bring you the article Reigniting Growth by top Bain consultants Chris Zook and James Allen. I’ll guarantee that there are a number of things you could take from Zook and Allen’s research and implement at your firm immediately.

Three very simple, but very powerful steps which require no-one’s permission, nor even much discussion. Just do it, as the slogan says.

.

Then, suddenly, you will find that you and you colleagues are on a road where the future is worth the hassle

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12

network

NETWORK Words Acumen Contributors

Our regular look at GIBS’ events and guests.

Maria Ramos

MARIA RAMOS – ASKING THE TOUGH QUESTIONS Confirming a R2.7 billion investment in its Shared Growth Programme, Barclay’s Africa CEO Maria Ramos told a recent CEO Engage event at GIBS that the funds would be split between youth education and skills training, along with financing for small and medium enterprises. This, she said, was in response “to arguably the greatest need and social stability threat facing the [African] continent.”

She urged delegates to do more.

“There are some fundamentally important CSI projects and we do a lot of those, too, and we’ve done a lot of those, but it’s challenging ourselves to do much more than that. To say, hold on, is this all we can do? Or do we need to do more? Do we need to change the culture of the organisation? What does it really mean to say you’re ‘customer-centric’? Are you really?

“When we talk about financial inclusion, what does that really mean? How do we really make that a focus for us? …

Have you really stopped to think how you are actually going

to deliver a financial product in a way that is accessible, that is easy to understand, with costs to deliver that are achievable and reasonable?

“We’re putting a lot of money behind education and skills - R1.4 billion in three years is a lot of money – I have an argument all the time with our team, I say ‘Why are we spending this money?

It’s a lot of money!’ But it’s about how you spend it. If we spend it well, what’s the impact? Who should be helping us with this? Who do we partner with? And then, how do we measure ourselves? It is changing the culture in the organisation. And the next time we put up a product, is it a product that we’ve developed first or a product that we’ve identified the customer needs? Is the product really addressing that?

“It’s not an easy journey to go on and I don’t think we’ve got all of the answers. We really have started down this road and I hope that we’re energising our own colleagues, internally, differently, because people feel like they’re part of something bigger, more meaningful, rather than something that’s got a label on it.”

GORDON INSTITUTE OF BUSINESS SCIENCE

PEER VISITS INSPIRE J.P. MORGAN SMALL BUSINESS BOOST ENTREPRENEURS The Enterprise Development Academy (EDA) is a GIBS unit committed to building business and leadership skills in entrepreneurs and helping them develop sustainable, efficient and profitable enterprises that are able to employ more people. In partnership with J.P. Morgan, the EDA is currently providing entrepreneurs in the green economy with a 10-month entrepreneurship and business management scholarship called the Small Business Boost programme – the first of two cohorts of 100 entrepreneurs to be trained.

The programme has a practical academic component, followed by mentorship and coaching. Earlier this year, participants went on a field trip to give them achievable and aspirational motivation.

Field trips are a dynamic method of providing entrepreneurs with a real-world simulation of business potential. During this time they can marry classroom-learnt theory with the reallife experiences of successful entrepreneurs. On this trip, they visited Press Dynamik, Solar Ray and Neat Cabinet Systems, all owned by entrepreneur Aylwin Stephenson. Then came a tour of Heatlight Trading, located on the same premises within the Kyalami Business Park and owned by an entrepreneur on the programme, Rikus Prins. Heatlight Trading is also a provider of

solar components to Solar Ray. Finally, participants were hosted by entrepreneur Job Moraka of Nameplate Centre Signs.

Participants agreed that their aspirations for local economic growth are achievable. Each of the entrepreneurs encountered confirmed an awareness that the provision of quality goods through world-class staff skills development would lead to the creation of further jobs.

network

13

BE SO GOOD THEY CAN’T IGNORE YOU It was a full house of more than 100 delegates on each day for the GIBS Conference on Strategic Corporate Communications, Reputation Management & Stakeholder Relations at the end of May/beginning of June.

“Human sigma is the moment the brand touches the consumers.

The brand is how the touch feels, how the experience feels,” stated visiting US expert, Alan Hilburg, CEO of Hilburg Associates. He warned delegates against falling into the trap of becoming content experts: “If you want to reach the ceiling, you need to be a trusted adviser. If you are a subject matter expert, you will always be a subject matter expert. How do you talk to CEOs? Not by being a subject matter expert. You talk to CEOs by helping them hear what they can’t hear.”

Scaw Metals Group Executive Head: Public Affairs and Communications, Dudu Ndlovu explained how she and her team worked through the very tough problem of implementing a reduction in headcount, via Section 189 of the Labour Relations Act. “It was like a massive Sudoku puzzle with multiple dimensions ... We had to redefine the organisation from scratch.”

Alan Hilburg, CEO of Hilburg Associates

Scaw Metals Group Executive Head: Public Affairs and Communications, Dudu Ndlovu

“Get out of your comfort zone, walk around, get in touch ... keep your ears on the ground,” advised PRASA Senior Manager: Marketing and Communications, Lilian Mofokeng. “That’s where reputation comes from, it starts with what the kids are saying.”

Hilburg’s message was echoed by FleishmanHillard CEO Sharon Piehl, who reported that the roles of Chief Communications Officer and Chief Marketing Officer were blurring. “Reputation capital is one of the best assets to have,” she added.

FleishmanHillard CEO Sharon Piehl

Mofokeng also had a stern warning for would-be practitioners.

“This function is involving, seriously involving, so if you do not have the heart for it, please do not ask to be moved to public affairs.”

PRASA Senior Manager: Marketing and Communications, Lilian Mofokeng

14

network

MARK BARNES – TURNING THE POST OFFICE Former investment banker and chairman of investing and trading solutions company Purple Group, Mark Barnes, is the new man at the helm of the SA Post Office. His job, according to Telecommunications & Postal Services Minister Siyabonga Cwele is to grow the Post Office’s business. Barnes outlined to a recent GIBS Forum how he planned to achieve that.

“Our really important clients are corporates and parcels and the rural areas where people have no choice. But you [in Johannesburg] have got choice, you who are prepared to pay any price to get what you want delivered on time and intact.

So what that’s done is created a whole parcels and logistics business outside the Post Office, which has also had the effect of substantially increasing the margins in that business.

GORDON INSTITUTE OF BUSINESS SCIENCE

“So what you’re paying to courier today, we can deliver that same thing at, like, 10% of the cost over our infrastructure, because we are the low-cost producer by far. The difference is that we can’t deliver it – well, we can, actually, as long as we pay the trucks that bring it to us.

We all use the same roads, there’s not much difference in the delivery mechanism – we just weren’t doing it.

So imagine if we did start doing it?

“And then … start imagining what you could use this physical infrastructure for.

Mark Barnes How much time is wasted every day for travelling to Johannesburg to collect antiretrovirals? Or any other chronic medicine, for that matter?

Why can’t we deliver that … at a post office? Why aren’t we paying social grants through the Post Office? Why is a foreigncontrolled company getting the business from government to pay the grants? My argument to the government is that if you take any piece of economics out of the fiscus and put it into the private sector, that’s a loss to the country. So don’t. If we can do it, we should do it.

“Ultimately, one day, you’re going to go to the Post Office, LSMs 1-10 are going to go to the Post Office. LSM 1 – you’re going to get your social grants, LSM 10 – you’re going to go and buy some easy equity stocks. In the middle, you’re going to go and collect...

I saw the Gauteng Government wanting to do a deal with Dis-Chem to distribute medicine. I’m like, “Why? Why don’t you do a deal with us? Pharmaceutical margins are huge. We could cut those margins extraordinarily and do a deal with you guys.”

Home Affairs - Home Affairs have got 407 outlets. We’ve got 4 000. Which queue are you going to go to if we can deliver your ID or your passport…?”

“WHEN CONSEQUENCES DON’T APPLY, THERE IS IMPUNITY.” With the focus still very much on ethical and honest behaviour in the workplace, delegates to GIBS’ annual conference on Fraud and Corruption, Governance, Ethics, Compliance and Investigations, heard this

Deputy Auditor General of South Africa, Tsakani Ratsela

very clear warning from Deputy Auditor General of South Africa, Tsakani Ratsela.

Corruption Watch’s Executive Director David Lewis

She explained that there was also “a lack of financial skills in those required to act”, but the “ultimate goal” of her office was “strengthening the system so that it is

not susceptible to fraud and corruption.”

Corruption Watch’s Executive Director David Lewis reminded the audience that most corruption happens “at the intersection between the public and private sectors”.

Institute of Internal Auditors CEO Dr. Claudelle von Eck emphasised the need for consequences, which she said

Institute of Internal Auditors CEO Dr. Claudelle von Eck

“must be there and they must be visible,” although she noted that “sometimes they have a high cost, like firing a sole breadwinner.”

Prof. Mervyn King, chairman of the King Committee on Corporate Governance

Keynote speaker, Prof.

Mervyn King, chairman of the King Committee on Corporate Governance, pleaded for sustainability issues to be embedded into corporate strategy

.

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15

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16

dean's note

A PUBLIC COMMITMENT TO ETHICS Words Professor Nicola Kleyn

Ethical breaches creep onto our news pages with alarming regularity.

GORDON INSTITUTE OF BUSINESS SCIENCE

One argument supporting the apparent rise in transgressions is made by those who suggest that in a country characterised by (mostly) free speech as well as the inevitable openness that social media brings, there’s no sea change in unethical behaviour. It’s just that more of it is being reported. In the words of one business elder in a recent conversation, “Nicola, there’s always been feeding at the trough, it’s just that the new feeders are not as smart at getting away with it”.

Perhaps. But another explanation would be that we’ve reached a turning point in calling unethical conduct. Health Minister Aaron Motsoaledi recently asserted that “politics of the stomach” were what lay behind the protests against Thoko Didiza’s nomination as the ANC mayoral candidate for Tshwane. This is testimony to an apparent willingness of some parts of government to illuminate individuals desperate not to support a shift in the status quo because their personal benefits would diminish.

Being able to intensify the spotlight on unethical breeding grounds that nourish norms of self-interest is a good thing.

But it’s important that we ensure that our discourse goes beyond the fingerpointing, lamentations of reduction in moral fibre and the inevitable stereotyping of transgressors that seem to characterise commentary. Hiding behind statements that enable us to generalise with head-shaking observations about wide-spread corruption across government, SOEs and private business ignores the outliers who have chosen to rise from their observation platforms to make active changes in organisations.

I recently had the privilege of hosting Post Office CEO Mark Barnes at a GIBS forum where he gave wonderful insights

into his journey to date. When I asked Barnes what he planned to do with the (in excess of R2 billion) funds raised from local lenders on the back of governmentbacked guarantees, he explained that the money would be used to settle accounts owed to legitimate creditors. He didn’t directly allude to the funds that had been siphoned away, but his focus on building a transparent, open and ethical culture along with his intent to close down historical feeding troughs was clear.

“Good luck!” quipped a member of the audience, who said he had previously worked at the Special Investigations Unit.

The Gauteng government’s open tender process is another example of an active change to counter unethical procurement.

In February of this year Premier David Makhura committed to extend the programme to all departments under his ambit.

Corruption Watch is a third example of an actor attempting to shift the status quo. I was fortunate to have an office next door to David Lewis at GIBS for a while and to observe his intellect, passion and action in fighting corruption. He and his team’s consistent and active commitment to driving positive change is noteworthy.

Whilst I don’t dispute that many organisations take active steps to manage their ethical conduct, their actions don’t seem to be as clear as the examples across government, SOEs and NGOs outlined above. The visible ones, including former Nedbank and Eskom chairman (and recent recipient of the 2016 Luminary Award for his outspokenness as a business leader), Reuel Khoza, are few and far between.

And yet, business is an active perpetrator of unethical conduct. For every corrupt buyer, there’s a corrupt seller. And as the

primary provider of goods and services to government and SOEs, business has a significant role to play. So, too, do we as business educators.

We need to go beyond incorporating the consideration of ethical dilemmas across all subjects – transgressions know no functional bounds. We also need to engage actors from across the spectrum – business, government, SOEs, NGOs – to shift general rhetoric to a more finegrained surfacing of ethical dilemmas.

This would enable us to agree on the ethical implications inherent in business actions, the stakeholders served, and those deprived. Until we have a clearer, more nuanced, sense of what we want to change, why it matters, and who needs to do what, we remain at risk of seeing corruption and ethics as blunt issues of principle.

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We also fail to realise our roles as agents of ethical change

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18

opinion

NEW BUSINESS MODELS FORCED TO CONFRONT RACISM Words Trudi Makhaya

They may be billion-dollar unicorns, but the problems they're confronting are as old as the hills.

GORDON INSTITUTE OF BUSINESS SCIENCE

It’s hard to describe why participating in the Airbnb community is so fulfilling.

Lodging in a stranger’s house conjures up a range of negative scenarios. From the nightmarish serial killer who lures guests to his murderous den to inconveniences such as an untidy house, a traveller can’t know for sure what to expect. But there are 60 million people that use Airbnb globally and they can’t all be wrong or broke. In the US, Pew Research data finds that home-sharing sites are used by more affluent, educated travellers.

A few months ago I joined the Airbnb community, as a host. This side of the platform also excites some fears and paranoias. Will guests trash the art, steal the linen or annoy the neighbours? My first guest was a violinist who works as a concert master for a symphony orchestra.

It is exciting to meet all these new people from other South African cities or from across the world. There’s also the rush of knowing that much of the transaction depends on trust. Something must be right with the world if perfect strangers can engage in this way.

But the platform doesn’t give you a guest’s life story. I’ve had to gain comfort by Googling potential guests to get a sense of who they are online, especially on social media. I wasn’t as thrilled about the guest with exuberant party pictures on Facebook as I was about the classical musician. But if you really think about it,

who’s more likely to steal the best linen?

It’s clear how unconscious biases and stereotypes can creep into the system.

In recent months, there have been a number of articles about a particular bias on Airbnb, one all too familiar to South Africans: racism. I imagine it must be particularly challenging for a company that is wrapped in the narrative of being a forward-looking tech ‘unicorn’ (a startup valued over 1 billion dollars) to deal with such an age-old, unsexy problem. A study conducted by Harvard University in the United States found that guests with “black-sounding” names were 16% less likely to be approved than those with “white-sounding” names, though the underlying profiles were identical.

And to underscore the irrationality of racism, those hosts who rejected the African-American version profile only found a replacement guest 35% of the time. This is not a problem limited to Airbnb. A few years ago OkCupid, a dating site, revealed that members of certain racial groups were systematically rated lower than those from other groups. Not individual preferences here and there, but discernible trends against certain demographics as a whole.

It might be easy to dismiss the racial biases evident in these platforms as customers’ prerogative. How dare anyone judge how people make decisions about who to date or who to let into their own

homes, even if they use something as arbitrary as race as a factor?

But it’s not as simple as that. Companies that turn a blind eye to persistent allegations of discrimination run the risk of aiding and abetting practices that go against their values. A company such as Airbnb whose slogan is Belong Anywhere, cannot at the same time accommodate bigots. It also opens up the brand to reputational harm that may invite activist, and even legislative, scrutiny.

Airbnb has had to deal with the popular hashtag #AirbnbWhileBlack on Twitter with people of colour sharing stories of exclusion online, and at least one lawsuit.

A range of solutions has come up to deal with bias on such platforms. Some have called for the removal of pictures from user profiles. Airbnb has pledged to educate community members about unconscious bias. There’s also instant booking, where hosts automatically accept all bookings. The hype over the sharing economy now has to confront the real threats to claims of openness and inclusivity that underpin these models.

As South African entrepreneurs build businesses in this space, they should be mindful that they are not building mere technological tools, but have to contend with dealing with society’s deepest flaws as they seek to connect people to one another.

opinion

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THE RIGHTS STUFF Words Dan Moyane

“The Bill of Rights is a cornerstone of democracy in South Africa.”

These are not my words. I did not write them. I bet millions of South Africans have never read this opening sentence of South Africa’s Bill of Rights, which is Chapter 2 of our Constitution. I am embarrassed to admit that until recently I had also not intentionally read our Bill of Rights. However, simply reading the Bill of Rights should not be the main goal but understanding it and living its values.

This is essential for our future success as a united, non-racial, non-sexist and democratic nation. We need to entrench this “cornerstone of democracy” in our society, starting in our homes and schools.

It’s all about human dignity, equality and freedom.

I thought about this as I ploughed through the tens of thousands of words of comment and analysis that followed the Constitutional Court’s Nkandla judgement. My mind went back to an interview I did with nowDeputy President Cyril Ramaphosa somewhere back in 1996. My colleague at Radio 702, John Robbie and I were talking to Ramaphosa about how the new democratic government should be judged. Without quoting him ad verbatim, Ramaphosa basically said the new government should be held to the highest possible standards. I understood this to mean that the government of the African National Congress (ANC), the majority party, should be of the highest possible standard.

Recent events recalled Ramaphosa’s words and made me wonder if what he articulated 20 years ago is a reality today? I guess this question would solicit a variety of responses from millions of South Africans in the wake of the damning

Constitutional Court judgement on the Nkandla matter.

When ruling on Nkandla, the Constitutional Court’s Chief Justice Mogoeng Mogoeng and his fellow judges reminded South Africans in general, as well as the State President and the National Assembly in particular, about our constitutional roles and responsibilities.

Writing about this quintessential Constitutional Court ruling, former President Thabo Mbeki described the need to preoccupy ourselves with “ … the wider and deeper significance of the Constitutional Court decision. That wider and deeper significance derives from the fact that in its consideration of the ‘Nkandla matter’, the Constitutional Court made an outstanding contribution to the clarification of the issue – what do we mean when we say that ours is a Constitutional Democracy?” Mbeki also noted that in the decision to establish a Constitutional Democracy, a commitment was made to respect the legal, political and ethical obligations that come with our country’s system of governance.

Practicing constitutional democracy meant recognising the Constitution as the supreme law of the land.

Our Constitution should therefore be the ultimate standard respected by all of us.

This means our leaders should champion the highest legal, political and ethical standards at all times as they carry out their duty to serve South Africans.

Former Constitutional Court judge Zak Yacoob has commented to the media that “We are not telling our young people what apartheid was. We are not telling

them about the enormity of what we’ve achieved. But most importantly we are not telling our children here is the Bill of Rights. It’s ten pages, read it. It’s an ordinary person’s document. Internalise it, live its values.”

I agree with Yacoob’s sentiment. I think that the Constitution should be taught at our schools, right from primary school. Our children should learn the Bill of Rights and understand what responsibilities come with it. Learning the Bill of Rights should be made a compulsory part of the Life Orientation and History curriculum.

With a deeper understanding of the Constitution by our children we can ensure that the future of our Constitutional Democracy will be in safe hands. When learning about the Constitution, our children need to also be educated about the sacrifices that were made by courageous men and women of all races to bring it about. They should be taught why it is important to safeguard it for future generations and that any leader who fails to uphold it does not deserve to be elected into authority at any level of our country’s government.

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Our Constitution should therefore be the ultimate standard respected by all of us

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dialogue

Lord Mervyn King

THIS ROUGH MAGIC GORDON INSTITUTE OF BUSINESS SCIENCE

Words Lord Mervyn King, in conversation with Chris Gibbons

Nearly a decade after the Great Financial Crisis of 2007-08, global economies remain sluggish, with poor demand and interest rates stuck at record lows. Former Bank of England Governor Mervyn King was one of a very small group of central bankers in the eye of the storm. In his new book, The End of Alchemy, King analyses the deep causes of the crisis, provides insight into how it was handled at the time, and offers a provocative recipe to change in the global system of money and banking to prevent something similar happening again. Retired and rewarded with a peerage, Lord King – as he now is – spoke to Acumen from London.

AS THE END OF ALCHEMY OPENS YOU STATE THAT “THE IDEA THAT BANKS COULD TAKE SECURE SHORT-TERM DEPOSITS AND TRANSFORM THEM INTO LONG-TERM, RISKY INVESTMENTS” IS “FINANCIAL ALCHEMY – THE CREATION OF EXTRAORDINARY FINANCIAL POWERS THAT DEFY REALITY AND COMMON SENSE”. WHY?

Both money and banking have been alchemy over the years. What I mean by that is that money, whether it’s paper money or even today electronic money, has no intrinsic value. We use it because we trust it and we put faith in the people who manage and issue money. Much of the time that is well-founded but not always. We put money into our bank accounts and we are told we can take it out whenever we want. Normally we can – but if we all decided to go to the bank and ask for our money back, they wouldn’t be able

dialogue

to pay us. They have used that money to make illiquid, long-term loans. So the idea that you can permanently finance long-term, risky investments by using short-term finance, provided by people who believe it to be safe, is clearly impossible to achieve.

There is an element of sleight-of-hand and there is risk involved, but it’s a certain kind of risk, which means that most of the time you never see it, but when you do see it, it is pretty catastrophic.

LOOKING AT WHAT LED TO THE 2007-08 FINANCIAL CRISIS, YOU OBSERVE THAT THE USUAL SUSPECTS – THE US HOUSING MARKET, COLLATERALISED DEBT OBLIGATIONS, BANKS BEING TOO BIG TO FAIL – ARE ONLY SYMPTOMS AND NOT THE FUNDAMENTAL CAUSE?

Whether it be sub-prime mortgages or fancy instruments, these are symptoms of a trend over 30 years towards extremely low, long-term interest rates. That’s in large part because countries in the East, but also including Germany, decided to pursue an export-led growth strategy. That led them to save a great deal, and they deposited those savings in the world capital markets. Countries in the West, like the US and the UK, but some other European countries too, found that because they faced a significant trade deficit, they had to boost their domestic spending, and in order to do that, they cut interest rates. Interest rates right across the spectrum – short-term and long-term – were continuously falling. That kept pushing up asset prices and as asset prices rose, such as house prices, people needed to borrow more in order to finance the purchase of those assets. The banking system willingly provided that debt finance by lending to households and companies that wanted to borrow. That put a great strain on the balance sheets of the banking system – they themselves had borrowed a good deal of money – and they didn’t have enough equity finance to withstand even the smallest concerns about their solvency. So when concerns were triggered in 2007, people started to run from the banks, both individuals but particularly financial institutions. It was that concern about the weakness of the banking system that really was the cause of the banking crisis, but, in turn, it reflected macroeconomic developments over quite a long period.

WHY WAS IT NOT POSSIBLE TO SEE THE CRASH OF 2008 COMING?

A lot of people did see that the developments in the world economy were unsustainable, and, indeed, many international meetings talked about the unsustainability of the current situation. Of course, it just kept on going, so that rather blunted the thrust of people who asked “Is this really sustainable?” At the level of central banks and governments, most people thought it would come to an end through a big and violent movement of exchange rates, rather than a collapse of the banking system.

YOU INTRODUCE ANOTHER CRITICALLY IMPORTANT CONCEPT: ‘RADICAL UNCERTAINTY’ – WHAT DOES THAT MEAN? This is absolutely fundamental because it explains why many economists were using so-called models that assumed that all risks could be adequately captured by known probability distributions and so priced in financial markets. In fact, the big risks that come along and create crises are ones that noone anticipates. You simply don’t imagine it happening, and

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INTEREST RATES RIGHT ACROSS THE SPECTRUM – SHORT-TERM AND LONG-TERM – WERE CONTINUOUSLY FALLING” therefore, if you don’t imagine it happening, you can’t price it and trade it in the markets. When banks get into trouble, it’s because they themselves, as well as their customers, experience a shock that they too didn’t see coming. This can cause mayhem both for the financial system but also the economy as a whole. It’s very important to recognise that the uncertainty that matters in causing booms and slumps is radical uncertainty, not uncertainty that can be emasculated in its effects by being represented by known probabilities and so priced in markets and tamed in that way.

THEN CAME THE CRISIS, THE COLLAPSE OF LEHMAN BROTHERS, AND THE SOLUTION THAT WE KNOW AS ‘QUANTITATIVE EASING’. AS YOU LOOK BACK, WAS THAT THE RIGHT ACTION?

In the immediate aftermath of the events of autumn 2008, it was the right thing to do – launching what might be described as a Keynesian stimulus. That stimulus helped to prevent a repeat of the Great Depression and it bought time for governments to deal with the underlying problems. Unfortunately, governments have not dealt with the underlying problems and so central banks have gone on creating more money and cutting interest rates.

This maybe buys us a bit more time but it doesn’t actually solve the underlying problem, the disequilibrium, as I call it, in the big economies and in the world economy as a whole. The problem is that we’re actually not dealing with the underlying problems and until we do, central banks are going to find it extraordinarily difficult to do anything other than keep interest rates close to zero.

IS THAT WHY, IN YOUR WORDS, “… WEAK DEMAND HAS BECOME A DEEP-SEATED PROBLEM, AND ONE THAT APPEARS IMMUNE TO FURTHER MONETARY STIMULUS?…ONE THAT THREATENS TO PERSIST INDEFINITELY…”?

Yes. Weak demand is a reflection of the fact that what monetary policy can do is to try to persuade people to spend today rather than tomorrow by cutting rates. People do that and, temporarily, you seem to get an improvement in the data on spending and output growth, but then it peters out. The reason is that once time has passed, what was tomorrow becomes today. So, having persuaded people to bring spending forward from what was tomorrow to today, you’ve now dug a hole in today’s spending and you’ve got to cut interest rates yet again to bring spending forward from the new tomorrow to today. That also works for a little while, but then time passes, that peters out, and then you’ve

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dialogue

. . . THE BIG RISKS THAT COME ALONG AND CREATE CRISES ARE ONES THAT NOONE ANTICIPATES ” got to do more stimulus because you’ve dug an even bigger hole in what has become the spending of today. There is a limit to how far people want to go on sacrificing their future spending in order to be encouraged to spend today. Monetary policy by cutting rates, if that’s all that you do, inevitably has diminishing returns. As I say in the book, it’s like a cyclist that’s cycling up a hill that’s just getting steeper and steeper.

This is not the right answer to the long-run problems that we face and until the restructuring of our economies takes place, in which countries like China and Germany genuinely move resources out of their export sector into sectors producing goods for domestic consumption and economies like the US and UK do the opposite, i.e. cut back on producing stuff for domestic consumption, and instead produce more for export and net investment, until we get that rebalancing of spending and saving, then it won’t be possible for central banks to raise interest rates. Only then, when they can raise rates, will we be back in a normal position, where economies can grow again and investors can anticipate that demand for their products in the future will be higher than today.

GORDON INSTITUTE OF BUSINESS SCIENCE

YOU SAY WE NEED FUNDAMENTAL REFORM OF MONEY AND BANKING – HOW?

First, I would unwind a lot of the complex and overly ambitious regulation that we see today. It’s too detailed. I would put in place two elements of regulation: one would replace the complex, risk-weighted capital requirements, which are imposed by the international Basel regime, by a simple leverage ratio. I’d be tougher than the leverage ratio today, but I think something simple like this is the best way to ensure that banks have sufficient equity finance so that when they do generate losses, there is enough equity finance to absorb those losses without the need to send banks into a complicated and complex resolution or bankruptcy process.

23

dialogue

The second thing would be to make banks, in effect, take out insurance for the risk that they take in borrowing short and lending long. I would do that by making them have to position some of their assets with the central bank. The central bank would then assess how much money they would be willing to lend against those assets at any point in – say – the next five years, if there was a crisis. They would not be willing to lend the full face value today of those assets because who knows what value they might have in the future. They’d be willing to lend a fraction of it – they would impose, in other words, a ‘haircut’ on the collateral against which they’d be willing to lend and the commercial bank would have to position with the central bank enough assets so that the guaranteed cash credit line which it had with the central bank would be sufficient to cover its deposits, the deposits that could run from the bank tomorrow. If you or I turned up and wanted our money back out of our bank accounts, then it must be possible for the bank to repay all the deposits by drawing on this cash credit line with the central bank. I call this the ‘pawnbroker’ role for central banks because in the Great Crisis, central banks were unable to lend against good collateral, they had to lend against risky collateral, much of which they didn’t entirely understand. So I would want to institutionalise this ‘pawnbroker’ role and ensure that banks don’t just wait until the crisis before turning to the central bank to say, we haven’t got very many assets, you’ll have to lend to us. The commercial banks would have to position collateral in advance. In other words, it’s saying to banks, there is mandatory insurance that you must take out, just as we say to people who drive on roads, you have to take out insurance before you drive, not after you’ve had an accident.

WHEN I READ THAT I THOUGHT, YES, THAT’S A GREAT IDEA BUT IT WILL NEVER HAPPEN. A PARAGRAPH LATER YOU POINT OUT THAT IT HAS ALREADY STARTED HAPPENING AT THE BANK OF ENGLAND?

Yes, and elsewhere too. Other central banks like the Federal Reserve are also pre-positioning collateral. What’s remarkable about the situation is that we’re much closer to this outcome that I describe than most people believe, because a consequence of quantitative easing is that banks in the US and UK now have,

on average, 20% of their assets in the form of deposits with the central bank. That’s a large chunk of their assets that they can draw on – just like that! – if they need a cash credit line.

What we don’t do at present is point out to depositors and others in the financial system that yes, indeed, the central bank is actually willing to grant this cash credit line. Central banks have been reluctant to commit themselves, but if the collateral is pre-positioned, there is no reason why they should be reluctant.

That would give a guarantee to everyone. If you have a deposit in a bank, you would know that there’s never any need to run from the bank because, when required, the bank would always be able to get a cash credit line from the central bank to repay you. So why join a bank run if it starts? This is a do-able proposition.

WILL WE FACE THE EVENTS OF 2008 AGAIN, AT SOME POINT IN THE FUTURE BUT EVEN WORSE? OR ARE WE TAKING CORRECTIVE ACTION, SUCH AS THE PROCESSES YOU’VE JUST OUTLINED? We have certainly not been prepared to take the protective action sufficient to prevent another banking crisis. We need to do that.

And we should worry about the banking system in Europe, China and emerging markets. There have been some improvements in the banking system in the US and UK, but it’s the banking system in the rest of the world that we should worry about more.

In terms of another crisis, it could well come but I don’t think it will take the same form. I don’t think it will be a banking crisis in New York or London. It’s much more likely to be a problem of debt default and we’ve already seen defaults by enterprises in China towards their banking system. We could yet see defaults in other emerging markets which have borrowed a great deal in dollars, or defaults, indeed, in the Euro area by other banks or other borrowers, including sovereign borrowers. By failing to correct the underlying problems of the world economy, we have not provided any incentive for the amount of debt in the world gradually to decline and we haven’t put in place the conditions that would encourage people to believe that they could, in fact, afford to spend more now against higher future incomes. So we are facing slow growth across the world economy and the risks of problems in the financial sector associated with debt

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. . . WE SHOULD WORRY ABOUT THE BANKING SYSTEM IN EUROPE, CHINA AND EMERGING MARKETS ” *The End of Alchemy by Mervyn King is published by Little, Brown in paperback at R385

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south africa

27

Chief Justice Mogoeng Mogoeng

COMETH THE HOUR… Words Chris Gibbons

At a time of deep economic concern and some political flux, South Africa’s Chief Justice Mogoeng Mogoeng has delivered an impassioned call for ethical leadership. Speaking at GIBS, Mogoeng described ethical leadership as “the national imperative that could facilitate the realisation of our national aspirations”.

As Chief Justice Mogoeng Mogoeng walks into GIBS’ main auditorium and down the stairs towards the podium, the audience rises. The loud applause that greets him is not for what he is about to say, but for the Constitutional Court’s decision two weeks earlier that the ruling of Public Protector Thuli Madonsela on Nkandla is binding. President Jacob Zuma will have to

#Paybackthemoney, or at least some of it. The people waiting to hear the country’s top judge approve.

Mogoeng was invited to speak at the event – a conference on social investing – many weeks before the Nkandla judgement but the timing of his appearance could not be more fortuitous.

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south africa

Nor does he disappoint, especially if you are listening with a particular set of preconceptions about South Africa’s current president, his government and corruption.

“Once ethical leadership is embraced as an essential or critical component of our nationhood, once it defines our kind of leaders, then there would be hope that our leaders would influence the nation and the running of its affairs in a manner that will inject as ethics. Some view it – morality – as an integral part of our daily discourse … Ethics concerns one’s moral judgement about right or wrong,” says the Chief Justice.

He continues by referring to US President Dwight Eisenhower, who “observed that the supreme quality of leadership is unquestionably integrity … Generally, elements of integrity almost always rank much higher than all other characteristics of leadership, even higher than competence. After all, who cares about a competent and yet corrupt leader?”

No, not Nkandla, nor Jacob Zuma, but the old enemy, apartheid: “… why we as a nation were divided and to a large extent continue to be divided.” Mogoeng points to both “the land issue and the economy”.

His challenge to “the business sector, government circles and civic society is what to do to bring about the radical paradigm shift that can normalise the situation in South Africa and bring an

WHO CARES ABOUT A COMPETENT AND YET CORRUPT LEADER?”

Murmurs of approval ripple through the audience; they clearly believe that they know exactly whom Mogoeng is talking about. Watching journalists tap-tap furiously on their notebook keyboards.

They, too, have jumped to the same conclusion.

WHY ETHICS?

GORDON INSTITUTE OF BUSINESS SCIENCE

There is more: “… ethical or quality leadership is a master key to a prosperous and peaceful nation. A true or ethical leader is thus a model for his or her followers. Leadership includes the capacity to influence, inspire, direct, encourage, mobilise and activate others to pursue a common goal or purpose, while maintaining commitment, momentum, confidence and courage.” In the audience, heads nodded approvingly.

Chief Justice Mogoeng Mogoeng

Moments later, however, the object of Mogoeng’s attack sails into plain view.

“Why does anybody in South Africa and wider sub-Saharan Africa require ethical leadership? I think we do as a nation, we do as business, because we are where we are as a result of what unethical leadership did to us as a nation. It takes a thoroughly unethical leader to design a plan whose objective it is to forcefully remove others from their land and houses. It takes a leader bereft of universally accepted ethics to design an educational system that is sub-standard to that which other compatriots enjoy. It takes leadership devoid of ethics to design the economic sector of a country in such a way that a significant portion of the nation is not supposed to participate meaningfully in it.”

end to the divisions of the past. The racial divisions of the past, that cost us as a people who belong together … to deny South Africans who were aggrieved in the past the opportunity to think about going back to the dark days when we were a nation at war with each other and killing each other.”

His conclusion: “For that, you need ethical leadership. Leadership that espouses the truth, leadership that is grounded on the truth, leadership that can be trusted; not manipulators, not intimidators, but people who are consistent: what they say, whatever promise they make to you is a promise that you can rest assured will be honoured … Ethical leadership leaves no room for corruption. Ethical leadership leaves no room for the manipulation of politicians by the corporate world…” – there is a collective intake of breath in the audience, is he about to name a big name? “... as I learn is the case, for instance in America, and

Share. Grow. Prosper.

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Sharing. It’s the most powerful form of humanity. It is something we are taught before we can even walk. Because in sharing lies positive growth for all. The chance to prosper. To give and receive.

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But there is no end. And each time we share we know that some day, in some way, it will be shared again. When we share, we grow.

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south africa

I think America is no exception.” The audience breathes out, a disappointed sigh, as Mogoeng details how business in America has apparently captured both the Republican and Democratic parties.

Yet again, though, he brings it home: “And that explains why ethical leadership really isn’t an option but a national imperative.” The link between US politics and South Africa isn’t entirely clear, so maybe he is inviting us to read between the lines after all?

“Because when you are a leader, you have it within yourself, you have the authority to influence those that you lead. And it is what you do that largely determines what those that follow you are likely to do. When the leader is unethical in his or her approach, check what those closer to him or her do … Everybody becomes a co-participant in the unashamed betrayal of the legitimate or constitutional aspirations of the people they claim to represent, the people whose aspirations they claim to cherish,” says Mogoeng, and he’s evidently not referring to residents of California or Iowa now.

Chief Justice Mogoeng Mogoeng

ETHICS & RACE

Repeatedly he hammers home his point about race: “You can’t be an advocate of the truth, you can’t be fair, you can’t be trustworthy, you can’t be connected to the Constitution, the preamble and the ethos of our Constitution, and still practice racism. It’s impossible … How can we be a united, democratic country when we still close an eye to racial discrimination?

GORDON INSTITUTE OF BUSINESS SCIENCE

He makes a telling point about why racism endures: “I think the mistake we made was to assume that because ours is one of the most progressive constitutions the world has ever seen, automatically the ills of the past will disappear.”

He’s nearly done. “If ever there was a time to embrace ethical leadership and stop spinning, stop manipulating, stop relying on our supporters or sympathisers to do wrong knowing that our wrongdoing would be covered up in some way, that time is now. If anybody ever needed a bell to be sounded, to say the time for the change we have all been waiting for, in every sector of our lives, including the economy, this is it. That bell has been rung.”

And he ends with a very clear exhortation. “So, finally, embrace ethical leadership, seek to know more about it. Don’t just know about it, absorb it and live it. Sleep ethical leadership, wake up in an ethical leadership mode. Even as you take a bath, your concern must be ‘what is it that I can do for my people?’ And when you say ‘my people’, as a white person or a black person, don’t be thinking of people of your colour. Every South African is part and parcel of your people.”

Three questions from the floor and then Chief Justice Mogoeng Mogoeng heads back up the stairs and out of the GIBS auditorium. Once again, the audience is standing, clapping, talking excitedly to each other. This time, though, they’re clapping because someone has just spoken to them the way Mandela used to speak to them, transcending race and class, bridging ethnic differences, laying out a vision, a call to action.

.

It’s long overdue but there’s an old saying.

Cometh the hour, cometh the man

EVERY SOUTH AFRICAN IS PART AND PARCEL OF YOUR PEOPLE ”

YOU SEE IT. SO DO WE.

You know it is happening, but you feel powerless to stop it.

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MAKING ETHICS REAL Words James van den Heever

The Chief Justice made it clear that ethical leadership was required of the private sector as well as the public. Whether by accident or design, his address was followed by the launch of the GIBS Ethics and Governance Think Tank, which aims to make ethics a corporate leadership commitment.

In the dark days of apartheid, business was called to play a broader role – and, arguably, a vital one – to end the system. Then King III drove home the lesson that this was not an exceptional case; in a connected world, the markets to which business answers now include more than just shareholders. Social capital is almost as important as financial capital. Trust, crucially, is the currency of both.

The consequences of the erosion of social capital are evident at all levels of South African society: in the toxic relationships between businesses and workers, and workers and unions, as well as between government and all its stakeholders. That erosion was caused by unethical behaviour, and it can only be rebuilt by a return to ethical practices.

GORDON INSTITUTE OF BUSINESS SCIENCE

The brainchild of Gideon Pogrund, the GIBS Ethics and Governance Think Tank is intended to catalyse this process within the corporate sector, and even more broadly. Pogrund is a specialist in Business Ethics with an MA from Cambridge; he has worked as a commodity trader and currently helps run a business ethics consultancy. He is also a rabbi. It’s an intriguingly diverse CV in today’s obsessively secular world, promising as it does an acute sensitivity to how moral law is translated into action, combined with an insider’s knowledge of what it’s like to work in the eye of the capitalist hurricane.

. . . THE THINK TANK IS NOT GOING TO BE JUST ANOTHER TALK SHOP . . . ” WHY GIBS?

Essentially, Pogrund’s vision is to leverage GIBS’ position to host public debates, but also intense private conversations where greater candour is possible. In addition, day-long group working sessions have been arranged, comprising members of the GIBS

James van den Heever

faculty and senior members of leading companies. He will also collaborate with other ethics initiatives as opportunities arise.

“Thanks to the King codes, among other initiatives, we have a framework of broad principles for responsible governance and ethical business conduct. Our contribution, we believe, will be to help make these tangible for business and to promote buy-in by getting corporate leaders to discuss ethical dilemmas and hard trade-offs, by getting them to come up with creative ideas and pragmatic solutions, and by getting them to talk in public about how ethics generates business value. GIBS is ideally placed to do this, offering the rigour and depth of an academic environment together with a platform that is widely used by leaders from business and other areas,” he says.

Pogrund is adamant that the Think Tank is not going to be just another talk shop and has committed to delivering a concrete action framework.

Getting it right will require a deft touch. Globally, growing corporate power means companies are increasingly seen as moral protagonists, accountable for their actions. But in a polarised environment like South Africa, business is seen by some as a driver of inequality, part of the problem – by definition, unable to offer ethical leadership.

However, Pogrund is undeterred. “South Africa has always had the capacity to produce ethical leaders. What we want to do is harness their moral and intellectual capital in a systematic way – a different type of ‘capture’ – to generate concrete action,” he says.

THE PROCESS BEGINS

The May launch event offered a glimpse into how the Think Tank will work. Participants were Dr. James Motlatsi, a founder member of the National Union of Mineworkers (NUM) whose business interests include TEBA and Ubuntu Mining; Nicky Newton-King, CEO of the JSE; Mark Lamberti, CEO of Imperial Holdings; and Dr. Reuel Khoza, former Chair of Nedbank and current Chair of Aka Capital, as well as President of the Institute of Directors in Southern Africa.

The event was oversubscribed and attracted significant media interest – perhaps an indication of just how widespread the realisation is that, as a society, we have lost our ethical compass.

GIBS Dean Prof. Nicola Kleyn began by asking, “What is an ethical business?” and, in a sense, everything that followed circled round this thorny question. By the end, one also had a glimpse of the challenge: deriving broad principles from a wide-ranging and philosophically heterogeneous discussion would be difficult.

For example, Reuel Khoza neatly sidestepped Professor Kleyn’s question to talk about ethical leadership, whereas Mark Lamberti wanted to look at why being ethical was a survival issue for businesses now, at this time. Dr. Khoza’s point is that ethical leadership depends on putting the common good above individual good, and must distinguish between right and wrong.

For Lamberti, ethical practice is now intimately tied up with a business’s survival. Corporate longevity has declined and, to reverse this, companies need to take a long-term view, creating value for a wide range of stakeholders. In today’s world of social media activism, stakeholders can shut your business down, and presumably they can also support it.

In this context, Lamberti said, unethical behaviour must be seen as a function of short-term thinking.

THE INVESTMENT LINK

By linking ethical business and sustainability, Lamberti put his finger on the hot button: no unambiguous correlation between ethical business and financial performance has been demonstrated. Newton-King came straight out with it: the markets tend to reward companies that meet short-term forecasts. However, she said, the fact is that companies cannot survive without a social licence to operate; in South Africa,

companies must take the country’s needs into account because, if it comes apart, their prospects will be truly blighted.

Thus, a long-term view that might, for example, favour investing in skills development or broad empowerment carries short-term risks, such as a reduced share price – but simply concentrating on short-term financial gains could (will) reduce a company’s longterm sustainability. Institutions, as the major investors in the economy, need to take the lead in assessing companies on their long-term strategy, agreed Dr. Khoza – a true change in investing mindset.

Dr. Motlatsi made the important point that a mutual commitment to ethics had the potential to build commonality of interest between employer and employees. Too often, labour and capital act as though they are not fellow citizens of the same country, let alone members of the same organisation. By combining an ethical appreciation of the country’s needs with those of the industry and the company, both parties can actually protect their own interests better. He cited the unprecedented co-operation between employer and employees to save Harmony mine, with NUM actually playing a pivotal role in convincing workers to take a much-reduced increase of 3.5% in order to save their jobs.

More broadly, an ethical framework is badly needed to make a diverse society like South Africa (and particularly its economy) functional.

He further argued that in order to build solid stakeholder support, companies must prioritise the needs of local stakeholders – in preference, presumably, to broader, arm’slength social investment initiatives.

And then, of course, the now seemingly perennial South African issue of corruption. There was agreement that corruption needs two parties to occur, and here the conflict between meeting shortterm performance goals and long-term ethical behaviour was noted. Nicky Newton-King seemed to speak for everyone when she said that corruption was a societal issue, and a zero-tolerance approach was necessary.

It was a wide-ranging and often challenging discussion, the first of many. But the trick will be to pull everything together to create an action framework that business will adopt – that’s where Pogrund and the GIBS team in general will make their major input

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. . . UNETHICAL BEHAVIOUR MUST BE SEEN AS A FUNCTION OF SHORT-TERM THINKING ”

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Learning from the crafters at !Xaus Lodge

DOES RESPONSIBLE TOURISM PAY? Words Eugene Yiga

Doing good for others can be good for business, as three tourism operators explain.

GORDON INSTITUTE OF BUSINESS SCIENCE

How does one compete in an increasingly commoditised hospitality industry? For Henko Wentholt, General Manager of Abang Africa Travel (Abangafrica.com), differentiation is key.

“The only way we can survive is by offering different experiences and ensuring added value for visitors,” he says. “That comes from sustainable community tourism.”

Founded in 2005, the company’s mission is to promote travel with heart and soul. It’s about giving travellers authentic experiences they value. It’s also about being responsible; not in a boring or guilt-inducing way but in a way that Wentholt describes as engaging, honest and fun.

“There’s a world of opportunity ready to be discovered by visitors but also a world of opportunity for people in South Africa to engage with visitors, make money out of them, and improve their livelihoods,” he says. “It’s a world where travellers have a positive impact but also where communities benefit, in financial and nonfinancial ways.”

CHANGING PERCEPTIONS

Because most news about Africa is negative, foreigners can be reluctant to visit. Worse, when Abang Africa Travel tries to convince tourists about its sustainable offering, many don’t believe it’s true.

“We’re selling a sustainable product but the market is still hesitant,” he says. “Responsible tourism still has a ‘tree-hugger’ label. That makes people suspicious.”

Changing perceptions required Abang Africa Travel to “walk the talk”. It became certified with Fair Trade Tourism in South Africa and Travelife in the UK. It also created a trust, to which it channels 10% of profits. This sponsors, among other things, projects on the Cape Flats.

“It’s common business sense,” Wentholt says. “We’re selling something that we need to sell in the future. What happens with many tourism companies nowadays is like chopping down a tree and selling little pieces of wood. And in twenty years’ time they

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won’t have anything to sell. So why would we destroy our own livelihood and not safeguard it?”

people closest to the environments that need protection, Gardiner believes that responsible tourism will grow.

TELLING BETTER STORIES

“The USP of Africa is our wildlife and our people,” he says. “If we don’t look after both, the tourists won’t come. And we’ve got a war on our hands. Our wildlife is being decimated; hence my time and effort trying to protect one of our USPs. I just hope we’re going to win this war. It’s one hell of a battle.”

These and other efforts have made it easier for Abang Africa Travel to market itself. Because being a five-star property isn’t enough, Wentholt believes that sustainable tourism makes it easier to appeal to the concerns of a new generation. It also helps companies tell better stories, which is something Mantis Collection (Mantiscollection.com) has at its core.

“The name came from my dear friend Dr. Ian Player at the Wilderness Foundation,” says founder and chairman Adrian Gardiner, who also founded Shamwari Game Reserve. “He said that because our products are small, we should call it Mantis Collection. We took that further and created the acronym: man and nature together is sustainable.”

Since its beginning in 2000, the company has expanded its hotels, eco-escapes and lifestyle resorts around the world. But while it’s been praised for environmental practices, with each property sensitive to its surroundings, that didn’t stop Gardiner from focusing on the bottom line.

“We have our own version of the big five: development, hospitality, sales and marketing, education, and conservation,”

RESPONSIBLE TOURISM STILL HAS A ‘TREE-HUGGER’ LABEL. THAT MAKES PEOPLE SUSPICIOUS” he explains. “But at this stage in my life, the two most important things are education and conservation. As I once heard Johann Rupert say, to do good, you have to have done well.”

“Our ethic with regard to responsible tourism focuses on enhancement of our people, protection of the environment and our partner associations,” Gardiner says, citing its relationships with non-profit organisations like Tusk Trust (of which Prince William is Royal Patron), MAD Charity (started by Francois Pienaar) and more. “When you look after those, the profit will grow. But if we don’t tell people what we’re doing in Africa, and give some of the profit back to the people who are helping us, it’s a no-win situation.”

SPREADING THE WORD

Despite the challenges, Gardiner admits to being “a positive guy” who believes we can make things work. Equally positive was Glynn O’Leary, co-founder and CEO of Transfrontier Parks Destinations, when he had the opportunity to take over !Xaus Lodge (Xauslodge.co.za) in the Northern Cape.

“It was built and left deserted for three years,” he recalls. “Every major lodge-owning company in South Africa was invited to have a look at it. They all said there was no way it could work.”

Never mind that the community wrote off the property as a “white elephant”. Never mind it being situated in an area that was part of a disputed land claim between the Khomani San and the Mier. And never mind its remote location. O’Leary took a chance.

“From Kgalagadi to Upington is 360km,” he says. “So to put yoghurt on the table for breakfast, we do a 720km round trip to shop. We use half a tank of fuel to fill the vehicle and have to lug it back in 500-litre drums.”

Because the lodge doesn’t have gravel road access, visitors drive through 35km of sand – and across almost 100 dunes – to arrive.

THE USP OF AFRICA

Gardiner cites several examples of lives changed through their work. In one instance, he recognised potential in a cleaner from a block of flats he managed. Gardiner got him a driver’s licence, taught him how to use a computer, and secured him a job at a game reserve.

“He didn’t want to go,” Gardiner admits. “But he became the head ranger and, a few months ago, one of our clients flew him to America to spend a week in his hotel. That guy’s life is changed forever. And that’s what I call profit out of tourism. It benefits the bottom line in the long run.”

On the education side, Gardiner was a founder of Stenden University South Africa in Port Alfred. He explains that it’s the only place in the world where BCom Hospitality Management students can do a semester in wildlife management. By educating

Abanga crafter

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!XAUS Lodge chalets

But more challenging than the logistics is spreading the word about what !Xaus Lodge offers.

“We were forced to turn the challenges into success,” O’Leary says. “But one of the biggest challenges is that not all tour operators recognise what we’re doing as important. We need to get more of them involved in responsible tourism and what it means.”

LISTEN TO THE SUNSET

GORDON INSTITUTE OF BUSINESS SCIENCE

There are several aspects to responsible tourism for !Xaus Lodge.

First, the community chose its name – it means ‘heart’ in the Nama language – and is involved in management through a joint board. The lodge has also trained Bushmen trackers including Melissa Mienies, the first Mier community female guide.

“We have a crafting village with Bushmen crafters but we don’t dictate how they operate,” O’Leary says. “We let them decide whether or not they’re going to be in their traditional clothes.

That sometimes creates a challenge for us. But we explain that if guests arrived hoping to see the Bushmen as they lived a hundred years ago, they’ve arrived a hundred years too late.”

Indeed, in an area almost twice the size of the Kruger National Park, O’Leary explains to visitors that seeing animals is a privilege and not a right. But one thing they don’t fuss about is the natural beauty that makes !Xaus Lodge an ideal place to “listen to the sunset”, and, as one guide said, see the world by day and the universe by night.

A LEAP OF FAITH

Even though the goal of a business is to make a profit, O’Leary explains that making an “unreasonable profit” could risk failure

by leading to a clash between companies and communities.

It’s why !Xaus Lodge regularly renegotiates its long-term agreements, sometimes to its detriment, to ensure they remain fair.

“If we don’t do that, tourism in our rural environments is doomed,” he says. “And if tourism in our rural environments is doomed, conservation in our rural environments is doomed. It’s something we have to keep in mind.”

Staying focused on what matters most has served !Xaus Lodge well. Since it opened in 2008, it’s generated R25m income for the regional economy and the local community has also earned significant income through salaries and craft sales.

“We took a leap of faith, believed we could make it work, and I think we have,” O’Leary says. “When you have a 24-bed lodge in an environment like that, generating that kind of economic activity, we’ve done something right. That’s what responsible tourism is about.”

. . . WE’VE GOT A WAR ON OUR HANDS. OUR WILDLIFE IS BEING DECIMATED. . . ”

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PHOTO: © LUANNE CADD

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Gorilla-trekking from Bukima, Virunga National Park

BEYOND OUR BORDERS: PARKS AND RECREATION

“We have an experienced intelligence scheme that looks at the local security situation and wider political context so we’re able to tell far in advance when there are potential problems on the horizon,” he says. “But we don’t control all the elements. And of course, during periods of armed conflict, it’s impossible to do tourism and you suspend it. But there are also long periods in which there is relative peace and, during those periods, it’s possible to bring visitors safely.”

National Park Gorilla-trekking

Indeed, since the park reopened to the public in 2014, it’s had thousands of visitors without a single incident. This is thanks to the effort to build a team of committed rangers who provide security to visitors and the local population. De Merode describes it as “the big breakthrough” for Virunga and the region as a whole.

PHOTO: © LUANNE CADD

“Virunga has seen the development of a remarkable thing with tourism over the last few years,” he says. “The first real drive was to reform the institution and build a tourism industry around it that also helps to make the government institution, which is a national park service, more sustainable.”

Inside Nyiragongo, Virunga National Park

Although tourism brought the notion that things can happen in Virunga, it hasn’t been just about the money. Yes, attracting highquality visitors is helping the park meet its growing budget. But tourism has also brought more exposure to the isolated region, already famous for its endangered mountain gorillas. And once it’s clear that people can visit safely, it becomes clear that they can invest safely too

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PHOTO: © DEAN STARNES

When coming to Cape Town for the annual We Are Africa travel expo earlier this year, Emmanuel de Merode wasn’t sure how to pitch his offering. But, as Director and Chief Warden of the Virunga National Park in the DRC, he didn’t want to present a sanitised version of what he’s lived through, even though the reality might make tourists reluctant to come.

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IS THE SUIT FINALLY DEAD? Words Cheska Stark

Head into any CBD and you will notice a few things – lunches are getting shorter, skirts are getting longer, gifts and corporate benefits are getting less and there are fewer and fewer suits worn.

Of course, this is not according to the entertainment industry (and a few exclusive names in places like New York) where the high-powered players still sport a perfectly tailored suit to the office everyday – think Harvey Spector in the TV series Suits. But the real men in the real world are choosing a much less formal equivalent – suits and no tie, chinos and open-collar shirts and forget the three-piece and power-game tie.

Suddenly we hit the 2000s and everything changed – we became a more conscious society. Vegans and vegetarians became cool again, the world became technology obsessed and you had guys like Steve Jobs standing up and presenting in jeans and a turtleneck, yet still being taken seriously. While the corporate guys always have a role to play, it was at this time when the tech geeks became the centre of attention. An entire new perspective was seen on business culture: not only had dress codes been demolished but the traditional idea of a work space had too – places like Apple and Google’s offices showed a new platform for the working world. Of course, these guys were not suit-wearing.

With the Internet boom and a sudden exposure to unlimited content, alternatives were seen – sartorial bloggers and, later, Instagramers, showed a different fashion aesthetic that was previously unexposed. At the same time there was a growth

Tom Ford

PHOTO: GETTY IMAGES

GORDON INSTITUTE OF BUSINESS SCIENCE

On the contrary women are suiting up, so to speak. Not necessarily in a formal three-piece, but let’s be honest: women are not choosing flats and easy shirts in the work place, so what’s going on? Did globalisation take away our suit? Or have our business role models and new age CEOs paved the way for a new dress code? Has the wave of hipsters and their wannabe counterparts influenced more than just the new age digital crowd on how to dress? Does it mean that just because you don’t work from a coffee shop with your Mac and skinny jeans, you can’t rock a beard in the corporate world?

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in smaller-owned hedge funds. These guys owned their own businesses and therefore didn’t have to answer to big corporates.

Enron, WorldCom and then the global financial crisis of 2007/2008 resulted in the slowdown of the financial world’s glamour – clientgifting virtually stopped and strict regulations were implemented in the financial sector. Of course one’s dress choices are affected by one’s mood and environment, a less flashy, high flying way of life results in less glamourous dressing. However, there was another shift too: “a major shift in the attention on men’s wear,” Tom Kalenderian, the executive vice president for men’s wear at Barneys New York, told The New York Times, “It’s coming from men directly. It’s almost become a fetish.”

BLAME TOM FORD

Like anything on its way to distinction, we didn’t just wake up one morning and lose the suit. Its death was a slow, stylish one.

Tom Ford left Gucci in 2006 to start his own label – bringing a new era into fashion. A black suit with a white shirt and no tie became his signature look and many followed suit – excuse the pun.

Men started to experiment with suit styles, tie shapes and knots changed, pants got narrower and jackets became more fitted (again to the TV show analogy think of Mike in Suits). This evolution wasn’t a surprise, think of the 1920s-style Great Gatsby suits versus Elvis Presley’s mix ’n match suit in the 50s. Gordon Gekko from the movie Wall Street epitomised the 1980s suit, so it was only natural for a revamp of this men’s staple in the 2000s. Suit styles now aren’t what they used to be. Like everything in the fashion world, there are endless choices – cotton, linen, suits with no tie, stars have hit the red carpet wearing a suit and tee, or sneakers – granted they are never on the best-dressed list but they are there. Jeff Goldblum is king of pulling off the mismatched suit while guys like Tom Hiddleston and Jay Zee make wearing a suit look like the only option. Needless to say, James Bond always wears a suit.

Then in the 2010s, hipster culture took over our men. According to Dan Fletcher, who wrote about Hipsters in 2009 for Time Magazine, “Everything about them is exactly constructed to give off the vibe that they just don’t care.” Which is exactly on point.

However, the parody of it all is that it takes so much care to look like you don’t. Hipsters became the paramount of cool, corporates and the stereotypes that go along with them became less on-trend, hence two things continued to happen. Firstly, rules continued to loosen up on work wear and secondly, fashion freedom once again became an obvious trend for both men and women.

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man you are, your creativity is explored through your clothes and each member of the firm has a different trademark. The liberation from the suit allows men to be themselves in the workplace. Many may argue that wearing a suit doesn’t mean you are oppressed; quite right, it’s about the choice.

Fashion is all about playing a game and the game has become more complicated as everyone realises that the suit is only one move. Like all things, suits come with a certain connotation – that of power and formality. While there is certainly place for these characteristics in business, when it comes to people skills, these may not always be the first impressions you want to put forward.

There is also the new idea of dressing like your client. All everyone wants to do is seal the deal and get the business so there is really no point in intimidating clients with high-powered, smart-playing suits. Dressing for the context is what it has become all about – you wouldn’t wear your swim shorts into the office, so why would you meet a potential partner wearing a suit when he is obviously more at ease in a golf shirt? One’s attire shows proper respect to those with whom you are meeting.

POWER GIRLS

Of course this is purely a sexist argument because while the suit for men may be dying off, women dressing up and more formally is totally on the rise. Once again it’s connotations of one’s outfit choice that sways this trend. While women in the workplace, unfortunately, still come with a whole lot of baggage, dressing is a sure power that we have. “Putting on formal clothes makes us

. . . WEARING A SUIT DOESN’T MEAN YOU ARE OPPRESSED . . .”

Taking the suit off liberates the corporate man – dressing no longer means a perfectly tailored suit, the ideal work shirt and a tie to match. Dress shoes are no longer a given for a day at the office.

Joshua Schulman, Bergdorf Goodman’s president told The New York Times: “Today there is as much variety and innovation in men’s shoes as there is in women’s shoes.”

Instead, even though you may find yourself in meeting after meeting, self-expression is high on the agenda. What you wear shows what kind of

Steve Jobs

PHOTO: GETTY IMAGES

MOVE OVER, IMELDA MARCOS

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President Barack Obama

feel powerful, and that changes the basic way we see the world,” Abraham Rutchick, author of a study and professor of psychology at California State University, Northridge, told The Atlantic. A woman in serious heels and a high-powered work dress means business. Women want to be taken seriously and the first step is to dress seriously. People take note of what women wear, probably more than men, but they certainly take note. Look at Hillary Clinton – often dressed in dowdy, non-conversation sparking clothes as the First Lady, trying to up her game as Secretary of State by going for a more formal look but now, running for President, she has completely revamped – wearing designer jackets worth $12 000. What Hillary wears is important for her image and her campaign. Dressing is usually about power, sex or money – in Hillary’s case power is what she is dressing for.

But dress codes can lead to serious consequences for the company which tries to implement them. Look at PwC which in May 2016 sent a receptionist home for not wearing high heels. In this case it’s most certainly not about money or power. The said receptionist is now petitioning against the company’s heel policy. The loss of dress codes may be simply an HR strategy.

ON A PERSONAL NOTE

I am completely devastated at the thought of the death of the suit: firstly, there is a certain bit of nostalgia that comes along with seeing a man all dressed up in a suit. I remember mornings before school as my father would get ready for work as an investment banker, I remember sometimes helping pick out his tie. Of course, suits made buying presents for men easier too – a beautiful new tie was always a good bet but now a gift like that would be wasted on the cupboard. Also, a suit comes with a fair amount of sex appeal which is unavoidable – on the surface, suits reflect the type of man who is successful, wealthy, stylish, powerful and charming and who would want the death of all that?

In the argument for suits you have to look at occasions where one is absolutely necessary or expected. President Obama famously told Vanity Fair, “You’ll see I wear only grey or blue suits, I’m trying to pare down decisions. I don’t want to make decisions about what I’m eating or wearing. Because I have too many other decisions to make.” I nearly said that you will always find suits at weddings but that is not even true anymore, I see many grooms and their entourage dressed in chinos with interesting socks and a fun bow tie, the guests can usually be divided into suit wearing and non-suit wearing – the latter often representing an older demographic.

.

The one occasion I found that most people deem a suit appropriate and expected is at a funeral which doesn’t give much credit to the argument that a suit is not dead

PHOTO: GETTY IMAGES

GORDON INSTITUTE OF BUSINESS SCIENCE

DRESS CODES CAN LEAD TO SERIOUS CONSEQUENCES . . . ”

Perhaps the death of the suit also happened less on purpose and more by chance. Casual Fridays and suiting up for the rest of the week slowly became casual Thursdays and Fridays, until now when it’s more casual Monday-Friday and the suits are an exception.

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FROM THE PLAYGROUND TO THE BOARDROOM Words Dr. Ngao Motsei

Until two decades ago, bullying was largely associated with children terrorising each other in school playgrounds. In South Africa many companies still have that perception.

This was clearly evident in a study I recently conducted, where respondents looked at me with utter surprise when I raised the subject of bullying at work. The typical response was: “but this is not kindergarten”, or something to that effect. Yet, the more we unpacked this phenomenon together, the more respondents began to realise the extent to which bullying exists within their organisations. This, in and of itself, points to the low levels of awareness around bullying in the South African workplace.

So what, exactly, is bullying? There are, in fact, a range of definitions and arguments about the scope and characteristics of workplace bullying; a fact which points to the infancy of the research. Notwithstanding countless, often country-specific definitions, workplace bullying is regarded as abusive conduct, and the mistreatment of others at work that causes harm.

GORDON INSTITUTE OF BUSINESS SCIENCE

Additionally, the general consensus is that bullying is characterised by repetition and duration (it occurs regularly over a period of at least six months), and escalation (usually accompanied by an increase in aggression). It is for this reason that single, isolated negative acts cannot be defined as bullying.

While bullying encompasses threatening, humiliating or intimidating actions, work interference and/or sabotage and verbal abuse, many of the respondents I spoke to were more familiar with the notion of harassment at work than with bullying. This is not peculiar to South Africa, but to fully understand the impact of workplace bullying it is important to separate it from the crowd and understand the particular influences at play. It is for this reason that I set out to understand the impact and cost of bullying on organisations as well as individuals by conducting in-depth interviews with 29 individuals, comprising HR professionals and targets of bullying.

My study sought out to investigate how targets, and/or ‘victims’ of bullying at work, HR professionals and bystanders perceived and defined bullying, and what they regarded as the organisational factors which made such bullying possible. Participants were drawn from private sector organisations in the financial services and manufacturing industries, and data were gathered through semi-structured interviews with targets and HR professionals, and from focus group discussions with bystanders. During the course of my research I was struck by comments such as the following:

Dr. Ngao Motsei

“My son is at preschool and they talk about bullying; bullying has always been a term used at school. I have never really thought about it in a work environment, but as I am speaking to you now, I am thinking, “oh, my…, this is happening and we are not focusing on it because we don’t think of bullying in the workplace.”

Another comment touched on the difficulty defining workplace bullying: “I battle with the difference between bullying and harassment.

When does it become bullying; and when has it moved from harassment or racism to becoming bullying? Maybe it is because we have not yet identified and defined it as bullying in the workplace.”

This comment talks to how South Africa has chosen to classify workplace bullying; with our HR policies and practices tending to incorporate it under the umbrella of harassment. The Commission for Conciliation, Mediation and Arbitration (CCMA), an independent dispute resolution body established in terms of the Labour Relations Act, 66 of 1995, defines harassment as: • Spreading malicious rumours, or insulting someone, particularly on gender, race or disability grounds; • Ridiculing or degrading someone – picking on them or setting them up to fail; • Exclusion or victimisation; • Unfair treatment, based on race, gender, sexual orientation, religion, etc.

• Overbearing supervision or other misuses of power or position;

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• Making threats/comments about job security without foundation; • Deliberately undermining a competent worker by overloading and constant criticism; and • Preventing individuals progressing by intentionally blocking promotion or training opportunities.

While this definition broadly accords with existing research on bullying, and even Collins dictionary’s view that a bully is “someone who hurts, persecutes or intimidates weaker people”, it fails to take into account the particular impact of bullying in a work context and how this creates power imbalances which, in turn, can perpetuate a culture of bullying. Critically, under South African law, specifically Section 6 of the Employment Equity Act, employees are protected from harassment, but no bullyingspecific legislation exists. The concern is that, while bullying continues to be wrapped up in this broader definition, the ability to enforce policies and institute meaningful interventions is hampered.

THE IMPACT OF WORKPLACE BULLYING

Almost all the people I spoke to agreed that the most distinguishing issue between bullying and harassment at work was the difficulty of proving bullying. Harassment is easy to prove because it is protected by law and, as a result, organisations which formed part of this study already had an Harassment Policy. However, in instances where an organisation does not share a common definition of bullying, employees are unlikely to recognise the negative behaviour associated with bullying, as, in fact, being bullying.

In the South African context it was particularly interesting to note the link between events at a country level and organisational behaviour regarded as bullying by participants. Essentially, almost all participants attributed the prevalence of bullying in the workplace to political power shifts and to changing social identities in South Africa.

The most salient social identity classifications in South Africa are race, gender, ethnicity and language. Respondents cited race and gender in almost all the discussions regarding how and why bullying took place within companies. This is not entirely surprising given that, historically, South African society classified its people by race and/or population groups, therefore race was found to be salient in participants’ descriptions of bullying behaviour. After all, at its most fundamental level, apartheid, like many other forms of fascism, was legalised, institutionalised

. . . APARTHEID, LIKE MANY OTHER FORMS OF FASCISM, WAS LEGALISED, INSTITUTIONALISED BULLYING . . . ”

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. . . WE ARE SCARED . . . ” bullying, the strong abusing the weak. Left unchecked, it became a crime against humanity.

Of all the social identity categories I found race and gender to be most salient in explaining bullying. Although it is important to note that participants also highlighted issues such as cultural beliefs, religion, sexual orientation, tenure and education.

But race and gender remained the overarching reason which participants attributed to their bullying experiences.

Overall, the study’s findings demonstrate that race and genderrelated “views of the world” and lenses are still deep-rooted in the psyche of many South Africans. The study’s findings also demonstrate how these racial and gender stereotypes and related conflicts spilled into the workplace in the form of bullying. This finding reflects the lingering effects of a society that was both racialised and male dominated during apartheid. The aftereffects of apartheid are clearly still at play in South Africa’s workplaces, as this comment around the complexities stirred up by transformation policies highlighted: “Most companies, including the company that I work for, drive transformation in that when we advertise positions, we openly state that preferred candidates will be AA (affirmative action) candidates or PDIs (previously disadvantaged individuals) because we want to promote equality and address the imbalances of the past. However, this is not taken well by some of the white colleagues who have occupied the targeted positions for a long time, and are used to a white-dominant work environment.”

PLAYING WITH WORDS

The study also found that while participants confirmed the prevalence of bullying in their organisations, many reported finding it difficult to associate what was happening with the notion of bullying. Some of the targets preferred to use alternative terms, such as ‘injustice’ and ‘unfair labour practice’.

The term ‘bullying’ appeared to carry a stigma of weakness, which explains why some participants appeared uncomfortable in being associated with the term or being referred to as the ‘victims’ of bullying.

It was interesting to note that the alternative terms used by participants to define bullying had a South African nuance. For example, it could be argued that the use of the term ‘injustice’ in reference to bullying is steeped in an apartheid past characterised by racially based injustices.

Many people I spoke to also reported finding bullying difficult and complex to define and grasp. For example, a few attributed what others considered as bullying to tough management and/ or a tough approach towards managing performance. Another complexity emerged around what they perceived as similarities and/or differences between bullying and other acts of negative behaviour at work, such as harassment and victimisation. Some perceived bullying as similar to, or as one of the elements of other negative acts at work, others felt it was different and separate.

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. . . WHAT, EXACTLY, IS BULLYING?” The findings of this study have shown that bullying is a serious yet silent and relatively unacknowledged problem in the South African workplace. If this is true, one can reasonably conclude that many employees and employers in South Africa are unaware of the extent, nature and effects of bullying in their workplaces.

And yet the impact is pervasive, as this respondent told me: “They will scream at you; they will shout at you; they will shut you down, and then they will try and bully you into submission through your head of department.”

Another comment highlighted the pervasive nature of bullying within an organisation: “The culture of the organisation is [to] be scared; we are scared, and that’s how things have been and that’s how things are and that’s how things will be.”

While another offered a glimpse into the personal harm caused by such actions: “There are many people who are unhappy, but they do not speak up. So a lot of people suffer in silence.”

Comments like this highlight the importance of understanding this phenomenon and the negative effect it has on staff morale, culture, values, productivity and, therefore, the bottom line.

The solution might lie in education. Training HR and wellness professionals in detecting bullying, heightening the level of awareness of the phenomenon in organisations, and developing policies aimed at creating bully-free work environments may prove key in exposing this pervasive phenomenon. It is my hope to continue to contribute to uncovering what remains an unrecognised, silent problem in the South African workplace

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GORDON INSTITUTE OF BUSINESS SCIENCE

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BEWARE THE DIGITAL SWEATSHOP! Words Chris Gibbons

It sounds like a freelancer’s dream. Hit the web, pick up the kind of work you want, get paid in dollars, and do it all from home.

But as GIBS Research Director and international business expert Professor Helena Barnard explains, this fairy tale formula can also look like a nightmare.

With a group of colleagues at Oxford University’s Internet Institute, Barnard has been examining the phenomenon of online freelance platforms. They began with a question: could workers in developing countries benefit from the opportunity to do work for clients anywhere in the world?

With the rise of the Internet, individual freelancers can find work online through an increasing number of platforms. The largest one, Upwork, attracts millions of freelancers across the world, doing an huge array of tasks – software coding, accounting tasks, virtual assistance, writing and many more. Its mission is to “create economic and social value on a global scale by providing a trusted online workplace to connect, collaborate, and succeed.[1]” Upwork is constantly refining checks and balances to make sure that it is indeed trusted. In addition to the essential precautions around the transfer of money, it has instituted a minimum wage online ($3/hour), it has made the use of aliases illegal, and it has instituted a system where buyers rate providers – and providers also rate buyers. But how well are those safeguards working?

Talking to contractors earning around the minimum wage on the platform, Barnard and her Oxford colleagues realised that this new way of organising work raised real questions around labour.

HOW MANY CHILDREN ARE BEING TOLD THEY WON’T GET FOOD . . . ”

“This type of work happens entirely below any form of labour framework. There is no labour regime that is actually governing how this work happens,” said Barnard.

INVISIBLE EXPLOITATION

One interview was with a very proud father who in his younger days had grown and sold tomatoes to earn pocket money: “He was now assisting his son do some of the simpler microwork tasks available online to help the boy earn money to buy a skateboard. When he told me about it, I felt all warm and fuzzy,” said Barnard. “But Mark Graham, one of my Oxford collaborators, was ashen, asking ‘What do we know about the use of child labour on this platform? How many children are being told they won’t get food until they’ve managed to complete a certain amount of work?’”

Another factor struck the team: “Many of the people we interviewed were in some form of transitional phase in their life. Somebody had lost a job and was looking for another one; somebody had developed a serious medical condition and was waiting for a kidney transplant; somebody had chronic depression and worked in bouts when more functional.”

On the one hand Barnard agreed that this might well be “a really useful platform for people who cannot be absorbed into a formal economy. But on the other hand, perhaps this kind of paradigm relies on people who have been marginalised?”

She pointed out that a digital platform is different from a traditional, physical sweatshop. “As soon as human beings come together, they organise. You can put them in terrible working conditions but the mere fact that they sit next to each other every day and walk home together creates opportunities to mobilise and protest against bad work practices. This is not the case in an online environment.”

NO AFRICANS, THANK YOU

Another problem identified by the research is stereotyping: “One of our respondents was a Kenyan, based in Kenya. He had studied

1

https://www.upwork.com/about/

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actuarial science but had to drop out for financial reasons.

Now he works as a financial blogger. But he pretends that he’s Australian because he doesn’t get work if he’s Kenyan. He has a whole Australian identity.”

But because the site aims to be a trusted marketplace and false identities are illegal, when an Australian client suggested, because he apparently lived in the same Australian city, that “he just pop by and pick up a document, he literally had to walk away from the job.”

“Africans are really discriminated against when they attempt to enter this apparently global marketplace as Africans.

Globalisation is often portrayed as proceeding without any form of old boys’ club or discrimination or racism. But what the research suggests to us is the reverse – these things happen on a global scale, too. And if you’re from a developing country, you’re very easily pigeonholed into doing the least-skilled tasks, to the point that you can’t get more skilled tasks even if you have the skills to do so.”

The research continues but more than 100 interviews have been concluded in South East Asia (Vietnam, Malaysia, the Philippines) and Africa (South Africa, Nigeria, Kenya). The process benefitted substantially from access to a large dataset from a major platform: now the team “could analyse in dollars and cents how much you get paid if you’re sitting in Sweden, Kenya or South Africa.”

That revealed another substantial problem: “We were able to quantitatively establish that there’s definitely what is called a ‘liability of origin’. The poorer your home country, the less you get paid for the work you do there.”

WHAT’S YOUR WORTH?

GORDON INSTITUTE OF BUSINESS SCIENCE

Part of it results from a form of self-discrimination, as people’s own expectations were typically based on wages in their own country: “The Filipinos described $3 per hour as a really decent

rate. In fact, they were unhappy that there was a minimum wage, stating that they could easily have gone for less. But the South Africans said $5 is the minimum they would work for, reflecting the different costs of living in those countries. If you’re sitting in whatever developing country, how do you know what the global rate might be for work that you could do?”

The various online platforms all have a ratings methodology.

“Like Uber, you get rated and the provider of the service gets rated. Theoretically that should keep everyone honest, but it doesn’t always work out that way.

“What we found was that it becomes critical for the seller of a service to have not only a good but also a recent and regular rating. People told us that because of this rating system, they could not afford to take a day off to visit a hospital.”

As a result, informal clusters of people – family, friends, etc.

– may step in to help with the work when the real seller of the service has to be absent. Like any kind of alias, that’s also illegal, explained Barnard, “but because of how it plays out in practice, we see all kinds of make-do routines. We’re interested in trying to understand how that shapes the people who actually engage with these platforms.”

Barnard emphasised that the website owners are trying to ensure that the system works as well as it can for both buyers and sellers. That was why the researchers were allowed access to the quantitative dataset. “There’s a real attempt by the people who create the sites to level the playing fields. But the people we interviewed told us that if you give bad ratings to a buyer, then other buyers won’t give you work.

“Like all innovations, it takes a long time before the school of hard knocks teaches us what works and what doesn’t. We hope our research is part of an ongoing attempt to make sense of what’s happening. That way it might work better for everybody concerned”

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THE POORER YOUR HOME COUNTRY, THE LESS YOU GET PAID FOR THE WORK YOU DO THERE”

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BIG SPENDING AUSSIES Words Sarah Wild

South Africa and Australia have more in common than clear blue skies, rugby and a penchant for burning meat on an open fire.

The two countries – whose economies were founded on the mineral resources under the soil and which are separated from European, Asian and North American markets by thousands of kilometres – also engage in similar areas of science and research.

A list of Australia’s science and research focus areas looks very similar to what you would see in South Africa: supercomputing and big data, marine science, astronomy, nuclear research, mining technologies, climate change and biodiversity, among others. But the major difference is one of scale – Australia simply has more money.

South Africa’s annual National Survey of Research and Experimental Development 2013-14, which was released last month, was underwhelming. The country failed to spend 1% of its gross domestic product (GDP) on research and development (R&D) – the percentage has sat at 0.73% for the last three years – and its target of 1.5% by 2019 seems increasingly unattainable.

“It is clear that the country needs to significantly increase investment and growth in R&D,” the Department of Science and Technology (DST) said in a statement, following the release of the report. The department is responsible for driving science and technology – and thus R&D – in the country.

In total, the country – which includes government, business, science councils, higher education institutions and the not-forprofit sector – spent R25.7 billion on R&D in 2013-14. At constant 2010 rand values, this was a 1.4% increase on 2012-13.

However, this is dwarfed by Australia’s R&D spend. In 2013-14, the country spent A$33.5 billion (R386.5 billion) on R&D, with business accounting for the lion’s share. This is just over 2.1% of GDP, substantially more than South Africa.

GOVERNMENT-LED While there are many areas of research crossover – not least of all astronomy, with Australia and South Africa jointly hosting the Square Kilometre Array (SKA), which will be the largest radio telescope in the world – the way that this research is organised is slightly different.

The main driver of R&D in South Africa’s government is the DST. This department is responsible for the National Research

PHOTO: SKA, SOUTH AFRICA

The South African MeerKAT radio telescope

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Foundation, which oversees research at higher education institutions and funds postgraduate students, and the Council for Scientific and Industrial Research, which is the largest scientific research institute on the continent.

According to the 2016 national budget, this relatively small department, which was established in 2002, has been allocated R7.43 billion for 2016-17, R7.56 billion for 2017-18 and R7.76 billion for 2018-19.

“The amounts are reasonable,” DST Director General Dr. Phil Mjwara said when the budget was announced earlier this year. “We’re happy that at least the budget is still around R7.5 billion. There are [departments] that have lost several billion in their budget. In the entire context [of South Africa’s economic situation], we’re also contributing to belt-tightening.”

The 2013-14 R&D figures did yield some good news, though: “This is the first year since 2008-09 that the business sector has shown a positive year-on-year change in R&D expenditure … The largest increase in business-funded R&D since before 2009-10 also occurred in 2013-14,” the report’s authors write.

In 2013-14, business spent R10.6 billion on R&D. But that was not enough for business to topple government from its status as biggest funder of R&D, a position which it has held since 2012-13.

Government accounted for 42.9% and business 41.4% in 2013-14.

BUSINESS-LED

Australian business, on the other hand, spent A$18.8 billion (R206.8 billion) on research in 2013-14, according to the Australian Bureau of Statistics. This is almost double what its government spent, at A$9.9 billion (R108.9 billion).

The Australian government’s science agenda is strongly orientated towards business. For example, its DST equivalent is called the Department of Industry, Innovation and Science.

GORDON INSTITUTE OF BUSINESS SCIENCE

Melbourne-based Philip Dalidakis, the minister of small business, innovation and trade for the state of Victoria, said: “Innovation policy is everything, not just technological. It is when you do something more efficiently than you did before. There is no limit to what innovation should be. It’s about having the right infrastructure at the bottom, which allows those companies in those different fields to flourish.”

But his portfolio is heavily focused on commercialisation, rather than research. “No disrespect to the men and women who are running around in their little white lab coats doing research thinking they’re saving the world, everything that I do as a minister will have a commercialisation focus.”

COMMERCIALISATION

Commercialisation of knowledge is an issue in all countries – including Australia – but South Africa feels it keenly since most of its R&D personnel are based in universities. In 2013-14, there were just under 41 500 R&D personnel within the higher education sector, more than double the 17 600 in business.

Although South Africa has promulgated legislation to ensure that researchers flag possibly patentable research, the reality is that commercialisation is not the focus of an academic institution.

South Africa and Australia both have tax incentive schemes to encourage business to do R&D, but South Africa’s is still trying to garner support.

South Africa’s incentive offers qualifying companies a 150% tax deduction on the operational costs of R&D. However, between its inception in 2006 and the middle of last year, fewer than 1 000 companies had applied, and the applications of about 190 had been approved. Businesses complain that the process is too slow and bureaucratic, and the scheme is currently under review in an effort to improve its efficacy.

In Australia, this incentive translates into a 45% refundable tax offset on R&D spend for a company with a turnover of less than A$20 million which is in a tax-loss situation. For other eligible companies, this could be a 40% non-refundable tax offset.

According to the latest budget statements, in 2015-16 R&D tax incentives cost the Australian government A$4.7 million (R51.7 million).

THE AUSTRALIAN GOVERNMENT’S SCIENCE AGENDA IS STRONGLY ORIENTATED TOWARDS BUSINESS ” THE SKA EFFECT

The order of magnitude difference between the South African research system and Australia’s explains the surprise – still present in Australia – that both countries were selected to host the SKA. Australia has been a world leader in radio astronomy since it began converting its radar systems – a part of Allied defences during World War Two – into radio telescopes. While South Africa also had expertise in radar, until 2007 its only radio telescope was at the Hartebeeshoek Radio Astronomy Observatory. In 2007, the country began building prototype telescopes to showcase its radio astronomy engineering ability.

But in 2012, the international SKA Organisation, the entity coordinating the pre-construction of the telescope, decided to split the site of the SKA between Australia and South Africa, following what was – for the science community – a relatively fraught bid campaign.

The SKA, which will comprise thousands of dishes and antennas in Australia and on the African continent, will attempt to answer some of science and humanity’s most baffling questions, such as: is there life on other planets, how do galaxies form, and what is dark matter?

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GROSS DOMESTIC SPENDING ON R&D (2000 - 2014) 3.0 2.5

OECD AUSTRALIA

2.0 1.5 1.0

SOUTH AFRICA

0.5 2000

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It will be the largest scientific instrument on Earth, and the most expensive. Initial estimates put the radio telescope at more than €2 billion. The first phase, known as SKA 1, is capped at €650 million, with construction planned to begin in 2018.

In the run up to the decision, both Australia and South Africa built precursor telescopes to show their scientific and engineering capability. South Africa’s 64-dish MeerKAT telescope is being built, with 16 dishes unveiled at the end of June this year.

The 36-dish Australian SKA Pathfinder (Askap) is currently being commissioned. Both countries have developed “radio quiet” sites to host these telescopes. South Africa’s in the Northern Cape, while Australia’s is in the Shire of Murchison in Western Australia.

However, while MeerKAT will form part of SKA 1 – with another 133 dishes planned in addition to the 64 dishes that will be on the ground at the beginning of next year – Askap will not. Australia will, instead, host about 130 000 dipole antennas, which look like 6ft-tall Christmas trees built out of thick wire. This was another blow for a country that thought it was a shoe-in to host the entirety of the SKA. Australian officials maintain that they have a “no regrets” policy with regards to the construction of Askap, although there is no guarantee that this precursor will be included in the SKA. “Big science is expensive,” says Peter Klinken, chief scientist for the state of Western Australia, where their portion of the SKA will be built. The amounts required for the SKA are “not that stunning” when compared to Australia’s science and research budget, he says. He estimates the total amount put into radio astronomy by the state and the commonwealth government at A$850 million (R9.35 billion).

South Africa, however, holds up astronomy, and the SKA, as a flagship project and geographic advantage focus area. It is considered a high-skills area of science, with the ability to boost technical development and skills in the country. In comparison to the science undertaken during apartheid, such as munitions and uranium enrichment, radio astronomy is a relatively benign science to fund with government money.

Wild's trip to Australia was funded by Australia’s Department of Foreign Affairs and Trade.

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The MeerKAT’s price tag is about R2 billion, but there are other funding boosts, such as astronomy research chairs in universities and the establishment of the Inter-University Institute for Data Intensive Astronomy, among others. This makes the country’s total spend on astronomy difficult to quantify. It is, however, less than R9.35 billion.

WRONGS OF THE PAST

But perhaps the most fundamental difference between the South African and Australian research system is one of redress.

South Africa’s science policies are geared towards human capital development and including previously disadvantaged people in a system that has historically been white and male.

The latest available figures show that academia in South Africa still has a long way to go before it is representative of the country’s population. Black women, the largest demographic group in South Africa, accounted for 12% of the total number of humanities, social science and natural science researchers in universities in 2013-14. White men held the largest percentage at 28%, followed by white women (27%) and black men (18%).

Indian men and women (both at 4%) and coloured men and women (both at 3%) held substantially lower percentages.

While this is an issue in South Africa, it does not appear to be one in Australia’s science, research and innovation space. There is a push to achieve parity for women in research positions in Australia, but inclusion of aboriginal peoples within the science system is not flagged as a high priority.

When asked if there were quotas regarding the inclusion of aboriginal people in science, Dalidakis said: “No. At this white settlement, we were very good at killing off indigenous Australians.”

While Dalidakis’ comments cannot be extrapolated to the whole of Australia, that government’s Indigenous Advancement Strategy’s five priority areas are jobs, land and economy; children and schooling; safety and well-being; culture and capability; and remote Australia strategies. Science, research and innovation are not included

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advertorial

A LEG UP WHERE IT COUNTS – STORIES OF THE INDUSTRIAL DEVELOPMENT CORPORATION South Africa’s national development finance institution, the Industrial Development Corporation (IDC), has a long track record in financing and promoting competitive entrepreneurs based on sound business principles. But it’s when you take a look at the enterprises that are thriving today, that might not otherwise exist, that you can fully appreciate what the IDC does.

The IDC has established, among others, the petro-chemicals and minerals beneficiation industries, stimulating large industrial projects in these industries, which are acknowledged as the cornerstones of the country’s manufacturing sector. It has also helped to establish industries in fabricated metals, agriculture, clothing and textiles.

One of the IDC’s major beneficiaries is Kalagadi Manganese, a manganese mine in the Northern Cape involved in the beneficiation of 3Mtpa of manganese, to yield 2.4mtpa of sinter, in the Kalahari Manganese Field in the mineral rich Kuruman area.

The shareholders of Kalagadi Manganese comprise ArcelorMittal (50%), Kalahari Resources (40%) and IDC (10%). The company holds new order mining rights believed to overlay some 960mt of manganese ore covering approximately 6300 hectares (ha), spanning three farms located about 10 kilometres from Hotazel,

An ambitious development by Kalagadi Manganese in a harsh and sparsely populated Northern Cape.

and the next phase of its beneficiation will comprise a smelter plant in the Coega Industrial Development Zone that will produce 320ktpa of high carbon ferromanganese.

“Kalagadi Manganese was established after the IDC acquired a 20% stake in Kalahari Resources (Pty) Limited, a company founded by black African women entrepreneurs in 2001 to pursue investments in the mining sector,” recalls Daphne Mashile-Nkosi, chairperson of Kalagadi Manganese.

Kalahari Resources was independently valued at R300 million when the IDC acquired its 20% shareholding in the Kalagadi Manganese, for a considerable amount of R60 million, which partially funded the completion of the bankable feasibility study, completed at the end of September 2008.

In order to raise project capital, Kalagadi Manganese concluded another acquisition by ArcelorMittal (50%), for US$432.5 million (R3.4 billion), and declared a dividend to both Kalahari Resources and the IDC. “Economic success today is heavily dependent on the public sector’s ability to provide a favourable political and business environment in order for the private sector to thrive. Clearly, there is a need for both the private sector and the public sector to

The Umtu Shaft by Kalagadi Manganese.

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In the drawing room, state-of-the-art design software enables Engineer Petros Barkowitz to create 3D-rendered models of any mechanical plant, civil or steel structure.

(Photo: Elias Nkabinde)

The IDC delegation is welcomed on arrival at Quality Steel and given an overview of the Mbombela-based company by CEO Andre Potgieter.

(Photo: Elias Nkabinde)

co-exist as partners for economic development. Our partnership with the IDC is a prime example of how it can be achieved,” says Mashile-Nkosi.

Another IDC beneficiary is eThekwini Cheese (Pty) Ltd, a cheese processing facility based in Ballito that was established earlier this year. In this case, 55% of the capital expenditure costs, and operating expenditure costs, were contributed by the IDC, leaving the other shareholders to find the remaining 45% required.

Simon Dixon, MD of eThekwini Cheese, recalls that the IDC was presented with extensive information from a detailed business plan, as well as a four year budget and a three year market research and feasibility study.

“There was strict B-BBEE criteria laid down by the IDC, with their primary objective being employment and development of local South African people. This objective gelled well with the intentions of the shareholders who had already sold two successful cheese and dairy processing businesses in the UK and the USA, and had invested heavily in the development of staff in these countries,” says Dixon.

Dixon says the IDC’s auditing and feasibility assessment “was probably the most thorough we have ever encountered during out time in the food industry, and the many funding justifications we’ve done with other multi-national companies around the world”.

The rigor with which the IDC approaches a business proposal may at first seem a little intimidating and critical, says Dixon, “but it was quickly accepted that their intentions were that of support and ensuring that enough financial backing had been correctly allocated to the project”.

Fastforward to today, and the continuing process of drawdown from the funding contract is also going well. “We have

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IDC CEO Mvuleni Geoffrey Qhena and his delegation listen closely as the process of working with Voortman machinery is explained to them.

(Photo: Elias Nkabinde)

encountered no issues from the IDC, and its funding has enabled us to fulfil our mission statement, which is to set new standards in the African food industry, leading the way in the technical and business development of local people in the manufacture and supply of dairy products,” he says.

In May, an IDC delegation led by its CEO Mvuleni Geoffrey Qhena visited one of its beneficiaries in Mbombela, Quality Steel, a steel construction and fabrication company.

In 2009, at the peak of the recession, IDC funding helped to stabilise operations at the steel plant and in the process helped to save jobs. The company was able to buy new, computerised machines from Dutch steel processing machinery maker, Voortman, after which it built new offices alongside the existing factory.

Drawing from IDC funding, Quality steel was able to set aside R2-million for capital, and since installing the plant machinery, the company has consistently achieved a monthly output target of 150 tons of fabricated steel.

These are the stories of the IDC and its funding, which is generated through income from loan and equity investments, and exits from mature investments as well as borrowings from commercial banks, development finance institutions and other lenders. Established in 1940, there are many more IDC stories to tell, and many more to come

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19 Fredman Drive Sandown 011 269 3000 Idc.co.za

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A COMPLEX AND DIFFICULT GESTATION Words Shoks Mnisi Mzolo

The idea of extending quality care to all South Africans has been on the table since the early 1990s. Having gone cold, the National Health Insurance (NHI) scheme suddenly gained traction to feature in Parliament in 2008. The Green Paper on NHI followed in August 2011 and the health system’s 14-year pilot phase kicked off to mixed reception seven months later. Now, with the much-delayed White Paper finally released in December 2015, South Africa inches towards universal healthcare coverage.

But tricky questions remain and the process hasn’t escaped criticism.

The plan under construction will be introduced in 2025 and taxpayer-funded by means of a yet-to-be determined financing model. Nor has it yet been explained how much extra each individual, above a specific income threshold, would contribute.

However, according to the paper, once the NHI is fully fledged, it will pool R225 billion in its first year. The figure seems tiny since it’s an equivalent of about two-thirds of today’s total health expenditure – in private and public sectors. Unsurprisingly, the department of health has dismissed such projections.

GORDON INSTITUTE OF BUSINESS SCIENCE

Through the NHI, government hopes that South Africa will improve health outcomes (including maternal and infant mortality as well as life expectancy) and reduce costs. Health Minister Aaron Motsoaledi views preventative care as a route to lower costs. Globally, health reforms that aim to attain universal coverage – including measures to open up access to quality essential services, and access to effective and affordable medicines – are now being implemented in more than 100 countries, reports the World Health Organisation (WHO). It cites Mexico and Thailand as examples of developing countries that have introduced effective universal care systems in recent years.

Broadening access could reduce absenteeism, says Econex, a consultancy based in Stellenbosch. The upshot is improved economic productivity. Econex and the WHO local office agree

I HAVEN’T SEEN A SINGLE DOCUMENT ON THE NHI PILOT. WHERE IS THE TRANSPARENCY? ”

that the NHI could also relieve mainly those who cannot afford medical aid from the burden of making out-of-pocket payments.

Despite the mandatory insurance’s lofty ideals and emphasis on preventative care, debates rage on. At stake is the how.

WHERE ARE WE NOW?

Many headaches persist. Perennial staff shortages impede progress, a point that Motsoaledi has discussed and tried to address since his appointment in 2009. Closely linked, dilapidated facilities in rural areas compromise delivery. Doctors in pilot districts scoff at NHI contracts over low pay. Since the new plan is focused on primary healthcare, the doctors’ reluctance can’t be taken lightly.

Further, Bestmed CEO Dries la Grange is dumbfounded why lawmakers did not seek input from the medical funding industry which, in turn, manages R140 billion per year on behalf of nine million members. The pilot project, now in its fourth year and spanning 11 districts (including Tshwane and Limpopo’s Vhembe), is insufficient, he says, warning against a “big bang approach”. Budgetary constraints on the part of the NHI are a sign that proper homework was not done, contends La Grange.

“I haven’t seen a single document on the NHI pilot. Where is the transparency?”

While it remains unclear how the discussion will unfold, “it’s not going to be business as usual”, asserts Medscheme health management Director Dr. Lungi Nyathi, who adds that this is no reason for panic and draws lessons from countries that have undergone similar reforms. What distinguishes providers, or makes them successful in universal healthcare environments, is efficient delivery despite limited budgets.

WHAT ROLE DOES THE PRIVATE SECTOR PLAY IN THE UK’S NHS?

Netcare CEO Dr. Richard Friedland, whose hospital network spreads to the United Kingdom, shares insights on the National

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Friedland, the UK suffered “white collar depression”, which forced those in the upper rungs to forgo private medical insurance (PMI).

That the British private market remains significantly off pre-global depression levels implies a vote of confidence in the taxpayer-funded NHS, Friedland observes. A rebound in the PMI market would also benefit BMI Healthcare, Netcare’s asset-rich subsidiary, thanks to its exposure to the private care market.

WHERE DO MEDICAL SCHEMES AND THIRD PARTIES FIT IN?

In South Africa, in 2014/15, medically insured people spent R46.6 billion on private hospitals and R20.5 billion on drugs dispensed by pharmacists.

The R10 billion medical aid administration space is dominated

by Afrocentric’s Medscheme, MMI-held Metropolitan Health and Discovery Health. Industry leader Clinton Alley once told the Financial Mail that administrators have “undue influence on schemes” – their not-for-profit clients.

Cases of conflicted interests and maladministration, as unearthed by the regulator, abound.

Health Minister Aaron Motsoaledi

Health Service (NHS) – that country’s version of universal coverage: “When we first started there, some people said we’d never make margins from low-income NHS patients. We’ve re-engineered our business and had to be a lot more efficient.”

The NHS of late, has had a rough ride with costs repeatedly outstripping income amid ever-surging demand.

Tough times aside, nimbleness and efficiency have won Netcare contracts. NHS-funded patients have soared from a lousy 2% of the hospital network’s caseload, when the firm set up shop there 15 years ago, to north of 40% today. The NHS covers everything from antenatal screening to dental services, transplants and treatments for chronic diseases. Around 2008, recalls

But, as a single-tier system, notes Bestmed’s La Grange, the NHI will let schemes provide no more than top-up cover when it’s rolled out in nine years’ time. If so, the stateowned NHI Fund will have to hire tens of thousands of people in order to do everything on its own: from collecting member contributions to paying providers. That won’t only threaten the prospects of medical funds as we know them today – thus the viability of administrators, brokers and other third parties – but would also curb access to private care. Subsequent to the publication of the White Paper, Motsoaledi tried to pacify the industry by dismissing the point about confining schemes to top-up cover.

“We want people to make their own choice,” he told Business Day, explaining that the new coverage plan would be compulsory but that didn’t mean that private schemes would be forced to cut down. “We want to make it clear that NHI will be mandatory, just like it is in England. [Not a single] millionaire is not part of the NHS, but if he says he wants to do something privately they allow it.”

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MANY HEADACHES PERSIST” Australia is also a two-tier market. Amid its universal coverage system, Medicare, the country encourages its well-off citizens to join voluntary health funds. Meanwhile, its mandatory insurance usually covers 75% of doctor fees, explains Sarah Barber, WHO representative in South Africa. Medicare pays 85% of specialist fees and 100% of public in-hospital costs. “Patients need to get private insurance to cover these co-payments or pay them out of pocket, with exemptions for the poor and elderly,” Barber adds.

In the Netherlands, whose universal care design was prepared and discussed for more than 20 years, she reflects, every resident is required to participate and contribute to one of the private insurance funds. “It is a tightly regulated market with standardised benefit packages and government-regulated prices.”

WHAT IS THE BUSINESS CASE?

Beyond policy, from a business angle, lies a simple question: will the NHI era open, rather than close, doors? The answer is probably yes.

On the upside, Medscheme’s Nyathi says the private sector is well-placed to play a role but cites potentially fierce competition.

Contrary to scepticism, which also greeted the Netherlands version when it was launched in 2006, Nyathi doesn’t expect that the NHI will drive prices higher and compromise standards. In contrast, she predicts that the state will use its gigantic buying muscle to achieve economies of scale and monitor standards at health facilities through mechanisms such as an independent quality-assurance unit.

GORDON INSTITUTE OF BUSINESS SCIENCE

“For businesses, this means that if you can negotiate well to deliver services to even a portion of a 40 million-plus market, you’ve done well,” says Nyathi.

In particular, the advent of the NHI will benefit players such as hospital groups and pharmacists. This includes Clicks, Shoprite’s MediRite and standalones (that are now complaining to the market inquiry of being elbowed out by larger rivals). To gauge how private hospitals could fit in, consider BMI’s role in the NHS. Still, it’s no easy walk. “It’s a double-edged sword,” Friedland says, explaining the balance between low margins and high volumes. It’s hardly soothing that the “cash-strapped NHS”, as The Guardian puts it, hiked tariffs by just 1% in April, remarkably the first increase in seven years.

At home, while the White Paper says that schemes “will only be allowed to provide supplementary insurance, the minister has been quoted to have retracted those statements,” notes Econex practice manager for health Mariné Erasmus. This is a sticking point for the medical aid market – dominated by Discovery, with 2.7 million members or a market share of 30% and Gems (1.8 million). Industry players are keenly awaiting a revised version of official documents to determine what limitations, if any, will be placed on private schemes.

While it’s unclear how long it will take to determine what the NHI minimum basket of benefits offers, Erasmus views the plan from a positive angle notably for pharmacies. According to the White Paper, “Prescription drugs that are part of the NHI benefits will be made available through retail pharmacies. This is certain to increase volumes for them. If agreement can be reached with private hospitals, they will also treat NHI patients and will therefore also see additional patients.”

Turning to the private hospital arena – where the Big Three command three-quarters of the market, according to Econex research – Erasmus reports “high occupancy rates”. She predicts potential changes in delivery model to free up some capacity.

“In many other countries, the private sector assists in providing services to ‘public’ patients – this is bought from the private facilities via the national fund.”

WE’VE REENGINEERED OUR BUSINESS AND HAD TO BE A LOT MORE EFFICIENT” BATTLES AHEAD

Pharmacists are likely to be left smiling, notwithstanding a fight for survival by the independents. The hospital groups can also expect a slice of the action. But captains of the medical aid industry have been given pause for thought. Many schemes spend a huge 15% of members’ total contributions on nonhealthcare. According to research done by industry expert Prof.

Heather McLeod that expenditure – comprising administration fees, broker commissions and scheme trustee pay – is well above international norms. The regulatory Council for Medical Schemes also disapproves.

To keep premiums in check, as the authorities urge, South Africa could learn from Australia whose state-owned Medicare competes successfully with private players. However, staff shortages and poor infrastructure – long synonymous with state facilities – threaten to compromise service delivery even in the post-2025 NHI era.

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To avert a stillborn NHI, such ailments demand proper and urgent treatment

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CHOOSING THE RIGHT LEADER – WISDOM AND LEADERSHIP Words Lisa Ashton, BIOSS Southern Africa

“... if there is anything the world needs, it is wisdom ... without it, I exaggerate not at all in saying, that very soon, there may be no world ...” Sternberg, Robert J. As the geopolitical situation spins out of control the world over, investors, governments and leaders are questioning how to best position their governments, organisations and institutions to survive the growing turmoil.

Few business decisions matter as much as the choice of leader. In our experience, the stakes of leadership decisions are greatest at the most senior levels. Traditionally, organisations tend to evaluate an individual’s track record on past performance at more junior levels for promotions or executive appointments. Our research has proven that assessment methods that examine knowledge, capabilities and past relationships are not sufficient to predict how a senior leader might perform where the level and the nature of the work is more complex, ambiguous and strategic in nature.

So, what is the difference between executives who can continually develop and excel at the highest levels of a business and those who can’t? Our research reveals surprising results.

What is required?

Comfort with ambiguity and uncertainty – CEOs and executives require a capacity to make decisions and be successful in new, unfamiliar, uncertain and complex situations. Success is no longer about being the expert. Rather, success requires big-picture insights from complex and disparate information, seeing situations from multiple perspectives, and the ability to think systemically. At BIOSS we use the Career Path Appreciation to understand this capability.

Cognitive skills and business insight – CEOs need to be rational deep-thinkers who seek out the “facts” and understand where these originate from, and who question their assumptions.

They display or encourage creativity, draw on the non-rational judiciously as appropriate, and acknowledge the potential worth of their own instincts in making judgements. They see the connection between external trends and the implications for core business.

Successful CEOs have nuanced understandings of major societal forces, and know where and how to respond. They also display vision and virtue, with proven commitment to the long-term welfare of stakeholders and the society they operate within.

Finally, they have a high degree of learning agility which allows them to change how they think and act in light of new information.

Interpersonal skills – Successful CEOs and executives have strong social skills, self-control and emotional autonomy. They can engage in multi-stakeholder collaboration with unconventional partners.

Their emotional intelligence helps them read and respond to others to ensure constructive interaction.

Openness and reflectiveness – Successful CEOs and executives possess self-knowledge and know their own limits. They tend to be mindful and attuned to the world around them. They are open to new ideas and possibilities and are comfortable with changing work environments.

Presence – Successful executives are articulate and can reach people through word, affect and action. They display self-control, suspend judgement and have the courage of their convictions to persist in the face of vested interests. They create the conditions that enable leadership and ensure support where needed.

Conclusion At BIOSS we measure executives against the abovementioned traits and provide rich detail on an individual’s potential to develop beyond current levels of experience and know-how. As a result, our assessments look beyond the executive capabilities a leader has today, and provide sight of the capabilities he or she is most able to develop in future – and in what time frame. This facilitates insight into how we can develop individuals with the potential to be great executives and CEOs, into leaders who actually perform at those levels

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info@bioss.com www.bioss.co.za 011 450 2434 24 Lucas Lane, Bedfordview,2007

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WOMEN EMPOWERMENT THRIVING IN JOHANNESBURG Thanks to a host of policies and initiatives that the City of Johannesburg has put in place to advance the empowerment of women entrepreneurs, Johannesburg was recently named among the top 25 cities in the world where women entrepreneurs thrive. This is according to the Dell Women’s Entrepreneur Network (DWEN) which looks at a city’s ability to attract and foster growth in companies founded by women entrepreneurs.

Topping the list is New York, followed by the San Francisco Bay Area, London, Stockholm, Singapore, Toronto and Washington DC. Johannesburg is positioned ahead of Jakarta and Istanbul.

“Innovation and job creation by women entrepreneurs is critical for a thriving global economy, yet our research shows some cities and countries are doing far more than others to encourage and support this important subset of the start-up community,” said Karen Quintos, Senior Vice-President and Chief Marketing Officer of Dell South Africa.

Judging by the following four success stories, the City of Johannesburg is one of those cities achieving great things in the development of women.

ZANDILE MAFATA CHIEF FINANCIAL OFFICER OF THE JOHANNESBURG DEVELOPMENT AGENCY

Zandile Mafata is the CFO of the JDA and has held this prestigious position for the past seven years. Although Mafata is reluctant to claim all the credit, she says one of her highlights at the JDA, which has an annual R1.6-billion budget, is achieving a clean audit.

Mafata’s love of numbers stems back to her father’s 30 years of employment at the City of Johannesburg’s Treasury Department, as well as his role as treasurer at their church. Inspired by him and also by an exchange teacher from the USA, Mafata set her young sights on becoming an economist.

Zandile Mafata

Unfortunately, Rhodes University proved prohibitively expensive and Mafata was forced into a detour. She settled for a teacher’s diploma, but walked away with the rector’s award for being the top-performing student at the Soweto College of Education in the

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early 90s. Mafata went on to teach accounting at a Meadowlandsbased high school, all the while completing her undergraduate and Honours degrees in accounting, part time through Unisa.

“I don’t like doing things in half measures,” says Mafata.

“Although my hopes of becoming an economist were dashed, I worked just as hard to qualify to be a teacher. I then juggled marking 40 scripts, preparing lesson plans and schedules, and studying part time. I tried to impress on my learners that they were the masters of their fate. No-one owes you a favour!”

After five years of teaching, Mafata put the chalk down and joined PwC as an audit clerk, where she gained extensive experience in auditing and financial management. Mafata also completed a two-year stint as a Corporate Accountant at Denel before joining the JDA as a Finance Manager in 2005.

Mafata credits former JDA CEO Lael Bethlehem for her elevation to the Chief Finance Officer’s position in 2009.

“I was competing against more experienced candidates but Lael said the JDA needed to grow its timber and develop from within, and that’s how I got the position. And when people have faith in you, you work harder to not fail them.”

In between teaching, studying and auditing, Mafata also found time to get married to Oupa and they have three children: Masego (18), Mangaliso (16) and Tshiamo (8). When Mafata is not following an audit trail or trying to balance the books, she spends most her Saturdays playing mom’s taxi and lapping up MasterChef and The Voice on DStv’s Catch-up.

YONDELA SILIMELA EXECUTIVE DIRECTOR OF PLANNING

For Yondela Silimela, the journey from small-town girl to big-city planner came about by chance. Silimela registered for the new discipline of Town and Regional Planning at ML Sultan Tech in Durban in 1992, when she was unable to gain admission to her first love, Physiotherapy.

She has since climbed the ladder of this male-dominated industry to be at the top of the building chain.

This award-winning Executive Director of Planning is responsible for shaping Joburg and determining what it will look like in the future. Her portfolio incorporates: City Transformation and Spatial Planning; Land Use and Development Management; Building Development Management; Corporate Geo Informatics (GIS) and Management; and Regulatory Support and Strategic Planning.

Under Silimela’s watch, the Department, which boasts a staff complement of 400 and a budget of R410 million for this financial year alone, won the 2014 Excellence in Planning Award at the Planning Africa Conference, for the Corridors of Freedom, and the 2016 South African Planning Institute Award in July 2016 for the Spatial Development Framework.

Last November, Silimela herself scooped the Women in Property Network Award in the Public Sector Category. Not one for personal glory, Silimela attributes these achievements to the collective efforts of her team.

Yondela Silimela

Perhaps because of her tomboyish tendencies in her formative years or because of her personal strength, Silimela’s gender has not held her back.

“I haven’t experienced any resistance from male colleagues in the city, and the City itself has proved to be welcoming to female executives.”

This rings true with the number of women who currently work in Planning.

“The glass ceiling there is not unbreakable,” she says, adding though that “there’s more resistance driven by racial prejudice in the profession.”

Silimela has built a career of more than 15 years in the local government and development policy environment having previously worked with the National Urban Renewal Programme, the CSIR and the Department of Provincial and Local Government. Since her return to the City of Johannesburg in 2012 she has played a leading role in the design and development of programmes such as the Corridors of Freedom and the revitalisation of the inner city.

Because of the influence of her 12-year-old son, Silimela relaxes by listening to Justin Bieber.

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“I’m a Belieber!” she exclaims as she bursts out into her favourite song. Despite her high-profile job, Silimela says she enjoys the responsibilities of domestic life.

“When I’m home, I’m not an executive. I enjoy cooking. There’s no confusion.”

Her message to young ladies is simple. “Don’t be afraid to speak your mind – read widely, but formulate your own opinions.”

HELEN BOTES JOBURG PROPERTY COMPANY CEO

Only two of the City’s 10 municipal-owned entities are led by women, and the picture becomes more blurry when Heads of Departments are added into the mix. Only four of Joburg’s 15 departments have women at the helm. One of the two women who leads a City entity, Joburg Property Company CEO Helen Botes, says sometimes it feels like one is swimming against the tide as the property industry is still predominantly white and male. Unlike most people who would throw their hands up in the air and complain, Botes and the JPC have been doing something to balance the scales.

The mother of two says her tenure in the City has been fulfilling and “I would like to pass on the opportunity, which the City has exposed me to, to other women. My journey in the City, starting at COJ Treasury, Economic Development and JPC, has been exciting. I hope that I repaid the honour, blessings and opportunity given to me by the COJ by serving and leading with humility, passion, love and by adding value.”

Botes uses weekends as silent retreats to meditate and reflect. “I am a really good cook. I do yoga. I am not really good at it but I love it. I love walking, walking and walking. I love travelling and family holidays, and I love hiking. In fact, I love life!”

“I believe charity begins at home. That’s why the JPC has invested heavily in training and reskilling our employees in partnership with the University of the Witwatersrand. As a result, the JPC boasts upwardly mobile young women who are contributing to the industry and disrupting the status quo,” says Botes, who has been managing the entity for the past seven years.

To ensure that more women get into the property industry, the JPC will hold a two-day conference in the second week of August, Women’s Month.

“The JPC is also in talks to partner with industry players in rolling out mentorship programmes so that young people are introduced to property,” says Botes, who has been appointed as one of the judges for the Standard Bank Top Women of the Year Award in the Property Category.

Asked how she broke into a male-dominated industry, Botes says, “All industries are male dominated, not just the property industry.

I was given the opportunity by the City of Johannesburg. Since inception, the JPC has always been led by a woman. I hope that it will always be led by women, so I need to coach and mentor the women that will come after me.”

Botes believes women are born to lead, manage, direct and share. She says women do it in their homes all the time, so they should find it easier in the workplace.

“We must remember that all great men were born from great women. Only women have the ability to give birth and turn a man into a king or a killer. As women we need to believe in ourselves, in our own abilities. If as women we can empower men, which we do from the day they are born, then surely we can empower ourselves, our daughters and all other women.”

Helen Botes

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NOMSA MAZWAI GENERAL MANAGER OF THE SOWETO THEATRE

Ever since she could speak, Nomsa Mazwai, has never been afraid to say what’s on her mind. She has used her outspokenness to constantly break barriers and change people’s mindsets.

Not only did she go against the grain by contesting for elections as an independent candidate, she won and became the first woman SRC President at Fort Hare University in the Eastern Cape. Despite the constant harassment and threats of impeachment, Mazwai didn’t sink into a depression. She used the experience to write a book, Sai Sai Little Girl.

“I think that was my dad’s advice on coping with the situation and the distance. I guess he could not handle my daily calls telling him about my harassment on campus. He suggested I start writing about my experiences and eventually this turned into a book.

It worked so well that at some stage, I used to egg my detractors on to get more content for the book,” says Mazwai.

She neglects to mention that her father Nomsa Mazwai is veteran journalist, former Robben Island inmate, entrepreneur, academic and ministerial adviser Dr. Thami Mazwai. And no, she’s not planning a collaborative album with her multitalented sisters, Thandiswa and Ntsiki.

“I’ve been asked the question so many times. No, we seldom discuss business when we’re together. But, I always get help from them when I’m working on something. There is a long-term legacy project that involves music, poetry, literature and theatre performance that my sisters and I are working on,” says Mazwai.

She says she has big plans to transform the Soweto Theatre into a family-orientated place of entertainment where she can involve the community more.

“There are plans to stage more vernacular plays, more gospel shows and screen more films. And we’re also planning a kids’ entertainment zone so that mom, dad and baby can come to the theatre and have fun. In that way, Soweto Theatre is empowering the family unit.”

When she was SRC President at Fort Hare University, Mazwai was called “little girl” by her detractors. She says some people disrespect her still today because of her youthfulness and the fact that she is a creative person. She has learnt to turn the negative into positive energy.

“I was a Fulbright scholar, got my Master’s cum laude, but I still struggled to get a job in the private sector on my return from the USA. I think women’s empowerment must continue to exist as a mechanism to allow women to excel. There’s an invisible glass ceiling that forces women to stay in ‘their place’ and not being allowed to access opportunities. Changing the narrative is not easy but we must undo the wrongs of the past and allow women to flourish,” says Mazwai.

It’s been an adrenalin rush for the past two-and-a-half months at the helm of the Soweto Theatre for Mazwai but she says she has surrounded herself with winners. “The management of the Soweto Theatre is brimming with positive African minds that are empowering others to succeed and everyone here and at head office at Joburg Theatre is solutions-orientated,” says Mazwai

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Contact details 158 Civic Boulevard, Braamfontein, 2000 Johannesburg, South Africa Joburg.org.za

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general management

REIGNITING GROWTH GORDON INSTITUTE OF BUSINESS SCIENCE

Words Chris Zook and James Allen

Like an aircraft about to plummet to the ground, when revenues plummet and shareholder value heads south, your company may be in danger of stall-out. Is there a way of pulling out of this deadly condition?

Most successful companies eventually face a predictable crisis that we call stall-out – a sudden large drop in revenue and profit growth or a collapse of once-high shareholder returns to well below the cost of capital. Stall-out occurs when the growth engine that powered a company to success stops working. This rarely happens because the business model has suddenly become obsolete – a common misconception. Rather, our research shows that the business has almost always become too complex, most often owing to bureaucracy that slows the company’s metabolism,

or internal dysfunction that distorts information and hampers managers’ ability to make rapid decisions and take swift action on them. When we talk to executives about the symptoms of stall-out, their words vary, but the reasons remain the same.

We’ve lost touch with customers. We’re drowning in process and PowerPoint. We have no shortage of opportunities, but somehow we can no longer act decisively. What was once such a highenergy ride now feels like trying to pilot a plane with no thrust and unresponsive controls.

PHOTO: GETTY IMAGES

Howard Schultz, CEO Starbucks

general management

In an analysis of 8 000 global companies, we found that two-thirds of those successful enough to reach $500 million in revenue faced stall-out over the 15 years ending in 2013 – including notables such as Panasonic, Time Warner, Carrefour, Bristol-Myers Squibb, Alcatel-Lucent, Philips, Sony and Mazda.

More alarming still, for 50 large companies in prolonged stall-out, we found that the onset had usually been sudden: Momentum fell sharply over just a year or two, with growth rates dropping from double digits to low single digits or even negative numbers – a finding consistent with past research.

To be sure, external forces put pressure on incumbent companies.

Strategy – the external chessboard of business – still matters.

Yet competitive strategies are more similar than they used to be, more easily copied, and of shorter duration. The roots of success or failure increasingly lie in the ability of companies to remain fast, perceptive, innovative and adaptable. Internally thriving companies can respond to shifts in their competitive environments, identifying – and executing – strategies that sustain their dominance. When we polled 377 business leaders, 94% of those in companies with revenue of more than $5 billion told us that internal dysfunction – not lack of opportunity or unmatchable competitor capabilities – was now the main barrier to their continued profitable growth.

Yes, stall-out may be predictable, but it can be overcome.

We argue in a forthcoming book that most companies with sustainable growth share attitudes and behaviours: (1) They view themselves as business insurgents, fighting on behalf of underserved customers; (2) they have an obsession with the front line, where the business meets the customer; and (3) they foster a mindset that includes a deep sense of responsibility for how resources are used and for long-term results. Because these qualities are most vibrant in companies led by bold, ambitious founders, we call them “the founder’s mentality”. Since 2000, returns to shareholders in large public companies where the founder is still involved have been three times those for other companies. But any leadership team can harness the revitalising effects of the founder’s mentality. In some cases, a once dominant mindset has been lost over time and may need to be rebuilt from a few vestiges. But these three qualities can help any company restart its growth engine by removing gunk and complexity that has built up over the years, inhibiting the clean execution of strategy.

1. REDISCOVER YOUR INSURGENT MISSION

When stall-out occurs, it is almost always connected to creeping complexity. “No single bad decision or tactic or person was to blame,” Howard Schultz said after returning to the CEO position at Starbucks in 2008 amid shrinking revenue, collapsing margins and a decline in stock price of more than 75%. Starbucks’s stallout was sudden and dramatic, he acknowledged, but it resulted from damage that had been “slow and quiet, incremental, like a single loose thread that unravels a sweater inch by inch.”

To begin tackling stall-out, companies need to strip away complexity and excess cost in order to liberate resources, narrow

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focus, and harness the vigour that drove the company’s early growth. We studied 10 successful rescue-and-rebirth operations and found that all of them involved reducing operating costs by at least 8% and sometimes more than 25%.

Successful attacks on complexity are led from the top down and proceed in a sequence. First the company must shed noncore assets and businesses. Next it must develop a simpler strategy for the remaining businesses. Then it can attack complexity in the core processes. Finally, it can focus on reducing product complexity in design, variations and customisation. We’ve seen leadership teams attempt transformation in the reverse order, only to become trapped in details and wear down the organisation before getting to what really makes most transformations successful: reducing high-level complexity and cost.

. . . INTERNAL DYSFUNCTION . . . WAS NOW THE MAIN BARRIER TO THEIR CONTINUED PROFITABLE GROWTH” We have found that as companies grow in size, internal budget processes become democratic, spreading resources evenly across businesses and opportunities. But democratic investment in the face of crisis is a sure path to mediocrity. The opposite is needed to reverse stall-out. At companies where it was avoided, leaders had made bold investment decisions to redifferentiate the company, usually establishing a major new capability that set off waves of growth.

Once back in shape, companies must renew their view of themselves as business insurgents. This does not require promoting a martial culture or abusing the metaphor of “waging war” on competitors. Rather, companies should view their customers as underserved and their industries as setting insufficient standards, and should constantly emphasise what is special about themselves. Bold goals – not just the aim of living to fight another day – will sustain growth. As they become very large, organisations may find maintaining an insurgent mission hard, but it’s not impossible. Google’s mission to “organise the world’s information”, for example, is at once specific to Google and nearly infinite in its ambition.

A company should even be prepared to shrink significantly if that’s what is needed to regroup, redeploy and restart profitable growth.

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Frank Blake, former CEO The Home Depot

Companies that sustain growth live and breathe the front line of their business. This obsession, which can often be traced back to a strong founder, shows up in three ways: an elevated status for front line employees, a preoccupation with individual customers at all levels of the company, and an institutional curiosity about the details of the business. A front line obsession is most obvious in “high-touch” consumer businesses such as luxury hospitality.

But the trait can exist in subtler ways in a range of industries: Consider the product obsession of Steve Jobs and the legendary attention to detail of the wine pioneer Robert Mondavi, who believed in the saying “The best fertiliser for a vineyard is the owner’s footsteps.”

The Home Depot, the largest home-improvement retailer in the world, provides an example of how losing a front line obsession can lead to stall-out – and how renewing it can reignite growth. The company’s initial success could be traced to its remarkable founders, Bernard Marcus and Arthur Blank, who devoted themselves to building a close advisory relationship with customers. Their corporate mantra was “Whatever it takes”. The founders even trained store employees in customer service themselves. Employees, in turn, offered clinics on home improvement projects for customers and were always available in stores to provide knowledgeable advice. The strategy set the

THEY VIEW THEMSELVES AS BUSINESS INSURGENTS . . . ” company apart and generated powerful customer loyalty, and for years The Home Depot was a major success story. From its founding in 1978, until 2000, it consistently eclipsed its 20% annual earnings growth targets. But in December 2000, after missing an earnings target and having become increasingly concerned about antiquated systems – especially IT – in a company that was approaching $50 billion in revenue, the board of directors hired Robert Nardelli, a senior executive from GE, to introduce some big-company discipline as CEO. Nardelli created a command-and-control environment. By early 2006, 98% of the company’s top 170 executives were new to their jobs, and 56% of the new managers at headquarters had come from the outside. Fresh leadership, especially in the area of systems, was probably needed, but this changing of the guard failed to build on the deep strengths that had once made the

PHOTO: GETTY IMAGES

GORDON INSTITUTE OF BUSINESS SCIENCE

2. OBSESS OVER YOUR BUSINESS’S FRONT LINE

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company special and beloved by its customers. Nardelli and his team neglected customer relationships and front line enthusiasm in favour of boosting quarterly profits. Many long-serving full-time employees were replaced by lower-paid part-time workers, and customer service collapsed. “Do it yourself ”, some people joked, was now “Find it yourself ”. When the University of Michigan released its 2006 American Customer Satisfaction Index, The Home Depot had slipped to last among major US retailers. The board held meetings in the field and found a consistent pattern: concern for the future, disempowerment of long-time store employees, and a feeling that the social contract between the company, its employees, and its customers was being breached.

. . . COMPANIES NEED TO STRIP AWAY COMPLEXITY AND EXCESS COST . . . ” Greg Brenneman, the longest-serving board member and a global turnaround expert, told us, “You could see the serious trouble bubbling up under the surface. Store managers were feeling shackled by dozens of financial templates and metrics that took time away from customers and running the stores. The most experienced store employees, the real experts on plumbing or electricity, had been let go and replaced with less experienced and cheaper part-time store workers. Foot traffic, the lifeblood of any retailer, was dropping. New stores were not generating good returns, leading to further staff cuts. We were stalling-out and needed to change course.”

The deterioration of the customer experience was at the root of the company’s woes, and thus it illuminated a path back to sustainable growth. In 2007, the board replaced Nardelli with Frank Blake. On his very first day on the job, Blake spoke to all employees using The Home Depot’s internal television station and quoted extensively from Marcus and Blank’s book, Built from Scratch. In particular, he highlighted two of their charts. One listed their core values and the other gave pride of place, at the top of an inverted triangle, to the company’s front line: its stores, where customers and employees interact.

Many of Blake’s first initiatives focused on restoring the “orangeapron cult”: knowledgeable store employees, easily identifiable by their aprons, who focused on high levels of customer service.

Taking advice from Marcus, Blake also began anonymously visiting stores on “undercover missions”, as he called them. These proved so valuable that he instructed his senior executives to adopt a “management by walking about” approach, something most had never done before.

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Blake then set out to reduce complexity, restructuring the businesses and closing money-losing stores – essentially, shrinking to grow. He also increased the employee bonus pool by a factor of seven, rehired some veterans, and asked store managers to return to the pre-Nardelli policy of giving out honour badges to employees who had been exceptionally attentive to customers.

Eight years ago The Home Depot had stalled-out and was facing the prospect of free fall. But as of the end of 2015, thanks to Blake’s renewal of the founders’ mentality, the company has re-energised its employees and re-personalised its customer experience – a return to core principles that has driven the company’s stock from about $25 a share in 2009 to more than $130 by December 2015.

3. INSTILL AN OWNER’S MINDSET

The third factor in reversing stall-out involves a management idea that first came into vogue 40 years ago: the owner’s mindset.

Designed to instill balance-sheet discipline and accountability by aligning employees and shareholders, this concept is frequently misunderstood. Too often, it implies an incumbent’s mindset: a concern with hunkering down and extracting value from the existing business, and a loss of interest in innovating, serving customers uniquely, and fully valuing front line employees.

At its best, the owner’s mindset focuses on the long term, has a strong bias toward speed and action, and embraces personal responsibility for employees’ actions and for how resources are used. The power of the owner’s mindset is central to the rise of the private equity industry – a reaction against the bureaucracy, poor cost management, and complexity that beset many large companies. When we analysed the returns of deals within several private equity funds, we found that businesses sold by large public companies in which management had seemingly lost the incentives of ownership subsequently earned nearly 50% more than the others. After private equity firms had restored the owner’s mindset, these companies benefited from increased speed, reduced bureaucracy, a more critical evaluation of noncore businesses, and an improved management of costs.

A case in point is Dell, the best-performing large company of the 1990s. It began to stall-out a decade later, when some of the advantages of its legendary direct sales model began to narrow, and the company saw its market value decline from $107 billion in 1999 to just under $25 billion in 2013 – a 77% drop.

When Michael Dell returned as CEO to renew the company he’d founded, he concluded that he could more effectively make the changes he wanted if he took the company private, which he did in partnership with Silver Lake in 2013.

“In going private,” he told us, “it’s amazing how we have been able to speed things up. We simplified meeting structures, went to a board of directors with just three members, and increased our appetite for risk. When big committees talk about risk, they talk about risk committees, how risk is bad, the mitigation procedures of risk, and the reaction of the analysts. For us risk is now about

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innovation and success. It has been very energising to our 100 000 employees to feel the long-term focus coming back into the company.”

GORDON INSTITUTE OF BUSINESS SCIENCE

Customer satisfaction scores have rebounded and Dell’s employee satisfaction scores are the highest in the company’s history. Its core businesses are outgrowing their industry peers again and Dell is investing heavily to redefine its model for the long term.

Going private is not for all, of course. An owner’s mindset can be instilled without taking the business off the market. Companies can generate “mini-founder” experiences by, for example, creating franchises with direct ownership stakes or encouraging employees to create internal start-ups that might later be spun off. They can encourage investors with a more long-term focus and link executive pay more closely to long-term performance measures. They can change the timing of internal meetings to increase the speed of decision-making. (Some leadership teams, for instance, hold Monday meetings and Tuesday follow-ups with the aim of removing blockages to important decisions and actions.) They can reach outside the company to partner with insurgents and perhaps eventually acquire them. Or they can bring founders into the company through acquisition and work to retain them and their entrepreneurial energy. This has been the approach of companies such as Cisco, Google and eBay.

. . . DEMOCRATIC INVESTMENT IN THE FACE OF CRISIS IS A SURE PATH TO MEDIOCRITY ” Stall-outs are frightening for companies – if ignored or mishandled, they can lead to lasting reversals of fortune. But like any other daunting challenge, they can also be viewed as an opportunity. When we analysed value swings on the stock market, we found that some of the biggest upturns occur when a company is forced to return to its core and redefine it in the process.

Managers need not panic when stall-out occurs. Companies that reignite their mission, renew their obsession with the front line and instill an owner’s mentality throughout the organisation can reach new heights

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A version of this article appeared in the March 2016 issue (pp.70–76) of Harvard Business Review.

Chris Zook is a partner in Bain & Company’s Boston office and James Allen is a senior partner in Bain’s London office. They are co-leaders of the firm’s global strategy practice and co-authors of The Founder’s Mentality: How to Overcome the Predictable Crises of Growth (Harvard Business Review Press, forthcoming).

PHOTO: GETTY IMAGES

Michael Dell, CEO Dell

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IN THE MIRROR, THROUGH THE WINDOW Words Prof. Dave Ulrich, in conversation with Chris Gibbons

Prof. Dave Ulrich

GORDON INSTITUTE OF BUSINESS SCIENCE

YOU’VE CALLED HR PROFESSIONALS “ARCHITECTS OF TALENT, CULTURE AND LEADERSHIP”. WHY? Any function should be measured by its outcome, not its activity.

So HR is not just about staffing, training, compensation, it’s about what we get because of those activites. I believe that in doing good HR work, there are three general outcomes for the organisation.

One is talent – people who can better serve customers and give investors confidence. The second is culture or capability – the ability of an organisation to move quickly, to be innovative, to collaborate, to do things that win in the marketplace. The third is leadership. Someone in the organisation should be the architect of those outcomes – the key to strategy execution is your talent, your culture, your capabilities and your leadership. HR should be the function that provides the blueprint to help make that happen.

SO WHAT IS THE RELATIONSHIP BETWEEN HR AND GREAT LEADERSHIP? One of the outcomes of HR is great leadership all the way through a company. Not just the senior leader, but all the way through. So HR’s activities of hiring, career planning, succession planning, performance reviews, compensation, training and development, if those are rows, then one of the columns is great leadership.

Professor Dave Ulrich is one of the most respected names in HR and leadership studies. The Rensis Likert professor of business at the University of Michigan’s Ross School of Business, he’s been ranked No. 1 Management Educator and Guru by BusinessWeek, selected by Fast Company as one of the 10 most innovative and creative leaders and named the most influential thinker of the decade by HR Magazine. He spoke to Acumen from Utah, USA. The HR systems should be integrated in such a way as to provide a company with exceptional leadership. When that happens, the company not only wins inside, because its leaders create value for the employees and help deliver the strategy, but it also wins outside, because leaders do things that help customers and investors have confidence, and that increases customer share as well as market share.

HOW WOULD YOU CREATE AND BUILD A LEADERSHIP BRAND?

Part of a brand is doing the basics well. A leadership brand means that promises made can be delivered. When we diagnose a leadership brand, what we then do is say, “Let’s start by looking at the promises we make to customers”, so when I myself or the folks I work with go into a firm, we say, “Show us your commercials, show us your print ads, your social media ads, show us the promises you’re making your customers – your firm’s brand, if you will.” Then we ask, “Are those now the competencies required of your leaders? We like to compare a leadership competency model with those customer promises. And then what can HR do? Hire against them? Train against them? Promote against them? Pay against them? Communicate against them?

Build a structure against them?” Everything we do in HR is designed to increase that leadership brand, which reinforces the customer brand. And that, in turn, increases profitability.

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IF THE HR TEAM ASSISTS WITH THAT PROCESS, IT MUST ALSO BE ASSISTING WITH BROADER COMPANY STRATEGY?

Absolutely. For many years, HR was focused around the administrative side, i.e. the cost of hiring, the policies, the policemen, the regulation. We then saw HR take a shift toward building exceptional HR practices in staffing, training, development, etc. Then we’ve seen, for 15 or so years, HR called ‘Strategic HR’ – you link those practices with the business strategy. Now what we’re seeing is what we call ‘Outside-In HR’, that the HR practices should not just connect with strategy. The metaphor I like is that strategy was traditionally a mirror, in which you could see your HR practices reflected. Now we see strategy as a window, and through the strategy window, HR people can connect what we do with the outside world, which is connecting with customers. We don’t want to be just the employer of choice, we want to be the employer with the employees our customers would choose. Our training programmes should include customers in the design, co-creation of the programme, in the delivery and the attendance. Our performance management should include customers in setting the standards, in doing the evaluation. And so when we do HR in the context of strategy, we deliver incredible value to the business.

THE BUSINESS WORLD IS LITTERED WITH FAILED STRATEGIES – MOST OF WHICH WERE WELL-DESIGNED BUT SIMPLY NOT EXECUTED PROPERLY. DOES HR HAVE A ROLE IN TURNING THAT AROUND?

When we have looked at strategy, there are two dimensions.

One dimension is the content: do we have the right strategy?

And the key to that in some ways is not only articulating where we’re going, but making sure we have the discipline to get there.

In some ways it’s really easy to articulate a strategy. I’ve done workshops where five people can stand up and fill in the blanks: “Our goal is to be the world’s leading empire, through dedicated people, who anticipate customers, who deliver shareholder value with incredible integrity.” I mean, articulating that is not genius!

The discipline to deliver it becomes the more critical factor and so that’s the content piece – design, execute, discipline.

. . . IT’S THE SINGLE BIGGEST PREDICTOR OF WHICH COMPETENCE FOR HR DRIVES BUSINESS RESULTS ”

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. . . THE KEY TO STRATEGY EXECUTION IS YOUR TALENT, YOUR CULTURE, YOUR CAPABILITIES AND YOUR LEADERSHIP . . . ” The other side of strategy is the process piece. Who’s involved?

The content should go from broad to specific: we have a broad aspiration to a set of specific actions. The process should go from few to many, because a few people get involved and then quickly we distribute that to many. HR people can facilitate both the content and the process of creating a successful strategy.

WHAT WOULD YOU DEFINE AS THE KEY COMPETENCIES FOR THE MODERN HR PROFESSIONAL?

We’ve studied HR Competencies for a long time, in waves, including in South Africa. We’ve done seven waves and in the last round, we found nine buckets of competencies, which is almost too many! Three of those are around Strategic Enablers, that HR helps enable the strategy of the company; three of those are around Foundation Enablers; but the three that are the Core Drivers are really interesting.

To be effective, HR professionals have to be 1. Credible activists. This gets you invited to the meeting, it allows you to participate.

2. Strategic positioners. Once you’re in the meeting, what do you talk about? And if you talk about employees, being an incredible activist is enough, but if you’re going to talk about customers and investors and business, you need to be a strategic positioner who can position the business to win.

3. Paradox navigators. This one is so exciting! We found that it’s the single biggest predictor of which competence for HR drives business results. When HR professionals can navigate paradox – in other words, should we be long-term or short-term – yes.

Should we be focused on employees or customers – yes. Should we be top-down or bottom-up – yes. Should we be local or global – yes. When HR professionals can manage these tensions or paradoxes, they help businesses drive results.

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Credible activist gets me involved, strategic positioner delivers value to customers and investors, and paradox navigator makes money for the business

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THE NEUROSCIENCE OF STORY Words Gert J. Scholtz

You are much more likely to remember this short narrative about the origin of the sandwich than if you had simply been told: “The sandwich was invented by the Earl of Sandwich in 1748.” Stories are easy to remember and in many ways it is how we remember.

told to your colleague at work. Stories permeate all societies and cultures. Verbal as well as written. Since the invention of the Gutenberg press some 500 years ago, humans have written more than 130 million books.

Mark Turner in his book The Literary Mind says: “Narrative imagining – story – is the fundamental instrument of thought.

Rational capacities depend on it. It is our chief means of looking into the future, of predicting, of planning and of explaining. Most of our experience, knowledge and our thinking is organised as stories”.

One of the most influential books of the century is Joseph Campbell’s A Hero with a Thousand Faces. In it he sets out the typical patterns found in myths and stories that are retold over time. The book had a major impact on writing and storytelling.

Oscar-winning moviemakers such as George Lucas, Steven Spielberg and Francis Coppola owe their success to the ageless tenets Campbell set out. Campbell discovered that the most persistent theme in myth, folklore and legend is that of

GORDON INSTITUTE OF BUSINESS SCIENCE

Perhaps in the business environment we have forgotten the impact of story? Conversations at the office are typically to the point, factual and data-driven. The more precise, the better. We forget that in our search for exactitude, certainty and brevity, stories are still the most powerful way of conveying messages, and a most persuasive form of communication. Ironically, in today’s environment of information and data overflow, what matters more and more is to place facts into context and to deliver them with emotional impact. And that is the essence of story – context enriched by emotion.

PERHAPS IN THE BUSINESS ENVIRONMENT WE HAVE FORGOTTEN THE IMPACT OF STORY? ” Why and how are our brains wired for story?

Tales are found everywhere in ancient cultures, written in Sanskrit, Latin, Greek, Chinese, Egyptian and Sumerian. From stories around the fire by hunter-gatherer societies to the millions of writers churning out books to the everyday anecdote

John Montagu, Earl of Sandwich

PHOTO: GETTY IMAGES

“He loved playing cards. Day and night he would sit around a table with a group of friends where they would covertly keep or triumphantly show their hands. They loved the challenge and merriment until… it was time to eat and they would need to take a break from play. The aristocrat wanted to do both at the same time, so he placed a strip of beef between two toasted pieces of bread. Holding it with one hand, and with his cards in the other, he could continue playing until the small hours of the night. The aristocrat was John Montagu, Earl of Sandwich, who in 1748 had just created the most popular meal of all time – the sandwich.”

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the Hero. Much like the eternal archetypes of the human psyche laid out by the great psychologist Carl Jung, Campbell identified the common unconscious thread that makes for the most repeated story theme. The hero is universal, occurring in every culture throughout time. It springs from the collective unconscious and reflects universal concerns of the human condition. A multitude of variations on the theme of the hero have been told – all following the same basic pattern: The hero is introduced in his ordinary world but soon an adventure or challenge beckons. At first, he is reluctant to embark on the journey but a mentor soon encourages him and he crosses the threshold from his world into the unknown world of the quest. Along the way he meets new friends and encounters enemies. He meets various challenges until he reaches the supreme ordeal. He endures, survives and gets his reward – be it the treasure, the insight or the woman. The hero then goes back to his ordinary world transformed, and brings his new secret to the people at home.

Does the theme sound familiar? It underlies many bestsellers and award-winning movies. Maybe not in the exact same sequence; the order given is one of many variations but the theme of the challenged, conquering and then transformed hero underpins many great tales.

The best stories, those told and retold, read and re-read, do more than simply sketch a picture of related events. These tales captivate our emotions and imagination through their characters and unfolding events. We forget time and that which surrounds us. Such immersion is what psychologists call “narrative transport” – the temporary transference into a different life and realm.

Neuroscience studies reveal that on reading a simple factual statement, such as “The sandwich was invented by the Earl of Sandwich in 1748”, only two small parts of the language processing area of your brain are activated – called Broca’s area and Wernicke’s area (and that is a fact).

By contrast, when hearing or reading something dynamic, rich and colourful, not only are your frontal brain processing areas activated but also your sensory, motor, olfactory, visual and auditory cortices. A good story activates the whole brain, including its older parts where emotional and motor processing occurs. On hearing about an emotionally charged event, the brain releases dopamine which makes it easier to remember a message and enables recall later with greater accuracy. As we hear a story, we quickly feel that what is happening “out there” is actually happening inside us. Activating different areas of the brain creates multiple hooks and draws us into the narrative.

PHOTO: GETTY IMAGES

Joseph Campbell, writer of A Hero with a Thousand Faces

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The novelist Graham Swift said: “Only animals live in the here and now. But man – let me offer you a definition – man is the storytelling animal. Wherever he goes he wants to leave behind not a chaotic wake, not an empty space, but the comforting marker-buoys and trail signs of stories.”

GORDON INSTITUTE OF BUSINESS SCIENCE

Stories invoke the mind to fill in gaps and to anticipate future outcomes and, as such, they provide a safe simulation of the possible perils of reality. Keith Oatley of the University of Toronto, after spending much of his life studying the effect of story says: “What a story does, is to provide cues for the simulation to run; cues that call up identifications, or indicate patterns of events so that we can feel sympathetic towards Walt Disney some character’s emotional plight, or prompt memories (consciously or unconsciously), or summon fragments of cultural understanding.

All these allow inferences that fill the gaps in what the author offers, to make the simulation complete, to sustain the dream.”

Steven Pinker of Harvard University states: “One might have expected natural selection to have weeded out any inclination to engage in imaginary worlds rather than the real one”. He posits that stories have evolved primarily for learning and for developing relationships with others. Good narrative with its redolent detail, imaginative metaphors and attentive description of people offers an especially rich replica of the real world.

THESE TALES CAPTIVATE OUR EMOTIONS AND IMAGINATION . . . ”

Listening to tales becomes a rehearsal for events that may occur in our lives and a means of making sense of that which has already happened to us.

On a cognitive level stories engage the brain because of the hermeneutic circle which holds that understanding works in a circular way. One can understand a narrative only by grasping in advance the relation of a specific part to the whole in which it belongs, even if one can only arrive at a sense of the whole by working through its parts. It is this oscillation and tension between our minds’ predictive starts and the actual unfolding of events in a narrative that draws us in and intrigues.

Not only do stories engage the mind fully, recent research also shows that they improve brain functioning. Over a period of nine days, researchers took brain scans of students who were told to read Robert Harris’ book Pompeii. The scans showed increased connectivity within the student’s brains on the mornings following the reading assignments. Importantly, the increased

PHOTO: GETTY IMAGES

One of the brain’s unique design features is its ability to form and recognise patterns in the world around us. We make patterns to enable us to react quickly and appropriately to our environment and the people it contains. By forming predictive patterns, the energy load on our grey matter is reduced and our sense of control over our environment is increased.

Indeed, some neuroscientists describe the brain’s main function as one large pattern-making and prediction machine.

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. . . MAN IS THE STORYTELLING ANIMAL” buzz in the brains was in a variety of cerebral areas including those responsible for language comprehension, recording of sensations and co-ordination of movement.

Other studies show that people who read more have more empathy and are better at theory of mind – the ability to put yourself in another’s shoes. Raymond Mar of York University performed a meta-analysis of studies on the brain and concluded that there is substantial overlap in the brain areas we use to understand a tale and that we use to navigate our social world – in particular those interactions where we are trying to figure out the thoughts and intention of others. Narratives offer a unique opportunity to engage in personal and social simulation as we identify with the characters’ hopes and frustrations, guess their hidden motives and track their encounters with others.

Stories almost always trump facts as a means of persuasion (and this is no story). A classic study on the effect of story was conducted amongst a group of American MBA students.

The students were provided with material on the winemaking procedures of an American winery attempting to use traditional French methods to ensure a high quality of wine. They were shown an advertisement which stated that the American winery would continue to use French methods. Students were then provided with supporting information in one of three ways: one group was given statistics, another a relevant story to read and the third reviewed both the statistics and read the story. All three groups were then asked what they thought the likelihood would be that the American winery would continue with its French winemaking processes.

The results were telling. The group which read only the story were most likely to believe that the American winery would continue to use the French methods, even more so than the group which read the story and saw the statistics. The MBA students that saw only the statistics, the hard and cold data, were least likely to believe the claim of the advertisement.

Reading fiction or listening to someone’s story leads to a peculiar phenomenon called embodied cognition. For instance, reading or hearing about a colleague who yesterday peddled in a cycling race stimulates the same areas of your brain as if you had actually competed in the race yourself. At Washington University, neuroscientists had volunteers recline in a brain scanner while reading a story on a screen, one word at a time. When the subject read about something the protagonist did such as “Raymond picked up his sword”, the same cerebral regions were activated as if they were actually picking up a sword. These areas include the motor-planning and soma-sensory areas of the brain. When you read about an action, the parts of your brain required to actually carry out that action fire up as well. The degree of intensity may

be less but the same neural changes occur internally when you read about someone else experiencing or doing something.

Oxytocin is often called the chemical of co-operation as it enhances our sense of being able to experience others’ emotions.

Paul Zak, a neuroscientist from the University of Pennsylvania, found in his research that character-driven stories increased the release of oxytocin, along with our propensity to trust and show kindness. Zak says: “My experiments show that character-driven stories with emotional content result in a better understanding of the key points a speaker wishes to make and enable better recall of the stories of these points weeks later”. In an analysis of the best TED talks it was discovered that 65% of the content fell under what Aristotle centuries ago called pathos – conveying personal emotion. A further 25% content was based on logos – data and logic, and the remaining 10% fell under ethos – establishing credibility for oneself.

Greg Stephens of Princeton University observed that neurostudies on storytelling have always focused on one of two brains: either that of the storyteller or that of the story recipient.

Curious, he peered inside the neural workings of both at the same time a tale was told. What he found underpins all that neuroscience says about the power of story. The storyteller and story listener’s brains formed the same neural brain activity, with that of the listener usually one to three seconds behind that of the storyteller. At the neural level, the listener is drawn into the story in a very real and visceral way. At some points of the narrative, the listener’s brain jumps ahead to form predictive leaps demonstrating the pattern-forming characteristics of our minds.

What’s more, Stephens found that the extent of the brain pattern overlapped and activation between the two people predicted the success of the narrative communication.

In business and organisation, the need for story has never been greater. To connect with the purpose of the organisation, to establish rapport with colleagues, to influence decisions and yes, to enjoy corporate life – neuroscience proves the value of the welltold tale. Not always and not everywhere, but where story can amplify fact or where a tale can foster purpose and connection, we would be wise to remember what the neuroscientist Donald Hebb said: “Neurons that fire together, wire together.” Nowhere is this truer than in story.

“The young man looked out of the train window, lost in thought.

His fledgling company, his dream, which he had called Laugh-OGram Films, had just gone bankrupt and he had also been fired from a local newspaper for not being creative enough. With an empty wallet and a bagful of determination, he was travelling from Kansas City to a place where start-ups were happening. It was called Hollywood and his name was Walt Disney…”

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REMEMBERING THE ZEROS AT THE ZIMBABWE STOCK EXCHANGE Photography Lisa King from the series Sometimes I make money one day of the week Words Sean Christie

GORDON INSTITUTE OF BUSINESS SCIENCE

Above: A Bull & Bear framed print hangs in the trading room of the Zimbabwe Stock Exchange (ZSE).

As a physical space the Zimbabwe Stock Exchange (ZSE), occupying just a single floor of the Union Avenue Building on Harare’s Kwame Nkrumah Avenue, is unremarkable. The corners of the trading room’s carpet tiles curl upwards, and some of the gypsum ceiling panels are missing. An owlish portrait of Robert Mugabe overlooks the large oval table at which representatives of Harare’s 12 or so brokerages make their trades from 10-11 on weekday mornings. Hardly the details of exceptionalism, but then there is much more to the ZSE than meets the eye.

The traders here have extraordinary stories to tell, particularly about the hyperinflation period of 2002-2009, which peaked in mid-November 2008 when the Zimbabwean dollar registered a monthly inflation rate of nearly 80 billion percent.

With zeroes stacking up at such an extraordinary rate, tracking the true value of the Zimbabwe dollar became a tricky business, and it was here that the equities market came into its own.

“During hyperinflation there were at least five different exchange rates being worked out daily in Zimbabwe,” explained John Robertson, the nation’s pre-eminent economist.

“We had the official exchange rate, permitted to certain people in positions of authority. Then there was the Reserve Bank of Zimbabwe’s (RBZ) exchange rate, the open market exchange rate, and the black market exchange rate, being the one that tourists would get on the streets. Last but certainly not least there was the

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Top Left: The daily trading session at the ZSE is opened with the ringing of this bell.

Top Right: A trader’s order book, ZSE. Bottom Left: Up-turned carpet, ZSE.

Old Mutual Implied Rate (OMIR), which was far and away the most trusted one. This was the rate worked out at the ZSE.” 160 year-old South African insurer Old Mutual first opened an office in Zimbabwe (then Rhodesia) in 1927, and was soon one of the pillars of the nation’s economy.

In 1999, Old Mutual demutualised and listed on the ZSE, the Johannesburg Stock Exchange (JSE), the London Stock Exchange (LSE), the Malawi Stock Exchange (MSE) and the Namibian Stock Exchange (NSE). Old Mutual shares listed on the ZSE were fungible, meaning a percentage could be moved from the ZSE to other stock exchanges. Similarly, investors wanting to invest on the ZSE could bring in Old Mutual shares from foreign stock exchanges and sell them on the ZSE for Zimbabwe dollars, which could be used to buy other stocks.

“Some deals,” explained Robertson, “took place each day on the ZSE, JSE and LSE, enabling a quick calculation: if x amount is what was paid in sterling on the LSE for 1 000

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GORDON INSTITUTE OF BUSINESS SCIENCE

Above: The Zimbabwe Stock Exchange trading room.

Old Mutual shares, and amount y is what was paid in Zimbabwe in Zimbabwe dollars, then the exchange rate between the Zimbabwe dollar and the pound must be z. You could do the same thing using the JSE to get the rand/dollar exchange rate.”

As the economic crisis deepened, the nature of activity at the ZSE began to change dramatically, with ordinary Zimbabweans replacing foreign investors as the major buyers and sellers on the local bourse.

Providing Zimbabweans with a reliable measure of their currency’s value was one inadvertent service rendered by the ZSE during these difficult economic times. Providing local investors with a refuge from searing inflation was another.

“Our typical client at this time was the Zimbabwean whose relatives had remitted money from the diaspora, and who needed to turn that money into something which would hold value,” said Shonhiwa.

“Everyone was looking for something to hedge against at this time, but buying shares was the only way to keep pace with inflation, so this is what a lot of people went for,” recalled Thandiwe Shonhiwa, a broker with Southern Trust Securities.

Christopher Maseke, a trader with EFE Securities, explained how this worked.

“Brokerages were legally obligated to take cheques, and so individual Zimbabweans basically started to use the ZSE as a bank

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Traders participate in the manual open-outcry or ‘call-over’ system of trading at the ZSE. Top left: Arnold Dhlamini, top right: Thandiwe Shonhiwa.

Bottom Right: Manual trade dockets used at the ZSE.

account. They’d receive money from abroad, hand it to their currency dealer, and their dealer would write us a cheque for however many billion dollars and we would then have to buy shares with it, which the client would sell as and when he or she needed money for things like rent, groceries or school fees. Ideally you went for dual-listed stocks, like Old Mutual, or PPC, but to be honest demand was so high and supply so limited that most of the time you would just buy whatever was for sale,” he said.

ZB Securities trader Wellington Mapedzamombe observed the physical dynamics of the trading room change in response to the extraordinary demand.

“In response to the demand from all these low-liquidity investors the

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GORDON INSTITUTE OF BUSINESS SCIENCE

Traders participate in the manual open-outcry or ‘call-over’ system of trading at the ZSE. Top left: Noel Mahombera, Courage Muranda and Alden Muhoni (l-r), top right: Edmond Mupfapairi, bottom right: Briony Knott.

number of brokerages multiplied in Harare, totalling 23 by 2008, which made the trading room so crowded it was no longer possible to fit us all seated around the table. So they raised the table and we had to stand, and even now we poor traders are still forced to stand, though the number of brokerages has since halved,” he said.

For Sebastian Gumbo, formerly Chief Trader for Imara Edwards Securities, it was the necessity of knowing his 75 times table that has stayed with him.

“When I started as a trader the Reserve Bank of Zimbabwe (RBZ) issued a Z$750 000 note, which was the hardest yet to transact in, but we learned how to do it. Later that year the RBZ issued 5, 25, 50 and 100 billion dollar notes, and from then on we all had to get these special calculators that stretched to 25 zeros. You’d just turn the things on, and already there were three zeros there.”

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Top: The $100 trillion note has the most number of zeros physically appearing on a note – 14.

Bottom Left: Seating and server board, ZSE. Bottom Right: Trading board and computer equipment, ZSE.

Managing the zeros became a job for very steady nerves. Former trader Briony Knott, now living in Australia, told of a recent mini slump in the Australian market on account of a single broker misplacing a single decimal point. “I’d love to know how these Aussie brokers would have handled trading call-overs on a manual system (The ZSE only transitioned to an Automated Trading System in 2015) in a hyperinflationary environment, where you’re chopping zeros off left, right and centre because they can’t fit the calculator.”

Ultimately, the situation became untenable. On 19 November, 2008, the RBZ moved to suspend all activity on the ZSE, and two months later the new finance minister, Tendai Biti, indefinitely suspended the Zimbabwe Dollar, replacing it with a multi-currency system dominated by the US dollar. Trading recommenced the same day, and a new chapter opened for the ZSE, with its own distinct challenges.

Sometimes I make money one day of the week was the inaugural recipient of the Fourthwall Books Photobook Award.

Speaking in the week the ZSE transitioned to an Automated Trading System, Jonno Waters, who formerly published the Central African Stock Exchanges Handbook, said that in all of its 115-year history, perhaps the most remarkable thing about the ZSE was the story of how it became one of the last properly functioning institutions during the hyperinflation years.

“The market capitalisation of the ZSE after dollarisation was the same as it was during those years, which shows you that markets work. The market worked out how much bullshit money was around, and adjusted itself, and the brokers made this possible simply by turning up for work and doing their job. I doubt there has ever been another moment anywhere else when a people and a share-trading institution have been so intimate, and so codependant,” he said

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DOING BUSINESS IN URUGUAY Words Tom Hennigan

There is an apocryphal tale about the Uruguayan who asked an economist what his country should do to boost economic growth. “Move!” came the reply.

This small South American country of just under 3.5 million inhabitants lives on a tough block. To the north is the continent’s behemoth Brazil. Across the River Plate estuary is Argentina. For most of the 20th century these two regional powerhouses have experienced wild swings in economic and political fortunes and too often Uruguay has been knocked about by the turbulence.

Geography and history mean Uruguay is inevitably closely integrated with its two bigger neighbours, especially Argentina.

Too often, this has presented difficulties. Uruguay’s last big recession, back at the start of the millennium was almost wholly the result of Argentina’s economic implosion, which followed 2001’s record-breaking debt default. It arrived with the Argentines who caught the ferry over from Buenos Aires in order to access funds stashed away in the country’s banks.

But times are changing. Currently Brazil is experiencing its worst recession since the Great Depression in the 1930s. Argentina is once again in the doldrums, experiencing a deepening slump in industry and consumption even as it battles rampant inflation.

Despite its neighbours’ woes, Uruguay’s economy still managed to expand last year, at a smaller rate than it had become accustomed to but nevertheless an impressive result considering the problems in the neighbourhood and the decline in commodity prices.

“Uruguay has suffered from the slowdown in the commodity cycle, meaning tax increases and cutbacks. But it is weathering the storm better than Brazil and Argentina. And this is because we have been better at implementing policies that attract investment,” says local political analyst Oscar Bottinelli.

PHOTO: GETTY IMAGES

GORDON INSTITUTE OF BUSINESS SCIENCE

The Finnish United Paper Mills Ltd (UPM) pulp mill in Fray Bentos, Uruguay, on the River Uruguay border with Argentina

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. . . JUST NEVER SAY ANYTHING NEGATIVE ABOUT LUIZ SUAREZ ” tiny economy and at times outstripped those into far larger Argentina. To give just one example, European companies have been welcomed in helping create from almost scratch a world class pulp industry that makes Uruguay a player in the paper production chain.

This has created a resilience that has seen the country win praise from the World Bank for the ease of doing business there and boosted confidence so that regardless of the woes of its two neighbours, the country can thrive as an open trading economy, a member of the dysfunctional regional trade bloc Mercosur but nevertheless looking out across the Atlantic to the wider world.

Most impressively this achievement has taken place under the country’s first-ever left-wing government which says it wants to facilitate capitalism so that it can redistribute some of the profits to the country’s poorest citizens.

During more than a decade in power, the Broad Front alliance has proved successful in both. Official statistics show Uruguay’s economy has grown on average 5.6% a year since the Front came to power in 2005 while at the same time the proportion of the population living in poverty has fallen from 40% when it took power to just over 10% currently.

DEMOCRACY RULES!

Happily for investors this policy mix is set to remain largely intact if and when the Front is finally voted out of power. Underlying Uruguay’s recent success is one of the region’s most robust democratic systems which, while competitive, is fought largely on middle ground beloved of investors who must take the long view.

PRAGMATISM VS. POPULISM

In a region still blighted by the sort of populism that has once again led oil-rich Venezuela to the brink of ruin, Uruguay stands out as a beacon of common sense implementing a pragmatic policy mix that encourages inward investment while at the same time winning high levels of support from the country’s voters.

The proof of this can be seen in the countryside. Here agricultural production is booming and much of the investment capital comes from Argentine farmers who since the millennium have been reluctant to invest in their own country so suspicious are they that the government will take their profits from them in higher taxes.

Other sectors of the economy have also thrived in the last decade during which direct foreign investment flowed into the

While the Front has adapted the economic policies of its right-wing opponents, these can also claim to have been the forerunners of its social policies. Back at the start of the 20th century it was President José Batlle y Ordóñez who set up a comprehensive welfare state before most European nations attempted to. Through all the vicissitudes of the intervening century this has retained broad political support meaning Uruguay does not share the rancorous, class-based, political polarisation too many of its neighbours suffer from.

“Uruguay lacks the political polarisation you see elsewhere in the region,” says Bottinelli. “The country has a long democratic tradition. There was an 11-year interruption for military rule in the 1970s, but since its return the depth of our democratic tradition, strong civic spirit has been evident. This means that while certain things changed when the current government came to power there was also much continuity and when they leave power there will be a strong degree of continuity again, and this provides reassurance to investors.”

dynamic markets

PHOTO: GETTY IMAGES

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A wind turbine blade at the Talas del Maciel I wind farm.

GORDON INSTITUTE OF BUSINESS SCIENCE

. . . WE HAVE BEEN BETTER AT IMPLEMENTING POLICIES THAT ATTRACT INVESTMENT ” The social result of this political consensus is South America’s most equitable society, an historic achievement on the planet’s most unequal continent, making its middle class proportionally the largest in the region. The country has also become a liberal torch bearer on what remains a socially conservative continent as illustrated by its decision not just to legalise marijuana, but place the state at the heart of the newly liberalised drug’s supply chain.

NO BEEF ABOUT BEEF

But challenges still remain. Despite diversification the country remains dependent on its two next-door neighbours for export markets and the commodity sector is still a dominant player. For all the changes during the intervening years, a gaucho from the last century would still recognise the country’s economy in which beef production remains a significant component, though in recent years soy has become a powerful new player in the countryside.

As Argentina’s national beef herd has shrunk, thanks to the misguided policies of the Kirchner administrations, Uruguay has rushed to fill the gap, becoming a major beef exporter to Asian

countries and winning a significant slice of the lucrative Chinese market. Though only one-fifteenth the size of Argentina, Uruguay exported almost half as much beef again as its bigger neighbour last year.

The country is now, along with Paraguay, seeking to carve out a name for itself as a prime exporter of natural, hormone-free, grass-fed beef. A drive in recent years to boost the economy’s productivity by investing in technology has already helped such traditional industries as beef. A government programme that funds a state of the art electronic tagging system for cattle means the country’s national herd has made Uruguayan beef highly sought in Asia where sanitary concerns mean traceability is a requirement of many customers.

But the ultimate goal of the government is to turn Uruguay into a high-tech hub for foreign companies looking to set up within the high trade barriers of the Mercosur bloc. Montevideo has had some success in building a software and Internet start-up ecosystem, the latter often driven by Argentines fleeing the economic chaos of their home country. Now that a pro-business administration is in power in Buenos Aires this new sector could face competition from across the River Plate.

INFRASTRUCTURE AND ENERGY

One measure designed to try and keep Uruguay’s competitive advantage over its neighbours intact is an infrastructure investment plan unveiled in May of this year. President Tabaré Vázquez said the country would spend $12.37 billion on roads, energy, communications and housing with the government providing most of the funding in partnership with the private sector.

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Cows are herded to the slaughterhouse of the Frigorífico San Jacinto, one of the most important Uruguayan meat processing plants.

The plan will not only upgrade the country’s infrastructure but the spending is also designed to offset the impact on the economy of the recessions in Brazil and Argentina. And with little slack in the labour market despite an uptick in unemployment there is an awareness among policymakers that future growth will have to be driven by productivity gains that require better infrastructure.

Another key target of the government that has opened up new possibilities is the energy sector. The country has upgraded much of its electrical grid in the last decade but, following the likes of Portugal and South Africa, it is now making a serious drive to become a leader in wind energy. Over 90% of Uruguay’s electricity already comes from renewable energy but with the majority of that hydro, the country remains vulnerable to droughts, hence the current focus on building wind capacity.

GORDON INSTITUTE OF BUSINESS SCIENCE

The country is also hoping that a recent drilling campaign off its coast will turn up deposits of oil and gas that could be exported.

Multinationals have already taken part in the campaign which is helping drive inward investment in the energy sector to over $6 billion in the last five years alone, or roughly 15% of GDP. It is investment narratives like these that have made Uruguay a regional darling of the investment community. Despite the country’s small size, its economic development and political stability – and civility in a neighbourhood lacking in it – makes Uruguay a beacon of hope in a region once again witnessing political and economic turmoil. Though much has changed, Uruguay still deserves its title as the Switzerland of South America.

BUSINESS ETIQUETTE IN URUGUAY

Like most of Latin America, Uruguay’s business culture is relatively closed. Uruguayans are less flamboyant than their Argentine and Brazilian neighbours which can leave them seeming stand-offish at first. But if you put in the effort, you can build lasting partnerships within one of the continent’s most reliable business communities.

URUGUAY LACKS THE POLITICAL POLARISATION YOU SEE ELSEWHERE IN THE REGION ” When starting off, remember lots of eye contact and do not be surprised if after a few meetings a hug replaces the salutary handshake. Like elsewhere in the region there is a premium placed on establishing trust between prospective business partners. So plan on spending plenty of face time with your contacts. Also, Uruguayans do not care much for foreigners telling them their way of doing things is slightly outdated. Wait to be asked an opinion before offering up suggestions on how things could be done differently.

A knowledge of, or lacking that, an interest in, the country will go a long way. Uruguayans are aware that their nation makes few waves on the international stage but are nevertheless a fiercely proud people. Let your hosts know how excited you are to visit and how much you are looking forward to learning a bit more about the country. As elsewhere in South America football is always a popular topic, just never say anything negative about Luiz Suarez.

Much of Uruguay’s business class speaks good English and is well travelled. But there are local customs to be observed. The business world is extremely formal but nevertheless punctuality is not highly valued. If you are arranging a business dinner, do not think of booking a table before 9pm or discussing deals over steak and wine unless your host initiates the discussion

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SUPPLY CHAIN SUPPORT NEEDED TO IMPROVE ACCESS TO MEDICINES IN AFRICA Reconceptualising the delivery model for drug distribution with private sector support of public health supply chains is the key to addressing Africa’s healthcare delivery challenges and maximising the availability of life-saving drugs across the continent.

This is the contention of Dr. Iain Barton, Imperial Group Business Development Executive: Healthcare. “Until recently pharmaceutical distribution in Africa was characterised by supply into Central Medical Stores in each country, from where drugs were distributed to areas of need,” he explains.

Barton says that where drug companies work with private sector businesses to change the delivery model for drug distribution, the results can be spectacular. He cites an initiative in Kenya as an example: “Drug prices to patients in rural African markets are often inflated by the many intermediaries involved in the supply chain distributing drugs to clinics and hospitals, often in remote rural areas. A global drug manufacturer operating in Kenya partnered with Imperial Health Sciences to reduce the price to patient. By changing the distribution strategy, the price to patient was reduced across a range of six lines of prescription drugs and over-thecounter products by between 44%-55%. Sales volumes rocketed by 300% in the first and second years after the change.”

Expanding on Africa’s healthcare delivery challenges, Barton states that in the developing markets of Africa, security of supply is poor, quality is not assured, and rigid and high price-fixing is the norm.

“Counterfeit and substandard medicines are also rife, and corrupt procurement and supply practices are seldom challenged,” he stresses.

In line with the current growth opportunities present in the subSaharan African market, Imperial is looking to directly support the improvement of the standards and services of the healthcare supply chain in a number of countries in Africa. “Our aim is ‘Big D Development’ focused on sustainability and long-term local growth. An improved supply chain ensures that a larger number of patients have access to medicines. It also improves the affordability of products at patient level, the quality of medicines, and traceability and sustainability of supply to patients,” he states.

Barton notes that by 2017, pharmaceutical spending in Africa is expected to be worth between US$40 billion and US$60 billion, and over the next five years strong growth can be expected in every segment of Africa’s pharmaceutical markets.

Dr. Iain Barton, Imperial Group Business

He reveals that in Imperial’s Development Executive: Healthcare view, supply chain support needs to focus on five key elements, which he has dubbed “the five Cs”. These are compliance, capacity, catalogue, credit and customers. Expanding on each, he explains that compliance ensures the safety, quality and efficacy of product, as well as the security of product integrity. “Capacity refers to the skills, systems and infrastructure to buy, store and sell medicines, and the means to deliver to multiple regions within a reasonable time period. Catalogue is the reliable availability of a wide range of product, while credit is the ability to access and to provide credit, specifically to access product from suppliers and to provide these products to retailers. Customers refers to the purchasing retailers, state institutions and donor-supported programmes that need access to the products.”

“In line with the way in which donor agencies have begun to redeploy funding to try to promote sustainable local private sector development, initiatives to support the growth and sustainability of a sub-Saharan African healthcare sector are critical to the development of regional African supply chains. Ultimately, it is a robust sector which can minimise wastage and obsolescence and maximise the availability of life-saving drugs across Africa,” Barton concludes

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Cnr Geldenhuis Road & Van Dort Street Germiston, Gauteng 011 677 5000 Imperiallogistics.co.za GPS Coordinates 26°11’44.48”S | 28° 7’49.89”E

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TOP EIGHT THINGS TO DO AND SEE IN URUGUAY Words Tom Hennigan

GORDON INSTITUTE OF BUSINESS SCIENCE

Uruguay’s capital is a charming port of entry that contains striking architecture, a vibrant cultural life and, in the Ramblas riverside walkway, one of South America’s best spots for people-watching. Explore the fascinating streets of the rapidly reviving old city by day, then at night dine in one of the restaurants in upscale Pocitos.

ASADO IN THE MERCADO DEL PUERTO

Uruguay’s beef stands comparison with the more renowned cuts from neighbouring Argentina but, crucially, Uruguayans are better grillers.

In Argentina charcoal is typically used for barbecue while in Uruguay wood is favoured, giving the meat a lovely sweet ‘n’ smoky flavour.

Vegetarians beware, but a top spot for experiencing a Uruguayan cook-up is the covered market down by Montevideo’s port.

PHOTO: SHUTTERSTOCK

MONTEVIDEO

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CARNIVAL

ESTADIO CENTENARIO

COLONIA DEL SACRAMENTO

PUNTA DEL ESTE

THE ATLANTIC COAST

CABO POLONIA

This sleepy town across the River Plate from Buenos Aires was once bitterly contested by Spain and Portugal during the colonial era. Now a UNESCO World Heritage Site, it exudes a laid-back charm with its bougainvillea-clad colonial-era buildings housing fine restaurants, craft shops and boutique hotels that are ideal for total relaxation.

Further north the Atlantic Coast attracts wind sport enthusiasts and surfers and an increasing number of foreign tourists looking for a more relaxed beach experience than the one at Punta del Este. If it is a more bohemian vibe you are after, head for the hippyish resort of Punta del Diablo where, after a day lounging in a hammock you can stroll down to one of the beach shacks for a fish supper.

The centenary stadium was the stage for the first-ever football World Cup back in 1930 when the hosts beat favourites Argentina in the final game. Hallowed ground for many Uruguayans, the stadium has a museum but far more enlightening of the importance of football for the locals would be to attend a match by the city’s two big teams, Peñarol and Nacional.

During the southern summer, one of the hottest beach scenes in all South America is to be found at Uruguay’s glamorous Punta del Este resort. Long a favourite destination of Buenos Aires’ smart set, in recent years there has been an invasion of Brazilians drawn to a beach party that seems to run day and night all through high season.

A nature reserve with a sea lion colony, this is another of the hidden charms of Uruguay’s coastline. Hard to get to, the trip is worth the effort especially in spring when austral whales play offshore. Most of the cabins for rent here have no electricity, meaning this is the ideal spot for disconnecting from digital life and reconnecting with Mother Nature

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PHOTOS: SHUTTERSTOCK

Like in neighbouring Brazil, carnival is big in Uruguay and the celebrations last a full 40 days, almost as long as Lent itself. The pulsating rhythm is provided by troupes playing candombe, a drum brought over from Africa by slaves over 200 years ago.

Montevideo also has a Carnival Museum which explains the celebration’s central role in the country’s cultural life.

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GENDER NEUTRAL TOILETS AND THE BUSINESS OF POSITIVE CHANGE Words Dion Chang

In recent years, brands and retailers have learnt quickly that mirroring your customers’ value systems is the gateway to (increasingly rare) brand loyalty. Corporate businesses are now being forced to become “value driven” rather than “sales driven”.

GORDON INSTITUTE OF BUSINESS SCIENCE

Last year the city of Indianapolis lost an estimated $60 million in economic activity after the state of Indiana supported a religious-freedom bill which, in essence, provides individuals and businesses, with moral objections and legal protection to deny services to the LGBTI community. High-profile companies ranging from Apple to NASCAR pushed back and protested by relocating jobs to different states, cancelling conferences, as well as sporting events and film shoots. In the current economic climate, no-one wants to lose business unnecessarily, and the potential loss of $60 million sends a very clear message.

Earlier this year, advocacy groups were fighting another proposed religious-freedom bill, this time in the state of Georgia.

As with the corporate pushback in Indianapolis, the protest was backed by corporates including Coca-Cola, Delta Airlines, Disney and almost 500 other companies – as well as major sporting organisations like the NFL – which warned Republican Governor Nathan Deal of an economic pushback should the bill be passed.

The bill was eventually vetoed, most likely because of lessons learnt from Indianapolis.

Of late, technology has become the main focus of business disruption: collapsing value chains, short-circuiting communication channels and rendering tried-and-tested business templates obsolete, one app at a time. But while businesses grapple with a technological revolution, a different

undercurrent is starting to erode their already shaky foundations: the expectation for businesses to share the responsibility – with governments – to drive positive social change.

For brands and retailers, mirroring their customers’ value systems by ticking the boxes like sustainability, social upliftment and ethical labour practice, has become the norm: it’s simply an extension of the new rules of consumer engagement. Not that it was entirely self-motivated. Due to the speed and viral nature of social media platforms, these companies have been forced to be more transparent, as well as to walk the talk. Eco credentials and CSI policies can no longer be used as a badge of honour or a marketing campaign: those values are now considered fundamental, especially by millennial customers and the next generation customer, Gen Z. If these customers don’t see their values reflected in the brands they buy, then the brands can’t expect loyalty in return.

The same applies to the recruitment and retention of a workforce, specifically of young millennials – the new workforce. Much like brand loyalty, a corporate needs to show – publically commitment to a set of core values, and if they don’t, it is reflected in fast staff turnover.

A blinkered obsession with the bottom line is no longer what makes that company great: creating positive change does.

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This is, in essence, the motivation behind the corporate pushback in America. Companies are finding themselves at a crossroads. Technology is changing operating systems rapidly, which in turn allows for, and can accommodate, a flexible and remote workforce. Agile business models also require hybrid “maker” skills and adaptable personalities, versus traditionally revered academic credentials. Business is now realising that to succeed in this new, disruptive environment, it needs to attract younger, more diverse employees, and much like brands and retailers which have had to learn to mirror the values of the new generation of customers, business is learning to take public stances on social and political issues, which it wouldn’t have been vocal about in the past.

ECO CREDENTIALS AND CSI POLICIES CAN NO LONGER BE USED AS A BADGE OF HONOUR . . . ” A recent survey by Havas Worldwide – a global integrated marketing communications agency – found that internationally, 68% of respondents believe that business now bears as much responsibility as government to drive positive social change.

In the political arena the impact of the youth vote was first felt when Obama was elected as the first black president of the USA. In the run up to the current US presidential election, the surprise support of Bernie Sanders by a young demographic was very telling. The distrust of both the status quo and the traditional political machinery in Washington came through loud and clear.

Similarly, the significant divide between young and old in the Brexit referendum also highlighted the different perceptions and value systems of a new generation. Social norms are changing rapidly and as a result, these changes also keep shifting the goal posts in terms of which value systems to embrace and endorse.

Following on from the religious-freedom bills is now the question of gender neutral toilets for transgendered people. This is building into a legal battle that analysts say could reshape civil rights in America. The right to use a toilet is having a remarkable ripple effect, globally. (In South Africa gender neutral toilets have already been introduced on the UCT and Wits campuses.)

The brouhaha began when the Obama administration sent a letter to all public schools across America ordering them to allow transgendered students to use the bathroom of their choice, according to the gender they identify with, rather than their biological gender, should they identify differently. This federal decree was in reaction to a raft of proposed ‘bathroom bills’ in various states opposing the concept of gender neutral bathrooms.

The war zone erupted in the state of North Carolina where the state’s governor, Pat McCrory, sued the federal government after receiving Obama’s letter. The American Justice Department immediately responded with a counter lawsuit, setting up

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an almighty legal battle that some observers say will impact American civil rights should it escalate to the Supreme Court, as discrimination against transgendered people could be viewed as a form of sex discrimination.

The issues of transgendered people were thrust into the spotlight last year after Caitlyn Jenner’s appearance on the cover of Vanity Fair, as well as with her reality show, I am Cait, which followed.

Immediately after Caitlyn was introduced to the world, Clean & Clear (a brand of beauty products aimed at teenagers) launched an advertising campaign using Jazz, a transgender teenager, as the face of their brand. It was an astute move and illustrated not only how a brand mirrors shifting social norms, but also how attuned they were to their customers’ values. They also implemented the ad campaign with lightning speed – the other new requirement of business.

In June this year, car maker MINI delved into the fashion arena and presented a limited-run sweatshirt collection at Pitti Uomo in Florence, one of the most important international trade fairs for men’s fashion and contemporary lifestyle. The MINI FLUID FASHION Capsule Collection was developed with five young designers and consisted of five unique sweatshirts. And the media hook and PR lure for this initiative? A genderless sweatshirt collection that engages both sexes.

The press release emphasised that, “a sweatshirt is something both men and women can wear and is one of the most ‘democratic’ and ubiquitous items of clothing out there. It exists in a place beyond categorisation. MINI has also gone its own, unconventional way in the fashion designers it has selected for the job at hand. Their latest collections brim with exciting designs, challenge assumptions and, in the process, overcome barriers within our minds.”

This is tapping into the zeitgeist at its best. Selling cars (and the topic of gender neutrality) using genderless sweatshirts and a global designer collective. It mirrors a generation’s social values and creates clever brand kudos in one fell swoop. It might not be as militant as the companies who threatened economic pushback in response to the religious-freedom bills in America, but it is nevertheless being upfront and public about where the brand stands in terms of embracing shifting social norms.

Political strategist Doug Hattaway describes the trend succinctly: “More and more businesses these days are becoming value driven, rather than sales driven.” It’s no longer just about selling a product, it’s about what that company stands for. Embracing and being vocal about values, especially when they shift in an uncomfortable direction, is what builds brand equity today.

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The sales will follow, but first, you have to have the courage to stick your neck out

THIS IS TAPPING INTO THE ZEITGEIST AT ITS BEST”

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entrepreneurship

ENTREPRENEUR-AT-LAW Words Sean Christie

A Cape Town lawyer brings new vision to an old profession.

South Africa’s legal system has evolved a great deal since Van Riebeeck brought Roman-Dutch law to the Cape in 1652, but corporate structures haven’t changed much in a century. Consider, for example, the foundation dates of South Africa’s so-called “Big 5” law firms. The oldest, Cliffe Dekker Hofmeyr, was begun in 1853. The youngest, Norton Rose Fulbright South Africa, was founded in 1922. Webber Wentzel, South African Law Firm of the Year seven times in the last decade, opened its doors in 1868.

But in 2011, little noticed, a Cape Town-based lawyer called Yvonne Wakefield founded a company called Caveat Legal, based on a radically different model, which is today reshaping the global legal industry.

“Entering the profession was a serious wake-up call for me,” recounts Wakefield, who joined the Cape Bar in 2005. “I quickly realised that my profession had developed in such a way that lawyers were, and still are, forced by heavy overhead structures to charge fees that don’t bear much relation to the work delivered.

There’s that saying about ‘the doors of the Court being open to everyone, just like the Ritz’. It’s true.”

. . . BIG LAW FIRM EXPERTISE AT ROUGHLY HALF THE PRICE ”

GORDON INSTITUTE OF BUSINESS SCIENCE

After completing an LLM at UCT, Wakefield took time off to have two children, but in 2011 she was anxious to get back to work.

“One day, my father-in-law dropped by carrying an issue of Forbes.

He said there’s an article in here you have to read. It was about this big-firm lawyer based in the US who had – also while taking time off to have kids – started a successful legal services company, drawing on the skills of lawyer friends who were away from work for similar reasons. I read the article, and the next day pronounced to my husband that this is what I wanted to do,” she says.

Being virtual, the business took a mere two months to set up.

Wakefield rounded up five acquaintances who had left jobs at big law firms for varying reasons, but who “still loved the work”, and were on the look-out for alternative ways to keep doing what they had been trained to do. Caveat’s sales proposition was an enticing one – big law firm expertise at roughly half the price. The timing, moreover, was perfect.

“In the US and UK, the move towards more flexible, less expensive alternatives to the big law firms was well underway in 2011, and although the same pressures were in place in South Africa, there had been no innovative responses from the industry,” she says.

The global attention being paid to the high asking fees of big firms (and to the quality of work rendered) had its roots in the global financial crisis of 2008, and to a significant extent with the publication the same year of Richard Susskind’s The End of Lawyers? Rethinking the Nature of Legal Services.

“The biggest strategic issue facing any law firm in the world today,” Susskind told Forbes, “is the extent to which they continue doing routine and repetitive, administrative, process-based work. What clients are saying is ‘we don’t mind paying law firms high fees for the difficult stuff, but on a big dispute, if you look at the document review exercise, or on a big deal, if you look at the due diligence exercise, we don’t really need expensive young people in expensive buildings in expensive cities doing this’.”

In the US and UK, the alternative model that came to the fore was one which used the Internet to create a virtual firm comprised of freelance lawyers and abetted by new software that takes care of a number of tasks traditionally performed by junior lawyers. Initially referred to as ‘alternative legal service providers’ these companies, including Axiom Law, which today employs 1 500 personnel across three continents, began pushing the neologism ‘NewLaw’, as a way of distinguishing themselves from ‘BigLaw’.

Wakefield did something similar, creating a ‘panel’ of former big-firm lawyers (50 at present count, including highly regarded legal minds like former Bowman Gilfillan partner, Hans Muhlberg) whose skills collectively cover all the major commercial legal fields.

“The fact that our panel members are essentially independent freelancers makes our offering completely flexible,” she says.

“One client might need a small set-up of terms and conditions for its website, and another client might need a team of eight for a year to see to the creation of a big international aid company. We can do it all, and at roughly half the cost of your big law firm because we don’t carry the expense of salaries, big buildings, art collections or support staff.”

The absence of overheads means the panel members come away with more per hour than they would take home in big firms.

“Plus they work when they want, where they want and as much as they want,” says Wakefield, adding that she has been surprised at how many male lawyers have expressed an interest in working this way.

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Yvonne Wakefield

“I thought initially it would be mostly lawyer moms who wanted a bit more flexibility in their lives, but it’s more or less a 40/60 split between male and female panel members at the moment. I think this is partly because lawyers are increasingly making lifestylerelated work decisions, particularly in Cape Town,” she says.

Working conditions in the big law firms have also contributed to Caveat’s success.

“The deals simply aren’t there for the big firms at the moment,” says Wakefield, “so they’re not hiring as many people as they used to, and they’re becoming much more ruthless in relation to the fee targets that their lawyers need to reach every month. So we’re finding that highly skilled, highly experienced big-firm lawyers are getting in touch with us, and in such numbers that we’re turning away five out of six applications.”

Commercial lawyers make up Caveat’s core team, with the rest covering a wide range of specialty areas, including the fields of banking and finance, environmental, energy, construction and employment law.

Wakefield is delighted by the direction in which Caveat has organically developed and is now starting to settle, which is mostly in the investment space.

“A very large portion of our work is done for private equity firms and venture capitalists. We will do everything for them from due diligence to the drafting of transaction documents, and what’s

. . . PANEL MEMBERS COME AWAY WITH MORE PER HOUR THAN THEY WOULD TAKE HOME IN BIG FIRMS ” really nice is we’ve gained traction in this space mainly through word of mouth,” she says.

In addition to this corporate work, Caveat serves two other markets: small-to-medium businesses requiring the services of senior legal professionals on an ad hoc basis, and also law firms requiring additional staff capacity or specialty expertise. Being a private company the management team is unable to supervise the work of panel members, and as such there is reserved work that Caveat cannot do, such as litigation and conveyancing.

This has not stopped Caveat from competing for big deals with the major law firms, and with considerable success.

Whatever the future holds for Caveat (and Wakefield suggests that expansion to the UK might be on the cards), the company has already, in its five years, done more to streamline the way lawyers work than most others have done in a hundred

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SLOW IN GOZO Words Caroline Hurry

Ancient history permeates the Island of Calypso, a charming composite of First and Third World lifestyles

Azure window

When my parents lived in Gozo, the village baker offered them a goat, two hens, bread, and a Fanta bottle filled with honey by way of a dowry for Yours Truly.

“Your daughter is strong,” said he, as though appraising a carthorse.

GORDON INSTITUTE OF BUSINESS SCIENCE

“Be my guest,” laughed my father, “but keep the livestock. We’ve no room for it.”

“We’ll take the bread and honey, though,” interjected my mother. This was duplicitous. His proposal entailed rising at 3.30am to knead the dough with his seven sisters, before tending their goats.

Seriously?

“Go on, be a sport,” said my mother.

“Their bread’s delicious.”

It really was – round biblical loaves baked in wood-fired ovens or pizzas topped with potato slices, tomato and anchovies. Even so, the answer was … no.

Tucking into the local ġbejniet – the world’s smoothest, softest goat’s cheese – on a revisit with my husband, brought on a sharp bout of nostalgia for that carefree time. Fortunately much of Gozo is still the

Typical street

Historic windmill

same. Her azure waters remain crystal clear; her beaches shingled, bar a stretch of yellow sand at Ramla Bay. There’s the unchanging inland sea where waves have eroded the cliffs to form a window, the Comino grotto, ancient Roman salt pans, an historic windmill, and museums.

Orders are expertly packed and sent to your South African address.

Most of the island is limestone rock and caves honeycomb the coastal cliffs – one allegedly where Calypso held Ulysses captive.

The Maltese language is essentially Arabic but with western script and Italian additions. English is the second language and Roman Catholicism rules.

Gozo radiates history, not least due to the ruined temple of Ggantija, which predates the island’s occupation by Phoenicians, Greeks, Romans, Knights of Malta, Turks, French, and finally, the British.

Each village celebrates Easter with costume parades of biblical characters winding through the streets. Priests stagger under the weight of holy statues and penitents lug huge wooden crosses on their backs, to thank the Virgin Mary for favours granted.

Small coastal blockhouses, first line of defence against Barbary pirates and the detested Turks, still stand, along with the high, thick walls of Gozo’s Citadel, main refuge for the populace in times of attack.

Gozitans are a friendly, agrarian folk, and competent farmers produce vegetables from miniscule plots of arable land, relying on desalinated seawater. They also make exquisite hand-blown glass ornaments, an ancient Phoenician art.

Flea markets sell leather wallets, Maltese crosses, hand-spun jerseys, and fresh veggies. GMO produce is banned here so you can stock up with impunity.

Fireworks mark the celebration of patron saints with petards – rocket-propelled bombs that explode with concussive bangs – reverberating around the cliffs.

This, combined with the Maltese “if it flies, it dies” policy of shooting every migratory bird that flutters overhead, means you won’t find so much as a seagull on Gozo or Malta. And that’s still a shame!

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PEACEFUL GREECE Words Caroline Hurry

From Mystra in the south to the Pelion Peninsula in the north, getting off the beaten track is the best way to avoid the hordes.

Had Eskom been the power supplier to the Vlychada Cave, a 14km wonderland of stalagmites and stalactites in the Mani Peninsula’s bay of Diros, no way would I have been persuaded into the four-seater punt. As it was, I felt nervous having to don a helmet to explore the subterranean route, accessible only by water.

Electric lights marked out places where the roof was low as guides used poles to propel the punts through an underworld maze of narrow, winding channels that brought to mind Charon rowing dead souls across the River Styx.

Formed a million or so years ago when sea levels were much lower, stalactites were found seven metres down. Man was around then too, judging by the pottery shards found near the cave entrance alongside fossilised bones of hippo, lion, leopard, hyena and deer.

Centuries ago, Mystra was a thriving city and the castle, never conquered, stood as a bastion of Hellenic freedom against raids by Franks, Albanians and Turks.

These isolated monks or nuns would pray, meditate and study. Artists painted biblical scenes on the walls while others hoisted up soil and planted vineyards.

Today, only crumbling walls, ruined palaces, deserted orchards and old churches with weathered ancient murals and icons testify to its former glory.

The drive around the Pelion Peninsula in northern Greece is even more spectacular than Chapman’s Peak. Towering mountains overlook tiny harbours or the sparkling Med hundreds of metres below. Narrow, precipitous mountain roads that snake back on themselves take hairpin bends to new extremes.

We visited Kythira, a small island, staying at the Vernardos Hotel, before taking off in a twin turbo-prop back to the mainland, where my husband hired a car to drive to the Pilion Peninsula.

Another place of interest is Mystra, a fortified medieval village with a castle overlooking it from the Taygetos mountain top. It is almost deserted as most of its inhabitants left for Sparta, 7km away, to find work.

Crossing the plains of Thessalonika, we saw mountains in the distance but nothing could have prepared us for the sheer 1 000m pinnacles of stone rearing against the sky in the district of Meteora. Incredibly, monasteries have been built on top of some.

How materials could have been lifted up perpendicular smooth faces to that height boggles the mind. Often, a basket to hold supplies – or possibly a person – had to be winched up to the top on a long rope.

Meteora garden

Meteora monastery

You can look (through your fingers) across ravines and valleys to see the road’s threadlike progress on the other mountainside. And oh, such lovely forests.

Grecian glades so luminous green with waterfalls and moss-covered boulders, I half expected to glimpse Pan himself. Under a massive 1000-year-old fig tree shading the village square of Tsagarada, we enjoyed a simple lunch of hard-boiled eggs and yoghurt sweetened with local honey. Bliss!

Meteora garden

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THE FINER THINGS Words Cheska Stark

GORDON INSTITUTE OF BUSINESS SCIENCE

HIS CHECKLIST 1.

Classic Tee, R279, Cotton On Man A classic black tee is on every man’s wardrobe essential list. Wear this everyday staple under a knit, light jacket or even on its own. Another big tee decision one has to make is V-neck or round neck - we say go round.

2.

Knit, R899, Billabong A classic navy knit is a great wardrobe staple which can easy be layered over just about anything. This Billabong one is stylish and affordable, which is what we are after, right?

3.

Shirt, R999, Polo Polo takes shirts to a whole new level with their cool prints (I love this check) and their perfect tailoring.

This shirt’s wide cuff and narrow collar is bang ontrend and will make any working guy look the part.

4.

Chinos, R1 099, Country Road There isn’t much to say about chinos other than they are the type of item that need to be replaced every season. Keep them new and fitted and you will have a great smart-casual look. This Country Road choice is a great colour and the perfect fit.

5.

Jersey, R899, Trenery I absolutely love this grey jersey for its play on textures and colours. It’s the perfect throw-over for weekends – remember grey is a neutral colour so wear it to death.

6.

Messenger bag, R4 799, Ted Baker Nothing quite screams style like the bag you carry and this messenger bag will take you to the bestdressed list. It’s a great modern shape and cool curved handles and the shiny leather gives it a smart professional look.

7.

Sunglasses, R1 399, Ray-Ban Ray-Ban sure knows how to do it, don't they? No summer look would be complete without a great pair of sunglasses and this Aviator pair are the ones to go for. The golden brown colour is cool and the classic shape will bring out your inner Top Gun.

8.

Backpack, R2 499.95, Tommy Hilfiger For fun weekends away this denim backpack is a musthave. The denim fabric is right on-trend – playing tribe to the countryman in you and the seventies vibe that is so big now, while the cool striped detail gives it a preppy feel reminiscent of your varsity days.

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HER CHECKLIST 1.

Shirt-dress, R799, Witchery The shirt-dress is the easy answer to all your summer style questions. The key to any fitting for this summer staple is the size – if in doubt go for oversized, and scrunch up the sleeves for a chic, relaxed look.

2.

Metallic skirt, R899, Mango How much fun is this trend? Metallics are huge for the season and there are so many ways to wear a skirt like this – head to the office in this skirt paired with classic court heels and a crisp white shirt, or go more casual on weekends with a simple tee and flats.

3.

Clutch, R1 699, Mimco Snakeskin is one of those trends that just keeps on returning so a (faux) snakeskin item that you will wear season after season is worth the investment. The most common question about an animal print (snakeskin included) is what to pair it with, so here is the rule: treat is as if it’s a neutral! That’s right – pair it with everything.

4.

Floral print dress, R3 899, Ted Baker A rule of thumb for summer: keep it bright and keep it floral.

We like how this dress ticks both those boxes yet the black makes it formal, exciting and seductive.

5.

Courts, R699, Madison at Spree Sometimes it’s not about the most on-trend shoe but more about the shoe that you will wear the most. Say hello to that classic court – simple, black and just the right height.

Easily paired with pants or a skirt/dress, these ones go with everything.

6.

Silk top, R999, Country Road An easy-to-wear silk top is a great addition to every workwear wardrobe. This black one is the perfect sit and shape, which makes it comfy. The slight pattern steps it up a notch making it much more interesting.

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Layer knit, R799, Trenery I absolutely love this trend – the knit/shirt-top look. It’s a cool retake on layering which is always a safe way to look good.

The extra shirt layer gives your knit a revamp making it cooler than just a jersey while the extra length is always welcome.

Leather jacket, R3 699, Poetry If there is one thing every woman has to own it’s a great leather jacket. Once you splurge and buy one you’ll wonder how you lived without it for so long. Wear it with anything – chunky knits for extra warmth, cool blouses to cover up, and dresses, yet you can still look cool.

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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 FEET: VIVOBAREFOOT PRIMUS TRAIL SHOE

ON YOUR BODY: ULTRASPIRE LUMEN 170 WAIST PACK

ON THE WATER: RED PADDLE 10’6 RIDE INFLATABLE STAND-UP PADDLE BOARD

WHAT IS IT: The Primus Trail Shoe is a trail-running shoe with an ultra-thin off-road sole boasting a perfect balance between grip and underfoot sensory experience.

WHAT IS IT: The Lumen 170 is a stable, light-fitted waist pack that illuminates the details and contours of the road or trail when running at night.

WHAT IS IT: This is the Ride inflatable SUP, the most popular board in the latest range – it is perfect for the ocean, rivers, lakes and dams.

WHY DO YOU WANT IT: A waistmounted light keeps the illumination at a lower angle to the trail, improving night vision contrast over technical sections through added depth of field, detail and clarity. Overall, this will help your run with increased speed and confidence at night.

WHY DO YOU WANT IT: Red Paddle is an undisputed leader in the inflatable SUP industry, so you can be sure of exceptional value for money. Once deflated it fits into a sturdy pack for easy transportation, allowing you to explore on the water, wherever you go. Plus it is durable enough to be used by the whole family.

DESIGN USPs: The Lumen has a focused beam with wide-angle peripheral light for a natural running experience. Settings DESIGN USPs: The ultra-thin, off-road sole allow 180º directional rotation as well as offers excellent traction without impeding a range of motion adjustment, including your sensory experience of the surface 90º up or down (and anywhere in underfoot. The Primus was specifically between) for a superb trail experience. created for the great outdoors, with 4.5mm The construction of the belt itself lugs ensuring unprecedented traction while comprises a comfortable and very maintaining good proprioception, thus breathable micro-fibre polyester mesh. allowing your feet to move naturally. You The illumination unit is water, dust- and are guaranteed a durable and lightweight impact-resistant, and made from aircrafttrail shoe suited to anything from the grade aluminium housing, fitted with a slippery mud sections and gritty descents, tempered glass lens for clarity and easyto the most rugged of technical climbs. to-operate light switch.

DESIGN USPs: First off, the process of coating the inner thread segments with molten PVC has been eliminated. Instead, the thread structure is coated in a specially formulated adhesive to create both a seal and a bonding layer; this is done at raw-material stage by carefully calibrated machinery, and results in a consistent and high level of cosmetic finish that has all of the durability and strength properties of the previous double-layer construction.

The SUP is packaged with all accessories, including the backpack, pump, repair kit et al.

GORDON INSTITUTE OF BUSINESS SCIENCE

WHY DO YOU WANT IT: Get back to the basics of hunter-gatherer locomotion, even across the most challenging terrain. The puncture-resistant, super-grippy and fully flexible sole is the foundation of an allterrain shoe that is sure to reset your body to its natural state of movement. Breathable and lightweight, it is undoubtedly Vivobarefoot’s leanest, meanest trail shoe to date.

GO GET IT : Go to Nativesport.co.za to check out a list of retailers, or shop online.

GO GET IT: Go to Nativesport.co.za to check out a list of retailers, or shop online.

GO GET IT: Available nationwide – visit Redpaddleco.com/za for a list of distributors.

PRICE: R1 998

PRICE: R1 890

PRICE: R 14 800

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FOR THE HEAD

FOR THE HEART

FOR THE PLANET

MOTORISED On the motorised side, we look at three machines similar at first glance, but with many a difference under the hood, so to speak.

Read on and see which appeals to your soul...

FOR THE HEART: MERCEDES-AMG GT S

FOR THE HEAD: AUDI A4 1.4 TFSI

FOR THE PLANET: OPEL ADAM

WHAT IS IT: In motoring parlance, GT stands for Gran Turismo or, in a less sexy language, Grand Tourer. Cars that fit this definition usually have three things in common: they are capable of high speeds, they are coupés, and they are luxurious enough for the driver to enjoy a long trip. And that describes to a T this new halo model from Mercedes.

WHAT IS IT: We all know the A4 – Audi’s premium sedan that battles the Merc C-Class and BMW’s 3 Series. The trio take turns at being at the top of the three-step ladder, and many would argue the recently released A4 is currently in pole position.

WHAT IS IT: Little cars use less fuel than big ones, so swallow the ego and drive something less ostentatious.

How about something from the Adam family?

WHY DO YOU WANT IT: If you regularly crisscross the country at high speeds, with only one passenger and not too much luggage, you’ve found your motoring soulmate. Alternatively, if you appreciate elegant design coupled with scintillating performance, the GT S might make your tummy feel a little fuzzy.

DESIGN USPs: Interestingly, this isn’t the most expensive Mercedes performance coupé. That title belongs to the Mercedes-AMG S 65, but the crown of halo model must sit on the GT S’s handsome head.

Capable of 0-100km/h in 3,8 seconds, with a top speed of about a million (although Merc say only 304km/h), this is a serious performance machine that will comfortably stand toe-to-toe with cars like the Porsche 911. The engine that creates these possibilities is a 4-litre, bi-turbo V8 that produces 375kW and 650Nm. Did someone say ‘vroom’?

GO GET IT: Prices start at R2 142 600 (but if you’ve got cash to burn you can plump that up with all sorts of options). A 6-year/100 000km maintenance plan is standard. Visit Mercedes-amg.co.za for more information, or just to stare longingly.

WHY DO YOU WANT IT: The A4 might be beautiful to look at and it may be great to drive, but its real claim to fame is the attention to detail spent on the classy, sophisticated interior.

DESIGN USPs: It’s not normal to see a luxury car of this size with an engine of this limited displacement, but it is a sign of the times. That said, the 1.4-litre engine produces 110kW of power and 250Nm of torque, which is more than able to shift the A4 along nicely. It also means fuel consumption of just 4.9L/100km!

GO GET IT: Prices for the Audi A4 range start at R454 000 and peak at R634 500. A 1-year/unlimited mileage warranty and a 5-year/100 000km maintenance plan are standard. Visit Audi.co.za for more information.

WHY DO YOU WANT IT: There are a number of Opel Adams, all of which are classy, funky, stylish little vehicles that drive as though they’re much bigger. Cracking interiors and outstanding build quality finish off a very appealing package.

DESIGN USPs: The base model has a 1.4-litre petrol engine that produces 74kW and 130Nm, with overall fuel consumption of 5.3L/100km, but it’s the mid-range models with the 1-litre turbo engines that really shine. The extra power (85kW and 170Nm) is evident, but they still use less fuel (5.1L/100km) thanks to a sixth gear and auto stop/start function.

GO GET IT: They’re not big cars, but for cars of this quality the price is very reasonable, starting at R206 500 for the regular Adam, R230 700 for the 1.0 T Jam, R287 100 for the convertible Adam Rocks, and R330 000 for the Adam S. Prices include a 5-year/120 000km warranty and a 3-year/60 000km service plan.

Visit Opel.co.za

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TECHNO Words Aki Anastasiou

LENOVO THINKPAD X1 YOGA Tech versatility for the executive Price R29 000

Lenovo has identified an interesting gap in the business market: executives who need a tablet and laptop. The Lenovo ThinkPad X1 Yoga is a 14-inch 2-in-1 notebook with really good 2K (2 560 x 1 440) touchscreen display running Intel’s latest Core i7 processor. Basically, it has all the bells and whistles. It has a 512 GB solid state drive, weighs 1.27kg and has an average 10-hour battery life. Is it the right laptop for you though? If you are like me, and have done a yoga class in your life, you’ll understand how humiliating it can be watching how supple others are and not being able to do the splits. Well, now you can do the splits thanks to Lenovo. But don’t let this influence your decision to upgrade your current technology. This is a really good piece of tech, especially if you are constantly on the road and need tablet functionality with a screen that has a 360-degree range. Another unique feature is the dockable stylus pen that slides into the holder close to the USB slots. Quite useful when you need to add annotations or diagrams. It also has built-in LTE technology, so communication is not an issue. Just on LTE, coverage has really come a long way across South Africa in the last 18 months when there were only small pockets of LTE coverage in the larger metros. Today, we are close to 50% LTE coverage across the country and on track for the target of 80% by 2018. Most notebooks can do the Lotus pose, but not many can claim the Downward-facing Dog, Cobra or even the Locust poses. The Lenovo ThinkPad X1 Yoga packs incredible functionality and agility making it unique in its class of technology.

ASUS ZENBOOK

Beautifully engineered 13-inch notebook that will make heads turn

GORDON INSTITUTE OF BUSINESS SCIENCE

Price R20 000 Yes I know what you’re thinking. First he talks about yoga and now he’s going Zen. The truth is the Asus ZenBook really does get you into a state of focus and togetherness. This 13-inch full HD touchscreen display laptop is beautifully engineered and you really feel that build quality when you hold it. The manufacturing process is interesting: this machine is crafted out of a solid block of aluminium and the edges are chamfered using a diamond cutting process. You have to look twice because initially it does look like a MacBook disguised as a Windows 10 machine. And it performs really well. Using the latest Intel Core i7 processor, it has a 1 TB hard drive and every port you need, including a mini display port, HDMI and 3 USB 3.0 ports. It weighs 1.45kg and the battery life averages around 6 hours. I loved the Instant On technology that lets you resume what you were doing in just 2 seconds if your screen is closed. Another highlight is the backlit keyboard that features technology that is able to sense the ambient light and adjust brightness automatically. Overall, a really well-built notebook that is solid, sleek and beautifully designed. But be warned, it’s one of those devices that when family members see it for the first time will say “wow that’s gorgeous” and before you know it, your brand-new laptop gets nicked by your kids.

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HUAWEI P9

A great phone with superb photography features Price R12 000 If there is one company that is innovating at a rapid pace, it is Huawei. One just needs to compare their smartphones from three years ago to their latest flagship, the P9. It is like night and day. The new 5.2-inch P9 is beautifully crafted with a massive focus on photography. Consumer research consistently shows that the quality of the phone camera is one of the deciding factors on what phone users buy. Consumers are serious about their cameras and the quality of their photographs. And this is where Huawei has taken it's latest device to another level. They have partnered with the German optics and photography expert, Leica, who has been in the imaging business for over 100 years. The dual Leica 12 MP lenses on the back of the phone are able to capture more light by capturing colour and monochrome via the two sensors. The smart algorithm then combines the images to create vivid photographs, rich in colour.

One of the advantages of this technology is the ability to capture great moments in low-light conditions. The hardware of the P9 is not too shabby either. It also features an enhanced fingerprint sensor for added security, a great battery life and a super-fast processor in a solid aluminium unibody. The P9 is a massive leap forward for Huawei, which is now fighting in the premier smartphone league while simultaneously offering great value to consumers. Photography lovers check out the P9!

iKLIPS BY ADAMS ELEMENTS External flash drive for iOS devices

Price 64GB – R1 800, 128GB – R3 450 One of the most frustrating aspects of modern day mobile technology is the memory. It is never enough and inevitably we will all find ourselves in a situation as you are about to snap that pic only to find your memory is full. The iKlips flash drive adds that much-needed storage to your iOS device so you can transfer your photos off your iPad or iPhone and free up much-needed memory. It’s so easy to use. Download the app and start transferring. This gadget is really versatile. You can also use it to transfer your music from one iOS device to another and it supports exFAT. No, that’s not a new diet. With exFAT you have no limit on the size of the files you transfer, so a file over 4GB is no issue. But the coolest thing about the iKlip is that on the one side it has a Lightning connector for the iOS devices and the other side a USB 3.0 connector so you can use it on Windows machines as well. Available from Tec-den.com

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BOOKS Words Chris Gibbons

THE END OF ALCHEMY

MERVYN KING LITTLE BROWN I R385 Former Bank of England Governor Mervyn King was one of a very small handful of key players who had to navigate their countries’ economies through the great financial crisis of 2007-08. However The End of Alchemy is not a “How I Saved the World” type of book. It’s more about the fundamental causes of the crisis and what needs to change to prevent another one.

His central tenet is to reveal something that most ordinary folk don’t fully appreciate: when you deposit your salary into your bank account or add to your savings, your bank then takes that shortterm money and lends it out, often in very complex long-term ways. This means that if every single one of the bank’s customers arrived to demand their money back at the same time on the same day, there is not the remotest chance of being paid. The banks bet on this not occurring, but it’s at the heart of what King calls the alchemy, or ‘sleight-of-hand’ which underpins the modern banking system.

GORDON INSTITUTE OF BUSINESS SCIENCE

As long as everyone has confidence in their bank, there’s no problem. But confidence did evaporate in the run-up to the crisis, and a number of banks – Lehman Brothers in the US, Northern Rock in the UK – went to the wall as a result.

A former Professor of Economics at both Cambridge and Harvard, King explains that many countries in the East, but also Germany, have been exporting and saving too much, while the US, UK and other European countries have not been exporting enough and consuming too much, creating trade deficits. The excess savings have been deposited into global financial markets and used to finance the trade deficits, placing strain on the balance sheets of both nations and banks.

The availability of the excess cash has also pushed asset prices up and caused interest rates to keep falling and falling.

In turn, this created a chase for higheryielding ‘products’, like the infamous collateralised debt obligations and subprime mortgages, instruments often so complex that even the originating banks didn’t fully understand them. And when confidence wobbled in 2007, and people began demanding their money back (in this case, banks from other banks), it quickly became apparent that a very great deal of alchemy had been practiced, leading to the near-total collapse of the global banking system.

King introduces a critically important concept: radical uncertainty. When a crisis – any crisis – hits, we never see it coming, because we cannot predict the future. Nor can brilliant economists create models which claim to be able to do just that, pricing in every possible variation. If you think it’s a Black Swan, it’s not a Black Swan. In this instance, the experts knew something was wrong and assumed it

would all be sorted out by dramatic shifts in exchange rates.

As important as King’s analysis is his prescription is to keep the patient from falling sick again. He recommends that central banks become, in effect, pawnbrokers. A commercial bank would have to pledge a significant amount of assets with the central bank, in advance, to secure a line of cash credit that would guarantee its ability to repay short-term customers. It would be a form of insurance that, once in place, would bring an end to the risk of a run on any particular bank.

Some central banks are already doing this, a good step, but much more still needs to change, according to King.

Mervyn King has written one of the most important books in many years on economics, finance and banking.

Triumphantly, he’s also done it in plain English.

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DEEP WORK

CAL NEWPORT LITTLE BROWN I R385 As you sit in the middle of your noisy cubicle farm, do you ever get to the end of the working day and wonder why you managed to achieve so little? Chances are that the phone kept ringing, you had to deal with apparently urgent emails and you were surrounded by other people’s conversations, most of which seemed to be about last night’s rugby or tomorrow’s baby shower.

Alternatively, do you ever close your office door and settle in for a period of concentrated, highly productive and personally satisfying work? Chances are that during that time, your phone doesn’t ring, you aren’t bothered by emails and no-one “just popped in to say hi”.

Cal Newport, a Professor of Computer Science at Georgetown University, has studied this phenomenon, which he calls Deep Work, and his eponymous book presents compelling evidence that it is not only rare, but also extremely valuable to organisations and meaningful to individuals. Hence that feeling of immense satisfaction when it all goes right.

Having established that, he then lays out a set of rules to help you achieve the Deep Work state on a regular basis. It’s not a one-size-fits-all approach, either: you might choose to get up an hour or two earlier in the morning, or block off chunks in your calendar, and so on.

Deep Work is something many of us practice unconsciously – like that feeling of being ‘in the zone’ which enables you to nail a tough exam. Simply put, Newport’s excellent analysis of how it works, why it will almost certainly do great things for your career and how to get there more regularly, should be on everyone’s desk.

And that desk should be in a quiet room, not a cubicle farm.

WARREN BUFFETT’S GROUND RULES

JEREMY MILLER PROFILE BOOKS I R380 The business section in many a bookstore often overflows with books about Buffett, the world’s most successful investor. What makes this one different is that it has been written with Buffett’s blessing and permission and it uses many of Buffett’s own words.

Buffett learnt his trade at the feet of value-investing guru Benjamin Graham, and before taking on the chairman’s role at Berkshire Hathaway, he spent 14 years running the Buffett Partnership Limited (BPL). Once or twice a year, he would send out a detailed Partnership Letter, setting out what had been achieved, accompanied by a why and how, and also the principles on which BPL was run – the Ground Rules.

New York-based investment analyst Jeremy Miller has, for the first time, brought all the Partnership Letters together and analysed them to reveal Buffett’s thinking and methods. As such, he has also assembled a detailed guide for anyone contemplating investing in the stock market, either at a professional or seriously committed amateur level. (Sorry, no room for amateurs here: if neither of those descriptions fit, don’t forget Buffett’s own will which recommends a bog-standard Index Tracker fund for the cash he’s leaving to his wife!)

Buffett’s celebrated dry wit sparkles through the book, as do things like his commitment to long-term investing and the value of compound interest. But is it any good? Well here’s what one critic had to say: “Mr Miller has done a superb job of researching and dissecting the operation of Buffett Partnership Ltd., and of explaining how Berkshire’s culture has evolved from its BPL origin. If you are fascinated by investment theory and practice, you will enjoy this book.”

The words of … Warren Buffett himself. Good enough?

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CLASSIC INVESTING Words Professor Adrian Saville

People are living longer because they are healthier. Great! But that has implications for traditional retirement planning and asset allocation with an investment portfolio.

About 100 years ago, when the current, generally accepted retirement age of 65 years was first proposed, life expectancy was just 32 years for men and 35 years for women. To quote Hobbes: “life was nasty, brutish and short”.

But with improved lifestyles and fantastic advances in healthcare, in parts of Western Europe, Japan, Australia and the US, life expectancy is now in the high 70s or early 80s for both men and women. So, to quote another famous economist, John Maynard Keynes, “when the facts change, I change my mind”. And the facts around life expectancy have changed. If you retire at 65 today, and you have access to advanced medicine and science and a good lifestyle, then you should be anticipating living at least 15 years in retirement.

Even as recently as the 1970s and 1980s, in advanced countries, retirement was still only 65 and life expectancy was 70 years.

So you would expect to live an average of just five years in retirement. If you’d been working for 30-40 years, that was time aplenty to have banked the retirement funding needed for living in retirement.

GORDON INSTITUTE OF BUSINESS SCIENCE

Now, with life expectancy moving higher and age of retirement having moved lower than 65, many societies are pushing deeper into uncharted retirement funding territory. In many of the countries with elevated living standards, people are outliving their retirement funds.

What we’re seeing in many advanced countries is that with retirement age now in the early 60s and life expectancy at roughly 80, available funding covers only about 50% of the retirement period. Your first eight years are covered by your own funding, but the next eight years or so you’re not supporting yourself, you’re at the mercy of someone else. That might be a state pension, your family, or it may simply mean poverty in retirement.

Several implications flow from this. First, 65 is arguably a retirement age anchored in history. We retire at 65 because our parents and grandparents retired at 65. At the very least we should be guiding our children that 65 is not a retirement age; 65 is now remarkably young, and we should be speaking this truth to ourselves, telling ourselves that the facts have changed. Indeed, if you just keep pace with life expectancy, then

statistically, retirement age is no longer 65, it’s closer to 75. So readers of Acumen should be anticipating retirement at 75 with life expectancy of 85 or even longer.

Second, an important rule of thumb – and you can do your own calculation in this one – says that with every four years that pass, gains in scientific and medical progress add one year to your life expectancy. For example, I’m 47 right now, so if I take life expectancy to 80, that says to me 80 minus 47 is 33 and 33 divided by four is roughly eight. Which means there are eight lots of four years between now and my current life expectancy.

Therefore, I can add another eight years to my life expectancy, which means my life expectancy isn’t 80, it’s more likely to be 88.

So if my life expectancy is now 88, then either I need to have adequate funding for 20-plus years of retirement, or I don’t retire until I’ve got much closer to 88. Maybe I retire in my mid- or late-seventies?

Another point applies to my kids, who are 10 and 13. Their life expectancy is into the 100s. Thus, their retirement age is probably in the 80s or even 90s. If that seems fanciful, just think of the life expectancy of your grandparents and greatgrandparents. It starts to translate into “Aha! I see what can happen.”

Most important, at 65 you should no longer be investing like a 65 year old, but rather investing like a 45 year old of thirty years ago.

Conventionally, when you hit retirement, the rule of thumb is to take about two-thirds of your assets and allocate them to equities, the risky asset class. Equities give better long-run returns but their return profile can be very bumpy. The remaining third goes into cash and government bonds, which give you a yield and, the theory goes, you’re financially safe.

But if the rules have changed so that you work and live longer, then you don’t need to turn your asset base into a “retirement portfolio” at 65. You can keep it invested in so-called growth assets, such as equities and property, for longer than conventional wisdom would have. Whilst we talk about equities being risky, one of the biggest risks that you can take is not having enough risk in your portfolio at 65.

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In short, at 65, you need to be investing for the next 20 years, not for the next five

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106 renew

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 Most pundits would agree that the Kanonkop Black Label pinotage is the best in the land, by the proverbial country mile. But it is made in limited quantities and comes at an eye-watering price (R1 450). Consequently supporters of SA’s home-grown variety are always on the look-out for something almost as good and nowhere near as dear. This bibulous community would have opened eyes and pricked ears at the announcement in May that the OMTWS Trophy for Best Pinotage on show went to a rank outsider, Brampton Pinotage 2014.

Brampton is a brand established by Rustenberg and

bought a few years back by industry megalith, DGB. Important to note that it was the best pinotage on show. In the opinion of this scribe there are many better examples that weren’t entered. Fram, David and Nadia Contour Series, Spioenkop – to name just a few that come easily to mind. But the panel can only judge what has been entered, and they surprised many by choosing this modestly priced quaffer from a very commercial producer. It’s very decent drop, though, with bright red and black berry fruit, fresh acidity and supple tannins. R65

DINNER PARTY

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The wine industry is a place of deep and abiding camaraderie. New entrants, and old hands trying something new for the first time, speak of how freely advice and support is given, without any sense of obligation. That doesn’t mean there aren’t ever sidelong glances thrown in the direction of a light that is shining particularly brightly at a given time. There are many industrious and innovative players in other regions that regard the nearfawning attention paid by critics to the wines of the Swartland with some bemusement. André van Rensburg of Vergelegen has decided to join the ‘revolution’ rather than stand on the sidelines and observe with necessarily mixed feelings.

He’s made a new range of four wines, (throwing down) The Gauntlet, that explores what happens when André van Rensburg, Swartland terroir and Rhône varietals meet. And what happens is very impressive, especially in the case of the cinsault/ cabernet blend from 2104. The grapes are sourced from a farm near Malmesbury and the wine is only lightly oaked (six months) to preserve the freshness of the fruit. This combination of grapes is at the heart of the legendary and long-lasting wines of the 60s, and The Gauntlet is a tongue-in-cheek and delicious nod, not only to the Swartland Revolution, but also to local winemaking history. Only available from the tasting centre, and superb value at R85.

OUT TO IMPRESS Minor dilemma for a wine writer – does one review a wine of which only 1 700 bottles were made, and only 200 of those made available to local buyers?

A wine that the reader of the review will almost certainly never have an opportunity to taste? In this case, yes. The wine in question is so very good, and confirms that its winemaker is so thoughtful and gifted, that serious wine lovers need to acquaint themselves with his oeuvre, and get onto his mailing list for future releases. John and Tasha Seccombe set up Thorne & Daughters Wines in 2012 to make wines in a “simple, honest and gentle” way. The Paper Kite 2015 is all of those – but add words like “profound”

and “exquisite” and phrases like “the best white wine I have tasted this year”. It’s a semillon made from the oldest semillon vineyard in the country, planted in 1908 on Landau du Val in Franschhoek. It’s a wine of quite extraordinary poise and grace, insinuatingly haunting in its (oxymoronic) blend of delicacy and power. Shy, and with little evidence of primary fruit characteristics at this stage of its evolution, but there are tantalising hints of spice and herbal scrub and green melon, which, added to the depth and resonant texture of the wine, promise an evolution into something even more dramatic and memorable. R280 for those lucky enough to get a tiny allocation

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CASSANDRA WILSON OWNS THE SONGBOOK Words & Pictures Victor Dlamini

It is her ability to capture in movingly lyrical notes the drama of jazz that makes Cassandra Wilson one of the most important musicians of the last 30 years.

Forth By Day, Wilson didn’t try to sound like Holiday. Instead she called in rockinclined musicians, and together with her own band, gave us one of the most significant interpretations of Holiday’s music. Her performance in Cape Town was an extended gift from this special album.

She was clearly in her element, alive to the love that the Cape Town audience had for her.

Cassandra Wilson

Appearing for the second time in South Africa, Wilson played to rapturous acclaim at the acoustically impressive Rosie’s Stage at the Cape Town Jazz Festival. She had last appeared there in 2004, her performance preceding that of Miriam Makeba. In the 12 intervening years, the US musician’s voice has lost none of its magic, and you also get the sense that she’s at the height of her powers as an interpreter of jazz standards.

Since her last visit, jazz has lost some of its most outstanding vocalists, including Shirley Horn, Abbey Lincoln and of course Miriam Makeba. These were singers who represented deeply unique approaches to their craft, eschewing the formulaic for individual voicing – some would say even a little eccentricity. So those gathered at Rosie’s on the evening of Ms. Wilson’s performance sensed that she was carrying on her shoulders the legacy of the leading ladies of jazz.

They had good reason to believe this.

Since breaking through in the 80s, Wilson’s deep, gruff and bewildering voice has marked her as one of those singers who challenge how we hear jazz.

She has never been one to limit herself to the narrow path of the genre. On each of her records, you hear the strains of the blues, of country music, the music of the South, a touch of rock, of the music of the church, and of electric music. It’s all in there. She is no purist, but her voice purifies all that she touches. But like Billie Holiday, who drew from Bessie Smith and the outstanding Bebop stars she played with, Wilson has continually drawn from those who have defined and refined the jazz tradition.

In 2015 it was the centenary of the birth of Billie Holiday, widely considered the most important female jazz singer.

Wilson brought out an album to mark this milestone. On this album, Coming

When she played Don’t Explain, you could see just why Wilson is considered one of the most authentic interpreters of lyrics.

She has this ability to get inside a song, and reveal both its humour and tragedy.

On this one there is of course defiance, even contempt. But it is the irony that Wilson delivers with such devastating beauty that made each of us seated at Rosie’s want to leap up with joy. Here was a master of the ballad teaching us, healing us, making us appreciate why jazz is the most important American contribution to culture. As she sang these words, the magic was palpable, and sitting as I was in the front row, I wanted to jump onto the stage and be engulfed by the magic.

Hush now, don’t explain Just say you’ll remain I’m glad you’re back Don’t explain Quiet, don’t explain What is there to gain Skip that lipstick

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Let me end by confessing that if Cassandra Wilson was a religion, I would be its high priest

108 looking backwards

PORKY POWER Words Sam Cowen

Is it ever OK to tell a little white lie?

On Friday evening last week I got a Facebook message from one of the mothers from the 12 year old’s class. Her daughter was having a party and he had been invited and she was chasing up an RSVP.

“Yes but surely you didn’t have to put it like that. You could have said you had to check with your mom to see if we were busy.”

Hi Sam. Please ask Christopher to respond to xxxxx's party invitation. He is apparently still deciding whether he wants to come or not. Thanks!

“And? Are we busy?”

Needless to say (or at least I hope it is needless to say) I was mortified. I was sure that no son of mine could have said anything so rude. I called him in for interrogation and read him the Facebook message.

And that’s the problem because I sort of … do. And I also don’t. And it’s difficult to explain degrees of truth to someone who doesn’t pay tax or vote or hasn’t been married for ten million years or runs late for a meeting. The older I get, the more I find myself editing, from the personal to the professional. I’d rather my brother thinks I got caught in traffic than that I ran late because I was giving my hair a hot oil treatment and forgot the time. It seems kinder somehow. And I’d far rather my boss thought I was coming down with the flu than tell him that the idea of a companysponsored ‘Away Day’ workshop on values, complete with hot buffet lunch, makes me wonder if anyone in management understands the word ‘recession’. That would be a career-limiting move.

“Did you say that, or words to that effect to xxxx?”

I hoped against hope he would deny it and we could laugh about someone else’s silly mommy getting it wrong.

“Well, kinda.”

That’s a long sentence for him.

“What does that mean?”

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Longer sentences.

“It means I’m not sure yet if I want to go.

There’s rugby on and also I’m not sure which of my other friends are going.”

I was almost speechless. Except I am never speechless.

“But you can’t say things like that to people.

It hurts their feelings.”

He eyed me coldly.

“Well… no.”

“So now you want me to lie.”

Now before you get hot under the collar and think I’m an habitual liar, I hasten to add that I like to be treated the same way.

Recently I was in Cape Town for a series of meetings, the first of which was at the ungodly hour of 8am. (In Cape Town, that’s ungodly.) I waited for fifteen minutes for A Manager. Then I messaged him to ask where he was.

He didn’t like that.

“Sorry Sam, I was daydreaming into my coffee. I’ll be a few minutes late.”

“You told me MY WHOLE LIFE to be honest and I was honest and now you’re cross.”

Yes. He said that. I still have the screenshot.

Yes and yes. Leg, to, stand, no, on. Make a sentence Sam.

Would it have been different if he had told me he had lost his car keys or couldn’t start the car? Yes, I would have preferred a lie. In

the most warped way possible I would have seen it as a form of respect, respect for the fact that my feelings were more important than the truth.

In fact, I’m starting to think there are very few places you should have to tell the whole truth. I’m not advocating a life of duplicity, but is it so terrible to ‘white-lie’ it a bit? To tell your boss you’re just “waiting for the figures from legal”, instead of admitting you won’t make a deadline. To say you’re working late when faced with a family drinks party, instead of telling your aunt you’d rather eat your own hair than attend?

I’m all for it I’m afraid. Tell the truth on your CV, your income tax return and your hospital admittance form but socially the rest is fair game.

I got another message from the mother in question.

Now Christopher told xxxx he needs to check his schedule........?

The boy has learnt.

So now you want me to lie

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