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Contents

5 Revolution in the Air GIBS Dean Prof. Nicola Kleyn examines the benefits and pitfalls associated with the Fourth Industrial Revolution.

6 Network 13 Fostering Entrepreneurial Neighbourhoods Columnist Trudi Makhaya explores memories of Grant Avenue in Norwood.

15 SA PhDs Robust and World-class GIBS Prof. Helena Barnard researches whether or not SA's PhDs are up to scratch.

Resurrecting Retail

Tamara Oberholster hears Grant Pattison's plans to rescue Edcon.

22 The Goldilocks Principle â&#x20AC;&#x201C; Getting It Just Right GIBS Faculty Gavin Price and Caren Scheepers investigate the effect of an arrogant CEO on a company.

The Source of Creativity

Walter Isaacson tells Acumen about Leonardo da Vinci and what made him so creative.

28 Decision-making Dilemma James van den Heever examines how executives go about making decisions.

32 The Fickle Finger of Employee Engagement Cara Bouwer explores why a focus on employee engagement is good for the bottom line.

39 What Makes Them Do It? Tamara Oberholster listens to a panel of experts discuss the "why" behind whitecollar crime.

42 The Productive Power of Teaming Great Talent Bain & Co.'s Michael Mankins and Tiaan Moolman reveal new research which says you need to put your very best players in the top team for maximum effect.

What Happens when AI Converts Human Expertise into Software? Futurist Dion Chang looks at AI and the outsourcing of human expertise.

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www.gibs.co.za

Editor Chris Gibbons Gibbonsc@gibs.co.za Layout and Production Contact Media and Communications (Pty) Ltd Designer Quinten Tolken Proofreader Angie Snyman

74 Financial Giants Look to Fintech Start-ups to Remain Relevant Arthur Goldstuck reports that South Africa's banks, big and small, are embracing fintech start-ups.

76 50 Bitcoin as Money – Yes or No? GIBS PhD candidate Craig Penfold looks at Bitcoin and the nature of money.

54 Head in the Clouds Brett St. Clair explores cloud computing trends and what they mean for your company.

56 A Tale of Two Cafés Marc Shoul and Cara Bouwer explore Norwood's Bangladeshi cafés.

61 On Your Bike! Alexander Mgadzah saddles up with a number of GIBS colleagues to raise funds for education.

Swimming Against the Tide

SA tech star and GIBS MBA Yossi Hasson heads to New York to lead a big, new venture.

68 Doing Business in Mexico Acumen's South America correspondent Tom Hennigan contemplates a business trip to Mexico.

Class Action

Travel expert Caroline Hurry asks whether the price of a business class ticket is ever justified?

80 Layer It Up Acumen fashion expert Cheska Stark advises on winter wear for the office.

The Motoring Business

Acumen's man-behind-thewheel Stephen Smith looks at the new Honda CR-V and BMW 240i Convertible.

84 Technology for Business

Publisher Donna Verrydt Donna@contactmedia.co.za Contact Media and Communications (Pty) Ltd 011 789 6339 Advertising Sales Sean Press Pressman@contactmedia.co.za 082 888 1137 Contributors Aki Anastasiou Prof. Helena Barnard Cara Bouwer Dion Chang Sam Cowen Arthur Goldstuck Tom Hennigan Caroline Hurry Prof. Nicola Kleyn Trudi Makhaya Michael Mankins Alexander Mgadzah Tiaan Moolman Tamara Oberholster Craig Penfold Gavin Price Caren Scheepers Stephen Smith Cheska Stark Brett St. Clair James van den Heever GIBS Managing Editor Luleka Mtongana 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

Tech expert Aki Anastasiou examines the latest and best apps and gadgets for business.

86 Books Chris Gibbons reviews Walter Isaacson's new biography of Leonardo da Vinci and HBR's Entrepreneur's Handbook.

88 Terrific Work, Team! Sam Cowen thinks about joining a workplace team.

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.

73 Mexico's Top Eight ...and then recommends some of the country's top places to visit.

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BY PROFESSOR NICOLA KLEYN

Revolution in the Air If there’s one concept that’s permeating boardrooms in both the public and the private sector it’s the Fourth Industrial Revolution (4IR) and associated terms like artificial intelligence, machine learning, robotics, nanotechnology, quantum computing and 3D printing. Prof Nicola Kleyn

Before considering the implications of 4IR, it’s worth looking back in time to the preceding three revolutions. For the purposes of this column, let’s agree to characterise the First Industrial Revolution (1IR) as a time when agrarian, rural industries urbanised and made quantum shifts from hand production to mechanisation. The Second Industrial Revolution (2IR) resulted from the development of technologies associated with electric power. More recently, the Third Industrial Revolution (3IR) heralded transitions of workplaces on the back of digital technology. Humankind has lived through many revolutions beyond those industrial, but what stands out about 4IR is the velocity, uncertainty and impact of technological shifts that are in the early phases of presenting broad ramifications for the ways we live (not to mention work). The vexing thing about 4IR for established business is the speed at which it’s emerged post 3IR. Given that 3IR only really started affecting industry in the 1980s, the majority of companies (excluding the so-called platform economies such as Uber, Amazon and Alibaba) are still in early to middle phases of integrating digitisation with pre-digital formats and responding to the opportunities and threats that have resulted from the rapid adoption of the Internet and associated technologies across the globe.

I was recently invited to be part of a panel at a conference held by the Gauteng government that focused on the implications of 4IR on township economies. Those of you that scrutinised the recent Gauteng State of the Province Address and associated budget addresses of Premier David Makhura and MEC Barbara Creecy, respectively, will know that strengthening township economies is integral to the Gauteng strategy. MEC Creecy’s speech reminded us that despite the significant economic contribution of Gauteng (around 10% of Africa’s GDP depending on our fluctuating rand), one in three residents officially lives in conditions of poverty, and of the economically active population, a third are currently unemployed. Global consulting firms are eagerly competing to offer thought leadership and advice to large companies about how to shift their embedded business models in order to remain competitive as 4IR becomes mainstream. But much of the wisdom (and for sceptics, the hype) is emanating from countries that completed their transition to 2IR in the early part of the last century. On balance, their citizens have the education and economic means to make the transition to knowledge workers that the embracement of technology and digitisation characterised by 3IR demands. The core question that we now face is “What does 4IR mean for countries with high unemployment and

inequality where, although the rump of populations may increasingly access the digital world through mobile technology, they woefully lack the skills to create or occupy jobs in 3IR, let alone 4IR?” That business and government cannot lag behind in the race for success in 4IR is not up for debate. The rise of global platform economies such as Uber and Amazon on the back of 3IR suggests that revolutionary spoils will go to early movers that can scale rapidly. But context matters. So does our definition of success. The implications of conceptualising how to survive and thrive in 4IR in economies that serve citizens who, in many cases, have not even benefitted from the electrification associated with 2IR need to be understood. The early use of 4IR to deliver goods and services to the disenfranchised shows promise, particularly in the health sciences and agricultural arenas. At the same time, the implications of job destruction may have sounded attractive when Keynes predicted the rise of a leisure society. But leisure as a choice is a very different thing compared to redundancy for breadwinners that support extended families. It’s not only government that is going to need to ponder on how 4IR meets township economies. The strategic shifts that business needs to make to remain competitive are going to challenge the core of what it means to truly value “our people”. Gordon Institute Of Business Science

Network

Our regular look at GIBS’ events, guests and achievements.

Retail insights Retail industry heavyweights and thought leaders came together at GIBS in March to discuss local and international trends and the outlook for the retail sector. Topics included the impact of digital, mobile and e-commerce on retail, understanding consumers, future shopping behaviours and customer engagement and product differentiation. There were also sessions on operational effectiveness and efficiency and how to drive bottom-line growth. Customer centricity emerged as a key theme throughout the industry, from fast foods to health and wellness retail, as did differentiation and retail technology.

Zaf Mahomed

In a panel discussion on the challenge of striving for profitability in a tough economic climate, Zaf Mahomed, CFO at McDonald’s South Africa, gave an example that highlighted all three of these trends – the introduction of self-service terminals at McDonald’s restaurants. “The average cheque at one of these terminals is double the average counter sale,” he said. “Why? Because of the customer experience. Customers have more time – they don’t feel rushed and they enjoy the tech experience.”

Sedick Arendse, Operations Director at Clicks Group, reported that personalisation has been an important strategy for the group. On the back of the successful 3-forthe-price-of-2 campaigns Clicks employs, the group came up with the Mixand-Max promotion, which essentially allows customers to build their own product bundle.

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He advised always taking a strategic approach to decisions, noting that often retailers are caught out by trying to do too much instead of building a business case for what they’re looking to do and only investing in plans after a thorough evaluation.

Enrico Baldassarri

Amid these technical deliberations, Benjamin Trisk (at the time of writing, suspended CEO of Exclusive Books) added some transcendent flair to the day, kicking off his presentation with 84 seconds of Mozart’s 21st Piano Concerto in C Major and a poetic ode to the value of reading. “We sell the slow, remorseless accumulation of knowledge,” he said, introducing his vision for Exclusive Books that has driven him in his 50 months as CEO. He spoke at length of the importance of looking after people, understanding customers, the difficulty of stock categorisation, the role of marketing messaging and the importance of working towards social impact – all topics that had cropped up during the day. Yet Trisk was the only speaker (to this writer’s knowledge) to move a few audience members to tears. Benjamin Trisk

Sedick Arendse

Enrico Baldassarri, Regional MD for Revlon, Africa, stressed the significance of context. “Your tactics need to relate to your context,” he said. “They need to come back to your strategy and your long- term objectives.”

GIBS selected as UN PRME Champion for 2018-2019 Cycle Gwede Mantashe

Land reform Following some deft behind-the-scenes negotiations reminiscent of CODESA in the early 1990s, GIBS played host in late March to a major dialogue on land reform. Convened at the request of the Parliamentary Constitutional Review Committee, as well as the Parliamentary Portfolio Committees on Justice and Correctional Services, among the speakers were Mineral Resources Minister, Gwede Mantashe, and his counterpart at Rural Development and Land Reform, Maite Nkoana-Mashabane.

GIBS has been selected as one of the 38 global business schools that will be part of the United Nations Global Compact and Principles for Responsible Management Education (PRME) for the 2018-19 Champions Cycle. PRME officially announced the 2018-2019 Champion schools at the Global 100 Executive Roundtable in Davos, Switzerland on 23 January, coinciding with the World Economic Forum. The Champion’s Cycle centres on developing the next generation of leaders with the necessary knowledge and skills to attain the United Nations’ 2030 Agenda for Sustainable Development. Over 40 academic leaders and corporate executives, including deans from top business schools and chief executives from leading businesses, gathered for the round-table dinner to discuss gaps in today’s business and management education. To be considered as a PRME Champion, business schools need to be committed to contributing to future leadership development through responsible management education as outlined in the United Nations sustainable development agenda. Champion schools that are recognised as a thought or action leader in the responsible management community receive preferred access for their students to internship and volunteer opportunities with the PRME Secretariat and Global Compact, exclusive access to Global Compact meetings, and are recognised as a PRME Ambassador. The recognition of GIBS as a business school that leads in responsible management education adds to the school’s growing accolades as Africa’s pre-eminent business school. GIBS Dean, Professor Nicola Kleyn who attended the event said, “We are delighted to be recognised as a PRME Champion. In a world of growing inequality, we believe that business schools have a vital role to play in fostering business behaviour that drives inclusive growth.”

Maite Nkoana-Mashabane

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South Africa’s Economy 2018 Dr. Iraj Abedian

Konrad Reuss

Prof. Adrian Saville

Dr. Azar Jammine

Gina Schoeman

President Cyril Ramaphosa’s new administration must show a demonstrable commitment to structural reform if it is to stimulate the stagnating South African economy. That was the view of many of the experts who took part in the annual Economic Outlook Conference in February, chaired by GIBS Professor of Economics and Competitive Strategy, Adrian Saville. Delegates were told that after the initial euphoria of a change in leadership, the country now faces tough decisions and economic trade-offs if it hopes to start out on the path to sustainable growth.

Commitment to structural reforms

Sovereign credit rating and outlook

“Most of the upturn will come from an improvement in confidence and a stable currency, which will result in lower inflation. However, from the second quarter of this year onwards, we will have to begin to look for structural growth as we have to expand the nominal income pie,” she explained.

S&P Global Ratings Managing Director for sub-Saharan Africa, Konrad Reuss told the conference that a number of structural issues behind the headlines could make it difficult for the new administration to put the economy on a more sustainable fiscal path. A low per capita income level combined with tremendous developmental needs left National Treasury with little fiscal flexibility, he said. In addition, the debt burden had become unsustainable and critical, urgently needed funds for education and healthcare are now tied up on debt servicing, he explained.

Dr. Iraj Abedian, Chairman and Chief Executive of Pan-African Investment and Research Services said government spending patterns had to address underlying long-term structural issues and not only aim to provide short-term relief. South Africa Economist for CitiBank Gina Schoeman said while she had upgraded her GDP forecast for South Africa to 1.5% in 2018 and 2% in 2019, in terms of real per capita GDP growth rates, this was “not good enough.”

Director and Chief Economist at Econometrix, Dr. Azar Jammine said the South African economy could grow by 3% in 2019, as a positive global environment contributes to an increased risk appetite for emerging-market assets. “Five percent GDP growth will then be possible if we get the structural changes right,” he added.

International recognition for GIBS’ Brewer GIBS alumna, Stacey Brewer has been recognised at AACSB’s 2018 Deans Conference in Las Vegas, Nevada, USA, among a group of 29 business pioneers, from 13 industry sectors, whose careers are addressing today’s most pressing social, economic, environmental and educational challenges.

Stacey Brewer

The Association to Advance Collegiate Schools of Business (AACSB), the world’s largest business education network, celebrated the positive impact business school graduates are making in communities around the globe as part of the

2018 Influential Leaders Challenge. As an annual initiative, the challenge honours notable alumni from accredited schools whose inspiring work serves as a model for the next generation of business leaders. Brewer is currently CEO of SPARK Schools which is a network of affordable private primary schools dedicated to delivering accessible, internationally benchmarked, high-quality education through a “blended learning” approach, which combines teacher instruction and computer-aided learning at the same per child cost as South Africa’s public schools. Gordon Institute Of Business Science

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Property Point: 10 years of big impacts in small business development Shawn Theunissen

2018 marks a decade of impact for Property Point, which has been a driver of transformation and small business growth within the property industry over the 10 years since it was founded by Growthpoint Properties in 2008. To date, Property Point has created 2 066 full-time jobs and R865.6 million in procurement opportunities generated for the 130 SMEs that have participated in its two-year incubation programmes. These small businesses have reported 43% growth in revenue. In April this year, Property Point celebrated its largest class of graduates so far. Twenty-one thriving small businesses graduated from its robust two-year incubation programme. Shawn Theunissen, Head of Property Point, says: “We are incredibly proud to celebrate a decade of impact. From the start of our journey building sustainable small businesses, we focused on the need to see and measure our impacts. We believe if you cannot measure it, you cannot manage it. We wanted to apply best practice impact measurement to see what we are delivering. Ten years down the line, consensus is that we have been able to fine-tune a lot of what goes into an effective business support programme, whether an incubator or accelerator. We have really been able to show an impact.” The seeds for Property Point were first planted when Shawn received a scholarship to study in Denmark. At the time he was consulting to Investec. Growthpoint, which was then managed by Investec Property Group, required help with their enterprise development efforts. Shawn’s masters’ thesis became the basis for Growthpoint’s enterprise and supplier development strategy, and ultimately Property Point. In Denmark, Shawn focused on user-driven innovation and concept making, which surmises that in order to innovate and disrupt you need to understand your user and your context. This global thinking about innovation, married with the local context in South Africa and with Shawn’s own passion for developing people and businesses was combined to apply drive to an economic development programme for Growthpoint. 10

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The research began with understanding the programme’s users – the stakeholders. For corporates, it considered the value proposition of developing small business outside of the compliance environment, and local B-BBEE legislation. For small black businesses, which at that time were very much a minority in the South African economy, it assessed needs and obstacles. What came out of the research was that a significant gap existed. Initial feedback from corporates was that small businesses are not compliant, they don’t have the technical capacity to be able to deliver, they don’t have the track record, and they needed to be trialled. From a small business perspective, the initial needs were access to funding, markets and mentors, and simply getting insight into the industry. They didn’t know how to break corporate procurement barriers to create sustainable opportunities. Property Point was developed to close that gap and its goals extended beyond growing small businesses to creating an environment that enables more opportunities for small business. However, in developing its programme, Shawn realised that barriers also existed at the psychological level and he started exploring the notion of unconscious biases. “Working with small businesses can be high risk. If a business is small and blackowned, the perception of risk can be even higher.” Tackling this challenge head-on, Property Point set out to change perceptions. After all, perception is reality. Its solution was to build the reputation of the businesses it works with -- on both sides of the fence; with the opportunity holder and the small business itself. “We really want to change the narrative around black business,” emphasises Shawn. To do this, Property Point encourages small businesses to sell their ability to deliver in excellence and to highlight their value proposition rather than their B-BBEE level. “Building a reputation means promoting your track record, which underscores your credibility, capability and competency,” he explains.

Advertorial

ESD Graduation winners 2018

With its innovative approach and measurable results creating credible, sustainable businesses that are able to grow, create jobs and contribute positively to the economy, over the past decade Property Point has become a leading partnership platform for both public and private participation in small business development for the property sector.

of four children, I always regard Property Point as my fifth child. It is very rewarding to have put pen to paper and, 10 years down the line, see how it has bloomed and grown. It is also gratifying to know there were other people who believed in and supported this idea. They were willing to put funding behind it, enabling it to grow to the extent it has today.”

Property Point has enjoyed a home with Growthpoint, a pioneering and entrepreneurial organisation that has spearheaded the ability to support small businesses and showcased opportunities for these businesses. It has also attracted partners such as leading JSE-listed property company Attacq and the South African Department of Small Business Development.

Shawn teases that his unofficial title is Chief Potential Officer, because his role is seeing every opportunity of potential and believing in people. “I believe every business that has been part of Property Point has been gratified to see their growth, from where they started to now. I feel like the proud parent of every single business that has come through the process. It’s not just the businesses that have grown, but the people too. That is the power of possibility. People have taken a risk on me to lead this process and now I get to do the same with others; it’s incredibly rewarding.”

“These leaders have aimed their focus on the end goal of creating businesses that are thriving, growing the economy and creating jobs,” says Shawn. Looking to the future, Property Point has the potential to become an initiative for the entire property industry and beyond, having established its own track record as a benchmark for providing entrepreneurship development with a focus on growing impacts. Replaying his personal journey, Shawn says: “Property Point is something that I am passionate about and proud of. As a father

58 Marshall Street 8th Floor, Marshalltown Johannesburg +27 11 833 0340 www.propertypoint.org.za

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BY TRUDI MAKHAYA

Fostering Entrepreneurial Neighbourhoods Trudi Makhaya

It was an unremarkable evening in the very early 2000s, the beginning of a tumultuous decade. The innocence of the nineties still clung to the air (although what we know now about the arms deal puts a wrinkle on that idealistic rainbowism). I was in the swing of postgraduate life and dating a loud, worldly, articled clerk. On that day we found ourselves, with a group of friends, at a cosy and stylish restaurant that served African cuisine, in Norwood. The menu featured delights we southerners were not at all familiar with like couscous, tagines and fish stews. I think they also served local fare – possibly mogodu – but I can’t be sure. That small restaurant grew up and spread across the city and the country. In later years, I would shepherd tourists to the farfrom-cosy, 500-seater Moyo restaurant in Melrose. At the height of its popularity, I admired Moyo’s success, but I still mourned for that spot on Grant Avenue. As the Mbeki era unfolded, and eventually unravelled, we grew up too and moved on. I did not frequent Norwood except for the occasional party. Then two years ago, I hired a nanny who happened to live in Norwood. It also happened that my small business was in need of offices. I did my rounds at the popular flexible working spaces. Nothing grabbed me. Then my brain started making some unexpected connections and I turned to Norwood. I recalled that little high street bursting with hustle. The place that spawned what was, for a while, a

Remembering the past and looking to the future in Norwood's Grant Avenue. remarkable but relatable business success story. I started walking around the area. Grant Avenue still had that solid block of restaurants. But there were many new occupants, including what my assistant calls a “spaza”, even though she can’t explain why it’s not just a shop, like the Spar down the road.

I recalled that little high street bursting with hustle. There’s a new African restaurant whose prospects of expansion appear slim – but these things are unpredictable. A trendy, shabby-chic coffee shop is more promising, having taken over the space next to it. A family lawyer who has overseen some notable divorces maintains a practice just off the high street. There’s a second-hand furniture store where I have found exquisite pieces for my office, what is now known as the Mzansipreneur Reading Room. We’re an old-school community. Of course, you can see the businesses that are auditioning to take over the city and the country. You see it in the store design that screams replicability and franchising. The food concept that is just waiting for the right capital injection. The nail bar that wants to be in every mall. This slice of Johannesburg is a reminder that South Africa is brimming with vibrant and entrepreneurial people, given the chance, and the space.

It’s not all rosy in the ’hood. In the time I have been here, businesses have collapsed in front of our eyes. Poverty is more visible here than in sanitised Sandton or booming Rosebank. Setting up a base here has also forced me to confront what ‘making it’ means spatially. Many new businesses still buy into the age-old notion of having the right address. Which, in Johannesburg, probably means a corporate-run office block in Rosebank or Sandton. In an article with the scolding title, Startups could raise a lot less if their expenses weren’t so lavish, published on the business site Quartz at Work, Chamath Palihapitiya, a venture capitalist, breaks it down thus: “It’s fine to fail. But if you fail because you didn’t have the courage to move to Oakland and instead you burned 30 percent of your cash on Kind bars and exposed brick walls in the office, you’re a f** moron.” The spatial reality in our cities is that they do not work well for entrepreneurship to thrive. Too many people are stuck in neighbourhoods that do not have vibrant local economies. On one end of the spectrum are poverty traps; at the other end are the expensive business enclaves, and not much in the middle. Norwood has its contradictions: it is a site of relative privilege but it could use a bout of investment and inclusive regeneration. Nonetheless, it gives a hint of the possibilities in that middle sphere.

TRUDI MAKHAYA Trudi Makhaya is CEO of Makhaya Advisory and has just been appointed economic adviser to President Ramaphosa.

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BY PROFESSOR HELENA BARNARD

SA PhDs

Robust and World-class

HELENA BARNARD is a full professor at GIBS and responsible for the GIBS doctoral programme. She is rated as an internationally recognised scholar by the South African National Research Foundation. She is the 2017-2020 Academy of International Business Vice President for Administration, is an area editor for the newly launched Journal of International Business Policy, and the deputy editor in charge of Africa for the journal Management and Organizational Review.

A PhD is more than just a ticket into academia. It highlights the depth of a country’s talent, potential and engagement with the world. When it comes to the quality of South Africa’s scientific training and doctoral scholars a new study tells us that we are world-class, despite our inferiority complex. A few months ago I joined forces with Moritz Muller and Robin Cowan, both from the University of Strasbourg in France, to build a deeper understanding of the value of foreign PhDs in the developing world. We focused on South Africa, arguably the leading producer of African PhDs, producing around 1 421 doctoral graduates in 2010, according to the Department of Higher Education and Training. While South Africa’s ambition (according to the National Development Plan 2030) is to increase this output to 5 000 PhDs a year, an unspoken consideration hangs over the heads of students and institutions alike: does PhD training in emerging economies yield comparable results to PhD training in the developed world? In other words, are we as good as our international counterparts? Understanding this subtext requires that we step back for a moment and consider the role of universities in society, namely research and teaching; after all, the job of a university is to develop skilled people for the economy. In a developing market context, the research portion of this role is slightly more complex in that we have not, historically, been the source of leading research. The Nobel Prizes are dominated by advanced economies, which has led some to query whether the research being undertaken by developing economy universities can really be taken seriously. By extension, the assumption is that developing countries cannot come up with good doctorates. So rather we should focus on the teaching role, and leave the research up to the ‘first world’. Or, as Oxford University’s Richard Nelson, puts it: “Indigenous universities will play a key role as the source of students who take advanced training abroad, and as the home of faculty who have been trained abroad.” But certainly not as meaningful contributors to the global research family.

Yes, this is a patronising view, but such opinions permeate the confidence we have in our local system. Consider for a moment how leading academic institutions in South Africa continue to use international rankings as a reference point as we try to understand where we fit and if we are good enough. In an effort to try and figure this out, and assuage our own anxieties, my co-authors and I set out to determine whether this inferiority complex is legitimate or overblown.

...are we as good as our international counterparts? To answer this question, we explored whether PhDs from top South African universities produce a similar quality and quantity of research output to those trained by leading universities in the developed world. Our findings have recently been published in the prestigious Elsevier journal, Research Policy. We began by examining the long-term career success of South Africa-based, South Africa-born academics, and comparing the performance of those who did their PhD abroad with those who studied in South Africa. The one shortcoming of our data is that we didn’t look at people who never returned to South Africa, only those born-and-bred South Africans who studied abroad and then came home. So our study focused on the South African university body and individuals working in South Africa. We made use of the National Research Foundation’s (NRF’s) rated research system, which is one of the most robust ways to measure Gordon Institute Of Business Science

academic quality and is undoubtedly beautiful in its bureaucracy. The system dates back to the 1980s as a way of comparing South African researchers to their global counterparts. An ‘A’ rating is reserved for researchers who are recognised by their peers internationally as a leader in the field. ‘B’ is for participants in the global scholarly conversation but not leaders; I fall into this category. ‘Cs’ are those who are active and valid members of the local community. So my co-authors and I started with a slightly patronising world view which doubted our ability to train scholars to do worldleading work and a data set that sorted people into world-leading (a small, elite grouping), world participant (a little beefier) and local participant (a wider base) categories. We started by correlating the NRF ratings with where the researcher obtained his or her PhD. One of the strengths of the paper is that we focused on locally trained South Africans, who studied here up to Master’s level. Then we compared those who stayed versus those who studied abroad. In the process, we were able to separate out ‘selection’ and ‘training’ effects. Selection refers to the appeal of leading global institutions like Harvard, Oxford and Stanford, which is a decided drawcard for top-rated doctoral students due to the prestige associated with these institutions; rather than the actual quality of the training students receive. This was not unexpected. After all, in developing countries, any foreign university has some currency, possibly because of our own inferiority complex. Critically, our data suggests that training and selection contribute about evenly to success as an academic, and when it comes to training, the best South African universities compare with the best global universities in terms of their ability to work with the raw material they get. A fillip to the quality of local PhD training. There were other nuances which emerged too, including some interesting questions around future local policy focus. This came out of our categorisation, for the purposes of this study, of the universities under investigation into: the top universities in the world (so the Oxfords and Stanfords), followed by the Shanghai Ranking of the world’s top 500 universities (ranked according to reputation), and then the local university universe (comprising historically black institutions, English-speaking universities and Afrikaans-speaking). Within the South African universe, our leading universities were on par with the top global institutions, with the next tier being comparable to the Shanghai ranking of global universities. This raises interesting policy implications, the most obvious being how government invests in doctoral students. There is a clear signal that the state should stop paying for individuals to go abroad to complete their doctoral studies. Firstly, many never return, and secondly, the selection effect will continue to remove top students from the local system anyway. But that becomes a personal choice since the training they receive in South Africa is clearly comparable.

Rather, given the hierarchy evident in the South African universe, should these funds not be invested locally? This could either be focused on building up top universities, like UCT, into even shinier and brighter institutions, or uplifting traditionally black universities which continue to struggle based on historical depravations. Whichever way government goes would be a matter of longterm policy outlook, but what is undeniable is that there is an inextricable link between funding and quality output and investing more locally would boost the research contributions to come out of South Africa.

There is a clear signal that the state should stop paying for individuals to go abroad to complete their doctoral studies. This study has also highlighted a link between the quality of research and a lack of political interference, as evidenced by the performance of English-speaking universities compared with historically more politically involved Afrikaans institutions. This is something we would do well to remember in light of current political rhetoric. It is, however, important to note that the data set being studied examined those who obtained their PhDs from the 1960s up to 2002. The South African academic system has evolved since then, so this paper did not manage to capture those most recent developments, including some noteworthy progress being made by the likes of Fort Hare, the University of the Western Cape and the University of Pretoria. But, in order to examine the longterm effects of local versus internationally obtained PhDs, a length of time to produce quality output had to be considered. Undoubtedly, future research which encompasses how current shifts might impact these findings would make for compelling reading. Ultimately, the results of this sophisticated analysis are a pat on the back for South African scholarship. While it does show that we are not yet ‘decolonised’ in our own minds, in terms of the graduates we are producing our training is on par with the rest of the world.

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Panic will cause you to do the wrong things; hope even more so.

Grant Pattison

Gordon Institute Of Business Science

BY TAMARA OBERHOLSTER

Resurrecting Retail Grant Pattison on surviving the downturn and the future of Edcon. Grant Pattison officially took the helm at the embattled Edcon Holdings group in 2018 after seven years as CEO of Massmart. Best known for brokering the sale of a majority share in the company to the USA giant, Walmart. Pattison spoke at the GIBS 2018 Retail and Consumer Insights Conference in March, sharing his thoughts on the future of retail, the plan to fix Edcon and lessons he’s learned over his years in retail.

Is retail really changing? Pattison freely admits that he is a cynic when it comes to changes facing retail (and most other things, apparently, including IT salespeople and business books).

“Do you think if you went back to Jerusalem or Cairo or Rome in the ancient world that retail was any different then?” he asked. “If you spoke to a retailer, they’d probably tell you they were impacted by political change (this Jesus guy), the Romans and their impact on the supply chain, the frustrations of getting stock, the way the world was changing and how fast technology was changing.” Retail, he posits, is not changing. It remains the same. What is changing, however, is people. “People are fundamentally changing the way they think and behave,” Pattison says. “Customers are different. We have changed. My advice to you would be to be cautious of the sales pitch about ‘the world is changing and if you don’t change you’re going to go out of business’,” he says. “Rather spend time understanding generational change. Watch the mega trend of how the human condition is changing. Study the new generation and keep in touch with what’s happening. And hire some young people so they can tell you how it all works.”

Survival strategies

In terms of surviving downturns in the economy, Pattison notes that it’s important to look through the cycle. “It’s like any form of investing,” he says. “It’s a difficult game and the people who really succeed at it just tend to ignore the cycle. If you respond to the cycle too much, your human emotions will work against you. Panic will cause you to do the wrong things; hope even more so. The real thing that you need to survive is discipline.” This, of course, includes financial discipline. First off, Pattison’s advice is not to use EBITDA as a primary measurement tool. “EBITDA assumes that the capital is free from two perspectives – that you don’t have to pay interest on it and you don’t have to depreciate it. Managing your business by EBITDA will ultimately ignore your most important discipline, which is return on capital.” He says that after one has been in business for some time, looking back it becomes easy to see that the majority of mistakes one makes relate to investing money, depleting cash and then not getting a return on that outlay. Discipline, Pattison says, is also about constantly measuring performance against the goals originally set out. “Over time, managing the income statement is relatively easy. What takes discipline is working out whether you’ve made a return on capital.”

Cursed consultants

Another Pattison pearl of wisdom is, “Don’t use consultants (to do your job).” Consultants are useful for helping with short-term skills and requirements, but Pattison cautions against using a management consultant. “Aren’t you the manager?” he asks, wryly. “If you find

Bain or McKinsey in your business, you must know you’re in trouble.” It’s clear that the foreign currency debt incurred by Bain before the consultancy walked away from Edcon still smarts. In tough times, Pattison says, it’s also wise to try to unlearn all the lessons learnt in the good times. “I got very lucky in retail. I got asked to take over Game in 2001. I was 29 years old. I knew nothing about nothing. What happened was that the consumer economy went on a record run from 2000 to 2008. Anything you did worked – absolutely anything. The people who learnt everything in those times…

Retail, he posits, is not changing. we think we’re geniuses. I can see this problem at Edcon, which was the most successful retailer in South Africa between 2000 and 2008. It’s hard – we are egodriven creatures. When you’ve done something, and it worked, it’s incredibly hard to actually learn the right lesson. Instead of thinking, ‘Well I increased the SKU densities in the high-tech area (which I did in Game) and that was the reason it performed’, you need to know that the real reason was that some person invented the flat television screen and everyone changed from a curved TV to a flat TV. It’s hard to unlearn it – I have it built into my brain that the way you fix a business is to increase the SKU density. You’ve got to be conscious of those things.” He says that bad times are actually the best time to learn proper lessons. “This is the time when great retailers are made.” Gordon Institute Of Business Science

Another important strategy is to break one’s business up into business units, and to understand each one. “There are no general solutions to general problems,” says Pattison. “There are only specific solutions for specific problems. Decentralised decision-making is a discipline.”

Fire them

Pattison’s most provocative piece of business advice is to “fire the underperformers and assholes”. He notes that firing the former is easier than the latter, but that it’s worth getting rid of people who do not align with the company’s culture. “I recognise that someone who’s an asshole in one company is not necessarily one in another company, so let them go and find the right company,” he says. He also advises against trying to be clairvoyant. “If you think you can predict how things are going to turn out, you’re just being arrogant,” he says. “Rather remain connected to your customer and the changes and trends and respond faster than your competitor.” He notes that it’s difficult to remain connected to the customer. Edcon has 45 000 staff and serves 12 million customers a month. “That might surprise you, if you think our stores always look empty,” he quips. “When it gets big, it’s hard to stay connected, especially because I’m not the customer – some rich, white, male CEO. I’m in the minority of evil. What do I know about the average person in the world? What I suggest you do, is to look at the research data. Find it; read it. More importantly, be accessible to customers.” Pattison has made it known throughout the Edcon group that anyone who asks for his personal telephone number should be given it. “I always phone the customer back because the stuff you learn in that conversation is remarkable. It’s not a waste of time.” He advocates allowing employees to fix their own problems, and to never punish them for it. It’s important to understand that staff are connected to the customer. “Your staff know what’s wrong with your business,” Pattison says. “Find them, ask them. Give them access to you. And let bad news flow upwards. It’s hard, but you

cannot beat people up for giving you bad news. But that information will allow you to stay connected to your customer. The rule I’m trying to implement at Edcon is that if you make a mistake, but you tell your boss or me, you get off free.”

Mapping the future of Edcon

“Edcon is a real-life business case on the subject of the future of retail and how to survive the downturn,” says Pattison. “Edcon has been in an 11-year downturn – even when the economy was in an upturn.”

He says there have been four key mistakes made at Edcon:

Leverage

In 2006, Bain Capital bought Edcon for roughly R25 billion and then raised bonds of about R24 billion in foreign currency. “You can’t gear a credit fashion vertically integrated company,” says Pattison. “In fact, I think you need quite a lot of equity funding or working capital (both in the book and in the creditors) to survive. That’s what you’ll see in Truworths or Foschini.”

2 3

Selling the credit book.

In 2012, Edcon sold its credit book to Absa for R10 billion.

Launching international brands.

Edcon signed up 30 international brands in a year and pushed them into stores, removing its own well-established brands from the front of stores. “It just absolutely destroyed the business,” says Pattison. “An international brand product is on average 10 times more expensive than the local brand product and its margin is half.”

Opening too many stores.

Pattison says the company is encouragingly actually well run at its deeper levels but has suffered because of poor leadership. “The board, the owners and the CEO have just been idiots for the last 10 years,” he says. “This company has been completely destroyed – it is such a crime. As a South African, I am quite angry about it, which is one of the reasons I’m here.”

...the company is encouragingly actually well run at its deeper levels... He says fixing the company requires undoing the mistakes that have been made. “How do we get out of leverage? Debt-to-equity – it’s the only thing we can do. By the end of this restructuring, there will be no debt left. How do we fix the credit book sale? What we’ve done is we’ve started what we call the second-look book. If Absa says no, we go and grant credit. It allows us, as the Absa book shrinks, to add to our own book. In five years’ time, we’ll take back the book and come up with a financing arrangement. What we won’t do is push the credit. We’re happy to keep the credit/cash sales mix the same, but now we are back in control of our business. For the last five years, we haven’t been.” The international brands have been taken out of stores. It cost R1.5 billion to bring them in and Pattison reveals it cost the same amount to undo that mistake. “We wasted R3 billion,” he says. Importantly, the company has also had to reinvest in its own local brands. The company will also close some of its stores, although the exact strategy around this is still being worked out. “That’s it – it’s no more sophisticated than that,” says Pattison. “It would have been a different story if, when I’d dug deeper, I had found more rot. But what I really have to do is let this group of people, who, by the way, knew every one of these decisions was wrong… I have to let them do what they’re good at.” He admits that he knows nothing about fashion, and says his job is merely to help with the “corporating” – things like introducing structure and process, and putting decent measurement, management accounting and incentive systems in place. “I’m leaving the fashion retail alone. We’ll see whether it all works!” Gordon Institute Of Business Science

DR. CAREN SCHEEPERS

DR. GAVIN PRICE

is a GIBS Senior Lecturer and holds a PhD in Psychology. She is a registered counselling psychologist and an accredited professional credentialled coach with the International Coaching Federation (ICF). She has 30 years consulting experience in psychometric assessments, leadership, team and organisational development and teaches on the MBA (Organisational Development and Transformation Module), as well as MBA electives: Contextual Leadership Intelligence and Change Management. Caren has authored two books on coaching leaders and co-authored 17 international case studies.

is a full-time senior lecturer at GIBS, where he lectures and publishes primarily in the areas of leadership, ethics and persuasion. He is an admitted attorney and, besides practicing as such, has also held a number of leadership roles in the property development, banking and finance industries. Gavin also has considerable experience and knowledge through his work in the property development, retail and motor industries.

BY GAVIN PRICE AND CAREN SCHEEPERS

The Goldilocks Principle

Getting It Just Right Banker, fund manager and founder of the Templeton Growth Fund, John Marks Templeton once noted: “The opposite of humility is arrogance – the belief that we are wiser or better than others. Arrogance promotes separation rather than community. It looms like a brick wall between us and those from whom we could learn. 22

Gordon Institute Of Business Science

Templeton’s observation is not far removed from the result that GIBS MBA Roberta Toscano achieved in her MBA thesis, Board Members’ Attitudes to CEO Arrogance, in 2014. We found her research so fascinating that we picked up on it three years later, and wrote a paper detailing her findings. Our paper has now been accepted for publication by the European Business Review. The purpose of the paper was to look at the effect an arrogant CEO will have on the attitudes of a company’s top management team. Our finding was that there is an inverse or negative relationship between perceived CEO arrogance and the attitude of the executive management team or board. This in itself may not be altogether surprising, but what we did find very surprising was that, on the other end of the scale, the character trait long touted as being essential for a good leader, namely extreme humility, was not altogether desirable either. Our paper concludes that what we need to strive for is the Goldilocks Principle: If CEOs are to be ‘just right’, then they should neither be too arrogant nor too humble, but rather somewhere in between.

A deeper understanding

The first thing to understand when reading a research paper is that academics are looking at very specific variables, so when we discuss the results of this research, we cannot generalise and apply the findings to situations that have very different scenarios, we can only apply it to the parameters which have been studied. Bearing this in mind, when we look at this particular research we are specifically examining how the arrogance of a CEO will affect the functioning of his or her board. We defined arrogance as “a sense of superiority and exaggerated self-importance, acted out with an overbearing manner and presumptuous claims, from the Latin, arrogare, meaning “to claim credit that one is not entitled to.” Arrogance is not considered to be a desirable character trait. As we said in the paper: “Ineffective leaders cause great misery for their followers and subordinates and arrogant leaders tend to cultivate an atmosphere of intimidation, stifling others’ ability to collaborate and communicate, resulting in toxic organisational environments.” We go on to say: “Characteristically an arrogant manager has a sense of superiority and presents himself as inaccessible and potentially unapproachable and does not listen well to others.” We must also remember that arrogance in this definition is not synonymous with narcissism or hubris, pride or even exaggerated self-confidence. In this paper, we stuck to the strictest definition of arrogance.

...the arrogance of a CEO directly affects the function of the board... like those on the shop floor, for example, would respond to an arrogant CEO. Although the research tested for a number of examples of how arrogant CEOs can cause dysfunction on a board, what we found was that there were, in fact, four key areas where there was a negative relationship between an arrogant CEO and the board. They are:

· Engagement, which manifests itself in many ways

including enthusiasm for serving on the board, pride in being a board member, a willingness to invest time in board activities and decision-making;

· Cohesiveness, which makes the group attractive to its

members, which in turn increases their motivation to be part of it and increases their resistance to leaving. Cohesion also makes board members more willing to partake and take ownership of strategic decisions. Another reason cohesion is important is that it makes members of the group feel more comfortable in expressing disagreement, thereby making all decisions a group effort;

· Collaboration, this is one of the most important attributes of a good CEO-board relationship, because collaboration is often directly related to a firm’s performance. Good collaboration also results in greater goodwill between the board and its CEO, as well as reducing potential aggression or hostility; and

· Consensual decision-making where everybody agrees that a decision is acceptable to them. This takes leadership, a lot of hard work and a robust level of discussion. Arrogance has a destructive effect on this dynamic and can disrupt team functioning.

In the same instance, we have employed a very fixed definition of humility which we defined as: “The lack of arrogance, a capacity to listen carefully, and egolessness.” Humble leaders will typically not promote themselves, but will rather put others first. “They are less focused on themselves and more likely to demonstrate self-transcendent attitudes than other leaders.”

We must remember, when we look at this research, that board members are peers of a CEO; they are not subordinates in the traditional sense to the CEO. For a CEO to perform his or her job to the best of their ability, they need to take into account the views of their board. In terms of top-tier management, the CEO needs the input of human resources, marketing, operations and finance, they need to work in concert to come to holistic solutions and the role of the CEO is to co-ordinate that in a constructive way.

It is also important to note that this paper focuses on the relationship between the CEO and his or her board or executive management team. We did not investigate how other employees,

Although the arrogance of a CEO directly affects the function of the board, it must also be noted that the attitude of the board may not necessarily directly affect the performance of the business. Gordon Institute Of Business Science

The business may perform despite its leadership. You can have a high-performing, highly dysfunctional group of people.

The method

Perhaps one of the most interesting aspects of this particular study and other research coming out of GIBS currently is our use of an experiential design. This means that we test our subjects in a laboratory setting. A business simulation, Execugame, replicates the challenges and dynamics faced by board members in a business environment. Using the game allowed us to measure the responses of players in a controlled environment. This is one of the great things about an experimental design. We could randomly assign subjects to three different arrogance levels (arrogant, normal and humble) while keeping everything else level. In this particular experiment, we had 126 participants, 53 of whom were management consultants while 73 were part-time Executive MBA delegates. We randomly assigned 45 to the boards chaired by arrogant CEOs, 41 by neutral CEOs and 40 by humble CEOs. Due to the fact that only one variable changed, we could be confident that the changes in the perception of attitude would not be attributable to any other factor other than their perception of the level of arrogance of their leader. As we didn’t have any other variables that people in an organisation are usually exposed to, the lab environment helped us to add validity to the findings. We also questioned how valid these findings would be if the scenario were to play out in the real world. The evidence suggests that the behaviour in a business simulation is a reliable predictor of the real world, especially as the subjects were not aware that this was an experiment. They were only aware that they were competing in a simulation. In a good experiment, people do not know they are being studied or manipulated. From a psychological point of view, what is interesting about these simulations is that people experience the same emotions they would in a real-life scenario. They are not acting. If they get angry, they are genuinely angry, even though it is essentially just a game. It is for this reason that these simulations prove to be excellent settings for research of this kind. And we think that it is important that people know that GIBS is doing this sort of research. This is not the first time this sort of simulation has been used in a research paper. Gavin Price, co-author of this article and the paper, and Dr. Toscano’s thesis supervisor, used this same type of laboratory experiment to conduct research into his doctoral thesis where he sought to demonstrate the impact of perceived reward or punishment consequences on a person’s ethical attitude toward an ethically ambiguous action causing the reward or punishment. His view is that research done through selfreporting is not always accurate. By using experimental design as a way to look into the behavioural patterns of people, he found that in the presence of reward or punishment, a person’s personal moral philosophy ‘flies out the window’ and has zero prediction of their ethical attitude in a morally ambiguous situation. Through using the laboratory, the point could be demonstrated experimentally, which garnered very different results had he used the method of self-reporting.

The importance of this study

Academic studies usually always have a very narrow focus. This one, for instance, simply looks at the effect CEO arrogance will have on the attitude of the board. Although we discovered an additional interesting result around humility of a CEO, the study started off with a very focused design. Therefore, although this study cannot be broadly used to explain all dysfunctional boards, where it does add value is when you consider that increasingly it is becoming apparent that a person’s personality is a predictor of their leadership style. This study, albeit narrow, will add weight to these theories. Now we can fairly definitively say that an arrogant CEO is going to have an effect on the way his or her board works as a team in terms of engagement, cohesiveness, collaboration and consensus.

...increasingly it is becoming apparent that a person’s personality is a predictor of their leadership style. We are also now able to distinguish between highly arrogant and arrogant CEOs, and on the other side of the scale, humble and highly humble CEOs. Looking at these findings within the South African context, you may even find the findings of this research being exacerbated within a context of the highly transformational change taking place in our country today. It is also important to note that CEOs looking to optimise their performance in the boardroom need not only be aware of an arrogant attitude but also realise that an overly humble attitude will also be potentially harmful to the optimal functioning of a board.

Proposed solutions

Once a leadership team understands how these two character traits and personality types may influence a board’s performance, it is then possible for them to look at ways to address the issue. We believe a preventative solution is for board members to actively participate in CEO performance appraisals. In order to achieve this, senior teams should consider feedback mechanisms whereby the board and the CEO can provide behavioural feedback to one another and discuss the impact of behaviour on the team’s attitudes. Another solution is executive coaching, as this can offer a non-biased appraisal of what constitutes arrogant behaviour and an analysis of its impact on team members. No matter what solution CEOs and their boards seek, what we need, as corporate South Africa, is to facilitate an environment of trust amongst top-tier management structures. And in South Africa, the character of an arrogant CEO is in direct contrast to what is actually required in a country where a huge societal transition is taking place. Gordon Institute Of Business Science

The Last Supper BY CHRIS GIBBONS

The Source of Creativity What makes an artist creative? Is it the same source that produces innovation in business? Can it be developed or is it something you are born with? These are questions which have gripped writers, critics and commentators for over 2 000 years and which author, journalist and thinker Walter Isaacson has been exploring in a series of acclaimed biographies. His latest is about the Renaissance polymath Leonardo da Vinci, creator not only of two of history’s most famous paintings, the Mona Lisa and The Last Supper, but also the author of a remarkable series of notebooks called the Codexes. Isaacson spoke to Acumen editor Chris Gibbons from New Orleans in the USA. You’ve written – famously – about Steve Jobs, Albert Einstein and Benjamin Franklin. What’s the thread that links them to da Vinci? Why Leonardo da Vinci? I’ve always been interested in people who combine art and science. That’s what Einstein was about, Steve Jobs, that’s what he was about, also Ben Franklin, and I believe that when you do that, you have real creativity. Leonardo was the ultimate in doing that. He loved everything from anatomy to zoology, as well as art, and by doing so, it made him creative. So, my books try to explore what is creativity and how it happens.

Da Vinci left just over a dozen paintings, including, of course, the Mona Lisa and The Last Supper, but you come at him through his Codexes – or notebooks, as we would call them. These are a dense jungle of jottings, scribblings, drawings, remarks, thoughts and more. Why did you take that approach? 26

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I think that other scholars focus on his art masterpieces, the 15 or 20 that he left, and they don’t realise that he considered himself an engineer as much as an artist, and that he didn’t make much of a distinction between his art and his science and his engineering. Whether it’s Vitruvian Man or the smile of the Mona Lisa, they were works of great art and also works of great science. By going page by page through the more than 7 000 pages we have left of his notebooks, you can see how his mind jumps from one discipline to another and how he sees patterns in nature.

You quote art historian Sir Kenneth Clark, who described Leonardo as “the most relentlessly curious man in history”, but that curiosity was also – perhaps – a weakness: he was forever darting off in new directions, failing to finish commissions, turning down new ones and generally missing what we would call deadlines. As you put it, “He was a genius undisciplined by diligence.”

One thing we can learn is simply to be very, very observant... Yes, Kenneth Clark called him ‘the most curious man in history’ and I think Clark also implied it was a bit of a weakness – Leonardo didn’t finish things, he got distracted easily. I think that’s wrong. I think the fact that he got distracted and his mind hopped around from figuring out how the aortic heart valve works (Hundreds of years before modern medical science confirmed that finding – Ed.) to figuring out how bird wings work, to figuring out how to paint the reactions of people in The Last Supper as a narrative, was part of a whole. I think that without his interest and curiosity about everything there was to know, he wouldn’t have had such a feel for the patterns of nature.

Before he was famous as a painter, he had carved out a niche for himself at the court in Milan as a designer of pageants… could we call him a showman? More of a George Lucas than a Steve Jobs? His joy at doing theatrical productions and spectacles and plays is reflected in his art and his science. The first flying machine we know of him drawing, which looks like a helicopter, was actually a prop for one of the plays. His first drawing was of a costume, a warrior, for one of the plays that was happening. It helped him blur fantasy with reality, and even if you look at his great paintings, such as The Last Supper, it looks like a theatrical stage set, the way the perspective recedes artificially, the way the gestures of the people are a bit exaggerated, and how it creates a narrative.

One of the most important points about Leonardo is that he didn’t just believe – he prodded, probed, lifted the lid and even cut into human bodies to find answers to his myriad questions? Mona Lisa

He was curious for its own sake after a while. For example, he dissects human bodies in order to get the neck muscles right when he’s painting St. Jerome in the Wilderness, but then he keeps dissecting, he dissects the whole spine and then the heart and then the liver, and you don’t need to do that to paint a painting. You need to do it if you’re relentlessly curious, and so one of the things that I admired was that he was curious for curiosity’s sake.

For example, one of the questions he puts in his notebook is ‘Describe the tongue of a Woodpecker’. That’s not something you need to know to paint a bird or make a flying machine, but it is something you need to know if you’re just curious about how everything works.

You end the preface to the book by suggesting that Leonardo’s “ability to combine art, science, technology, the humanities, and imagination remains an enduring recipe for creativity”. Can we really apply that in the modern workplace?

Muscles of the shoulder

If you look at what Steve Jobs did, he was curious about everything and when he designed the iPod, for example, one of his principles was “beauty really matters” and that’s why the iPod, and not the Microsoft Zoom or the Sony Walkman, became the standard music player for years. Understanding the patterns of nature and how to emotionally connect to those patterns becomes a legacy for anybody trying to write a book or paint a painting or make a piece of electronics.

...one of the questions he puts in his notebook is ‘Describe the tongue of a Woodpecker’... In the world of business, we look continually for ways of finding the next Leonardo or the next Jobs or Franklin, of stimulating ourselves and our equally prosaic colleagues into moments of brilliance, if not genius. What can we learn from Leonardo to help us stumble along that path with a little more certainty? One thing we can learn is simply to be very, very observant or very, very curious. This was something we all knew how to do when we were children, and somehow, when we finish our ‘wonder’ years, we forget how to be relentlessly curious. I think that it’s important for all of us to “always stay curious and stay hungry”, as Steve Jobs once said.

Walter Isaacson’s Leonardo da Vinci – The Biography is reviewed on page 86.

Gordon Institute Of Business Science

DR. CHARLENE LEW

KERRY CHIPP

is a senior lecturer at GIBS. She teaches on the doctorate, MBA and corporate programmes in the areas of Organisational Behaviour and Strategic Leadership Decision-making, and has a passion to explore, through research, the intra- and interpersonal behaviours that determine strategic organisational outcomes.

is a senior lecturer at GIBS and at Sweden’s Luleå University of Technology. She has a demonstrated history of working in the research industry and is skilled in Analytical Skills, Coaching, Lecturing, Facilitation, and Management. She is a doctoral fellow at KTH Royal Institute of Technology.

BY JAMES VAN DEN HEEVER

Decision-Making Dilemma

IMAGE SHUTTERSTOCK

How should businesses make decisions, and what constitutes a good decision? Here’s an issue that goes to the heart of what being an executive is all about.

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Executives make decisions all the time, from the simple to the complex. Most executives would also agree that the emergence of a global marketplace and the need to take a wider range of stakeholders into account has made decision-making much more complex than ever.

Dr. Charlene Lew

At the most fundamental level, says GIBS’ Dr. Charlene Lew, decisionmakers have to be aware of the dangers of bias. Bias is insidious and very hard to spot: one’s own biases operate under the radar because they are so “obvious”; other pitfalls include the tendency to group think and undue deference to expert opinion.

Dr. Lew concludes that one of the essential steps in making good decisions is to actively cultivate awareness of what forms of bias are in play. “With that in mind, follow the best process you can – and set a time frame for making the decision to avoid the paralysis that comes from overthinking,” she advises. EY Partner Chad Schaefer broadly agrees, adding that companies should identify the decisionmaking style they wish to follow in order to bring some consistency into the process.

Chad Schaefer

“You also need to establish what a good decision actually is,” Dr. Lew says. Once profit was considered the main criterion in business, but nowadays an often conflicting set of criteria have to be balanced.

Other practical techniques would be to get as many different points of view as possible – while one finds it hard to spot one’s own biases, other people’s are usually very clear! If bias is one of the fundamental realities of decision-making, then another is the seemingly eternal tussle between gut feel, intuition and experience on the one hand, and a methodical, research-based and rational approach on the other. It could be argued that the growing importance of big data and analytics tools over the past years is driving business towards this end of the spectrum.

You also need to establish what a good decision actually is... The decision spectrum

Common sense and conventional wisdom both seem to agree that the more strategic (and thus complex) a decision is, the more the decision-maker would rely on intuition and gut feel. Many strategic decisions require new thinking about which, almost by definition, little data exists. Intuition is also frequently necessary to make connections that will take the company into new areas. Dr. Lew uses the decision of MTN to be the first South African mobile operator to enter other African markets, and Iran, as the kind of strategic decision that probably relied rather heavily on intuition. Very little hard data on these markets existed, and executives had little or no real experience of such a venture to fall back on; in the end, they had to go with gut feel, she believes. Another way of looking at this is to ask who is making the decision. Typically, says Dr. Lew, the more senior the executive, the more complex and ambiguous the decision-making process will be – and, of course, the more far-reaching its consequences. “CEOs have to accept that the kinds of the decision they make fall into this category,” she says. Kerry Chipp, a senior lecturer at GIBS, argues that science has long used a number of procedures and protocols to counteract the effects of bias. We should leverage these to improve our decision-making. Following science’s lead, for example, we should use data to make rational decisions while being very selective about what data we use. The integrity of both the data and the research process are important, she notes.

Kerry Chipp

“You’ve heard of ‘management by walking around’, but there is also ‘research by walking around’, which often means senior management mistakenly think they are gathering solid information whereas what they are receiving are random facts and impressions,” she says. Likewise, the research industry pushes consumer panels as a means of amassing representative data. But who sits on the panel is crucial: typically, participants are young, retired or unemployed. We also have to be wary of placing greater weight on data that supports our own conclusions, or of data samples that are too small. Gordon Institute Of Business Science

Hypothesis-testing is integral to science and should be to decision-making. This means seeing all our opinions and beliefs about our business as hypotheses. If a hypothesis cannot be verified evidentially, it is considered to be incorrect. “You must be prepared to hold your conclusions lightly,” Chipp says, something that may be hard in the typical corporate environment where decisiveness and consistency are often prized. “We must learn to value those who will change their minds based on evidence, and distrust the view that decisionmakers should always be right.” EY’s Schaefer says that at a practical level, it is important to be receptive to what story the data is telling one, rather than using data to validate decisions/conclusions. One also has to be alive to what it is not telling you, he adds.

Best of both worlds

While intuitive and scientific approaches occupy opposite ends of the decision-making spectrum, they are not mutually incompatible in the real world. A body of academic opinion argues that both should be used in making decisions: the dual approach. Mala Padayachy is Principal Industrial Engineer at a large mining house. As part of her MBA at GIBS, she researched how senior executives in the mining industry made strategic decisions. [1] Her main conclusion was that senior managers in mining did, in fact, use a combination of intuition and data-driven rationality to make strategic decisions. She makes the good point that the mix between intuition and rationality is affected by the nature of the decision. In mining terms, in a decision affecting a brownfield development, the Malathee Padayachy usefulness of data and expert opinion is likely to be high because one is dealing with the current business. By contrast, in a greenfield situation, intuition has more of a role to play because, by definition, decision-makers have no experience and little data to rely on.

...the mix between intuition and rationality is affected by the nature of the decision. What was perhaps unexpected was Padayachy’s finding that while the senior managers did rely to some extent on intuition, they tended to place more emphasis on rational, data-driven decisionmaking. The theory is that the more time people spend in an industry and the higher their level of education, the more they will tend to make decisions rationally as they will have developed a good analytical capability. At the same time, she notes that one can never discount the role of various biases, along with ego and power plays, in shaping any final decision. She believes one must also recognise the role of company governance frameworks and governance codes, and King IV in particular, in pushing the pendulum towards a more rational approach. King IV’s focus on articulating principles and outcomes rather than mandating actions, and its “apply and explain” ethos, mean that boards cannot take refuge in simply following a recipe: they have to explain their thinking. All of this supports a rational approach to decision-making that is easy to explain and justify. Codes like King also highlight the heightened importance of ethics in business decision-making. One could argue that while business’s traditional profit motive supports rationality in decision-making, ethics demand even greater rationality. Ethics provide the basis for the social licence to operate, notes Rabbi Gideon Pogrund, who heads up the GIBS Ethics and Governance Think Tank but, at the same time, they demand that executives weigh up the benefits of profits today against the longer term, even multi-generational, outlook that ethical decision-making sometimes demands. In conclusion, it is clear that decision-making in business involves striking a balance between a rational, scientific, databased approach and the judicious use of intuition. Whatever approach is chosen, it is probably wise to articulate it clearly so that it is as transparent as possible – the best way to reduce bias. And while the growth of tools to exploit the potential of big data will likely tip the scales further in favour of rationality, intuition will always have a place. Not to forget a healthy dash of luck.

1 Malathee Padayachy, Strategic decision making in the mining industry when presented with dilemmas (Research project in partial fulfilment of the requirements for the MBA), 14 November 2016.

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BY CARA BOUWER

The Fickle Finger of

Employee Engagement

Employee engagement, as a concept, has tended to be classified among business’s ‘soft skill’ considerations. Important, yes, but not imperative. However, in recent years the likes of global professional services firm Aon Hewitt have managed to put some real numbers behind the value of understanding what makes employees tick in order to harness their energy across the organisation. Aon, for example, posits that a 5% increase in employee engagement is linked to a 3% hike in revenue growth the following year. Other studies would seem to confirm this. For example, Harvard Business Review suggests that companies with low employee engagement scores are 18% less productive and Gallup research notes that firms with higher engagement levels are 21% more productive and have 22% higher profitability than those at the bottom of the pile. Having an engaged workforce is, therefore, of paramount importance to any organisation. The question is how? How do companies stop employees switching off in the workplace? Why are so many staff members physically present but mentally absent? Why does this happen even to people who have survived a downsizing and still have their jobs? What is the magic elixir when it comes to creating a corporate culture that ignites enthusiasm in employees? With vexing questions such as these hanging over business it’s understandable that a significant number of the GIBS MBA class of 2016 chose to focus their thesis research papers on the issues and implications of employee engagement in South Africa. The likes of Louis de Jager and Yusuf Mahomed turned the spotlight on leadership and the ways in which effective leaders are able to get the most out of their people and enhance employee engagement. Others, like Madeline Gerber and Walter Meyer, honed in on the banking and engineering sectors to determine the levels of engagement among specific workforces. While Frederik Coetzee examined the impact of technological uptake by companies on key knowledge workers in a business. The common thread among all these studies was an eye to the adaptation required by various industries, management levels and employees to a changing and uncertain world. Staff members 32

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Companies that fail to understand how psychologically connected – or disconnected – workers are from an organisation risk more than just a disgruntled workforce, accelerated staff turnover and a bad reputational rap. A failure to take employee engagement seriously puts a firm’s very existence in jeopardy.

are not immune to global and local disruptions, and during challenging times they need more engagement, not less. As Ken Oehler, Aon Hewitt’s Global Culture and Engagement Practice Leader, noted in the firm’s 2017 Trends in Global Employee Engagement report: “As leaders have tried to adjust to a rapidly evolving global reality, the average employee across the globe is left with a great deal of fear and anxiety that threatens their full engagement at work.” Over the course of 2017, these trends may have abated somewhat, but since political, social and economic uncertainties are likely to raise their heads again, it is imperative that companies keep engagement channels open. Around the world, this message seems to be getting through, as Oehler observed in the 2018 edition of the Aon report: “Although most companies are continuing to face disruption and uncertainty, a robust, expanding economy means companies typically are investing more in people, and that makes the work experience much better for most employees.”

Employee engagement in Africa

Ken Oehler

Khalid Youssef

Compared to the 2017 Aon report, which showed a decline in global employee engagement, the 2018 report noted that: “Engagement around the world rebounded to its all-time high of 65% of employees.” This bodes well for the growth and sustainability of businesses around the world and specifically

across Africa, which recorded the largest increase of the five regions included in the study: 61% to 66% (a notch above the global average). Speaking at the release of the new report in March 2018, Gavin Griffin of Aon Employee Benefits in South Africa said: “It’s a remarkable jump when you consider the trends over the past five years. Only half (51%) of all employees were engaged in 2012, whereas now nearly two-thirds of employees are engaged.” South Africa remained the laggard on the continent, following a three-point Gavin Griffin decline in 2016 with a modest one point increase in 2017 (to 61% employee engagement). This was in contrast with Nigeria, which improved by nine points in 2016 and a further nine points in 2017 (to 77%). Algeria improved by 11 points (62%), Morocco by six points (59%) and Egypt by four points (69%). Across the board, Africa is seeing stronger employee engagement and, said Khalid Youssef, Aon’s Employee Engagement Solution Leader, this improved employee engagement is priming Africa’s companies for future growth. “Africa’s recent economic struggle resulted in leaders placing an increased emphasis on creating growth-driven business environments through more engaged employees by actively listening to them. Driving engagement has become a much larger focus for the regions’ companies over the past few years which is clear in the improved results. Now, leadership will need to provide clear direction and strategy for the future in order to position their organisations for long-term success,” he said.

...a 5% increase in employee engagement is linked to a 3% hike in revenue growth... Reshape the employee experience

Delivering on this promise of success, believes Leslie Benson, Senior Managing Director in the Strategic Communications segment at London-based FTI Consulting, requires that African organisations remain agile and aware in the face of changing demographics, customer demands, employee requirements and communication avenues. Addressing a GIBS Forum in February 2018, Benson noted: “A lot of the work we are doing is in reaction to pressures which are forcing organisations to change the way in which they operate.” He highlighted three trends impacting FTI Consulting’s work, namely the digitisation of communication, challenges around how to engage influential employees in an organisation, and the rise of customer centricity. While the latter may seem removed from a discussion on employee engagement, it lies at the heart of the conundrum as organisations are

How to win over SA’s Millennial workers One of the most significant challenges facing business today is the emergence of the Millennial employee and, indeed, the Millennial customer. This socially minded, technology-driven generation (those born roughly between 1980 and 2000) are a different kettle of fish to the more malleable Baby Boomers (1946-1964) or Generation X (1965-1980) before them. Globally, research from the likes of Pew Research and Cornerstone OnDemand highlights a group that is highly motivated by purpose, work-life balance and communication and one which is more inclined to seek out new opportunities if they hit a glass ceiling. And, as former Harvard Business Review editor Leigh Buchanon wrote in her 2010 paper Meet the Millennials, globally this demographic group is highly motivated to make a difference in the world. “One of the characteristics of Millennials, besides the fact that they are masters of digital communication, is that they are primed to do well by doing good. Almost 70% say that giving back and being civically engaged are their highest priorities,” wrote Buchanon. Understanding how to motivate and engage with these individuals is crucial for the longevity and sustainability of businesses around the world, but, worryingly, 29% of South African companies surveyed by Deloitte in their 2016 Human Capital Trends Report for South Africa had no employee engagement programme in place for Millennials. However, if these companies are relying on global research to fill their local knowledge gap it would be a mistake, as a recent GIBS MBA thesis by Harshini Rattan highlights. In his paper, Reward Preferences of Millennials in the Consulting Industry and Their Influence on Attraction, Retention, Motivation and Engagement, Rattan distributed approximately 150 digital surveys to Millennials in the consulting industry. Participants ranged in age from 22 to 36, in line with the Millennial generation parameters, with 61.5% female and 38.5% male. The racial breakdown of respondents was: 35% Indian, 34% white, 26% black and 5% coloured. Of those surveyed, 72% held an honours degree and 17% a Masters. Most were, understandably, early on in their careers, with 48% at associate level and with 35% having been employed in the consulting industry for between one and two years. Analysing data based on reward preferences, it emerged that fixed pay – or salaries – was the single biggest motivator for this generation, followed by work-life integration and flexible working arrangements. This was followed by quality leadership and benefits, such as a pension and medical aid. In line with international trends, training and development were also important. While Rattan’s study focused only on the management consulting sector, it does offer insights into how South African Millennials are motivated and what is required to attract and retain these individuals. In essence, they want the full package: robust financial rewards and an accommodating working environment, coupled with, to quote Rattan “community work and social responsibility initiatives, a sense of comradery within the organisation as well as support provided by organisations to pursue further studies”. As Rattan concluded: “This study also upholds the notion that a holistic total rewards approach is required, one that fulfils the needs of organisations’ youthful employees, despite the notions and perceptions of the youth of today solely looking to gain knowledge and experience, this workforce segment places the most importance on financial compensation for their skills.”

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increasingly being forced to re-shape themselves in order to drive customer loyalty, customer retention and customer engagement. Using the challenges being faced by a well-known (but unnamed) global airline client, Benson pointed out that a disconnect existed because “the airline sees itself as an airline but the passengers increasingly see the airline as a hospitality company because aeroplane travel is something you do all the time and, as an empowered customer, you expect to have a good experience”.

Ramp up your employee engagement approach

As a result, the company was faced with a need to shift its internal thinking and that of its 20 000 customer-facing employees to “reshape the way they [the employees] think, feel and what they believe and what they actually do to facilitate the customer journey”. If, at any point along the customer journey, this message jarred then a disconnect emerged; emphasising the importance of keeping employees involved. “If there is a disconnectedness across that experience because the organisation’s people are not aligned then you are going to potentially create those social media moments which you would love to avoid,” said Benson.

...IT sophistication does impact the perceived work alienation of knowledge workers. In the world of banking, with its multiple touch points for customers, this type of organisation-wide buy-in is vital and was the subject of Madeline Gerber’s MBA thesis, entitled Effectiveness of Talent Management in Creating an Engaged Banking Work Force. “Employee engagement plays a pivotal role in optimising the organisation’s performance and also plays a role in keeping employees loyal to the organisation,” she wrote. When exploring how to affect the sort of buy-in necessary for a coherent client offering, Gerber’s research highlighted four essential leadership attributes: communication, leveraging of employee skills in the workplace, understanding the drivers of employees, and trust (see ‘How to improve employee engagement’).

Lead with intention

The leadership approach outlined by Gerber was similarly highlighted in Yusuf Mahomed’s thesis, The Impact of Different Leadership Styles on Employee Engagement in an Organisation Undergoing Change. Mahomed found that “transactional and transformational leadership were the only two styles suited to drive both the agenda of employee engagement and organisational change. Whilst transactional leadership [which focuses on performance through supervision and rewards] showed success in this regard, transformational leadership [vision-based, inspiring leadership] was found to have had a considerably higher influence on employee engagement in comparison.”

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Madeline Gerber

GIBS MBA Madeline Gerber’s thesis focused on the effectiveness of talent management in the South African banking sector. In a qualitative study comprising 17 semi-structured interviews with respondents from four of South Africa’s largest banks, Gerber focused on recommendations to both business leaders and HR practitioners. In terms of the former, she wrote: “Leaders of business need to get close to their employees and come to grips with what it is that employees want.” The way to achieve this level of intimacy came down, she wrote, to four key actions:

Communication The need for open channels of communication was seen as vital. “Open communication allows leaders the opportunity to address the issue of the perceived lack of trust, as open discussion and debate around these principles will eradicate ambiguity,” wrote Gerber. “The flow of communication needs to surpass employer to employee conversations and open between leaders in industry as well so as to facilitate skills transfer and best practice in terms of employee engagement.”

Harnessing employee skills Organisations need to allow for robust discussions around the strengths and weaknesses of each employee’s skill set. “Employees implore employers to get to grips with the skills they are able to bring to the table and for those skills to be fully utilised within the workplace. This serves not only as a sign of recognition and an indication of trust between employer and employee, but also increases employee self-efficacy due to the fact that employees perform optimally when they are able to leverage their skills.”

Understanding what makes employees tick “Employees indicate that they are driven by more than just monetary rewards and have become aware of their impact and the greater environment, they also indicate a sense of self-awareness,” wrote Gerber. This was particularly noteworthy among younger generations (see ‘Money does the talking for South African Millennials’).

Trust The level of trust employees have in an organisation comes down to the approach of its leaders. Noted Gerber: “Leaders, therefore, need to be particularly honest and sincere with employees regarding the intention of the talent management processes within their organisations to reinforce openness but also as a platform for employees to willingly make recommendations without fear of being chastised.”

De Jager’s analysis, Influence of Leadership Styles and Performance Management on Enhancing Employee Engagement, similarly highlighted the positive relationship between transformational and transactional leadership styles and experiences within the performance management and employee engagement processes. As he wrote: “Passive-avoidant, laissezfaire approaches to leadership were found to have a negative relationship with the employee experiences of performance management and engagement.” He added: “Transformational leadership was found to have a significant, positive relationship with employee engagement which was consistent with the current literature.”

The traditional approach to engaging with advocates in an organisation is not working effectively. to drive competence and to drive a desire to work within that organisation actively”.

While both Mahomed and De Jager’s research reinforced the abilities of the transformational leader to motivate and inspire, Mahomed’s focus on organisations undergoing change was noteworthy given the disruptive times in which we live and the need for companies to adapt; a fact both Benson and the Aon report focused on in some depth. While many factors influence employee engagement, noted Mahomed, the leadership styles present with an organisation undergoing change represent one of the greatest influences. Or, as the Aon authors noted: “Success will also require leaders that courageously lead the way through the ambiguity, fear and uncertainty in the current environment. Collectively, strength in these top opportunities creates a sustainable culture of engagement that is hard to replicate. Companies that do this will be the elite... the extraordinary... and they Yusuf Mahomed will win.”

However, as Coetzee’s thesis, The Impact of Information Technology Sophistication on the Work Alienation of Knowledge Workers, shows, there is a delicate balance between using technology to increase efficiencies and streamline processes and alienating vital knowledge workers in the process. Coetzee looked specifically at the financial services sector and, making use of a web-based survey of 216 participants from eight financial institutions in Johannesburg, he was able to determine that IT sophistication does impact the perceived work alienation of knowledge workers. Given that these workers are highly valued within an organisation, this research noted a worrying disconnect between the use of sophisticated technologies such as big data, artificial intelligence and automation, and the engagement of skilled workers.

But effective company-wide engagement does not only boil down to the attributes of its leadership. Winning in the modern, digital age increasingly requires an appreciation of how these leaders are able to adapt to the pervasive impact of technology and digitisation. As Benson notes: “I don’t think there is an organisation on the planet that is not, in some way, bumping into the digital age.”

So, as GIBS Executive Director: Open Programmes, Nishan Pillay, noted during the GIBS Forum addressed by Benson: “Industry 4.0 is coming, so how do we communicate with employees and how do we keep them engaged?” These changes are here, and they are inevitable, so how do we communicate in such a way as to allay angst which, if unchecked, will ultimately result in further disengagement by employees and a decline in the work experience.

The impact of digitisation

Digitisation affects every aspect of how organisations operate, from branding efforts to employee engagement. “So many people we talk to are running virtual teams, and how you lead a virtual team is different in practice to how you lead a team that is constantly in your presence. It goes to how you measure effectiveness in the organisation and it will affect all aspects of stakeholder engagement,” said Benson. He added that new ways of communicating raise questions around how to facilitate the use of digitisation in a way that ensures a company optimises employee engagement. Any use of these communication tools should be optimised “to foster innovation in a way that helps you to drive confidence,

As the Aon report points out, this rapid onset of technological advancement also creates a level of stress for workers, skilled or otherwise. “Rapid technology advances that would make many jobs obsolete are no longer the subject of science fiction, and are here to stay. Driverless cars, drones, virtual reality, artificial intelligence, machine learning, and other technologies are competing for jobs like never before,” noted the authors.

One way is to make use of the wealth of information available within organisations, to tap into these data analytics in search of guidance around when and where to change course, recommended Benson. Another avenue requires focusing less on control and more on influence, about using networks to provide feedback and then responding proactively.

Engaging influential employees

Benson focused extensively on the growing importance of engaging influencers within an organisation and how this too was being impacted by the rise of digital. “A number of our clients have become increasingly fascinated by the challenge of being able to identify who these influential employees are and what are

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the networks they are using to communicate messages to their colleagues, to their customers at large and how do you best engage them,” he said. From pharmaceutical companies battling to control a wealth of international communication platforms – from websites to social media channels, WhatsApp and WeChat – to mining companies finding their use of ‘push-down’ communication to speak to advocates in the organisation to be expensive and ineffective, Benson outlined a case for greater authenticity in communication and creating a sense of dialogue. “The traditional approach to engaging with advocates in an organisation is not working effectively,” said Benson. This ‘push’ approach to messaging, where companies identify and select those advocates they believe are in the right positions and places to communicate effective messages on the ground, is increasingly not hitting the mark. “What they [the likes of mining companies] found increasingly is that this approach was expensive and, worse than that, it was relatively ineffective.” Why? Because communication has moved on to become more interpersonal and empathetic. The world of social media has changed the way we communicate socially, and similarly, it is impacting how companies interact with employees. Further reading SuperTeams: Using the Principles of Respect to Unleash Explosive Business Performance Dr Paul L. Marciano and Clinton Wingrove Carrots and Sticks Don’t Work: Build a Culture of Employee Engagement with the Principles of Respect Dr Paul L. Marciano The Best Place to Work: The Art and Science of Creating an Extraordinary Workplace Ron Friedman The 5 Languages of Appreciation in the Workplace: Empowering Organisations by Encouraging People Gary Chapman and Paul White Building a Magnetic Culture: How to Attract and Retain Top Talent to Create an Engaged, Productive Workforce Kevin Sheridan Purpose Meets Execution: How Winning Organisations Accelerate Engagement and Drive Profits Louis Efron The Employee Experience Advantage: How to Win the War for Talent by Giving Employees the Workspaces they Want, the Tools they Need, and a Culture They Can Celebrate Jacob Morgan Fierce Loyalty: The High Impact Leadership Formula to Transform Employee Engagement Louise Mallam

This means making friends with new channels which require greater authenticity. “Just think, from a political point of view in the USA today, how Donald Trump – irrespective of how you think of him – has changed the game in terms of communication,” said Benson. “It’s the recognition that the use of social media allows you to get directly to people in ways that people have never been able to do before. And depending on how effectively you tweet and use different media, you are able to shape opinion in a way which 15 years ago would have seemed completely impossible.” Ultimately, networking and influencing in the new digital environment is critical, he said. “For me, it’s about critical mass, if you look at the employee base of an organisation, who are the early adopters of change who you want to engage with and how do you find them and how do you elevate them, without disempowering others? There are analytics to help you identify who they are.” Identifying the ‘laggers’ is also essential as this allows you to engage them in the debate as well. But, noted Benson: “One of the biggest challenges of change management is

trying to drive that process too quickly. The second is believing your own nonsense. It is really important to have a forum of people and respect all points of view. This comes back to integrity and patience and having a reasonable, thoughtful approach that matches the needs of the organisation.” The end result is ultimately to create an open communication structure that hears employees, listens to suggestions and empowers all members of the organisation to become more effective in growing the business in a sustainable and effective way, stressed Benson. However, as the Aon report warns: people are emotional and fickle. Yes, they create business value but they require time and work and patience. “They want to be won over often,” noted the report’s authors. “That is why employee engagement can be an organisation’s great differentiator in terms of stability or in times of rapid change. When you have a culture of engagement, your competitors better take notice.”

Engagement opportunities While senior managers and leaders have a critical part to play in creating meaningful opportunities for employee engagement, the Aon Hewitt 2018 Trends in Global Employee Engagement report points out that other areas cannot be overlooked. Namely:

Rewards and recognition Some, like rewards and recognition, are the strongest drivers of engagement but must be handled with kid gloves, say the authors. Not only are financial rewards a challenge for many organisations, but they can potentially result in accusations of unfairness. As a result, these should be handled with the utmost transparency if executives employ this route. Interestingly, the 2018 study shows that recognition for contributions made to the organisation, beyond pay and benefits, was of growing importance.

Employee value proposition More sustainable perhaps than rewards is the articulation of a promise from the organisation about what it will – and then does – deliver to employees. In other words, the employee value proposition. “This opportunity is fundamentally about creating a magnetic sense of belonging to your organisation,” said the 2017 Aon report. It is about creating a compelling reason why employees should join an organisation and invest their time and skills in the business.

Career opportunities and enabling infrastructure Part of that drive comes down to the career opportunities on offer and the infrastructure in place to enable that person growth. “These drivers illustrate the importance of advancement and support, respectively, in a strong culture of engagement. Without these ingredients, talent stagnates, is frustrated, and eventually leaves or becomes complacent.”

But, as Ken Oehler, Aon Hewitt’s Global Culture and Engagement Practice Leader, points out: “There is not a one-size-fits-all employee experience that will maximise engagement; the specific drivers will vary by region, by industry, by company and by role. Organisations need to identify the drivers that are most important to their own employee population and then focus on creating the employee experience to yield the best return.” Gordon Institute Of Business Science

BY TAMARA OBERHOLSTER

What Makes Them Do It? Exploring the “why” behind white-collar crime.

According to the 2018 South African edition of PwC’s Global Economic Crime and Fraud Survey, 77% of South African organisations surveyed say they have experienced economic crime in the past two years. This compares to 49% of respondents globally. These staggering figures were cited by Rabbi Gideon Pogrund, director of the GIBS Ethics and Governance Think Tank, as he opened the GIBS Forum titled, White-Collar Crime: Why They Do It, in March. Professor Eugene Soltes, Harvard Business School academic and author of the highly acclaimed book Why They Do It, kicked off the forum via video link by sharing how he’d first become interested in the idea of what motivates white-collar criminals. It was an idea that came to him while watching the US prison documentary Lockup 11 years ago.

...the victims of corporate crime tend to be far removed... “They were interviewing people convicted of crimes and this was at the time of Bernie Madoff and Enron,” he says. He started to wonder about how the motivations for perpetrating whitecollar crime might differ from those of people committing “street crimes”. The question led him to interview over four dozen offenders across the world over the next few years. “As a financial economist, I started out thinking that white-collar crime occurs because of some sort of calculation going on,” he says. “I began to think that perhaps there’s nothing abnormal about the individuals perpetrating these crimes except that they view the costs and benefits differently.” However, a year or two into his research, he became frustrated with this approach. He came to believe that white-collar crime was less of a calculated occurrence than what he terms a “failure of intuition” and a lack of ability to realise the harm of these actions. His new question became, “Why can we see that what they did was wrong, but these (often very smart people) couldn’t?”

He points out that the victims of corporate crime tend to be far removed, which is very different from many other crimes (for example, violent crimes). “With things like insider trading, it’s hard to even identify a victim – it’s the market that suffers,” he says. Soltes believes that people perpetrating white-collar crime also don’t necessarily see what they are doing as wrong. They don’t think of themselves as criminals, and often think the end justifies the means and rationalise what they do. He says we all do this at some level – doing things we know we ought not to do, but that we do anyway and rationalise. Speeding is a perfect example. As long as we don’t believe that our action is harmful, we will continue to do it, even if it’s against the rules. “At the same time, if we feel something is harmful, we don’t even consider doing it, even if there’s no law against it,” he says. The question is how we create cultures, norms and compliance systems that nudge people towards being the best versions of themselves.

Leaders

Bonang Mohale, CEO of Business Leadership SA, points out that the people whose economic crimes wreak the biggest havoc tend to be those in leadership positions. Power, he says, can either be used judiciously for the greater good, or for purely self-serving purposes. He, therefore, views white-collar crime as a failure of leadership.

Bonang Mohale

The key challenge facing boards is how to enable decisionmaking that not only supports company objectives, but fuels shared value. If business were to become obsessed with the idea of shared value, Mohale muses, it would naturally begin to use its might for the greater good. Gordon Institute Of Business Science

Mark Lamberti, at that point Group CEO, Imperial Holdings, suggests there are three reasons behind white-collar crime: poor process, short-termism and poor custodianship. On short-termism, he says that instead of focusing on long-term value creation, companies focus on ensuring the bottom Mark Lamberti line delivers, at all costs, often bending the rules to achieve results. Citing his personal management credo, written in 1978, he says the test for ensuring a long-term perspective should be asking how any decision will look “to a disinterested corporate historian of the very highest integrity, common sense and humanity 5, 10 or 15 years from now.”

South Africa tends to focus more on public sector crimes... On poor custodianship, he calls out management arrogance and reinforces that unless one owns 100% of a company, one is merely a custodian and cannot behave as though the company is one’s own. Reading from a 2004 Massmart annual report, he highlights the importance of improving disclosure, “however uncomfortable this may be in times of underperformance”: “I would like to suggest that a failure to face up to the reality of underperformance is at the heart of dishonest investor relations and the ultimate cause of corporate malfeasance. As directors, we are in trouble when we start to craft the message to embellish the good news or to hide the bad news. We are in serious trouble when our decisions are shaped by a desire to influence the share price. We must recognise that our companies cannot perform impeccably indefinitely. We must recognise that public shareholders will exploit performance lapses in the short term. And we must recognise that a decline in the share price is not necessarily a failure. As directors, we are not salesmen of the company’s shares and we are not appointed to meet analyst’s consensus forecasts.”

Adv. Kgomotso Moroka, SC

Advocate Kgomotso Moroka, SC, notes that South Africa tends to focus more on public sector crimes than private sector misconduct and stresses the need for balance between legislation against criminal activity and an ethical culture. Without the latter, the former is ineffectual. She points out that King IV has moved from tick-box

compliance methodologies towards a more outcomes- based approach. Rob Rose, Editor of the Financial Mail, pointed out that private sector economic crimes are reported on, and that the market extracts quite a high levy from companies that misbehave – for example, in the recent case of Steinhoff. He agrees with Prof. Soltes that cognitive Rob Rose dissonance is a factor in white-collar crime, and that corporate criminals often don’t have a sense of the harm they are causing. Rose refers to a 2008 paper by the SEC that divided white-collar criminals into various classes. The first comprises the obvious crooks who are out to get away with whatever they can. The second is the “borrower” – a criminal who actually believes that he will replace what he has taken at some point. Ponzi scheme criminals often fall into this category. Then there are the opportunists, and finally, the crowd-followers. These are often people who get sucked in to crimes that are legitimised within communities in which they happen, even if they are technically illegal. Examples include cartels, insider trading and currency rigging. If there’s a feeling that “everyone else is doing it” the behaviour is easy to rationalise. Professor Michael Katz, Chairman of ENS and one of South Africa’s most eminent lawyers, believes that a particular “toxic mix” makes for an environment where white-collar crime can run rife: “A strong, arrogant CEO, nonexecutive directors who don’t understand the business and who are captive to the money, and an absence of a culture of healthy dissent.”

Prof. Michael Katz

Society has to start to see white-collar crime as a crime... He believes that a large part of the problem is that the people who commit white-collar crimes don’t believe that they will be held to account and don’t see themselves as criminals. Thus, even if deterrents are escalated (e.g. increased jail sentences), it doesn’t have the effect of decreasing corporate crime. The challenge is in finding ways to lower the disconnect. “It’s an important point in Prof. Eugene Soltes’ book,” Prof. Katz says. “Society has to start to see white-collar crime as a crime. It needs to see that these things are wrong and harmful – they do not happen in a vacuum.” Gordon Institute Of Business Science

BY TIAAN MOOLMAN AND MICHAEL MANKINS

The Productive Power of Teaming Great Talent It's one of the thorniest of thorny questions in any office: who goes into which team, why, and to what effect? New research from Bain & Company sheds some fascinating light on the problem.

When Bain & Company asked senior executives from 308 large companies how they form teams for their most important initiatives, most told us they assemble teams based on whoever is available. Only a small minority indicated that they consistently create all-star teams, comprised of their very best talent, to tackle their company’s highest-priority issues. This is an enormous missed opportunity: we found that the best companies are more than 25% more productive than the rest due to the way they deploy, team and lead scarce, difference-making talent.

Here’s what our research shows:

The best talent is significantly more productive than the rest. Most of us know from experience that our best players are much better than our average teammates. But we may not fully recognise just how much better they are. For creative or highly unstructured work, the best can be eight to 12 times as productive as the average. The best software developer at Apple, for example, writes nine times more useable code 42

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each day than the average software engineer in Silicon Valley. But even for routine or highly repetitive work, the difference in productivity can be significant. The best fish butcher at Le Bernardin restaurant in New York can butcher three times as much fish per hour as the average prep cook in Manhattan. The best can do more – and do it better – than the rest. Therefore, the more stars in an organisation, the more productive it will be. Teaming great talent together acts as a force multiplier; increasing productivity geometrically. Teaming people with different skills and perspectives together almost always produces more output than the sum of those individuals acting alone. After all, two heads are almost always better than one. But with star talent, this relationship is more extreme. Indeed, productive power increases geometrically with the percentage of star players on a team. A five-member team, comprised entirely of A-players, can produce 16 times as much output – or the same output in one-sixteenth the time – as the sum of five average players working individually.

The best can do more – and do it better – than the rest.

Tyre stop for Kyle Busch

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Take NASCAR pit crews, for example. For many years, Kyle Busch’s pit crew was considered the very best in NASCAR. His crew is a team of all-stars that trains together year round. Their performance can be objectively assessed. A standard pit in NASCAR involves 73 separate manoeuvres, such as changing all four tyres or refuelling. Busch’s pit crew can complete a standard pit in just 12.12 seconds. It’s remarkable to watch. If you remove one of his crewmen and replace him with an average crewman – say, a tyre changer – the time it takes to complete that same pit jumps to more than 23 seconds. Take two out and find average replacements and it increases further – to more than 45 seconds. Essentially, a geometric decline in productivity as the percentage of stars on the crew decreases.

are alike. Great coaches get better performance out of their teams than mediocre ones. They encourage each member of the team to play his or her position – leveraging other team members – and play to their full potential.

Star talent has an outsized impact on team productivity. The greater the percentage of A-players on a team, the more productive that team will be.

In 2012, the National Bureau of Economic Research studied the impact that great bosses have on team productivity. They found that a great leader (the top 10% in the companies they studied) can increase the productivity of an average team by about 10% – roughly equivalent to adding an additional member to a nine-member team. However, take that same great boss and put them in charge of an all-star team and he or she will increase that team’s productivity by more than 10%. And, keep in mind, the productivity of that all-star team was already significantly higher, to begin with.

Great leaders further magnify the productivity of extraordinary teams. Not all team leaders are alike – just like not all coaches

Great leaders act as a force multiplier on the force multiplier of all-star teams. Gordon Institute Of Business Science

Teaming great talent together acts as a force multiplier... So what does it take to unleash this productive power in your organisation? Our research and experience highlights at least five actions:

1Track star talent.

Creative and ingenious people are rare. In fact, our research suggests that fewer than one in seven employees is a star in most organisations. It is impossible to effectively team, deploy and lead these individuals unless you know who they are, where they are currently deployed, and how able they may be to play new and different roles. Unfortunately, most HR systems fail to provide leaders with this vital information. They may identify stars, but fail to track where they are deployed. They may track deployment, but miss opportunities to better allocate them to new roles and teams. Finally, the approach companies use to identify A-players – i.e. some combination of “high performance” and “high potential” – are typically so subjective that they fail to reliably separate a company’s star employees from those who are merely good enough. The best-performing companies treat difference-making talent as a scarce resource. They track it carefully and make sure that it is consistently put to its highest-value and best use.

2Assemble all-star teams.

Most companies seek to form balanced teams, teams comprised of subject matter experts, or teams based on who happens to be available. This is true for routine work as well as mission-critical initiatives. This balanced approach may seem fair, even admirable, but it fails to capitalise on the force multiplier associated with all-star teams and great bosses. In short, most teams are assembled in ways that virtually ensure average performance. The best-performing companies are nine times as likely as the rest to assemble all-star teams when confronted with a mission-critical initiative. When the US government located Osama bin Laden in Pakistan in 2011, it didn’t assemble a “balanced team” of soldiers to take him out. It sent its very best team of Navy SEALs. Likewise, when something vitally important needs to get done in business, the best companies assemble all-star teams to complete the mission.

3Target mission-critical initiatives.

Not all efforts are equally important. Some issues must be addressed quickly and effectively in order to sustain or extend a company’s strategic position. Many companies are reluctant to call out these efforts as a higher priority – fearing that individuals who are not working on them may feel slighted. But the cost associated with treating every effort equally is that mission-critical efforts get shortchanged for resources. The best companies have systematic processes for identifying their highest value-at-stake and most urgent issues. As a result, these issues receive

Extraordinary teams offer the potential for exceptional productivity and performance. Sadly, most companies fail to realise this potential. They treat the teaming of scarce star talent as an afterthought – or follow outmoded practices for assembling teams. The best companies take a far more disciplined and rigorous approach – particularly with respect to teaming their very best talent. They aren’t afraid to assemble all-star teams to tackle mission-critical initiatives. And they reward team performance commensurately. 44

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special attention. They get more time from senior management. They get the very best teams to ensure that they are tackled effectively.

4Remove obstacles to effective teaming.

Organisations frequently create obstacles to effective teaming. For example, many companies have compensation systems that disproportionately reward individual performance, even for teambased achievements. They may have stacked-ranking systems that force a bell-curve distribution of performance across all members of a team – ensuring that only a few receive a favourable performance evaluation. These systems create a “market mechanism” that actively discourages A-players from teaming with other A-players, or risk having their pay docked. Many companies – namely Microsoft, GE, Amazon and others – have discontinued the use of stacked ranking. The best companies recognise that great work is most often done by teams, not individuals. Accordingly, these companies weigh team performance as much as (or more than) individual performance in determining compensation, professional development or career advancement. As a result, these organisations capitalise on the full force multiplier created by extraordinary teams.

5Manage team member egos.

Perhaps the biggest factor limiting the deployment of allstar teams is the belief that “egos will get in the way of team effectiveness.” While there are certainly situations where this is true, the best companies don’t give up on forming all-star teams. Instead, these companies find ways to manage team member egos. The primary vehicle for managing individual egos is to make team success essential for individual success. When the so-called “Dream TIAAN MOOLMAN Team” took home the gold medal at the is a partner in Bain & Barcelona Olympic Games in 1992, the egos of Company’s Johannesburg NBA all-star team members were kept in check office where he leads by the fact that no one team member could the firm’s Organisation take home the gold unless the entire team practice in Africa. was successful. This allowed bitter rivals to compete together victoriously as a team. Similar mechanisms can be put in place in the business world to keep team member egos in check.

MICHAEL MANKINS is a partner in Bain & Company’s San Francisco office and a leader in the firm’s Organisation practice. He is a co-author of Time, Talent, Energy: Overcome Organisational Drag and Unleash Your Team’s Productive Power.

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High-Tech Fight Against Killer Fakes in Pharmaceutical Supply Chain Fake, substandard and counterfeit medicines are claiming lives and compromising the health of patients around the globe. According to the World Health Organisation (WHO), thousands of people die in Africa every year due to counterfeit medicines. And the care of hundreds of thousands is compromised because of substandard product. “The issue of counterfeit, falsified and contaminated medication that contains the wrong or no active ingredients has long plagued the global pharmaceutical supply chain,” states Dr. Iain Barton, healthcare strategy executive at Imperial Logistics. He notes, however, that new regulations that are coming into effect around the globe, along with mandates such as mass serialisation or “track-and-trace” aimed at addressing the threat, and are set to become the worldwide standard for regulators. “In response to the global plague of fake and substandard medicines, the European Union and the United States have put strict regulations in place requiring pharmaceutical companies to ensure that their products are secure throughout the supply chain – from manufacturer to patient. Two innovations that have come into prominence to respond to counterfeits and falsified medications are serialisation and authentication,” he explains. “Serialisation is the assignment of unique, traceable numbers to individual items. Think of a box of painkillers in blister packs. Each pack will have a serial number tag. This essentially provides traceability at all levels along the supply chain. Product authentication allows someone to pick up a product at any point in the supply chain and to confirm its concentration of constituents as correct.” As the leading force in African healthcare supply chain management, as well as pharmaceutical wholesale and distribution, Imperial Logistics is committed to combating the public health threats that stem from fake and substandard medicines. One of the group’s latest pioneering initiatives in this arena is a partnership with technology solutions provider One Network. Barton elaborates: “We are leveraging a sophisticated cloud-based solution and blockchain platform to secure supply chains. It includes serialisation of critical drugs such as antimalarial drugs.” One Network’s serialisation chain-of-custody solution is based on the technology specialist’s blockchain platform. It enables real world chain-of-custody with support for powerful supply chain visibility and security-enhancing capabilities that include serial tracking, lot tracking and targeted recalls. “By providing serialisation and tracking across complex supply chains that involve multiple parties and hand-offs, Imperial Logistics can

Dr. Iain Barton

mitigate threats such as counterfeiting, falsified and substandard products in pharmaceutical supply chains,” Barton states. He reports that on the authentication front, Imperial Logistics is working on an initiative to create a database of product spectral scans of its healthcare clients’ products using state-of-the-art Raman technology. “This database of authentic scan images will then be used to provide broad quality screening services in wholesale and retail settings. Raman spectral techniques are commonly used in chemistry to provide a structural fingerprint by which molecules can be identified. This is a non-invasive, non-destructive and quick way to analyse medicine and determine whether it is real or counterfeit,” he outlines. To enable its authentication programme, Imperial Logistics plans to invest in portable, handheld Raman devices that will be used to scan products anywhere in the supply chain and to confirm their valid identity and source. “In this way, we will be able to identify non-authentic pharmaceuticals before they can enter the market, and products will be scanned and verified along the entire supply chain. Raman handheld devices can measure through blister packs and bottles, and we have conducted extensive evaluations of their efficiency and ease of operation.” Barton notes that the organisation’s ability to screen samples in the field will also have an impact for its wholesaler partner programme, commercial clients, ministries of health and donors. “We are proud to be able to support them as they work to comply with new regulations and strive to fight the scourge of fake, counterfeit and substandard drugs. “Imperial Logistics will roll out these value-added capabilities this year, to support the critical need for both patients and the pharmaceutical industry to be assured of proven product integrity. Patients deserve the guarantee that the medicine they are receiving is safe and effective,” Barton concludes.

10 Skeen Boulevard Bedfordview 011 677 5000 Imperiallogistics.co.za GPS Coordinates 26°11’44.48”S | 28°7’49.89”E Gordon Institute Of Business Science

BY DION CHANG

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What Happens when AI Converts Human Expertise into Software?

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The big debate on which jobs will be lost to automation and mechanisation is firmly on the business radar. We’re mildly appeased that robots and algorithms can’t replace human empathy and intuition. Yet. But what happens when you are able to replicate and outsource your expertise as a form of artificial intelligence? That day is dawning. The future of work is about to become even more complicated. A few months ago, some owners of Amazon’s IPA (intelligent personal assistant), who have been getting accustomed to chatting to the Amazon persona, Alexa, were understandably unnerved when Alexa emitted unprompted, witch-like laughter. Amazon said that they fixed the problem by disabling the phrase, “Alexa, laugh,” and changing the command to “Alexa, can you laugh?”, saying the latter phrase is “less likely to have false positives,” or in other words, the Alexa software is likely to mistake common words and phrases that sound similar to the one that makes Alexa start laughing. I'm not sure if that appeased the customers who were on the receiving end of the disembodied cackle, as it was a totally unsolicited response. Welcome to the new frontier of artificial intelligence, and like the Star Trek sign-off mission statement, we’re on the threshold of the unknown and about to, “explore strange new worlds…and to boldly go where no one has gone before”. The late Stephen Hawking, along with scientists and tech pioneers like Elon Musk, have for some time now been warning about the dangers of delving too quickly into the realm of AI: but humanity is not known for heeding warnings, so we’re pushing ahead nevertheless.

Cape Town drivers!

In December last year, I was privy to a very insightful glimpse of where we are exactly on the journey to autonomous, or driverless, cars. Dubbed the Mercedez-Benz Intelligent World Drive, Mercedez-Benz was sending their autonomous prototype on a global five-city tour to collect data about conditions and drivers from different parts of the world, namely Munich, Shanghai, Sydney, Cape Town and Los Angeles.

We also drive “on the wrong side of the road”, have illegally parked cars obscuring road markings, unconventional traffic signs warning you of wildlife, and that’s before factoring in the Wild West behaviour of our minibus taxi drivers. All these anomalies will be added to the data for the car’s AI to absorb, process and add to its self-learning. It’s this self-learning aspect of AI that worries the scientists and tech pioneers.

HAL’s progeny

Last year Facebook quickly abandoned an experiment after two AI programmes started interacting with each other in a coded language that only they understood. The experiment involved two chatbots, which Facebook had challenged to negotiate with each other over trade-offs involving hats, balls and books, each of which were given a value. But soon they started excluding humans, by inventing a shorthand they quickly developed on their own. That’s when the experiment was stopped. A preventative measure, and a wise move.

...two AI programmes started interacting with each other in a coded language that only they understood. When, six months later, Alexa started cackling at its owners, everyone was reminded of a pivotal scene in the movie 2001: A Space Odyssey when HAL 9000 (the spaceship’s computer) first makes his evil intentions known and responds to an instruction to open a crucial airlock with, “I’m sorry Dave, I’m afraid I can’t do that.” This was back in 1968 and is possibly the first (of many) science fiction references to a dystopian future where robots begin ruling their human masters. We now seem to have reached that crossroads.

The challenges, and limitations, of AI – or the ability for a machine to think like a human being – were brought to the fore. The Intelligent World Drive revealed just how varied these challenges are, in different parts of the world, and just how much the car “still has to learn”.

When the topic of the Fourth Industrial Revolution comes up, the inevitable question, “what happens when the robots and algorithms take our jobs?” arises. That question is now not one for scenario planners to mull over but for businesses to factor into their short and medium-term strategies.

For example, in Cape Town very unique South African curve balls were faced. Unlike the strictly monitored autobahn in Germany, we have pedestrians ambling along the sides of our motorways.

Complex algorithms are already being used across many business sectors, from retail heat mapping to ensuring your Uber Eats meal is delivered piping hot to your door, to the more Gordon Institute Of Business Science

controversial, like using AI to provide targeted messaging to certain demographics, as was the case with Cambridge Analytica using Facebook users’ data. The Cambridge Analytica scandal has brought into sharp focus the issue of bias, and how AI can not only be used to affect bias in large demographics but also the problem when a harmful bias is programmed into its core learning. Humans, after all, are the ones that do the initial coding. Machines will take initial learnings from their human masters, then evolve them. These nuanced issues are becoming more complex and the ability to solve them, more urgent. We have, till now, been comforted by the fact that robots and data cannot replicate empathy or intuition, and so certain jobs will be immune to automation and mechanisation.

Emotive algos

Rob Gruppetta, head of financial crime at the UK’s Financial Conduct Authority, is one such believer. In a speech for the FinTech Innovation in AML and Digital ID in London, he said: “Machines can direct the humans to the cases of most interest. But the software will deal in probabilities, not absolutes, and a person will need to make the final decision about whether intelligence is passed to the authorities”. I suggest he chats to South African company Merlynn, who are in the pioneering business of applying another layer to AI: one that could fill the gap of empathy and intuition, missing in big data. In essence, the possibility of downloading and outsourcing your expertise.

Say what?

The company has developed a technology they call TOM (Tacit Object Modeller), which they say, “enables the creation of virtual experts”. TOM has the ability to “replicate the judgment, intuition and years of experience of experts in making time-critical, highconsequence subjective decisions”. To do this they interview a person whose job relies on intuition, coupled with years of experience – for example, a bank’s risk assessor whose job it is to flag potentially problematic clients or scenarios. These kinds of jobs require hard data analytics (what machines can do) but rely more on personal intuition (what machines can’t do). The TOM interviewing process delves deeper into how these specific decisions are arrived at, asking questions that progressively narrow down the probabilities in order to replicate an expert’s specific decision-making behaviour, which then is converted into software. This technology is currently being used in high-volume, highconsequence environments – needed in sectors like financial services – to demonstrate the value of scaling human expertise: in essence, downloading your expertise, then outsourcing it.

A soul in the machine?

Understandably, this type of technology and its proposed benefits spark heated debate that has many trajectories, including moral and ethical ones. But then again, parallel debates are also raging around robots, (especially sexbots), the Industrial Internet of Things, nanotechnology and turning humans into cyborgs by implanting microchips into their bodies. It’s just a consequence of where we are in history…and the fast-approaching era of transhumanism: when humanity and technology eventually merge. The TOM technology and the concept of downloading and outsourcing your expertise might be at a nascent stage, but it exists and is possible, even if the current format is limited. But we all know the exponential evolution of technology. Futurist Ray Kurzweil maintains that if you imagine a graph that curves from horizontal to vertical, humanity will reach the “knee of the curve” (as it becomes vertical) by mid-century, and if we think things are changing fast today, that vertical trajectory is going to be beyond our current comprehension.

...the fast-approaching era of transhumanism: when humanity and technology eventually merge. Just a year ago robotics seemed to have reached a difficult hurdle. Engineers were of the opinion that it was going to be a very long time before a fully functional humanoid robot could be built. They said it was not easy to replicate the sense of balance, and the movements to maintain balance, which a human body is capable of. That hurdle was overcome in November last year, when Atlas, a humanoid robot developed by Boston Dynamics, was unveiled. Atlas can not only walk and move in a human form but can also perform backflips, with almost the same poise and balance of a gymnast. Downloading your expertise and converting it to software that you could sell on, or outsource, might seem a utopian (or dystopian) dream, but like the warning signs in a rear-view mirror: things are closer than you think. If TOM proves to be an invaluable tool in high-volume, high-consequence environments for financial services, how soon will it be before it is applied to other industries and sectors? Best you factor this into your HR strategy. Or should that be your co-bot strategy?

DION CHANG is the founder of Flux Trends. For more trends as business strategy, visit: www.fluxtrends.com.

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CRAIG PENFOLD The cryptocurrency narrative has to date been dominated by tales of nefarious activity carried out on the dark web, and unpredictable price volatility, inevitably calling into question the sustainability of these alternative forms of money. Comments made by JP Morgan CEO Jamie Dimon, amongst others, have further fuelled the fire, calling into question Bitcoin’s suitability as a currency. This has prompted an exploration of these assertions to determine whether they are indeed valid. Why? A cryptocurrency found to be unsuitable as money could not be utilised as regional or national money, which ought to be one of the most profound applications for cryptocurrencies in emerging markets. My investigations took me into the history of money and apart from revealing a general ignorance of what money is, it brought to the surface some interesting insights into the nature of Bitcoin and by association, the majority of cryptocurrencies in circulation today.

Where money comes from

Nineteenth-century authors like Karl Menger (1892), produced the seminal works surrounding the origins of money in which they argue that money has three functions, namely as a means of exchange, store of value and unit of account. My first stop along this journey was, therefore, to define these functions and then test whether Bitcoin fulfils these requirements.

...evidence from Zimbabwe and Venezuela has revealed a preference for Bitcoin in daily transactions...

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is currently registered as a PhD candidate at GIBS and the founder of blox advisory, an independent, research-centred consulting firm, providing product agnostic blockchain and cryptocurrency advisory services to organisations and institutions. He is passionate about the implications of these technologies with a view to furthering knowledge in this regard.

BY CRAIG PENFOLD

Bitcoin as Money YES OR NO? Cryptocurrency volatility and the implications for emerging markets. I then tested for the currency’s relevance as commodity and fiat money. Menger looks back to the days of bartering within a village for the utilisation of commodities as a means of exchange, arguing that goods most favoured in exchange, such as rice and corn, became socially accepted as money. It could be argued therefore that Bitcoin has been adopted by the Internet community in much the same way. Overlaying Google search trends for Bitcoin over the Bitcoin price graph seems to offer fairly conclusive evidence of the social construct upon which Bitcoin has been built, supporting the view that Bitcoin’s value is derived from our collective inter-subjective view of what its value should be. I know that I can accept Bitcoin as payment because I believe that I will be able to exchange the Bitcoin for something of equal value at a future time. Excessive payment delays and transaction fees have however recently undermined Bitcoin’s suitability as a means of exchange, but the same cannot be said of all cryptocurrencies. I would therefore argue that Bitcoin serves as a questionable means of exchange. Returning to Menger’s tale, once the local market had been saturated, merchants needed to travel between villages in order to extend their markets. The time delays inherent in this form of trade meant that a merchant returning to his village with bushels of corn, would not want a local

villager to have planted several hectares of corn, thereby undermining the value of his stock. Merchants would therefore seek out commodities with a greater ability to preserve value over time. This function of money became known as the store of value. Supporters of Bitcoin, claiming that the coins possess a store of value are misguided in this regard, as the risk associated with the coins losing value over time is substantial. The third function of money, outlined by Menger, is known as the unit of account. This characteristic, which many economists argue to be the most fundamental feature of money; is the money of business. It is the money in which proposals and quotations are drafted and in which invoices are issued and payments received. It is the money in which stock is valued and accounts are drafted. Bitcoin, as a result of its volatility, could not be said to have use as a unit of account, as businesses would be unlikely to quote in a currency, the future value of which is highly uncertain. The lack of willingness to conduct business in Bitcoin has been evidenced by merchants such as Overstock, accepting Bitcoin as payment but that exchange the majority of these coins for local currency instantaneously, keeping only a small amount of Bitcoin in stock. Other than for the fact that Bitcoin, much like many other forms of money, has been

constructed and derives its value from social interactions and conventions, the story so far does not seem to be in support of Bitcoin as currency. The search for clarity was therefore extended to include the most prominent forms of money in use for the last two hundred years, namely commodity and fiat money and to ascertain whether any of the features of these currencies could be transferred to Bitcoin.

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Gold and fiat

Commodity currencies were most evident during the gold standard era, which lasted until 1971. Although notes were utilised during this period, they were supported by the promise of redemption, in that they could be exchanged for the commodity used to back their value, e.g. gold or silver; and that the commodity itself had a use other than as a means of exchange, e.g. gold jewellery. A feature of commodity money is that the price in equilibrium, assuming competition exists in the supply of the commodity, will have a positive price equal to the marginal cost of production (Selgin, 2015), which had the effect of stabilising the price of the money. Comparing Bitcoin to this form of money is problematic. Bitcoin does not have an alternate utility other than as a means of exchange and the cost associated with the

production of Bitcoin is far exceeded by the value of coins created during the same period. Fiat money, unlike commodity money, has a price in equilibrium that is substantially greater than the marginal cost of production, as the cost associated with producing a note is significantly lower than its face value. The variance between the two is known as seigniorage and is cited by many as a drawback to the fiat monetary system, as issuers of currency are incentivised to issue currency so long as the face value is in excess of the cost of its production, which calls for monopoly over money issue, as well as high degrees of monetary and fiscal discipline on the part of governments and central banks. This is where central banks can take a feather out of the cap of Bitcoin, which embeds these rules in the construct of the system and in so doing replaces institutional trust with trust in the immutable algorithms built into the system. Rules such as capping the issue of Bitcoin at 21 million coins, as well as the rate of coin issue as incentives to miners for block authentication, are maintained within the system’s code and, it may be argued, are reminiscent of Nobel

Laureate and economist Douglass North’s institutional ‘rules of the game’. Any attempt to alter these rules would either require the consensus of the network or result in a technology ‘fork’, which results in the creation of a new coin, while the incumbent continues to operate, as highlighted by the recent creation of Bitcoin Cash. The idea of embedding the monetary and institutional ‘rules of the game’ in the construct of a money system is an appealing notion and could have implications for nations where there has been a breakdown in political and financial institutional trust. The practicalities of achieving this aside, evidence from Zimbabwe and Venezuela has revealed a preference for Bitcoin in daily transactions, as the currency is seen as more stable. While these preferences are evident in the short run, it is unlikely that a cryptocurrency would be effective as a national currency in the long run without some degree of price stability. The question that remains: what factors can we attribute to the price of Bitcoin and how could they be stabilised?

Volatility

Bitcoin’s scarcity is one of, if not the most, important drivers of Bitcoin price Gordon Institute Of Business Science

volatility. Think of the supply of Bitcoin as a ‘liquidity lake’. The rainfall in the area is low, but consistent, so the lake is increasing in volume at a constant rate, although this rate is far exceeded by the demand for the water, or Bitcoin. The top 1 000 holders of Bitcoin own half the lake and are not willing to give up their share in a hurry. Passive miners and other enthusiasts hold a significant portion in addition to this. A recent study showed that 73% of all Bitcoin accounts were dormant or had not transacted in the last year. This has the impact of reducing the supply of Bitcoin to little more than a ‘liquidity puddle’ over which buyers seeking to purchase the coins must contest. Demand for cryptocurrencies, on the other hand, is driven by a multitude of factors including but not limited to technology changes, political turmoil, regulation and media attention. It must be noted that changes in these factors would typically impact any currency’s value, whether digital, commodity or fiat, however, the extent to which this seems to impact the relative exchange rate of Bitcoin is exponential. Therefore the scarcity of the currency appears to be largely responsible for the non-linear behaviour.

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Nobel Laureate and political economist F.A. Hayek in his Denationalisation of Money: The argument refined (1976), provides some clues as to how this could be achieved, arguing that the

competitive issue of currencies within a single economy, much like during the free banking era, would result in improved price stability and quality of money issue, as a result of competition. Issuers of currencies who failed to preserve the stability of their price would lose customers to issuers who succeeded in doing so. Hayek, however, argues that, in order for a first-mover advantage to be eliminated, that it will be necessary to introduce competing currencies simultaneously. While the horse has already bolted in the case of Bitcoin, it is not necessarily too late when considering the introduction of national currencies, particularly in emerging markets.

These technologies offer a glimpse of what future monetary regimes will look like...

Many would argue that the current trend towards pegging cryptocurrencies to fiat currencies such as the US dollar will provide a more stable coin. I would argue though that these coins are acting in a manner that is contrary to the philosophy underlying the cryptocurrency ethos, by instead placing these currencies under the control of human-directed institutions.

It’s about blockchain

In returning to the question posed at the beginning of this article which asked whether Bitcoin could be viewed as a currency, it could be argued that Bitcoin finds itself in a ‘Catch-22 situation’.

Price stability seems unlikely without mass adoption, which in turn is unlikely to be achieved without the price stability merchants require in order to utilise Bitcoin as a unit of account. While I am not able to find much support for the hypothesis that Bitcoin is money, it does not mean that I am not hopeful that Bitcoin 2.0 and the blockchain technology upon which cryptocurrencies are built will succeed. These technologies offer a glimpse of what future monetary regimes will look like and at the very least have given us cause to reflect on our understanding of what money is. In much the same way as Bitcoin emerged from the turmoil of the 2008 Global Financial Crisis and the proliferation of high-risk financial instruments and monetary policy decisions leading up to that point, the current complexity and volatility surrounding Bitcoin will give rise to the emergence of new, higher-level structures and behaviours that would be called money. Cryptocurrencies such as Bitcoin are currently being utilised in emerging markets to facilitate crossborder remittances at greatly reduced costs, while other coins look to provide digital wallets and payment mechanisms with a view towards stimulating financial inclusion in these markets. These social experiments will no doubt offer fertile ground for future academic research and offer new insights into the future of money.

References Hayek, F.A. (1976), Denationalisation of money, London: Institute of Economic Affairs, pp. 20-35. Menger, K. (1892), On the origin of money, The Economic Journal, 2(6), pp. 239-255. Selgin, G. (2015), Synthetic commodity money, Journal of Financial Stability, 17, pp. 92-99.

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...with the cloud there is no need for vast capital expenditure...

BY BRETT ST. CLAIR

Head in the Clouds Your guide to the top cloud computing trends and what they mean for your company. In the early days of computing, a digital business usually meant using a computer to automate basic numerical tasks. PCs changed the definition of digital business, extending computing power to every employee. With the rise of the Internet, websites became the digital front door for every brand, from the largest enterprise to the smallest local shop. Then mobile computing came along, and the definition of digital business has continued to evolve. Today, digital businesses are those that have thoroughly capitalised on the opportunity to connect people with technology. Digital transformation continues to grow with a predicted spend of $1.7 trillion globally by 2019, a massive 42% increase on 2017 spend (IDC 2017). The business models and processes that we have grown deeply familiar with being are disrupted for the good. In particular, cloud computing services will grow exponentially in Africa this year. The “public cloud” with local data centres is booming – that is, a service provider makes virtual machines, applications or storage available to the general public via the Internet, on a pay-per-usage model. “Software as a service (SaaS)” or on-demand software such as Gmail, Salesforce or Sage has already overtaken all locally hosted software.

Flexibility and lower costs

Historically, your hardware investment would depreciate substantially over a few short years. By contrast, today with the cloud there is no need for vast capital expenditure on local hardware. Your business can choose computing power and storage as and when required. Using the cloud means that you can offload lower-level tasks like scaling and maintaining infrastructure to service providers, and focus on delivering new functionality to your users faster. Brett St. Clair

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You can use billions of dollars worth of equipment at the price of thousands of rand per month – as well as ‘switch it off ’ when you want to. Businesses will no longer buy three-year software licences but increasingly take advantage of “pay as you go” licence models for enterprise services like document editing, CRM, HR and accounting. The same thing applies to skills: businesses used to take outsourced multi-year IT contracts for granted, but we’ll see that model shrink as internal technical skills are reshaped. The cloud frees up the capacity of existing teams to invest in other internal skills. Retooling your approach comes at a fraction of the cost of what it used to.

Staying relevant in the age of big data

According to PwC and MIT Tech Review, data-driven organisations are three times more likely to report significant improvement in decision-making, yet less than 0.5% of data is currently being analysed. To stay relevant in the age of big data, businesses must analyse copious amounts of data to derive actionable insights – both from historical data and in real time. The right infrastructure is key to making this happen: a modern, cloud-native data warehouse with smart analytics. Whether your business is a start-up or an established enterprise, shortening the time to actionable insight should be the key objective. To take a local example, South African start-up Beverage Insights is changing the way beer is poured, and at the same time pushing the boundaries of the ‘Internet of Things’ (IoT). The company saw the massive potential for the IoT – where networks of physical devices embedded with software and sensors enable these objects to connect and exchange data – to measure beer consumption and management across South Africa. They built South Africa’s first-ever “smart beer tap” – incorporating pressure, temperature and flow rate sensors to measure telemetry of beer being poured in multiple locations around the country, linked to a dashboard analytics interface. Beverage Insights connected beer taps provide instant insights to bar owners and breweries about what is being poured around the country, allowing for optimised inventory management, waste reduction and better profitability. A combination of hardware and software, big data analysis and interpreted reporting allows bar owners and breweries to be far better informed before taking operational decisions. Cloud computing is now about access to unlimited computing power and storage, for as much as you need, whenever you need it. Historically, we created data warehouses because our production infrastructure was not powerful enough; there was so much data to move around that we had to run batch jobs in low-peak times. Today the cloud offers unlimited storage and computing power at extremely affordable pricing, all being packaged together into services accessible via APIs (application programming interfaces). The world of data is moving away from warehouses to real time ingestion engines that can consume millions of records per second, meaning that the data can be processed in real time with real insight for your business. The biggest effort in data today is transforming the “old school” warehouses into cloud modern architectures (we call this ETL – “Extract, Transform and Load”) that will unlock business

...there is global deluge of security breaches and ransomware...

potential. By getting this right we will start to see an explosion of big data and artificial intelligence services, which will for the first time be far more accessible.

Cloud-based security and data protection in the age of ransomware

Planning for data backup and recovery has long been a grudge purchase for most businesses. But the reality is that there is a global deluge of security breaches and ransomware. In 2016, South Africa ranked 58th in the list of the 117 countries suffering the most cyber attacks; in less than a year, SA jumped up to the 31st most attacked country, losing around R50 billion in the process. How secure is your on-premises data centre? What happens if it goes down? How many dedicated security engineers do you have on staff? What is the cost of a system upgrade? Nagging questions like these can keep you awake at night. What could you accomplish if you didn’t have to worry about these things? Security needs are driving organisations to re-evaluate their practices and products. Previously, it was painful to create a replica disaster site which barely got used and was a headache to maintain. The cloud changes all that: it makes the portability of data seamless and, with purchase-on-demand Compute, you no longer need to have a disaster site running. Providers like Google have more than 650 security engineers working away to BRETT ST. CLAIR discover vulnerabilities so that you don’t is CEO at Siatik, one of have to – they offer end-to-end customGoogle’s leading African built infrastructure, from the physical Cloud partners, and has over security of their data centres to their 20 years of experience in underlying hardware and software. Their the global digital landscape. He was previously Barclays’ custom-built infrastructure has a subset of digital transformation director the features in off-the-shelf hardware, so it for Africa, where he launched has a smaller attack surface. a world first with chat banking 2018 is the year you can comfortably hit that big “test your recovery” button knowing full well it will work every time into the cloud. This will also prove to be the secret weapon for your big data plans, thanks to your own backed-up data set.

in Facebook Messenger. Prior to that he was Google Africa’s lead for cloud services and led AdMob’s expansion across the continent. Brett was also the first keynote speaker in Africa to accept Bitcoin as payment.

Gordon Institute Of Business Science

BY CARA BOUWER | PHOTOGRAPHS BY MARC SHOUL

A Tale of Two Cafés

Imran Samim, Ritz Café and Take Away

There is a gung-ho, ‘get it done’ attitude to the Bangladeshi expats who now call South Africa home. While a strong sense of community binds these largely economic migrants, their success often comes down to long hours of hard work and a single-minded focus on business. 56

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Africa are professionals, speciality doctors, engineers, architects, accountants, etc.” Other, more anecdotal sources, put the figure closer to 100 000, but with no formal manpower export agreement in place with South Africa the exact numbers remain sketchy. These expats have left their home country for any number of reasons, but they remain closely tied to their country and their culture; and many continue to make contributions back to Bangladesh. Bangladeshis in South Africa haven’t had it easy, with many being caught up in waves of xenophobic attacks on foreigners in recent years. Despite the challenges, many continue to – to use the popular South African street term – ‘hustle’ to make a living and show home-grown entrepreneurs how it should be done.

Although the conditions in which they operate are often difficult, Bangladeshis appear to be flourishing across South Africa, operating spaza shops, retail outlets, grocery stores and trading companies, often selling essentials in small quantities to meet the needs of their customers.

While the Bangladesh High Commission in Pretoria did not respond to queries regarding the size of the community in South Africa, the commission’s website notes that “about 40 000 Bangladeshi expatriates live in South Africa. Most of them are engaged in small businesses and the majority of them are undocumented. A few hundred Bangladeshis living in South

Among this number are Dedarl Islam and Nayeem Rahman, the owners of Dedarl Supermarket and Ritz Café & Take Away respectively. These businesses, although unrelated to one another, share a street corner in the trendy Johannesburg suburb of Norwood, on the corner of Grant Avenue and Algernon Road.

Dedarl Islam, Dedarl Supermarket

Both Islam and Rahman are sanguine about having a competitor, literally, on their doorstep. “We offer different products, but you know it’s the same as going to a market where shops sell the same items,” says Islam. Rahman adds: “Look at how many restaurants sell sushi on Grant Avenue, so what is the difference if there is a café on the other side of the road selling similar things?” Rahman, whose store predates Dedarl Supermarket, remains competitive by ensuring his shelves are well stocked, he has first-grade products, a clean store and offers good, quick service. Thanks to the fast food element, Rahman’s café has the benefit of foot traffic. But that is the only real differentiator: both store operators have the same work ethic and demand a lot from themselves and their staff. And they run cut-throat operations when it comes to mark-ups and turnover. Long hours are also part and parcel of the Bangladeshi culture, says Islam. “Bangladeshis work 12 to 16 hours a day and [they] work hard.” It’s hard to find South Africans who are willing to put in similar hours, he admits, which is why they prefer to employ other Bangladeshis and African expats. “South Africans are clock watchers and don’t go the extra mile, [and] they also have unions protecting them. South Africans come with CVs saying all sorts of

Dedarl Supermarket

Ritz Café and Take Away, Grant Ave, Norwood

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Lunch hour, Ritz Café and Take Away

things but Bangladeshis prefer to do interviews to judge what a possible employee is really able to do,” says Islam. Islam employs one Malawian man to help out in the shop, doing packing, cleaning, keeping an eye open and helping customers where necessary. He doesn’t work behind the till. Islam also employs another Bangladeshi man to relieve him when needed. This also helps with communication, he believes, as it’s easier for him to converse in Bengali. But employing a Bangladeshi is double the price of an African, admits Islam, and the cost must cover the employee’s food, clothes, rent and salary.

Helal Kabir, Dedarl Supermarket, stock intake

Across the road, Rahman employs one Zimbabwean lady and two South Africans, who prepare the food, load the shelves and clean. He also employs two Bangladeshis, who relieve him when he needs to collect stock or take a break. That, to be honest, isn’t often. Typically he puts in a 15-hour day, working from 7am to 10pm. “When you work for yourself, you don’t count the hours,” he admits. For both Rahman and Islam business runs on slim margins and tight overheads. You can’t do anything about competition, says Islam, but what you can control is stocking the best items at the best prices. As a result, he only marks up around 5% to 10% and he keeps his overheads low by limiting the number of shop assistants and cutting on security costs. These savings are passed on to the customers, giving the store a competitive edge, he says. Rahman employs the same philosophy. Convenience is also another key tenet of their business approach. The ability to pop in and out quickly without navigating endless queues is an important aspect of his business; after all, time is money and both men understand that for their customers convenience is vital. Knowing their clientele’s preferences is something both Islam and Rahman monitor closely, not in the ‘business school market research’ way but through an understanding that stems from dayto-day interactions. Both stores, says Rahman, have a similar,

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Dedarl Supermarket

mixed customer base which is about 50% black, 30% white and 20% other race groups. Or, as Islam says: “Our clients are a mix of different people; they are pretty much the same as the client that goes across the road.” Ritz Café and Take Away

As a result of this identical demographic, if one store can’t help a customer then they happily refer them across the road. While Rahman attributes this to simply maintaining good relationships and “keeping a good vibe and quick service”, it highlights the collaboration between the two stores, and illustrates the community spirit which pervades Bangladeshi business. Bangladeshi traders are generally happy to work together, pool resources and start up a business as a collective; but not always. While Islam agrees that it might be a good idea to join the shops, he is pragmatic about the limited space on Grant Avenue and declares that the rental across the road is more expensive – offering just a glimmer of the competition that exists between the two outlets. While Islam and Rahman may go to Mosque together, make no mistake that neither is prepared to give up their slice of the market. After all, for both men, these businesses are a ticket to a better life, both for themselves and their families. Rahman, the son of a farmer, is driven to succeed. He would like to expand his business or even get involved in a car dealership in the future. He sees in South Africa a place of opportunity where he can build a successful future as a businessman. While Rahman has family settled in South Africa, Islam still sends money to his family back in Bangladesh, which limits him in terms of expanding his business. And right now he’s not even sure he wants to, expressing disillusionment about some aspects to doing business in South Africa. “It’s not easy to get a work visa for South Africa, it’s easier to get one for Mozambique,” he bemoans. This highlights yet another hurdle facing this hard-working community who, it seems, have much to teach South Africa. That is if we are willing to learn.

Audrey Java, Ritz Café and Take Away

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Advertorial

BY ADV. RORY VOLLER

Digital Financial Reporting in iXBRL A move aimed at boosting investment in South Africa Two months ago South Africa was ranked first out of 115 countries for the transparency of its national budgeting process. It should come as a big surprise that a country in the Southern tip of Africa leads the entire world in the stakes of playing open cards with the public by allowing anyone to analyse and scrutinise its finances. This is no small feat and certainly not a once-off accolade as South Africa has been ranked in the top three of the Open Budget Index since 2010. But this level of scrutiny should not only be the reserve of the public sector, especially in a country where the financial mismanagement in the private sector has also reared its ugly head of late. This is why the introduction of digital financial reporting, called eXtensible Business Reporting Language (XBRL), by the Companies and Intellectual Property Commission should be welcomed by all. None of the qualifying entities as registered with the CIPC could argue that they shouldn’t be expected to be held to the same standard as their public representatives who have displayed transparency about how taxes are being generated, and how budgets are allocated and spent. The speed of development and benefits of technology had surpassed the imagination of all who lived before the change of the century. In the same way, digital financial reporting is revolutionising the business world. This is how the CIPC envisages that technology can be used to the eventual benefit of all in South Africa. The scope of the ongoing XBRL pilot Programme applies to the submission of audited or independently reviewed annual financial statements by a sub-set of around 100 000 qualifying entities, close to 50 JSE listed companies recently participated in our pilot phase. 60

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Adv. Rory Voller

Not only will this technology improve the efficiency of sorting through high volumes of financial reports, but it has been proven around the world that improved transparency in financial reporting in a rigorous regulatory environment improves investment. The Programme – to be rolled out from 1 July 2018 – will also pave way for eventual standard business reporting in South Africa where various regulators can share data, thus achieving the principle of ‘report-once- share-many’.

Improved transparency has also been proven to heighten investor confidence and investment.

A 2002 study by the Organisation for Economic Co-operation and Development - an intergovernmental economic organisation with 35 member countries – found that transparency in financial reporting reduces “herding” of fund managers’ investment decisions. The study also found that “improved transparency could improve the quality of investment decisions”. Reasons for XBRL as technology standard for financial reporting are gaining momentum worldwide with various countries attesting to the benefits of XBRL outweighing the status quo of legacy mechanisms of reporting for consumers of financial or business information. If South Africa is to move into the new age, improve investor confidence and boost entrepreneurship, there is no better time than now for the private sector to emulate the transparency displayed by those entrusted with public finances in their own business environment.

ADV. RORY VOLLER is the Commissioner at Companies and Intellectual Commission (CIPC)

086 100 2472 www.cipc.co.za the dti Campus, Block F 77 Meintjies Street Sunnyside, Pretoria

All-in-all we are a little short of R1 million and still going... I got there at 06:17 and I was late. It looked like half the group had taken off already. There was still a chill in the air but the parking lot was half-full already. No, I wasn’t flying anywhere, I had a bicycle perched on the tail-end of my car and good intentions at heart. It was Saturday morning in the Cradle of Humankind, Johannesburg’s cycling playground. After a sustained rally of WhatsApp exchanges, Team GIBS had sort of “compromised” a 06:00 take-off from one of the popular coffee joints. I soon spotted a few other stragglers, Joseph, Busi and Koos. Forever the optimist, Joseph, who doubles up as Team GIBS’ chief whip, declared that we’d catch up with the others. Apparently, Elton who had pushed for a 05:30 start was still in Durban, Thando had overslept and Fran was travelling on business. So, with bicycles off the cars and our lycra tights hitched up, we mounted and rolled off into the crisp and chilly morning.

BY ALEXANDER MGADZAH

On Your Bike!

Team GIBS – alumni cycling for a worthy cause.

As the mild headwind brought tears to my eyes, I thought of the warm bed I had abandoned and reflected on the need and reasons for parking a semi-decent German sedan and balancing on a skinny Canadian two-wheeled bicycle for 60 kilometres. To complete it, my trusted steed has Taiwanese wheels, a Japanese gearset and brakes, and an Italian-made saddle. Enough geography to confound some contemporary presidents. Then out of the blue, Joseph shouts, “How is your Back-a-Buddy page coming along?” I am furiously pedalling to try and catch up with the Ofentses and Shibishis. Joseph wants to know how much money I have raised. To buy time, I shout back, “Good chief! Have you seen Girland has now raised more than R7 000!” Team GIBS rides for charity. That’s why we show up at unholy hours and persist with entering the 94.7 Cycle Challenge each year, even though the chances of one of us ever winning the race are slim and none; although, honestly, even a slim chance is beyond consideration. And yet, we ride. Gordon Institute Of Business Science

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About Team GIBS Part of the distinguishing ethos espoused by GIBS is the nurturing of responsible and active citizens. For the MBA students there is often a caveat to “focus on the studies” – you will have plenty of time and, hopefully, money after the two years and once you have those three letters affixed to your name. Fittingly, over the years, a growing number of students and alumni have donned lycra and taken to riding their bicycles for worthy causes.

That’s where the story of Team GIBS begins. We have a motley crew, a true rainbow mix ranging from distracted insomniac assignment-chasers, the brash Comrades runners, new parents (postMBA fertility), competitive couples and some post-MBA, middle-aged men in lycra (MAMILs). It’s a story worth telling because it’s also the story of a bright young lady, named Auspicious, who has no parents, no

money, siblings to support, unfettered ambition and wants to be a psychologist. It’s the story of countless youngsters in South Africa’s dusty townships who refuse to believe that Maths is difficult. And it’s also the story of Kgomotso, a young man from Olivienhoutbosch, whose dream of becoming an Engineer is now a work-in-progress. These are some of the beneficiaries of the funds raised to date by Team GIBS. All-in-all we are a little short of R1 million and still going.

The real winners – our beneficiaries As for the 2017 Team GIBS contingent, we rode the race and all of us finished. We raised university tuition fees for Auspicious Nokuzotha Ndlovu, the bright young lady, now a University of the Free State Psychology student. Furthermore, we raised enough funds to pay for Auspicious’s tuition and fees for the whole year and, in addition, she has been equipped with a laptop. Auspicious is now well on her way to completing her degree and her success has been a source of inspiration for her siblings and others. Donations were also made to CareerBuild that is doing excellent work in high schools across South Africa.

It’s the story of countless youngsters in South Africa’s dusty townships who refuse to believe that Maths is difficult.

The rides have been part of our annual programme for the past four years. What has been particularly rewarding for some of us over the years were the opportunities to meet the recipients of our efforts and witness their growth. The first charity ride dates back to 2014 when 30 GIBS students and alumni first participated as a co-ordinated team in the 94.7 Cycle Challenge. Just to ensure transparency and avoid misrepresentation, Team GIBS does not aspire to tackle the Tour de France! However, with sponsorship, we are determined to make a difference in our society. In that first year, the benefiting charity selected was an orphanage.

R200 000 was raised and used to build and furnish the house in Ivory Park that is now home to 35 orphans. Each year since 2014, the number of participants has steadily grown. The funds raised have, among others, enabled Kgomotso Mathokoane from Olievenhoutbosch Secondary School to enrol for a Mechanical Engineering degree at the University of Johannesburg. Kgomotso was subsequently awarded a full bursary worth R500 000 by Fuchs Lubricants South Africa. Those eager to clock the miles on a bicycle for fun, for greater good, for that fitness resolution, for the youth of South Africa, or for using up all the free time you are rediscovering post your studies, the invitation is open... Why not ride for a worthy cause? And yes, it can be done with any bicycle. But be warned: like most sports, once the cycling bug has bitten, you are hooked for life. The next time someone asks how you are contributing to a better South Africa or about your grasp of the Sustainable Development Goals, you will be able to tell them how you wake up early and get on a bicycle to welcome the African dawn among a band of likeminded heroes in lycra. Gordon Institute Of Business Science

YOSSI HASSON GIBS MBA Yossi Hasson co-founded Synaq, which was sold to Dimension Data in 2015. He also started Techstars and WeThinkCode

Yes, me and Trev are going to be best friends.

Yossi Hasson

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BY CARA BOUWER

Swimming

Against the Tide It’s not just the allure of the Big Apple that has tech entrepreneur and GIBS MBA Yossi Hasson heading for the East Coast of the United States. It’s the draw of a disruptive, dynamic and fastchanging industry that has captivated the world’s imagination: cryptocurrencies. Hasson joined the ranks of South Africa’s tech elite back in 2004 when he and David Jacobson dreamt up Synaq, an opensource cloud email firm. Eight years later a majority stake in the business, launched with just R900 000 in funding, was sold to Dimension Data’s Internet Solutions for a hefty (although undisclosed) amount. In 2015 Hasson exited the company and became a free agent. He funnelled his energies into starting up Techstars, the mentorship-driven start-up accelerator in Africa, and WeThinkCode, South Africa’s first tuition-free tech talent incubator. Now he’s on the move again, and this time it’s the fast-paced and rapidly evolving world of cryptocurrencies and blockchain calling. Acumen caught up with Hasson at OR Tambo airport, just hours before he boarded a plane bound for San Francisco, where he was attending a cryptocurrency conference. But the City by the Bay is not his final destination in the States; instead, the Hasson family will be setting up shop in New York. Hasson’s new business will be headquartered in New York and will focus on international technology businesses that are building using blockchain. But, at this point, he can’t reveal more than that other than to say: “I am going very, very heavily into the cryptocurrency world, so I am going over to head up … to set-up a business that is going to be purely cryptocurrencies and blockchain. I can’t go into details because it hasn’t been announced yet.”

The lure of crypto

Any cryptocurrency doubters who may question the wisdom of this move should heed the insights of Thomas Frey, senior futurist at the DaVinci Institute think-tank in Colorado, who recently told Time magazine: “Cryptocurrency is very much here to stay [and] is going to displace roughly 25% of national currencies by 2030. They’re just much more efficient, the way they run.” He is not the only commentator pinning great hopes on this new industry, with the likes of cybersecurity pioneer John McAfee, South African tech expert Simon Dingle and home-grown Internet entrepreneur Vinny Lingham weighing in in recent years. It’s a highly competitive world he is stepping into and Hasson admitted to some nerves ahead of the move. “Sure you’d be

nervous moving to any new country and trying out something new,” he said, “and while Bitcoin has been around for about nine years, cryptocurrencies is an emerging asset class and it’s an emerging market and its changing at rapid pace, so it’s a whole new world. It’s extremely exciting. But you have to find the gaps, and learn, and that’s going to take some time.” With his past local successes behind him, Hasson may be going over to the States as South African tech royalty, but he is not oblivious to the old saying that if you can make it in New York you can make it anywhere. It’s a big and bold market and he doesn’t expect any handouts in this fiercely competitive city. “In many ways, the United States market is far more competitive and far more difficult [than South Africa],” he says. “There is a greater market, so inherently there might be slightly more opportunities and there may be a culture of backing entrepreneurs, and more friendly capital, and if a business fails it’s not culturally shameful, and all of those factors, but in other regards, you are up against far more competition. And when you have an idea showing success you’ll immediately have five competitors who might have better budgets. The legal system is also different, so there is a range of different challenges to planning a business in the United States [than in South Africa].”

I am going very, very heavily into the cryptocurrency world... He is not blinded by the idea that the grass may be greener stateside, and admits that “in many ways if you are talented and you have a good business in South Africa, you are shielded from a lot of those elements that allow you to scale business maybe a bit slower and with less competition”.

An American dream in the making

But this is a move he’s relishing. In fact, it’s a dream almost a decade in the making, one which dates back to his GIBS MBA global elective to San Francisco. In fact, he admits, GIBS has played a big part in shaping his business successes and aspirations, including helping him to scale Synaq and obtain corporate finance. And this, he says, “by an individual who didn’t have an undergraduate or any other formal background. It was immensely valuable.” It was as a GIBS MBA student that Hasson was first exposed to the opportunities in the United States. “I went to the West Coast on my global elective and I remember distinctly being in San Francisco with Justinus Adriaanse and looking at the ecosystem there and what was available for tech entrepreneurs, and feeling that we had Gordon Institute Of Business Science

to try and do something in South Africa that would help to try and grow the tech ecosystem in the country. So that seed was planted back in 2009 and that was what resulted in both of us joining forces with our two other partners to start WeThinkCode later, in 2016.” During that trip the idea was also born to move to the United States, build a business there and try to see what entrepreneurial life in the States was like, recalls Hasson. “It’s taken a little longer than expected, nine years, but this wouldn’t necessarily have happened without that global elective.”

Another reason to relocate is the development talent on offer... and in New York in particular. While it was San Francisco which first stirred Hasson’s imagination, when it came to selecting a new home he wanted a city with greater cultural diversity and not only a tech focus. So relocating to New York ultimately won as the ideal location for both Hasson and his wife. “When you are married you are never moving on your own personal accord, so we wanted to find a city that would have enough in it for a career-based move for myself, where the industry that I’m focusing on had a hub of activity and opportunity and access. And New York ticked that box,” he says. New York was also ideal for his wife – “who has an NGO that works with teachers in developing schools” – who will be embarking on her Master’s in Education. At this point the length of their stay in New York is open-ended but, says Hasson: “In terms of the move, my wife and I have committed two years and we’ll see how that goes. In terms of the industry, I’m married to the industry for the next 10 years, potentially longer. So the location is the start, but it’s not as if we are leaving South Africa for good.”

A flag bearer for SA

Make no mistake, Hasson is upbeat about South Africa’s future: “I have always been very bullish about South Africa. South Africa is my home and it is a country that has been very, very good to me and I have been extremely privileged in the country, so I will always be positive about South Africa.” He believes there has been a positive shift in recent months and that a sense of positivity is breaking through again, “things have changed into a very positive view of what the future holds for the country, there is a lot more interest in the country [from investors] again”, says Hasson. Given this upbeat narrative, the irony is not lost on him that he is swimming against the trends tide with this relocation. Right now American firms and individuals are increasingly looking to distance themselves from the issues in that country, and the focus is increasingly shifting to emerging markets and Africa – “with South Africa as an access point into Africa”. But Hasson is going

against the tide. That counter trend is interesting, he says, but right now there are a number of reasons that make New York the right place to be at the right time. “The United States as a market has a much greater size market than Cape Town,” he admits and “blockchain and cryptocurrency businesses are global and a lot of the global companies are setting up in the United States, and it’s also a hub for Europe. I will be spending a helluva lot of time in the United States trying to meet with businesses and get access to investors. And access to capital is also far more available [in the American market],” he says. Another reason to relocate is the development talent on offer in the United States, and New York in particular. “We have some strong development in South Africa but [when it comes to] those who are building part of the blockchain, in the crypto space, there is a far greater amount available [in New York].” In a twist of possibility, there are also likely to be advantages to the WeThinkCode coding university’s insights into the evolution of the industry as Hasson will be at the cutting edge and wellpositioned to observe skills developments and trends. Training and developing Africa’s human potential continues to be of great importance to him, so Hasson is quick to note that: “I’m still involved in that [WeThinkCode] and will be travelling backwards and forwards, in part to work with the team in South Africa.”

A nod to the future

As for the potential of this nascent industry, and his preparedness to lead the charge, Hasson believes his experience with opensource software business Synaq positions him well to understand the changes coming. “In 2004, when we started Synaq … opensource software was seen as the alternative way to develop software. It wasn’t centralised, it was a decentralised way to build software where it wasn’t necessarily a financial motivation as to why you were doing it,” he recalls. “And in many ways, cryptocurrency and blockchain development is following the same path that open-source was back then.” He adds: “The belief is that what happened in the open-source world is what is going to happen in the blockchain world, and [similarly] how it is going to change the way we consume technology, how we use technology, the way business conducts business. I think is a seismic shift and a fundamental shift that we will only really begin to understand the impact of in about 10 years.” Hasson’s new venture will put him at the heart of these developments and position the business to “see crypto businesses that are trying to leverage blockchain technology, different cryptocurrencies, and a new way of building technology and a new way of doing business, and [then] investing in those companies”. He adds: “Hopefully, in the process, we’ll make some good calls.” Whether one of those calls is to South Africa’s most well-known export to New York: Daily Show host Trevor Noah, remains to be seen. But, with his trademark humour, Hasson is quick to quip: “Yes, me and Trev are going to be best friends.” And, with that, he was off.

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IMAGE GETTY IMAGES

Mexico’s President Enrique Peña Nieto with his US counterpart Donald Trump.

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BY TOM HENNIGAN

Doing Business in Mexico It was the late Mexican dictator Porfirio Díaz who coined the immortal phrase that summed up his country’s eternal dilemma: “Poor Mexico. So far from God, so close to the United States.” Living next door to the world’s most powerful country has been tough for Mexico. For a start, it would be much bigger if not for the gringos up north. Places like Texas and California? They used to be Mexican until they were taken from it, along with a slew of other states. But historically troubled relations were placed on a better footing with the signing of the North American Free Trade Agreement (NAFTA) in 1992 which saw Mexico form a trade bloc with the US and Canada. Coming into force in 1994 NAFTA has been a key driver of Mexican growth in the intervening years. It has tied the country into the supply chains of industries in the rich, technologically advanced economies to the north and helped wean it off a dangerous dependence on oil receipts. And now along comes Trump. The US president launched his campaign with a notorious racially charged attack on Mexican immigrants to the US, describing them as “rapists” and promising to build a wall to keep them out. Oh, and for good measure, make them pay for it. Even more threatening for Mexico than the wall is the protectionist Trump’s threat to rip up the NAFTA agreement which he has slammed as “the worst trade deal in history”. Were the world’s biggest economy to walk away from the bloc, Mexico could see its access to the market which buys 80% of all its exports suddenly restricted thanks to the sudden bizarre turn US domestic politics has taken. Poor Mexico indeed. Mexico is now fully integrated with the US and Canadian economies. In this sense, it is much more of a North American economy than it is a Latin American one. Because of this integration if the US suddenly decided to walk away from NAFTA there would be financial turmoil in Mexico,” says Alberto Bernal, chief Latin America economist with XP Securities.

Back on track?

That means for Mexican investors the recent release of the US blueprint for renegotiating NAFTA has been met with relief. Already Trump has backed down from his threat to just walk

away from the agreement. That has been revealed as bluster. Now instead of new tariffs, the US is looking to lower non-tariff barriers to its goods being sold into Mexico. The US blueprint also includes a commitment to duty-free market access. This means it contains enough to allow investors to imagine Mexico’s current NAFTA-based economic model will survive Trump, though his mercurial nature will leave observers nervous especially as the renegotiations have an aggressive timetable. Desperate for some sort of political win, Trump is demanding a deal be reached by year-end and is again threatening tariffs as his self-imposed deadline looms.

Forget lazy stereotypes of the Mexican ‘manaña’ In part it is NAFTA’s very success in achieving its designers’ hopes that it would pull the continent closer together that is likely to save it. Trump rails that the agreement allowed US companies to export manufacturing jobs across the Rio Grande. But much of what they now make in Mexican factories gets re-exported back across the border as parts needed to keep plants open back in the US. “Because of this integration if the US walked away the impact on a company like General Motors would be huge so we think a US withdrawal will not happen, not necessarily because of pressure from Mexico and Canada, but because of that from US corporations,” predicts XP’s Bernal. In a recent speech Mexico’s President Enrique Peña Nieto, who has sparred with Trump, recently said he now had “real optimism that we will be able to build a new working agenda in the bilateral relationship that would be positive”. But if the worst fears over Trump’s threat to the basis of the economy are now receding somewhat, the giant to the north still has the potential to create turmoil in Latin America’s number two economy. This is because despite integration to the north, Mexico still shares some features with

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...more remains to be done to tackle these powerful domestic groups...

its Latin cousins to the south. One clear example of this is their economic exposure to the expected tightening cycle from the Fed in Washington after the extended period of record low rates and quantitative easing. After a period of austerity and fiscal reform, Mexico’s government has done much to reduce the deficit, leaving it well placed to confront a hiking cycle in Fed interest rates. But there are fears about corporations that have loaded up on cheap US dollar-denominated debt. A sudden hike in the cost of servicing those debts could hit investment and so curb growth. That could become a serious issue if the historic main driver of Mexico’s economy – the oil industry – continues its slower than expected transformation after the state gave up its 75-year monopoly in 2013. President Peña Nieto sold the move to a sceptical public saying allowing outside drillers to compete with state giant Pemex would inject dynamism into a pillar of the economy that is in structural decline. But the great recession, the collapse in the oil price and the emergence of the shale oil industry in the US have helped dampen the enthusiasm among foreign drillers for Mexican assets. After decades of being shut out, they have shown up, but it has been far from the promised stampede.

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And even that is at risk of being reversed. Veteran left-wing politician Andrés Manuel López Obrador is leading in the polls for presidential elections in July, 2018. An opponent of the ending of the oil monopoly, like he once opposed NAFTA, he says if elected he would hold a referendum on letting foreign drillers in. Painted by opponents as a potential Mexican Hugo Chávez, the autocrat who drove oil-rich Venezuela over an economic cliff, 63-year-old López Obrador is determined to win the presidency many believe he was cheated out of in a dubious election in 2006 that handed victory to right-winger Vicente Fox. López Obrador is a vocal critic of Trump, having taken his campaign to Mexican communities in the Mexico City, Mexico US and saying he is the only candidate who will stand up to the US president. The prospects of two voluble antagonists running the two neighbours by next year could puncture the current optimism surrounding prospects for NAFTA. President Peña Nieto cannot run again but the rampant corruption at the top of his administration will hobble the chances of his conservative-populist Institutional Revolutionary Party. The right-wing National Action Party high-flying independent candidate Margarita Zavala is tainted by association with her husband, Felipe Calderón. As president, he launched a cackhanded crackdown on drug traffickers which failed and has led to a huge surge in violence that is yet to end. With these advantages in his favour, the thought of López Obrador as president already has some investors selling the peso. Even if as president he does not let his antagonism towards Trump hit NAFTA or upend the oil sector reform, a López Obrador presidency would present other challenges to the Mexican economy. He has opposed economic liberalisation as right-wing neo-liberalism. But a halt to reform could block efforts to end what is widely seen as one of the main blocks of growth in Mexico – the existence of powerful monopolies and duopolies in key sectors. President Peña Nieto’s reforms have not just targeted state control over sections of the economy but also these private groups. Reforms of the telecoms

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Elections

Petróleos Mexicanos (PEMEX) Antonio Dovali Jaime refinery in Mexico

sector – dominated by Carlos Slim, once the world’s richest man and whose fortune is still $54.5 billion – has seen competition and services improve even as costs have fallen. But more remains to be done to tackle these powerful domestic groups which are the most Latin characteristic of this North American economy. Whether López Obrador would do so is open to question and this, the NAFTA talks and the future moves at the Fed have many observers wondering if the current calm in Mexican markets is just a lull before the next of the country’s occasional bouts of volatility. And so the next twelve months are shaping up to be interesting ones for the most successful of Latin America’s big economies. What happens next though is not wholly in the hands of its own voters. As ever, events in the US will play their part in shaping Mexico’s immediate future. NAFTA, and the central role it now plays in the Mexican economy, has only reinforced the truism uttered over a century ago by Porfirio Díaz.

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Doing business in Mexico

Despite integration with the two economies to its north, Mexico’s business world remains a relatively closed affair, proving that in many respects it remains a deeply Latin country. Family conglomerates still dominate. Old school connections, even if made on US MBA programmes, are important. As in other Latin economies, finding a local partner is a good means of helping with introductions. Invest the time, as many Mexican business

...Mexico’s business world remains a relatively closed affair... people will be reluctant to do deals with people they do not know, regardless of the reputation they bring to a first meeting. English is widely spoken in Mexico’s business community but this is a Spanish-speaking universe. Making an effort with the language is a worthwhile investment, especially if you are trying to build the sort of long-lasting relationships that lead to success in the country. If you cannot speak any Spanish, do not just assume that those you are meeting also speak English. Bring an interpreter. Even if you end up not needing one, the respect shown in doing so will stand you in good stead. In Mexico the breakfast meeting is just as important as the lunch one. Be prepared to attend them even for initial encounters with potential partners. When at one, tuck in, especially as lunch is a later affair in Mexico than in the US, say, often not starting until after 2pm. If you have serious business to discuss, try to avoid doing so at lunch which normally is a very social affair consisting of several courses. Forget lazy stereotypes of the Mexican manaña. This is a serious country where punctuality is prized and expected. Business attire is smart, especially in Mexico City, the country’s political, business and financial capital. Mexican business people are a stylish bunch. Pack your best suit when travelling. But unlike in some parts of Latin America, there is no kiss on greetings. A formal handshake is sufficient.

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BY TOM HENNIGAN

Mexico's Top Eight And after the business is done in Mexico City, why not stay on for a few days? Tom Hennigan gives his recommendations.

PUEBLA

MEXICO CITY For many Latin American lovers it does not get any better than Mexico. The main entry point is Mexico City, the biggest in all Latin America and a pulsating metropolis that is a wild stew of history and cultures that range from Aztec ruins to the studio of modernist painter Frida Kahlo but is, despite its bad reputation in Hollywood movies, actually safer than the US’s capital.

A majestic colonial city that best displays the architectural glory of what was often otherwise cruel Spanish colonial control. The historic centre contains stunning cathedrals and is a neighbourhood decorated in distinctive colonial tiles. It is also a culinary destination, though with its rich traditions the same can be said of most of the country. Puebla also contains one of the country’s best museums of preColombian art.

MAYAN RUINS IN YUCATAN

OAXACA

Mexico was the home of many great civilisations before the Spanish arrived. The Aztec ruins in and around Mexico City give some idea of their sophistication and power. Another great civilisation has left impressive monuments in the south-eastern peninsula of Yucatan. The Mayan ruins of Chichén Itzá contain the famous El Castillo pyramid from where visitors can look out at the vast jungle canopy.

The second most southerly state on Mexico’s Pacific Coast includes the colonial Oaxaca City that is home to vibrant indigenous markets and some of the most interesting cuisines in all the country. Nearby are some fine pre-Colombian archaeological sites belonging to the Olmec peoples and on the coast some of the best surfing in the country at a string of beach towns along a lush tropical coast that also offers great scuba diving.

CHIAPAS The state below Oaxaca, even richer in indigenous culture and still home to Subcomandante Marcos and his guerillas, Chiapas is also famous for its sumptuous sub-tropical rainforests. To get a sense of its wildlife, visit the El Cascadas del Chiflon eco-park, where you can hike to view crystal waterfalls crashing out of the forest before swimming in the large pools they form.

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JALISCO This semi-arid desert state is the geographical opposite of Chiapas and further testament to Mexico’s extraordinary range of geography. Jalisco is also home to the favourite liquor of party animals the world over – tequila. Blue agave plants are all around the town of Santiago de Tequila which gave the drink its name. Visit the town’s distilleries to learn just what a sophisticated and satisfying drink tequila can be.

GUANAJUATO

BAJA CALIFORNIA

A hill town where the Spanish were building within decades of discovering Mexico, Guanajuato is best visited in October during its Cervantino cultural festival. This gives you the opportunity to discover the range of Mexican culture from its indigenous roots right through to its longestablished but still exciting avant-garde scene. Best of all, the whole lot – even the ballet – is free of charge.

The part of California that is still Mexican, this Pacific peninsula has been a hot tourist destination in recent decades with many gringos attracted by the luxury beach resorts and year-round dry heat. But away from the famous resorts there are still wonderful jewels waiting to be discovered for the more adventurous, such as the town of Todos Santos which hosts a community of bohemian artists living under the mountains along some great surf beaches. Gordon Institute Of Business Science

BY ARTHUR GOLDSTUCK

Financial Giants Look to Fintech Start-ups to Remain Relevant As we approach the end of the second decade of the 21st century, it is almost a given that banks, credit card associations and insurance companies face massive disruption from fintech start-ups. But, sometimes, conventional wisdom is not a match for the rapid pace of change within these organisations. Typically, the biggest changes are not in their business structures, but in their corporate cultures. Arthur Goldstuck

Banks are not standing still. Insurance is not mired in its 17th-century origins. Card payments are no longer moulded in plastic. All these venerable old institutions are embracing new ways of thinking, and looking outside their ageing walls to remain relevant. In recent months, insurance giant Hollard has teamed up with private investment group Yellowwoods to invest R20 million in Naked, described as an “insuretech” start-up; credit card giant Visa announced up to $100 000 in grants for the “next big thing” in payments in sub-Saharan Africa through its Everywhere Initiative; Rand Merchant Bank continues to invest in anything from robo-advisors and chatbots to blockchain start-ups through its AlphaCode “club” for fintech start-ups. 74

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When AlphaCode started out, says its head, Dominique Collett, “the thinking in the industry was that fintech would destroy the banks”.

building solutions themselves, but now they are opening their platforms to see how they can work together with fintechs.”

“This hasn’t happened,” she says. “In fact, we are seeing a rise in partnerships between fintechs and financial institutions. Two aspects have driven this. Globally, we saw a pull-back of VC investment into fintech, and there’s been a dramatic increase in banks’ investment and partnerships into fintech. There is recognition that fintech businesses require a lot of money to scale and it takes time to build a brand that customers trust.

SnapScan

“In South Africa, we are seeing a lot more interest from banks and insurers to work with fintechs. A few years ago, the incumbents were more interested in

Peter Schlebusch, Standard Bank’s chief executive for personal and business banking, agrees wholeheartedly. “We certainly see that we don’t have all the answers and that we can get fintechs to help us get new channels to customers,” he says. He points to the example of SnapScan, which has become almost synonymous with small businesses using QR codes to accept payments from mobile devices in South Africa. “We didn’t come up with the idea of QR codes and mobile payments. We use it now

...we are seeing a rise in partnerships between fintechs and financial institutions. to provide a more convenient payment method for consumers, but also for small business to accept card payments.” The result is evident at restaurants and flea markets, food trucks and clothes stores, and anything in between, where the SnapScan logo is displayed next to moneyboxes, tills and checkouts. In the foyer of the new Standard Bank headquarters in Rosebank, Johannesburg, Schlebusch proudly points to a shoeshine stand positioned in a strategic spot. Even this shoe cleaner is taking card payments with SnapScan. Schlebusch also highlights Standard Bank’s investments in Shift, a forex platform using a virtual card, which has generated more than R1 billion in purchases and remittances; and Phoenix, a crowdfunding platform for student fees. “We’re helping students get to university through contributions from members of the public,” he says. “There are virtually no administrative costs, and it is funding students’ tertiary education.”

Sasfin

It’s not only the big banks that are looking to the start-ups. Specialist bank Sasfin has collaborated with a number of fintech start-ups in recent years. and is now investing directly. It has bought a successful payments platform, Pay@, and invested in a robo-advisor based in Silicon Valley. Through its asset management and financial planning business, Sasfin Wealth, it also acquired a locally developed robo-advisor start-up called SIPP Investments. The founder, Erol Zeki, was brought on board as CEO of Sasfin Wealth, indicating the level of skills integration the deal allowed. “Whether we build, acquire or integrate those products is of less importance to

us,” says Michael Sassoon, CEO of Sasfin Holdings. “While we recognise that there might be elements of competition between us and some of the start-ups with which we work, what is most important to us is that our clients ultimately win.” To this end, Sasfin is finalising an investment into digital business lender Payabill, and has integrated with Xero, the fastest-growing online accounting platform in the world. It has also built a digitally enabled Internet banking platform focused on SMEs, called B\\Yond, which integrates the core banking offering with payroll, invoicing and accounting capabilities. “Only through effective innovation will we be able to grow our economy to its potential,” says Sassoon. “This innovation is best achieved through a powerful and enabled start-up ecosystem. This ecosystem is both exciting and tough in South Africa. Especially in the realm of fintech, we are seeing brilliant businesses and concepts both thrive and fail. “We believe that the success rates can be increased significantly through more open-minded collaboration between banks and fintechs. Typically, banks like to own their clients and starts-up like to remain fiercely independent. These outdated mindsets inhibit innovation and ultimately hurt the client.” The language of client-centric services is echoed over at Standard Bank. Like Sassoon, Schlebusch is passionate about what is possible for the customer. “The most important thing we have to do is change ourselves to ensure we become a digital business. We have to eliminate all the friction of old, paper-based, peopleintensive processes, and enable clients to do whatever they want to with us, whenever they want. “In this context, I don’t see fintechs as a massive threat, but as an option to work together to improve our own business.”

Mega-platforms

The real threat, Schlebusch believes, is posed not by the small start-ups but by the giant e-commerce, cloud and social media players. He cites, in particular, Amazon, Google, Facebook, Alibaba and Tencent.

“When you’ve got over a billion users on your platform, with great data and great analysts, and all of them with payment platforms, those are the ones I worry about. When you see the likes of Amazon and Alibaba doing small business financing off the back of their sales data, we get very anxious. In our favour is that most of them would choose bigger markets with bigger profit pools before they choose Africa.” Standard Bank has sent what it calls “immersion teams” to many of the hubs of the start-up world, ranging from Silicon Valley, Tel Aviv and London, to Singapore, Beijing and Shanghai, “to learn from these digital disruptors how we can disrupt ourselves”. Schlebusch is brutally honest about the fundamental strategy behind this strategy: “We have no divine right to exist 20 years from now, and we have a burning platform to transform as fast as our customers are transforming.” Geraldine Mitchley, senior director for digital solutions for Visa in sub-Saharan

We have no divine right to exist 20 years from now... Africa, believes this very approach to start-ups is the key to the future of financial services on this continent. “With over a hundred million dollars invested over the past 10 years alone, the region’s fintech industry is on the brink of a transformative breakthrough,” she says. “We believe the time is ripe to bring together its brightest minds and work on the next big idea in payments technology.” Sassoon, speaking for Sasfin, could be reading from the same mission statement: “We, as an open bank, want to provide an ecosystem to ARTHUR our clients which enables GOLDSTUCK them to thrive by enabling is founder of World them to acquire the best Wide Worx and editor-in-chief products and services, of Gadget.co.za. whether built by us, our Follow him on competitors or new fintech Twitter @art2gee and on YouTube. start-ups.” Gordon Institute Of Business Science

BY CAROLINE HURRY

Class Action Can flying business class go from an indulgence to a viable return on investment?

Cathay Icon Chair

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So where do business class travellers really score? Travel makes you richer, as the saying goes, but when the average business class seat can cost five times as much as its economy counterpart, you have wonder if it’s worth the price? Take British Airways. A Club World ticket to London costs around R49 400, compared to a World Traveller ticket for about R10 800. That’s a hefty price difference of R38 600. From Johannesburg, Cathay Pacific will charge you R31 890 to fly business class to Bangkok with their economy fare being R22 779 cheaper at R9 111, while the lowest Emirates business class fare of R35 886 to London via Dubai is R26 988 more expensive than an economy ticket for R8 898. Throw in a difference of R30 000 on Turkish Airlines with their Johannesburg-Istanbul flight priced at R40 000 for business and R10 000 for economy, and you get the picture. Flying business class is not cheap. On the plus side, you could write the business class ticket off as an expense, and with any luck, the tax man will pay 48% of it. Also, when it comes to business class, the more you fly, the less you spend, thanks to all the reward systems offering points, discounts, air miles, cabin upgrades, fast-track security, reward flights, hotels and car rentals.

Deals, deals British Airways has ‘competitively confidential’ special deals for corporates, an On Business programme that rewards smaller businesses that may not qualify for a corporate deal, and an Executive Club with a similar range of benefits for individuals. Cathay Pacific offers corporate clients a discount of between four and 10% depending on the company’s annual revenue spend. Their Business Plus portal lets smaller enterprises manage their travel arrangements and enjoy various perks according to the five-tier Business Plus reward system, while Emirates and Turkish Airlines also give regular business users annual discounts. However, when it comes to all the ‘business class benefits’ airlines like to tout, some may seem a little flimsy. For example, is priority check-in still a big deal when most passengers today check-in online and there are automatic check-in machines at the airport? The same goes for the extra baggage allowance. How much of it do you actually use, especially when business trips are short? I rarely exceed the economy limit of 20kg per check-in bag, even though passengers are allowed to double or even triple that number on a business class ticket.

Lounging around

Emirates Champagne Lounge section

As for lounge access; while there’s a lot to be said for exclusive entry to hushed enclaves with relaxation areas, shower facilities, tasty food, liquid refreshments and free WiFi, you don’t necessarily have to fly business class to get in. Emirates just spent US$11 million renovating their Concourse B lounge at Dubai International Airport and for 100 US dollars, you too can enjoy their barista experience, health hub and Champagne salon. Turkish Airlines keep their award-winning Ataturk Airport Lounge with private massage suites, library, snooker tables, indoor golf simulator, cinema and tea garden exclusive to their Commercially Important Passengers (CIP) as do Cathay Pacific. Their Bridge lounge in Hong Kong is for Marco Polo members only, but airports do offer one-time lounge admission for a fee. Around 45 euros will buy the economy traveller access to a lounge in a European airport, which may seem pricey but it’s still a fraction of what you’d pay for a business class ticket. Business class dining beats economy hands down with most airlines offering award-winning menus crafted by famous chefs, boutique wine lists and top-notch service, however, if you’re among the last to be served, there’s a chance they might run out of your entrée or mains choice. And as for all the free hooch, how much of it can you actually drink, especially if you are a teetotaller, or have a meeting to attend the next day? Might it not be more expedient to settle for the regular airline food and spend the money you save on a memorable meal somewhere at your destination?

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I’ve reeled in a husband of 20-odd years...

Upping the ante

Istanbul Bosphorus Experience

Since business class typically accounts for the lion’s share of an airline’s income ‒ economy class is more of a ‘top up’ income ‒ there’s ample incentive to entice more CIP and competition between airlines is strong. (Sadly, the opposite is true in economy class.) British Airways is investing £600 million into their Club World cabins to combat what their chief executive, Alex Cruz, calls “challenging competitive forces” while other airlines offer free hotel stays, city tours and complimentary chauffeur service to and from the airport. Emirates offers free transfers to their business clients in a luxury vehicle, a great way to start and finish your trip. If you live in Johannesburg this would save you about R1 000 as a taxi to the airport costs R500 one way.

Sleep tight

British Airways Club World screen

There’s no question that business class seating is superior. Most airlines now offer flat beds, slippers, seat control panel, adjustable table, power socket, privacy screen and amenity kits containing eye masks, socks, lip balms, moisturisers and toothbrushes. A good night’s sleep in the clouds stretching out with a soft duvet over you is obviously way preferable to being shoe-horned into the middle economy seat like a battery chicken, but how much are your comfort and time worth? Well, that depends on how much you earn. If it’s around, say, R3 million or more a year, then the extra cash for business class that allows you to work, sleep, avoid jet lag and arrive fresh to your meeting, might save you around 10 to 12 precious productive hours. Many companies either reward their staff with a business class ticket or give employees the choice of flying economy class in return for two days holiday after the flight to compensate for the less comfortable option. Personally, I’d take the business class flight but everyone else I asked said they’d rather have the extra days.

Emirates and Turkish Airlines also offer their business clients free accommodation in a four or five-star hotel, if the connection time exceeds the required hours. Turkish Airlines go one further with the Bosphorus Experience, a free city tour for business travellers with seven hours to spare. A guide whisks you through passport control, into a luxury vehicle, and on a private cruise followed by breakfast, lunch or dinner, at the Çırağan Palace Kempinski hotel, before dropping you back at Ataturk’s departure terminal. Now those are layovers you could learn to love! While on paper it might seem as though you don’t really get that much for your money, apart from a good night’s sleep, all the networking opportunities that come with flying business class have increased my financial affairs quite substantially. In 30 years of mostly business class travel, I’ve reeled in a husband of 20-odd years, (our marriage, not his age) who sat next to me on a flight from Copenhagen to Johannesburg, plus an assortment of useful media contacts I’m still in touch with.

As for being among the first to disembark, does that really justify the price? Ditto ‘priority luggage service’ that can be capricious and is often the “luck of the draw”. So where do business class travellers really score? Gordon Institute Of Business Science

BY CHESKA STARK

Business fashion

LAYER IT UP

The best advice you can get this season would be, “go for layers”. And, at the risk of sounding like my older sister when I was in high school and showing too much skin, the fact of the matter is that layers really do answer all your style questions as we find ourselves in winter. Let’s face it, cold days often mean one’s fashion sense gets chucked out the window – no crops nor flattering silhouettes when it comes to icy temperatures at 5am when warmth is all you can think about. That’s why layering provides a practical yet totally on-trend solution. Secondly, layers mean “keeping your options open” should the day suddenly present beautiful weather, or if your boss springs a must-seal-the-deal meeting, let alone a spontaneous night out. Of course, we mean layering like Miu Miu, Gucci, Céline and Marni did on the runway, not like an old bag lady! This doesn’t give you free reign to just wear everything at once.

5 tricks (for men and women) to make it easier:

1 You are not a rainbow

Layering does not mean everything in your wardrobe. Stay away from clashing colours and rather choose a (muted) palette within which to work. Don’t add a pop, don’t decide to “try something different” this season and go for that multicoloured sweater, but rather look within your key palettes and find interesting textures. Colour combos that always work: greys and camels; khaki, army green and black; denim and camel.

Don’t be afraid of socks

No, it isn’t practical to show off those bare ankles, and yes, I am talking to you too, men. Socks get the stamp of approval this season. Socks and cropped trousers are your first step in layering (and warmth).

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SHOPS TO TRY For great casual wear, like tees and hoodies: H&M Best oversized scarves: Zara On-trend coats and footwear: Country Road, Trenery

parka, the trench and 5 The coats are your friend

for different 3 Look textures

Doubling up your knits can be the easy way to master the layering trend but make sure you layer different textures or types of knits. A thin jersey under a chunky knit looks bold and on-trend. Textures also allow you to embrace all other key trends like sheer (seen at Miu Miu and Victoria Beckham) and a bit of sparkle (think Louis Vuitton and Marc Jacobs); layer it all and you are good to go. Men – knits under your coats and blazers, shirts and socks can show, and work if you are keen for that European look. Also, consider a turtleneck.

That’s right, these babies are the final layer on your look. Remember you don’t have to stick to traditional colours (army green parkas) and camel trenches to make these items work. The tie-style of a trench is a layering dream, left open shows off all your styling work underneath while it still means business on top. Coats with contrasting collars (faux fur or sheepskin) are great.

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It’s all about accessories

Gloves, hats and definitely scarves are key items in layering. Basically, don’t set foot out the door this winter without a scarf. Large handbags or on-trend man bags are key, too – adding another texture to your thought-about look. For women, jewellery counts as a layering accessory, too – go for a bunch of bangles over your sleeve or a statement necklace on the outside of your turtleneck. Gordon Institute Of Business Science

BY STEPHEN SMITH

The Motoring Business We’ve changed up the format of our motoring pages, bringing you two in-depth reviews of great cars that deserve your attention.

OUTSIDE The 2 Series was refreshed in late 2017, the new models benefitting from sharper front-end styling, a larger grille and LED headlights fitted as standard. It’s a handsome, aggressively styled vehicle in both coupé and convertible form, but it’s the convertible that stands out in a crowd. The electrically operated fabric soft-top can be opened while on the move, at speeds of up to 50km/h.

Senior Management

INSIDE

BMW M240i Convertible

There’s no mistaking the interior of a 2 Series for anything other than that of a BMW. Classy, understated and beautifully put together, it is a lovely place to be, whether on the morning commute or screaming around a mountain pass. The infotainment system has received a few tweaks and is built around an 8.8-inch central touchscreen display. The newgeneration models have the option of powering compatible smartphones wirelessly by means of an inductive charging tray, and Apple CarPlay can be accessed via the BMW navigation system. No more risking your life taking that important call…

WHAT IS IT? The BMW range seems to have a car for every digit, and the 2 Series is a compact range of two-door coupés and convertibles. The M240i is the big hitter in the line-up, boasting an engine as good as just about anything on the market.

WHY THIS? Not everyone wants a big, cumbersome SUV for the daily commute (even if it is as opulent as a Range Rover or as sexy as an Alfa Romeo Stelvio). Some of us want a vehicular scalpel that can slice through traffic, cut time off our journey, and nip a few turns off our parking.

THE DRIVE Truly brilliant engines are few and far between these days, thanks mainly to the downsizing trend in pursuit of reduced emissions and fuel consumption. Thankfully, BMW engineers flew against the wind with this one. The 3-litre, straight-six petrol engine with twin turbochargers produces 250kW and a whopping 500Nm of torque. Despite this, the M240i has the potential to deliver fuel consumption figures of just 7.4L/100km. Just remember that speeding fines aren’t tax deductible...

This is that scalpel. Despite being one of BMW’s smaller cars, the 2 Series is eminently spacious for two people, while you will manage to squish a couple of underlings into the back seats. And the M240i is fast enough and sexy enough to turn heads and point out that bigger isn’t necessarily better.

FINAL WORD You really have to look the part, be it in business or in your social life, and the M240i will do that for you. It also shows that you respect performance. Be warned though – the doors are long, and nothing puts a career on the skids quicker than a dent in the door of the chairman’s Maybach. 82

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GO GET IT The M240i Convertible is priced from R802 700 and comes standard with a 3-year/100 000km warranty and a 5-year or 100 000km maintenance plan. Visit www.bmw.co.za for more information.

OUTSIDE Bold aesthetics set this new-generation CR-V apart from its predecessors, and from just about every other SUV on the market. It’s the kind of look that shows your boss that you don’t mind standing out from the crowd, that you’re not a sheep who’ll follow blindly without giving things the thought that they deserve.

INSIDE

Middle Management

Honda CR-V WHAT IS IT?

Honda makes interiors that are good and technologically advanced without quite reaching premium levels. What they are, though, is durable, and you’ll be hard-pressed to find a rattle or a squeak even after a few hundred-thousand kilometres. You’ll be amazed at the size of the CR-V – I was, and so was almost everyone who joined me for a test drive. This is a full-size family vehicle, more cavernous that any previous CR-V thanks to a longer wheelbase.

Now in its fifth generation, the Honda CR-V is one of the world’s best-selling SUVs, with over 9 million units sold so far in 150 countries. With space for five adults as well as a generous boot, this is the kind of car that will end up the ‘go-to’ when you and colleagues need to get to a meeting or team builder. It’s an urban SUV that doesn’t promise the ability to traverse the wilds of Gonarezhou, and so isn’t hampered by macho impracticalities that affect the ride comfort or urban drivability.

A full-colour touchscreen display (5-inch or 7-inch, depending on the model) offers access to the infotainment system, and even the base model gets Bluetooth connectivity, to keep you in touch with the office while you’re on the road.

WHY THIS?

At the heart of the CR-V that we drove is a 1.5-litre turbocharged petrol engine, which will surprise most. Even more surprising than the small engine capacity is the performance, thanks to the fact that it delivers 140kW of maximum power together with 240Nm of maximum torque. If this little technological marvel isn’t for you, there is also a 2-litre petrol engine (113kW and 189Nm). Both engines are paired with a CVT (essentially an automatic) gearbox, while the 2-litre models are front-wheel drive and the 1.5-litre models get intelligent all-wheel drive. A comfortable drive has been prioritised over sportiness, and it is refined and sophisticated on the road.

You want your boss to think you’re sensible. Responsible. That you “have a good head on your shoulders”. But you still want a comfortable, luxurious car that will take you on adventures on the weekends when you need to forget about your boss and his opinion. This could be just the ticket. Honda has created the most technologically advanced, sophisticated CR-V yet, and it is very hard to fault.

Honda always takes safety seriously and the CR-V is no exception. All models have the usual braking and traction assistance programs, as well as the innovative Driver Attention Monitor that keeps an eye on how you’re driving and alerts you if you need to take a break (just the thing after an 18-hour day at your desk!)

THE DRIVE

FINAL WORD Buying the CR-V is a decision made by the heart more than the head. It’s the conclusion you come to after weighing up all the available data and applying it to the problem at hand, namely, sensible family transportation at a reasonable price (and with reasonable running costs), and with no obvious drawbacks. But once you’ve bought it and start living with it, you’ll also start loving it.

GO GET IT The Honda CR-V is priced from R422 900 to R626 900, and is backed by a comprehensive five-year/200 000km warranty, as well as a five-year/90 000km service plan. Visit www.honda.co.za for more information.

Gordon Institute Of Business Science

AKI ANASTASIOU

Technology for Business World’s smallest computer IBM

It is as small as a grain of salt and has the same processing power as an x86 computer chip from the 90s. This is what IBM launched at their recent Think 2018 conference. Imagine almost a million minute transistors on such a tiny surface. But what does it mean for businesses? We are living in a world where data and analytics are redefining business intelligence. This chip has the ability to analyse, communicate and make decisions in real time. It is small enough and cheap enough to be put anywhere. IBM says this prototype costs less than $.10 cents (R1.20) to manufacture. In a world with billions of IoT (Internet of Things) devices and blockchain technology, computers like these are going to change the dynamics of how we do things digitally.

Essential business apps Tripit Pro - Taking the stress out of travel Price $49

Time is money, especially when travelling on business. You need to be able to rely on accurate travel information to get you from point A to point B. Tripit is an indispensable app to help you manage your journey without stress. The app curates all your travel options in one easy viewing experience, chronologically on your phone. You don’t have to worry about logging in and entering anything manually – Tripit does it all automatically. All you do is simply forward your travel tickets to the app email and within seconds the information is uploaded and displayed. It manages car hire, flight tickets, train tickets, hotel accommodation – basically any travel bookings for your trip The free version allows you to do the basics but with the paid version, a $49 a year subscription, you get a whole smorgasbord of services which quite frankly are worth every cent. You get SMS alerts when your boarding gate

Gordon Institute Of Business Science

has changed or your connecting flight is delayed. No more wasting time when arriving at a foreign airport, frantically looking at the departure screen and trying to figure out where you’re supposed to be! The paid version also alerts you when better seats become available and you get to view all your reward programmes on one screen with your latest mileage accruals. The Tripit Pro version also has interactive maps of airports to guide you to the various lounges. My favourite feature though is the real-time transport option: the app knows where you are and what time your flight is, for example, and it then checks traffic congestion and alerts you as to how soon you need to leave for the airport to make your flight.

Samsung S9 Plus

– a business phone on steroids Priced from R16 000 Samsung recently launched their latest flagship devices, the S9 and the S9 Plus. Are either worth the upgrade? Absolutely! Although aesthetically the S8 and the S9 look the same with the edge-to-edge screen and rounded edges, the upgrades have been done with speed in mind. The new S9 Plus has 6GB of RAM and a faster processor. It is useful when you are running several business applications simultaneously on the phone screen. It feels significantly zippier than its predecessor. The big jump has been on the camera. It has a dual-aperture lens that adjusts automatically to the current lighting conditions. Samsung also introduced real-time translation via its Bixby personal assistant platform. It’s a great tool when travelling in foreign countries – you simply open the camera and point to any foreign text and the foreign language in translated into your language of choice on your screen.

New tech Philips LiFi

Mobility is key in any business. The first thing most people do is check if WiFi is available before getting down to business. Connectivity is the gateway for any modern device and WiFi has become the standard for connecting. The truth is that WiFi networks can be flaky and signal strength can make it challenging. WiFi which has been around since the early 2000s is about to undergo a metamorphosis thanks to new innovations. Philips has been working on brand new technology called LiFi, which stands for light fidelity. Traditional WiFi networks use radio signals to transmit data whereas LiFi uses light. It is that simple. The technology sits in the LED light – data is sent through light waves that are modulated at the light source and received via an integrated infrared sensor which sits on the machine. The win for business with LiFi is the range of connectivity. LiFi has 10 000 times the spectrum of WiFi. Areas where there is electromagnetic interference, for example, thick walls, underground areas or even high-security areas in banks where traditional WiFi struggles is not a problem for LiFi. The technology is currently being tested in an office environment in Paris and users on average are currently getting speeds of around 30 Mbps.

How LiFi from Philips Lighting works Modem modulating the LED light is integrated in the luminaire

Luminaire has to be connected to Ethernet

When the light is on, LED starts to transmit data to the LiFi USB access key/dongle

USB access key sends back data through the infrared emitter

Gordon Institute Of Business Science

BY CHRIS GIBBONS

Books A BRIEF GUIDE TO BUSINESS CLASSICS JAMES M. RUSSELL LITTLE, BROWN R295 There are two ways of approaching this book. The first is to acknowledge that you have neither the time nor the desire to read every mighty tome written about business. But you do want to be able to nod knowingly when the Chairman or the MD makes a casual remark about Collins’ Good to Great, or Taleb’s The Black Swan. Here’s a single volume to keep by your bed or in your desk drawer that contains a short essay on 100 of the major business books and distils the key ideas in each book. For those of you with the attention span of a flea – or Donald Trump – there is even a very short speed-read-summary of less than half a page about each book. The second approach, perhaps slightly more nuanced, is to use this as a guide to those business books you haven’t yet read but feel perhaps you ought to. Author James Russell gives you the inside track on each one to help you make your decision. Russell also offers his selection logically, going back in time to the first great supposedly business book, Sun Tzu’s The Art of War, written in 500BC, and takes us through to the present day, with slightly more of an emphasis on more recently published works that we might not have yet had the chance to read. Happily, he also rubbishes when rubbishing is deserved, as with Keith Ferrazzi’s Never Eat Alone, which he says is “utterly exhausting and utterly depressing”. He is only marginally more polite about Donald Trump’s 1987 blockbuster The Art of the Deal (with Tony Schwartz). Read several of Russell’s essays on these business classics in a single sitting, though, and you may also reach the conclusion that much of what is sold as startling management insight and insider know-how is no more than a glimpse of the blindingly obvious, well made-up and wearing a pretty frock. 86

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LEONARDO DA VINCI WALTER ISAACSON SIMON & SCHUSTER UK R545 With a string of bestselling biographies to his name – Steve Jobs, Albert Einstein and Benjamin Franklin among them – Walter Isaacson turns his attention to yet another so-called genius, Leonardo da Vinci. As with the others, the promise of his latest book is simple: pay close enough attention and some of the genius might even rub off on you. As the creator of both The Last Supper and the Mona Lisa, Leonardo is already unquestionably one of the most studied and written-about artists in history, so what more does Isaacson add? His approach is through the 7 200 pages of doodles, scribbles, sketches, notes, random pensées and jottings that make up Leonardo’s Codexes. It represents about a quarter of what Leonardo actually wrote, but it is nonetheless a fascinating glimpse into the mind of someone described by art historian, Sir Kenneth Clark, as “the most relentlessly curious man in history.” Isaacson’s thesis is that Leonardo’s “ability to combine art, science, technology, the humanities, and imagination remains an enduring recipe for creativity” along with his “relentless curiosity and experimentation” which should “remind us of the importance of instilling, in both ourselves and our children, not just received knowledge but a willingness to question it…” Does Isaacson succeed? There’s no doubt that he has produced a compelling, highly readable portrait of Leonardo, using his formidable skills as a writer and journalist to draw the reader into 15th century Florence and Milan. But in doing so, he also reveals and even emphasises the great contradiction that lay in Leonardo’s heart: he was an inveterate procrastinator who not only abandoned commissions in a half-finished state but went to great lengths to avoid new ones. Isaacson concedes the dichotomy by quoting Steve Jobs: “Great artists ship.” Leonardo shipped but rarely and only when he felt like it. It’s not a recipe for the modern business world.

HARVARD BUSINESS REVIEW ENTREPRENEUR’S HANDBOOK

HARVARD BUSINESS REVIEW PRESS R630

So you want to start your own business – “go out on your own” – and you have a couple of good ideas. But maybe you’re not too clear on the best route to take or the steps involved. Or perhaps you think you have it all down but just need a checklist to make sure? You could do a great deal worse than Harvard Business Review’s Entrepreneur’s Handbook, which applies and condenses a vast array of knowledge from the legendary magazine and its parent business school into a respectably sized volume. It’s particularly strong at the very outset when it poses perhaps the most important question of all: Is starting a business right for you? In particular, “…what are the personal traits and backgrounds of people who become successful entrepreneurs?”

PLUCKED! THE TRUTH ABOUT CHICKEN MARYN McKENNA LITTLE, BROWN R315 Hard though it is to imagine, for much of humankind’s existence something as simple as a scratch from a thorn could prove fatal. The scratch itself wouldn’t have been the problem, but the frequent infection that often followed was. In the aftermath of epic battles like Waterloo (1805), post-battle infection claimed as many lives as canon or musket balls. It remained that way until the beginning of World War II when a wonder-drug called penicillin was discovered to be effective against infection-causing bacteria like Staphylococcus and Streptococcus. Penicillin was the first in a long line of drugs that came to be called antibiotics. Food, especially meat, spoils in much the same way as human flesh when it is infected: decay and putrefaction set in and the food must be discarded. So it wasn’t long after the discovery of penicillin that food scientists and technologists wondered what might happen if antibiotics were administered to animals being bred for slaughter?

You are encouraged to undergo some rigorous selfevaluation to make sure that after you have jumped from your current existence, you don’t wake up the next morning sure that you have made a fatal mistake.

An Englishman called Jukes, working in California, came up with the answer. Administered in tiny quantities, mixed in with feed, antibiotics produced startling spurts in growth, particularly in chickens. Pigs and cows followed in quick succession; in no time at all industrial agriculture was consuming vast amounts of antibiotics, far more, in fact, than the amounts used by humans.

From there, the Entrepreneur’s Handbook takes you through a very clear, time-based sequence: Shaping an Opportunity, Building Your Business Model and Strategy, Organizing Your Company, Writing Your Business Plan and so on, all the way through the various kinds of finance needed at various stages of the company’s life to an IPO and the decision to sell and harvest the fruits of your labour.

What followed is the truly frightening story told by Maryn McKenna in Plucked! In short, the wonder drugs stopped working for humans that consumed chicken or other meat given antibiotics to spur growth. The bacteria had become resistant to the drugs. As soon as a newly developed antibiotic was used, resistance appeared, and, more alarmingly, the different strains of bacteria seemed somehow able to pass the resistance between them.

There are also some very thorough appendices on Understanding Financial Statements, Breakeven Analysis, and Valuation, along with plenty of further reading on the many facets of entrepreneurship.

McKenna sets out in great detail how, despite compelling proof of the damage being done, agricultural pharmaceutical companies conspired with industrial-scale chicken producers to continue using antibiotics and threatening to take humanity back to the age of deadly infections.

One caveat: this is an American book aimed at American readers, with many references to both US legislation, the US tax code and US business associations. Don’t let that deter you: the principles and practice of starting up your own company are the same worldwide.

Her story has a happy ending, however. Bowing to intense public pressure, ‘Big Chicken’, certainly in the USA, has moved away from the use of antibiotics. She expects the beef and pork industries to follow soon. Gordon Institute Of Business Science

BY SAM COWEN

Terrific work, Team! “It’s Mr X’s house.” He is The Boss. “Well that can’t be right, I thought he had a place in Joburg?” “So he told us it was a rustic retreat in the bush.” The Friend was in a state of controlled hysteria.

“Yes, he does,” she said, finishing the bottle, “and a place in the bush. The lapa we built was in his garden. Next to his pool.”

“Well that sounds lovely for a team-build getaway,” I said soothingly.

“Hang on, your boss made you finish his lapa and told you it was team building?”

“We got there and we were in tents. TENTS.”

“Yep. AND then congratulated himself for keeping costs down and suggested we all look for original ways to do the same when we were back in the office.”

That was more serious. Tents should be banned for everyone except the army and children. “That seems a bit mean. Couldn’t he have stretched to chalets?” “THERE WERE NO CHALETS! THERE WERE NO BATHROOMS!” She took a gulp of wine and said tearfully, “We were in tents and there was a portaloo.” I did not see how being dirty and uncomfortable could make me want to bond with anyone except the chap who was going to drive the bus home. I said so. “So what was the actual team building exercise?” “It was,” she spat out, “building a lapa.” “Ah,” I said knowingly, “you had to build something together to learn how to work as a team towards a common goal, and because it’s putting up something pretty simple, you’re all on the same level, no hierarchy.” Silence. “So,” I said, “Where is this slice of hell so I can refuse if ever I’m invited on a team build there?” 88

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Genius! Team building has developed a terrible reputation, although I’m not sure if it ever had a good one. The term ‘team building’ is associated with activities that are often at best childish and at worst humiliating. In my own experience, I’ve built bridges with sticks and sat in circles holding hands and humming with co-workers from whom I would usually recoil in a work setting. I’ve travelled to expensive adventure venues, where the company paid a premium for us to swing on ropes across large mud pits. This activity, we were assured, would ready us for when ‘things got sticky’ in the ‘business arena’. If you managed, by some super-human fruit bat-like manoeuvre, to get across unscathed, you were a ‘high-flyer’. Yes really. If you didn’t, well, team leader Pete barked encouraging words while you waded through wet filth. “Work the mud! Work it! Fight back! Strive to thrive!” Pete never found out how close to death he walked. On that trip, one night we were separated into small groups and dropped off at various points along the river that ran through the ‘retreat’. The idea was that we would work as teams to find our way back

to the main buildings using only the stars as our guide. Of the three groups, one made it back to the lodge (management), one decided to smoke a joint (creative) and its members were found later, stargazing in the same spot at which they were dropped, and one group (sales) ended up at a nearby pub ‘by accident’.

We were in tents and there was a portaloo. I’m not suggesting that bonding does not occur during these experiences. I’ve seen people who wouldn’t share a lift during office hours become the best of friends when united in common hatred (and mud) for someone like Pete. I also observed an altogether different bonding experience between the HR director and one of the sales team who forever afterwards was referred to as Aquaman. Suffice it to say that I had never before seen such an enthusiastic attempt at maximising human capital. Mr X’s team building, however, hit new heights. He ticked the training requirement box and got a lapa out of the deal. The team has bonded, admittedly in the hope that one day his bush paradise will burn to the ground with him inside it. And apparently there’s more! “We have to go back if we don’t make our targets,” wept The Friend, “because if we don’t, we need to strategise how to forge a new business pipeline.” “And how will going back help you do that?” I wondered. “He’s going to make us dig a trench next to the electric fence.”

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