Acumen Edition 11 by Contact Media

Jeff Immelt

. . . on Leading in Uncertain Times P.36 Ten Trends to Shape Tomorrow P.26 Bain’s bob bechek . . . gives his view of the future P.31 GIBS NEW DEAN NICOLA KLEYN . . . On challenges Facing sa Business P.22

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Issue 11 • First Quarter, 2015

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contents Issue 11 • First Quarter, 2015

Issue 11 • First Quarter, 2015

features

P.36 JEFF IMMELT

GE’s Chairman and CEO Jeff Immelt explains how to manage through turbulent times.

. . . ON LEADING IN UNCERTAIN TIMES P.36 TEN TRENDS TO SHAPE TOMORROW P.26

R39.95 incl vat

Issue 11 • First Quarter, 2015

BAIN’S BOB BECHEK . . . GIVES HIS VIEW OF THE FUTURE P.31 GIBS NEW DEAN NICOLA KLEYN . . . ON CHALLENGES FACING SA BUSINESS P.22

ACUMEN_ISS11_FINAL.indd 1

On the cover

Leading in Uncertain Times

P.26

03/02/2015 10:54:38 AM

Photo: Gareth Jacobs

Ten Trends to Shape Tomorrow Chris Gibbons examines the major factors which will shape both lives and businesses in the years ahead.

P.31

Top Trends – a Global View

gordon institute of business science

Bain & Company Worldwide Managing Director Bob Bechek gives his opinion on what lies ahead for business.

Acumen is also available as an app for your iPad or iPhone in the Apple App Store, as well as in the GooglePlay store for your android device.

P.22

A New Dean for GIBS GIBS Dean-elect Professor Nicola Kleyn tells Acumen about the challenges facing business in SA.

P.26

et cetera

p.02 Contents p.04 Contributors p.08 From the Editor p.10 Network

opinion

p.14

GIBS Dean Professor Nick Binedell says business leaders need an acute awareness of the world around them.

The Fingers of the Strategist

p.16 Time to Bury the Myth of

Corporate Exceptionalism

Trudi Makhaya argues that the private sector does not have all the answers.

p.17 Remedying South Africa’s

Labour Market Ills

Dr Mzukisi Qobo says that through its current policies, South Africa has chosen unemployment instead of employment.

p.18 Don’t Invest in South Africa,

Invest in South Africans

Alan Hilburg believes that South Africa should not accept foreign investment that doesn’t also invest in its people.

p.20 Africa – Waving or Drowning? Richard Dowden cautions that African economies may be rising, but so are levels of frustration and anger among the continent’s youth.

general management

p. 40 When is it Time for the CEO

to Go?

James van den Heever says leaders are important for the success of any organization, so it is vital to understand when they need to go.

p. 44 Lost in the Matrix Dr Caren Scheepers and Professor Nick Binedell say the current obsession with organizational matrices is wrong.

P.50

P.46

p. 46 The Need for Speed James van den Heever asks if it possible for big corporates to be really agile?

South Africa

p.50 Silkworms and Parachutes Kathy Berman explores the work of GIBS’ Enterprise Development Academy. p. 55 Drones Poised for Action Cara Bouwer discovers a bureaucratic nightmare holding back this fledgling industry.

dynamic markets

p.58 The View from Africa Victor Kgomoeswana highlights three key factors behind Africa’s current economic success. p. 60 Policy Anchors for Africa’s

Growth

Seth Mukwevho and Itumeleng Mekwa outline preconditions for the continent’s continued growth.

p. 64 Doing Business In ... Vietnam Kate Whitehead says it’s about understanding the Vietnamese people.

future

p.80 Digital Burnout: The New, Invisible Threat to Business

Futurist and trend-spotter Dion Chang says we appear to be always busy but not productive.

renew

p.82 Travel Caroline Hurry in Mauritius and Rome. p.84 Wellness Now Mandy Walker says a kind note to yourself can boost endurance.

The Finer Things

p.86

Cheska Starck recommends a Pringle work boot for Him and a Radley handbag for Her.

p.88

Jacques Marais & Stephen Smith examine the Altra running brand and the new Alfa Romeo 4C.

Forward Motion

p.90 Techno Bites Aki Anastasiou calls the Battle of the Phablets.

p. 70 Top Eight Things to Do

p.92 Books Chris Gibbons receives A Brief History of Humankind and learns The Virgin Way.

Including Hanoi’s Ho Chi Minh Mausoleum, the Cu Chi Tunnels and Hue’s Citadel.

p.93 Wine John Maytham recommends the Riebeek Cellars Shiraz for a everyday tipple.

p. 72 From Pablo to Prosperity Drs. Lyal White and Greg Mills assess Colombia’s turnaround

p.94 Music Victor Dlamini goes to New York to see Vusi Mahlasela, Hugh Masekela and Dave Matthews on the same stage.

& See in Vietnam

entrepreneurship

p. 76 Succeeding Where Giants Fail Sean Christie meets Hamish and Tania Hamilton, and uncovers one of Tanzania’s success stories.

Looking Backwards

p.96 Death By Workshop Mike Wills explains why all-day workshops are a waste of time.

contributors

Dr Caren Scheepers

Dion Chang is an

innovator, creative thinker and visionary. He is a sought-after trend analyst and, while his feet remain firmly planted on African soil, he uses a global perspective to source new ideas, gauge the zeitgeist and identify cutting-edge trends. He contributes to various print publications and online portals as a freelance journalist and social commentator.

Richard Dowden

is the director of the Royal African Society and a former Africa editor of The Economist and Independent. He is also author of the bestselling Africa: Altered States, Ordinary Miracles and has been writing about the continent since his first visit in 1971.

gordon institute of business science

Kathy Berman

is Head of GIBS' Innovation Lab, a cutting-edge and multidisciplinary space that focuses on social, technological and cultural innovation â&#x20AC;&#x201C; for business, government and civil society. This follows a career in journalism, corporate finance and strategy consulting. Kathy sees her new role as simply an elaborate excuse to dabble in cuttingedge global concepts, access funky gadgets and do cool and socially relevant stuff.

is a full-time faculty member at GIBS where she lectures in organisational development and transformation, leadership and team effectiveness, among other areas. A qualified counselling psychologist and board certified executive coach, she also manages her own consulting firm, Irodo Consulting, www.irodo.com, which specialises in team interventions, executive coaching, psychometric assessments, organisational development and restructuring projects.

Sean christie is an award-winning South African features writer and essayist who has contributed articles to most of the country's mainstream news publications, mainly on land, environmental, foreign policy, literature and diaspora issues. He recently became the first person to walk the length of Johannesburg's Jukskei River and is writing a book about a community of Tanzanian stowaways who live under Cape Town's Nelson Mandela Boulevard.

Trudi Makhaya is Alan Hilburg is President and CEO of Hilburg Associates. He's been confidant and advisor to senior luminaries around the world including country presidents, university chancellors, CEOs, leading entrepreneurs, sports and entertainment celebrities and religious leaders. Author of two NY Times best-selling books on leadership, he received an Academy Award nomination for the world's first environmental film and a number of awards in marketing and television production.

an economist, writer and business strategist. She was also Deputy Commissioner at the Competition Commission of South Africa and is the resident economic analyst at broadcast channel eNCA, and writes a column for Business Day. Trudi holds an MBA and MSc in Development Economics from Oxford University, where she studied as a Rhodes Scholar. She also holds degrees from Wits University, including an MCom in Economics and a BCom (Law).

Dr Mzukisi Qobo

teaches international political economy at the University of Pretoria, where he is also deputy director at the Centre for the Study of Governance Innovation. He offers insights to corporates and other organisations on the theme of leadership, covering transformational leadership, Africaâ&#x20AC;&#x2122;s rise and global challenges, and political trends in South Africa. He is the coauthor of The Fall of the ANC: What Next?

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contributors

editor Chris Gibbons gibbonsc@gibs.co.za

Victor Kgomoeswana is

author of Africa is Open for Business; anchor of Africa Business News – a weekly programme on CNBC Africa and anchor of PowerHour, Monday to Thursday, on PowerFM.

james van deN Heever writes for a

gordon institute of business science

range of clients, including the Institute of Directors in Southern Africa, the Ethics Institute of South Africa, the South African Institute of Professional Accountants and Ernst & Young. He was formerly editor-in-chief of Systems Relationship Marketing, a custom publisher with blue-chip clients and editor of Computerweek. He also worked as a media liaison in the corporate world.

managing editor Clea Dias diasc@gibs.co.za cover photography Gareth Jacobs

CARA BOUWER is a

freelance journalist and editor. She’s been published in a variety of local titles including Business Day, Private Life, Destiny and Sawubona. She cut her teeth at Penta Publications in the early 1990s before moving on to Business Day where she made history by becoming the newspaper’s youngest sports editor and the first woman to hold this title on a national daily in South Africa. She later became the paper’s chief sub editor.

layout and production Contact Media and Communications ( Pty) Ltd art director Sudene Braun proofreader Angie Snyman publisher Sean Press pressman@contactmedia.co.za Contact Media and Communications (Pty) Ltd 0117896339 advertising sales Damian Murphy damian@contactmedia.co.za 0828881137

contributors Bob Bechek Kathy Berman Professor Nick Binedell Aki Anastasiou Cara Bouwer Dion Chang Sean Christie Victor Dlamini Richard Dowden Alan Hilburg Caroline Hurry Dr Azar Jammine Victor Kgomoeswana Trudi Makhaya Jacques Marais John Maytham Ithumeleng Mekwa Greg Mills Seth Mukwevho Dr Mzukisi Qobo Dr Caren Scheepers Prof. Adrian Saville Stephen Smith Cheska Stark James van den Heever Mandy Walker Kate Whitehead Mike Wills marketing director Howard Fox foxh@gibs.co.za contact acumen 26 Melville Road, Illovo, Johannesburg P O Box 787602, Sandton, South Africa, 2146 011 771 4000 acumen@gibs.co.za

Brought to you by:

kate whitehead is a Hongkonger and has made the city her home since she was eight. She escaped for university and returned after her Masters degree. The author of two Hong Kong crime books – After Suzzie and Hong Kong Murders – she's been on staff at the Hong Kong Standard, South China Morning Post and edited Cathay Pacific's Discovery magazine. She writes for CNN, Time and BBC Travel.

Disclaimer: Acumen is the official publication of the University of Pretoria’s Gordon Institute of Business Science (GIBS). All material is strictly copyright and all rights are reserved. No portion of this magazine may be reproduced externally, wholly or in part, in any form without the written consent of GIBS. The views and opinions expressed by the contributors to this publication are not necessarily the views and opinions of the publishers, GIBS or its associates. While every effort has been taken to ensure the completeness or accuracy of the published information, errors and omissions may occur. The publishers, GIBS and its associates cannot accept responsibility for any loss, damage or inconvenience that may arise from the unauthorised use of this publication.

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editor’s note

The Need for speed Words Chris Gibbons

Much of modern business life certainly gives the impression of the need for great speed. Technology changes at an exponential rate, corporations have to try and keep pace; individuals – managers included – are deluged in data, yet more and more spend increasing amounts of time jetting around the world from meeting to meeting. Companies emerge at undreamt of speed to dominate industries in a way never before seen, creating wealth in their wake that is literally incredible. In 1990, no-one had heard of Amazon or Google; in 2000, neither Facebook nor Airbnb nor Uber had been born. They are all now worth billions of dollars. Very late last year, Uber – only founded in 2009 – was given an estimated value of $40 billion.

gordon institute of business science

But are we certain where all this activity is taking us? As the 19th century American naturalist Henry David Thoreau remarked, “It is not enough to be industrious; so are the ants. What are you industrious about?” Speed is one thing, direction another and purpose yet another. At Acumen, we would never presume to forecast the future but in this edition we attempt to examine the links between where we might be heading, how fast we’re getting there and what some of this might mean for business. As well as our own research, which features in the article Ten Trends to Shape Tomorrow, we’re lucky enough to have expert input from Bob Bechek, who heads one of the world’s leading management consultancies, Bain & Company. Of course, the expert strategists amongst you will understand that for every Twitter or Tencent, there are hundreds, if not thousands, of failures. Plans and schemes are easy enough to come by, littering

boardroom floors and business school halls. A plan is only as good as the ability of a team to execute it. A central question, then, for both military and business strategy over the past two centuries has been why, at any given point, is one team, company, army or government better at executing its plans than another? That’s the focus of an examination of the qualities of a good strategist by outgoing GIBS Dean, Professor Nick Binedell. GIBS was able recently to host the CEO of one of the world’s most observed and storied companies, General Electric, Jeff Immelt. He discussed these very issues in front of a GIBS audience that included a number of ‘A-List’ local CEOs, among them Imperial’s Mark Lamberti and FNB’s Jacques Celliers. They heard Immelt make the same point: it easy to be small and nimble, it’s also easy to big and slow, but Immelt admires those who can be big and fast. The GE chief pointed to India’s current crop of entrepreneurs as role models. These are daunting challenges, but in our modern world, you simply don’t have enough time to ignore them. And finally, Acumen would like to welcome GIBS Dean-elect Profesor Nicola Kleyn and to congratulate her on her new position. Readers of Acumen will be familiar with her writing in previous editions on strategic marketing and customer behaviour. In this edition, she offers her views on the key

It doesn’t matter if you’re on the right track. If you’re not moving fast enough, you’ll still get run over.” - Anonymous challenges facing South African business and also on the role that should be played in that by a business school. That’s another daunting challenge but one that I’m sure both Professor Kleyn and her colleagues here at GIBS will be fully able to embrace

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network

Network Words Acumen Staffers

Looking Ahead – Foresight 2015 A meeting of some of the county’s most respected figures in the fields of politics, economics, business and civil society was held at the Gordon Institute of Business Science (GIBS) at Foresight 2015.

gordon institute of business science

The panel engaged in a vigorous debate on the year that had passed, and diverse ideas were presented as to what South Africa can do to remain competitive and improve the lives of ordinary people in the one that lies ahead.

“Nothing untoward is happening in Parliament, debate is a sign of a healthy democracy and brings about vibrancy and discussion. But, anarchy and total disregard of the rules is unacceptable. Parliament is not the place for tricksters and brothel owners.” Minister Fikile Mbalula – Minister of Sport and Recreation

network

“2014 started at 3.5% and finished at 1.4% (GDP growth). But the real tragedy is – where is the 5.7% that was spoken about in the National Development Plan? We haven’t got remotely close and it’s not about to happen any time soon.” Dr Adrian Saville – Chief Investment Officer Cannon Asset Managers Dr Adrian Saville

“How are we going to restructure our economy so that the gaps start to close? Is our society so tone deaf? CEOs earn extraordinary amounts of money. We are on the edge of a precipice: we promised more and we must deliver. We can’t get away from the fact that we live in a grossly unequal society. What is needed is a bit of sensitivity and modesty.” Judge Dennis Davis – Judge of the Western Cape Division of the High Court

Kennedy Bungane

“South Africa has to recalibrate the way we think about the continent – we must realise that the rest of Africa isn’t a threat and our economic xenophobia has to end. South African business must push for an open-market policy – we could be the biggest beneficiary of Africa’s rise.” Kennedy Bungane – Chief Executive Officer of the Pembani Group (industrial holding company)

“Much of the emphasis of our discussions has been on politics and GDP, and profit for shareholders. Has the emphasis ever been on ordinary South Africans? Government and business are there to improve the lives of the people. We have enough money in this country; the problem is the way it is used.” Dr Imtiaz Ismail Sooliman – Founder, Director and Chairman of Gift of the Givers

“While there is hope we will pull back from the precipice, labour has something to say on a wide variety of issues unrelated to the shop floor. New unions vying for members could result in a rise in militancy, which is a nightmare scenario for the mining sector. How business responds to this and cools down the temperature in 2015 is going to be very interesting to watch.” Nonkululeko Nyembezi-Heita – Chief Executive Officer of Ichor Coal Nonkululeko Nyembezi-Heita

Dr Imtiaz Ismail Sooliman

network

Despondency misplaced – Madonsela Many South Africans will remember 2014 as a turbulent year, filled with corruption and political scandal. But Public Protector, Advocate Thuli Madonsela, a woman at the forefront of the fight against dishonesty and malfeasance in public office, says any despondency is misplaced. “I see the tide turning in favour of good governance and our democracy is strengthening. It is essential that we see ourselves as part of the solution,” she told a recent GIBS Forum. “The challenges we face in South Africa are global in scale – the lack of good governance and failure of leadership is not unique to us. Our strong constitutional foundations and our multi-accountability system have given us the ability to avert a crisis.” Advocate Madonsela explained that her vision for the Public Protector’s office is closely linked to aligning human behaviour with the values contained in the Constitution, and that she would use her remaining time in office to focus on values transformation. “Our rulings must be implemented because people believe that our judgements are aligned with Constitutional values, not just because they fear our office,” she said. The Public Protector’s office must be considered a place of shelter for those who feel they have been wronged by the State, Advocate Madonsela said, and good administration and service delivery should be systematised at all levels of government. “Wherever you go in the country, I want the quality and speed of service to be the same. When we look at integrity, we immediately consider the improper use of money. But we must also look at service, or instability will be one of the consequences of gross service failure,” she said. Advocate Madonsela argued the need to continue the fight against corruption, before it has tragic consequences. “Both business and government leaders are sending the right messages that corruption is eating away at the soul of South Africa. We must continually reinforce that corruption is a crime, and discover its causal and influencing factors.” As a tireless campaigner against corruption, Madonsela said she manages the intense criticism often received from politicians and the media by simply forgiving people: “I believe people are doing the best they can; when they know better, they will do better.” Any sense of a corruption crisis should be seen as an opportunity, Madonsela concluded: “A crisis is the juncture between danger and opportunity. Where we see fault lines, there is an opportunity to come up with solutions and examine the role of the private sector in becoming an agent of change.”

Watch this space for the 2015 event – it’s going to be bigger and better!” Thank You, Team Fulufhelo! A massive R180 000 was raised by GIBS’ Team Fulufhelo Ride For A Purpose during the Momentum 94.7 Cycle Challenge late last year. The beneficiary is an orphan’s centre in Ivory Park called Bakgetwa, which needs extensive renovation in order to qualify for government funding. Bakgetwa was founded by community activist mum Matankie, who uses her home to feed around 40 vulnerable children from the surrounding squatter camp whenever she has enough food. She also fosters eight orphans, the maximum she is allowed to live with her in her home. Fulufhelo is a non-profit organisation started by GIBS MBA students in 2009. Its purpose is to drive community development initiatives in disadvantaged communities. Another GIBS student, Adolf Makgatho, founded its ‘cycling arm’, Team Fulufhelo, in 2014. “A heartfelt thank you to all who gave generously,” says Makgatho. “Thirty cyclists took part and funds were raised from other GIBS students, friends and corporate sponsors. A special mention goes to Momentum who, as part of their donation, generously funded our branded cycling gear,” he notes. A final word from Adolf: “Watch this space for the 2015 event – it’s going to be bigger and better!”

opinion

The Fingers of the Strategist Words Professor Nick Binedell

Rapid change brings in its wake fundamental challenges. While not to over-exaggerate because many things stay the same, one essential challenge is that as an organisation or as an executive, you must learn faster than the rate of change around you. To do this well requires what the 19th century German Field Marshal Helmuth von Moltke1 called 'fingerspitzengefühl'. Translated literally this means the sensitivity in the tips of your fingers, but von Moltke used it in the sense of a military commander possessing an intense situational awareness and mastery of detail which creates the ability to adapt on the battlefield swiftly, appropriately and repeatedly.

gordon institute of business science

We might also think of the impact of peripheral vision and in business, a lot of innovation comes from peripheral vision allied to fingerspitzengefühl: the intuitive understanding that there’s a new opportunity, structure, process, product or service that is somehow going to create a big opportunity for an industry or a company. That intuitive understanding needs to be built into the architecture of both the structure and processes of companies. It is not always there. The problem many big companies have is that the methods and strengths that got them into the room are what’s sustaining them, but as we all know, history is a wasting asset. Unless you update the levels of energy and innovation in the business, over time you’re likely to start depleting those assets. Leadership expert Martin Linsky once wrote that when top executives move into senior positions, they consume the knowledge capital they’ve brought with them and seldom have time under the pressure of daily business to increase that capital through study, reflection and new experiences. It is hard to learn under intense ongoing pressure. 1

How then do we run organisations to avoid such depletion and encourage peripheral vision and fingerspitzengefühl? Firstly, at a personal level, leaders need to ensure that top executives have enough time for reflection, along with high-quality contested conversation in which ideas and theories about the business can be put forward and validated if possible, or argued thoroughly. They also need exposure to alternative ideas, industries and places, all unrelated to their main business. Again, they need the time to do all of this. In the modern 24/7, 70-hour-aweek world, many executives burn out because they simply don’t have the time. The second level has to do with the structure and design of processes within the organisation. At times, I’ve been on strategy retreats where the discussion was creative, playful, and insightful – sometimes relaxed and sometimes pressured. At others, it’s felt like being in a formal meeting with a highly structured agenda: papers written, presentations made, PowerPoints flung about, but little discussion of the fundamental direction of the strategy: how the world is changing around us and what opportunities or challenges that presents. You can mechanise innovation or you can create a culture where innovation is part of the lifeblood of the

conversation. Where people are willing to bring bad news or good news about new opportunities into the ExCo or the boardroom and start assembling some ideas, even though they may be tentative. Some industries, of course, are changing faster than others. But even within constrained and mature industries, there’s always room to break the fundamental rules or assumptions of that industry. We see this over and over again in mature industries. In fact, in my view, there’s no such thing as a mature industry. There may be a mature company, whose memory is stronger than vision, but mature industries are being shaken up by the very forces that are creating opportunities for new companies in new sectors and industries. On the other hand, new companies – and I often think of MTN as an example – have to run at such a speed that the normal rules of organisation, planning and budgeting, in the early years at least, simply don’t apply. MTN was like Genghis Khan’s Mongol Horde crossing the steppe at a gallop. The opportunity in the cellphone business 10 to 15 years ago was so open-ended, so unknown, that the idea of a careful budget or a plan simply just wasn’t part of their culture – at least, as I experienced it. In South Africa, we have this incredible mix of mature, large companies along with a rapidly changing environment. Thoughtful leaders will therefore undoubtedly structure the time, decision-making and learning of their

Often called “von Moltke the Elder” to distinguish him from his nephew, also Helmuth von Moltke, (“the Younger”), who commanded the German Army at the start of World War 1.

opinion

leaders need to ensure that top executives have enough time for reflection.” top executives in a fluid way. Some will be highly ordered and organised, some creative and exploratory, and a good agenda will always embrace both. By the same token, most board meetings I’ve been privileged to listen to were highly organised, and sometimes sterile because the discussion was predominantly about corporate governance. The real discussion about the company’s strategy took place outside the board meeting and boardroom, and it was often by luck, experiment or some other random experience, that the eyes of the team were opened to what’s possible out there. Von Moltke would not have approved: his highly successful generals had fingerspitzengefühl, but it certainly wasn’t developed through randomness or luck

opinion

Time to Bury the Myth of Corporate Exceptionalism Words Trudi Makhaya

We have become a nation of scandal. Institutions at the centre of national life – the Post Office, SABC, SAA – have experienced episodes of dysfunction.

gordon institute of business science

For almost half of 2014, mining and manufacturing came to a standstill as historic strike action saw production plunging. Years, if not decades, of bitter industrial relations came to a head in difficult disputes that tested the nation’s wage negotiating forums. And corporate boardrooms have not been spared: major listed companies such as PPC and HCI have also seen their fair share of turmoil. These meltdowns raise searing questions about the post-apartheid settlement’s robustness. Workers’ living conditions and wages have not improved much since 1994, despite policy mechanisms such as the Mining Charter and land reform that were meant to challenge the exclusion and exploitation of the disadvantaged. Twenty years into democracy, relations between government and business are strained over economic policy direction. Instances including the construction and bread cartels uncovered by the competition authorities also undermine the faith that policymakers, and ordinary members of society, have in the private sector. Conventional wisdom about South Africa says government is troubled, whereas the private sector, despite its flaws, is fairly efficient. Surveys like the World Economic Forum’s global competitiveness indicators rank government-aligned institutions and functions, i.e. public health and education, near the bottom of global league tables. Yet boardroom intrigues suggest that perhaps government is symptomatic

of the challenges that the country as a whole faces. South Africa’s extremely high ranking on corporate governance, at No.3 for the effectiveness of corporate boards in the latest WEF survey, possibly reflects the perceptions of the survey respondents, who are mostly corporate executives, rather than reality. Can boards that are blind-sided by colluding executives, poor communication and murky decisionmaking lines really be all that world-class? We’ve lived for too long on the myth of corporate exceptionalism. In a troubled society, we’ve led ourselves to believe that business is an enclave away from the madding crowds. Yet scratch beneath the conventional narrative about the private sector to reveal challenges papered over by quiet dismissals, sealed with golden handshakes and chirpy press statements. For a long time, economists and other social scientists grappling with the fortunes of nations focused on resource endowments, geographical location and productivity as explanatory variables for why some nations succeed and others don’t. But work by academics such as Daron Acemoğlu, James Robinson and Douglass North places institutional effectiveness at the heart of economic performance. Debates rage on the ideal institutional arrangement that should prevail in a country. There is consensus however that open and accountable government, fair and competitive markets and effective

dispute resolution and bargaining institutions support economic growth, particularly in market-based economies. We are learning in South Africa that some of our most fundamental institutions underpinning corporate governance, industrial relations and transparent government are under siege. Some time ago I participated in a thought leadership symposium at GIBS where Lord Boateng, former British High Commissioner to South Africa, bemoaned the sense of exceptionalism that pervades this country. This exceptionalism means that we fail to acknowledge that other African countries have experienced some of the challenges that we face today. Thus, we lose the opportunity to learn from the experiences of our neighbours. Yet there is also an insidious exceptionalism within the country; it says that the private sector has all the answers whereas government and labour take the country backwards. Evidence suggests otherwise: we are all in this leaking ship together. At this stage in South Africa’s socioeconomic development, it should be expected that the path to an inclusive, high growth economy will be littered with setbacks. The myth of corporate exceptionalism undermines an important dialogue and cross-fertilisation that should be nurtured between business, labour and government leaders

opinion

Remedying South Africa’s Labour Market Ills Words Dr Mzukisi Qobo

South Africa’s labour market rigidities hinder employment creation. Jack Lew, US Treasury Secretary, made this point during his visit to South Africa late last year. These rigidities have long been recognised as constituting binding constraints to growth. Around 2007, our National Treasury assembled a team of Harvard-based economists to diagnose such constraints and propose remedies. For the next two years, reams of paper were churned out, with recommendations across various policy dimensions: labour market, industrial and trade policies. Many never saw the light of day. Leadership passed from Thabo Mbeki to Jacob Zuma, who was keen on building his own economic policy legacy more attuned to the Left and trade unions. Yet South Africa’s huge unemployment challenge, acutely felt by its youth, requires urgent action. If nothing is done, this powder keg will unravel social stability. Unemployment amongst the youth is above 50%. Overcoming labour market rigidities and improving efficiencies should be a priority focus for government along with creating a positive investment climate in the economy. In various World Economic Forum Global Competitiveness Reports, labour market efficiency – the opposite of labour market rigidity – is identified as one of the 12 pillars of competitiveness. Ranked 116 out of 148 countries (Global Competitiveness Report 2014), South Africa lags most of our developing world peers: Egypt (146), Paraguay (117), Indonesia (103), Guyana (63), Namibia (59), Mauritius (55) and China (34). Quite clearly, we compare poorly against the majority. A look at our BRICS partners (excluding China) also reveals poor labour market efficiency with Brazil ranked at 92, India 99 and Russia 72. As the WEF points out, South Africa lacks scale in its domestic market and thus cannot use this as a compensatory factor for inefficiencies in its labour markets.

Prolonged labour market rigidities, as the WEF cautions, can create a fertile ground for social tensions: think Tunisia in 2011, where unemployed youth set in motion a wave of social uprising that toppled President Zine al-Abidine Ben Ali. Of course, there are socio-historical factors that shape the structure of South Africa’s labour market. These include racialised wage inequalities; historical low wages amongst black workers in agriculture and manufacturing; the ruralurban divide entrenched by the apartheid system; apartheid laws that restricted the expansion of the informal sector in the urban centres; and the varying levels of access to quality education between different races. A particularly salient factor complicating the analysis of South Africa’s labour market is its dualistic nature. On one hand, the formal sector is protected by a restrictive labour legislative framework, and with a clear industrial, but adversarial, relations mechanism. This sector exhibits characteristics that are found in advanced middle-income countries and developed economies. On the other hand, there is the informal sector that is flexible. In this sphere are small-scale, unregistered activities, and no system of industrial bargaining or laws that protect workers. But, unlike other developing countries, in South Africa

this is not a sector that expands fast enough to compensate for joblessness. It remains smaller in proportion to the labour force. In many developing countries the informal sector plays an important role as a buffer for those who are flushed out by the formal sector. Not so in South Africa where, according to the OECD Economic Survey 2013, the informal sector represents less than 20% of total employment. There is a need to recast labour market policies in ways that balance the interests of both workers and employers. Blanket deregulation is not necessarily the appropriate response. Instead, we should develop dynamic industrial and social policies that are both growth enhancing and poverty alleviating, including income support and extended asset ownership for the poor. Flexibility in the provisions of labour legislative framework is also required. Sadly, as Dani Rodrik, one of the Treasury-appointed Harvard panelists suggested, through its current policies, South Africa has chosen unemployment instead of employment. Finally, there is a need to overhaul South Africa’s social dialogue mechanism to place at its centre the urgency of growing the economy, improving competitiveness, and creating new jobs, rather than obsessing with meeting parochial trade union interests

opinion

Don’t Invest in South Africa, Invest in South Africans Words Alan Hilburg

What’s missing from the conversation about the impact of direct foreign investment in South Africa today? Government leaders, CEOs, economists and the media obsess about the bottomline investment figures committed, rather than the single most important asset in the equation. People. People make investments happen. People, not plans, deliver results. And if you don't invest in the people of South Africa, and don't contribute to ending the inequalities that keep South Africans from having the opportunity to succeed, companies are repeating the 300 yearold tradition of being takers, not givers. All relationships to achieve trust must have balance and equilibrium. Most importantly, investments can't just be extractive, they must also be contributive.

During the past few months, the opportunity of being here has afforded me the privilege of getting to know some truly incredible people that share my desire to satiate the hunger in the townships and suburbs, for the chance to learn critical thinking skills as well as practical business and vocational skills.

With that decision, to come here is a responsibility to end the one-way history of First World foreigners in this country. For us, we are trying to build more than an African advisory business for companies in transition, we need to be resolved to help build bridges between individuals and institutions that share a common commitment to develop opportunities for South Africans.

Coca-Cola’s initiative to develop people’s business skills in the township economy seems likes a great example of responsible corporate citizenry and a business sustainability strategy. Recently I met Coca-Cola’s South African Marketing Manager Sharon Keith. She is a homegrown executive who has benefited from the company’s deep investment in its people and South Africans. With posts in Atlanta HQ and professional development experiences in other emerging markets she explained how one of our most admired employers has trained and developed more than 56 000 direct and indirect employees across the Coca-Cola system in South Africa – who in turn support approximately 500 000 dependents.

Our clients’ challenge is building a culture of trusted relationships in a society that is experiencing a crisis in distrust. This contributes to many of the country’s woes. And, while the hostile labour relations climate and the erosion in business confidence gives many a foreign investor reason to hit the ‘pause’ button, I believe this is a good moment to press

Coca-Cola’s programme to teach informal vendors and spaza shop owners about cashflow management, inventory control and other skills to run their businesses more successfully is another great example of the multiplier effect of investing in people. It is good for the community, the country and the company’s bottom line.

Like everyone who invests in South Africa, I am not here by chance... but by choice.

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‘fast forward’ and reveal the leadership necessary to guide South Africa to achieve its unique potential.

Foreign investors have a vital role to play in the development of scarce technical skills locally as well. Samsung is a powerful example of a pragmatic and progressive solution when confronted with a dire shortage of engineers and technicians to staff their manufacturing and service facilities. Samsung’s Engineering Academy is a publicprivate partnership to reboot vocational training. Their professionals help to ensure that the education and training experience is relevant to industry needs. Another example is Unilever, the fastmoving consumer goods multinational. Employing more than 3 000 South Africans, Unilever’s number one goal is not just to make money but to ensure that the communities where it does business are better off for the fact that they’re there. To achieve that, Unilever models ‘best practices’ in its employee engagement strategies. They invest heavily in their employees to make certain they create a bright future for them and their communities. At a recent GIBS Forum about rebranding South Africa, I was trying to answer my favourite two word question: “What's missing?” I proposed that South Africa should simply not accept foreign investment that doesn't also invest in its people. The thesis is simple, South Africa's brand promise should become “South Africa ... Success Squared.” When a foreign company invests in South Africans, as well as South Africa, everyone wins

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opinion

Africa - Waving, or Drowning? Words Richard Dowden, London

Whenever I hear the words “Africa Rising” I find myself recalling the TV images from October 21st, 1967, when 50 000 people, mostly hippies, converged on Washington to surround the Pentagon and demand the end of the Vietnam War. Abbie Hoffman, the High Priest of Hippiedom, had proclaimed that if enough people surrounded the building, joined hands, meditated and chanted beautiful words, the Pentagon would turn orange and levitate and be purged of the evil spirits of war. Did it work? Years later the poet Alan Ginsburg, who was there, was asked whether the Pentagon had really turned orange and levitated? He paused and then replied: “Just a little bit.” So much hot air has been pumped into Africa recently that maybe the continent is beginning to levitate. Have you noticed? But I am not sure whether Africa is rising because it has really overcome all the problems that have held it back or because the global consultancy companies are puffing so hard.

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Only a few years ago some companies involved in Africa banned any mention

time trying to pick the right moment to tell the editor I had an African story, often only to be told that there was no space. What coverage of Africa there was, was devoted to coups, wars and famines. So I got to go to Somalia, Uganda, Rwanda, Congo, Angola and many other countries in turmoil but never to Botswana, a decently run country where no-one was fighting or starving. Modest success does not sell newspapers. Death and drama do. That is the nature of journalism. I was Africa Editor at The Economist when it ran The Hopeless Continent cover in 2000. I didn’t write it or the editorial that went with it. I did write a long article

. . . Asking about Africa at a meeting of a global corporate was like farting at the opera . . .” of it in their annual reports for fear that the very mention of Africa might crash the share price. Asking about Africa at a meeting of a global corporate was like farting at the opera. Now they are all opening offices and branches in Johannesburg, Nairobi and Lagos. If you are not in Africa, you are not with the programme. That attitude also infected the press. My life as a journalist has two distinct halves. For a couple of decades I spent a lot of

had cursed the continent in the decade that followed the end of the Cold War. In the 1990s Africa had suffered 24 wars and grown poorer. But no matter how bad life became I found that Africans always survived circumstances that would make me curl up and die – drought, war, famine, disease. Yes, there was grief and loss but Africans I interviewed always talked of rebuilding, returning home, carrying on. They had a sense of a better future. Africa can be confusing and frustrating but it doesn’t do hopelessness. In retrospect, May 2000 looks like the moment when a second wind of change started to blow through Africa. The wars began to recede and its economies began to grow. Maybe that cover did make a difference. Years later Cyril Ramaphosa made the connection. He said that the hopeless continent cover might have done some good. It was a wake-up call. “If that’s what they think of us – we had better do something about it,” he told me.

inside which tried to explain some of the deeper reasons why Africa was not doing too well but had great strengths as well as weaknesses. But that cover has hung round my neck like the rotten meat that dishonest butchers were forced to wear in medieval times if they cheated their customers.

In the second half of my journalist life the phone has never stopped ringing. Can you tell us about Ethiopia’s growth? What will oil do for Somalia? How has Nigeria become the biggest economy in Africa? Will Mozambique’s gas make it the richest country in the world?

The word ‘hopeless’ did not appear in that article because I had never come across hopelessness in Africa. I had covered some of the wars and subsequent famines that

Outsiders’ views of Africa have always swung violently between the land of treasure and wealth and The Hopeless Continent, between El Dorado and

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Human rights, accountability and democracy indicators are worsening . . .” Desperado. It was ever thus. Africa is vast – you can fit the USA, China and most of Europe into it and still have room to spare. Some parts are highly developed; others – often close by – are very much as they were more than two thousand years ago. Africa is where the iPhone and the Iron Age still exist side by side. I think this explains the confusion of outsiders who see Africa from afar but never walk its streets and paths. In the case of the consultancy firms they just look at numbers – and perhaps a game park. The figures are better than they were a decade ago but are sometimes quite unreliable and, as the health warning on shares says: “past performance is not a sure indicator of future returns.” It was ever thus. In the 18th century The African Association was formed to “promote the discovery of the interior parts of Africa.” Its founder was Joseph Banks who, in his youth, had sailed with Captain Cook on his global voyage. He believed that a place called Timbuctoo was a city of gold and if only British merchants could reach it and trade with it (before the French did), it would create great wealth for Britain. He recruited several adventurous young men who spoke Arabic and were willing to walk across the Sahara, and he sent them off in search of

Timbuctoo. Most of them died of malaria or dysentery or were robbed and killed by the Tuareg and Arab traders. It wasn’t until 1826 that one of them got there. Alexander Gordon Laing did survive the journey but was rumbled and murdered as he left the city. But he had sent his notes by another route and when they arrived in London the dream of the city of gold was shattered. Timbuctoo was a poor dusty trading town on the edge of the Sahara. There was no gold. Later that century, another explorer, Verney Lovett Cameron was sent to find Dr Livingstone in 1873 but found only his dead body in what is now Malawi. Livingstone’s descriptions of the slave trade in Africa portrayed it as the ‘tragic continent’. His writings inspired a generation of missionaries to come and ‘save’ it. Having dispatched the body back to England, Cameron continued across Africa to what is now the Angolan coast. He survived – just – and wrote a book called Across Africa in which he described the continent as having everything Britain needed: gold, coal, copper, diamonds and miles of open fertile land with a good climate which would be excellent for farming. The book was reviewed in The Times and we know that the newspaper was delivered daily to King Leopold of Belgium who read it diligently. The ironic

result was the horrific rape and pillage of the Congo by King Leopold under the guise of Dr Livingstone’s three ‘C’s – Christianity, Civilisation and Commerce. We had another burst of Africa optimism at independence in the 1960s and again after the end of the Cold War in 1989 when dictators were tumbled and democratic elections held. So the political and economic history of Africa – or at least perceptions of Africa – seem to go in waves that alternate between immense optimism as new opportunities emerge, followed by troughs of despair when it doesn’t work out. Today we have immense optimism about Africa’s economic future and especially its oil and gas finds. This is the “Africa Rising” narrative. It is not wrong. In almost all African countries – except South Africa – the economic indicators seem to be pointing north. But the political and social indicators are not good. Human rights, accountability and democracy indicators are worsening. Discontented youth, outraged by the stolen and misused wealth that is sloshing around bad governments, is becoming more and more frustrated. And today the young are connected. African economies may be rising but so are levels of frustration and anger of African youth. Watch both these spaces

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SA Business - Innovation, Leadership, Dialogue Required Words Nicola Kleyn, in conversation with Chris Gibbons

GIBS’ new Dean-elect, current Deputy Dean Professor Nicola Kleyn, says SA business is going to have to move beyond its traditional boundaries and engage more broadly if it is to succeed. What are the key challenges facing South African business?

There’s no doubt that the low economic growth, political instability, a softer currency and growing signs of social unrest are key challenges that will continue to test executive mettle. These domestic factors coupled with the increased competitiveness and internationalisation across the world mean that South African businesses are going to have to work hard for their lunch! Having said that, it’s not all doom and gloom. Despite the political turmoil that characterises much of the continent, there’s no doubt that African expansion is a key opportunity for many local organisations.

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. . . people talk about the magic of GIBS . . .” But to survive and prosper is going to require organisations to innovate their business models, to lead effectively and to ensure that plans translate into action on the ground. There’s also never been a more important time for business to engage with broader constituents who are shaping South Africa’s future. South African business needs to find its voice and articulate the important role that is has to play in building the country going forward. What role is played by the business school in that scenario?

Building management and leadership capability sits at the heart of any business school. Business schools must enable business to become more competitive in order to generate the economic growth that the country needs. But business schools need to do more. Business does not operate in a vacuum and business

schools, particularly those in emerging markets, have a crucial role to play in ensuring that business executives are able to develop a broader view and constructively engage with actors in the wider eco-system – government, labour, civil society - both locally and internationally. Traditionally, the primary stakeholders of business schools have been centred around business and serving the requirements of business. But if business is not engaging more broadly and does not have insight into broader socio-political issues, and simply focuses on economic issues, growth will much harder. As a result, a business school must put issues that might traditionally have been considered as beyond business onto its agenda. This is not new thinking at GIBS: the formation of the Centre for Leadership and Dialogue is just one example of the importance of us being able to promote strong, vigorous engagement and, where required, robust debate between business and those broader stakeholders. How do you intend to build on GIBS’ success?

First, recognise what has made it successful and ask if those drivers continue to be important? Some are totally valid moving forward, a reinforcement of what we’ve done, and those include an emphasis on very strong relationships, listening to clients and being client responsive. That’s in my blood and something I absolutely, fervently believe in! Second, there’s a ‘can do’ culture. People talk about the magic of GIBS when they come here and that magic has to be appreciated and lived by every employee. My role as a leader is to try and make sure I can create the magic for them, to enable them to deliver. Having said that, I think that we are doing a sterling job in our delivery in a number of world-class programmes At the same time, thought leadership exists at GIBS and there is scope for us to disseminate that beyond the classroom. We examine cutting-edge questions from both business practitioners

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and scholarly communities and look to supply answers to serve both sectors. It’s already happening in our classrooms but we could be more active in disseminating that thinking. So what do you intend to change or do differently?

I’ll answer that in three or four months when I’ve had the opportunity to engage more deeply. The days of a leader arriving and announcing, “I’m going to change this!” are over. I also want to engage more deeply with our clients to make sure I understand their agendas. Also with the ExCo and our various internal teams. Once I’ve done that, I’ll be in a much better position to triangulate the feedback from that against some of my initial ideas. It’s always difficult to follow a successful predecessor?

Many people have asked me about stepping into Nick Binedell’s shoes. But a leader can’t step into another leader’s shoes. You have to wear your own shoes, although I am profoundly appreciative of the tremendous role that Nick has played in the school. One issue is what happens to the strategy of the school? Nick and I have worked closely with the members of the ExCo over the past year, so I’m comfortable, having actively participated in those discussions, that there will be a very natural evolution. I have no doubt that there will be change: there’s always change and innovation at GIBS, it’s part of our DNA. Your career has oscillated between academia and business?

A passion for marketing led me to a junior lectureship in the Wits Commerce Faculty, followed by a spell in store control at Edgar’s. Then back to the faculty before joining Investec to head up the Investec Business School. I’ve always felt the need to inform my teaching with real world experience. Then one day, 15 years ago, I had a phone call from Nick Binedell, who said to me, “I’m starting a new business school. Would you like to join us?” The rest, as they say, is history. Since joining the School I’ve valued the opportunities that are given to faculty to work directly with business in addition to teaching and research. It’s been the best of both worlds. How did you feel when you were told you’d got the Dean’s job?

A mixture of humility and excitement It’s an amazing responsibility and it’s also one of the most vibrant places that I could imagine being. Also, a sense of “this feels right, this is my place”. I’ve been at GIBS for 15 years and I think I’ve made a contribution in the many areas in which I’ve worked in the organisation, but this is a wonderful opportunity to take the school forward on its phenomenal growth trajectory. Away from GIBS – do you have a family or do you prefer to keep that private?

Many leaders have a tendency to separate out the various roles that they play. Whilst privacy for family is important, we cannot ignore the blurring of the lines: work comes home and home goes to work. But leaders of today need to take into account that people have home lives and that the quality of their work life is also linked to the quality of their home life. So building quality relationships at both work and home really matters to me. My four children and husband have been pillars of support for me – something for which I’m very grateful

. . . a leader can’t step into another leader’s shoes . . .”

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gordon institute of business science

Already more of us live in cities than in rural areas . . . It’s a trend that will accelerate as the world’s population growth slows down . . .”

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Ten Trends to Shape Tomorrow Words Chris Gibbons Expert contributors Professor Adrian Saville (GIBS), Dr Azar Jammine (Econometrix), Dion Chang (Flux Trends)

Predicting the future is largely impossible – after all, who could have forecast Amazon, Google or Facebook? But observing the past trajectory of a trend and closely examining its present status does permit an extrapolation into the future. With the help of three masters in their respective fields, economists Adrian Saville (AS) and Azar Jammine (AJ), and regular contributor and ace trend-spotter Dion Chang (DC), Acumen has tried to do just that. We believe that our Ten Trends will definitely shape not only the world around you, but also your lives and your businesses.

The Very Big Picture

Looking back over the past couple of hundred years, two mega-forces have dominated the global landscape: population growth and technology. Since 1800, the world’s population has grown from roughly a billion people to its current level of seven billion. That growth has been facilitated by basic new technologies such as steam power and electricity, as well as applied technologies in areas such as medicine and agriculture. More and more food has produced an ever-healthier population which has lived longer and longer. These massive trends will continue for the next 40 years or so, although what might happen after that is unclear. Although the United Nations estimates that another two billion people will cram onto the planet by 2050, the rate of growth is slowing. After 2050, say the experts, population growth will flatten. With this will come the continued greying of populations. (AS) Technology, on the other hand, is changing at a pace that’s becoming exponential. The internet is one example, but another, even more impressive, is the rise of cellular telephony. There are now more cellphones than human beings and while Apple’s iPhone was only born in 2007, less than a decade later more than 1 in 5 of those humans have a smartphone. So those are Acumen’s 2 Very Big Trends: Slowing Population Growth and More Technology. Let us dig deeper to see what these might mean for you and your business. First, we’ll deal with the population question and then technology, but many of these factors are interrelated. (AJ)

Trend 1 Urbanisation

Photo: getty images / gallo images

Already more of us live in cities than in rural areas. The UN estimates that it’s been that way – the first time in history – since roughly 2008. It’s a trend that will accelerate as the world’s population growth slows down, and heads towards that steady state of about nine billion people by mid-century.

Trend 2 Megacities

From urbanisation comes the rise of the Megacity, defined as a metropolitan area of more than 10 million people. Not that we don’t already have examples: there are 35 in existence, led by Tokyo, Delhi, Seoul and Shanghai. Cairo, Lagos and Kinshasa are Africa’s current official contenders, but some argue South Africa’s Gauteng region, comprising Johannesburg, Pretoria and what used to be called the East and West Rands, with a combined population of more than 12 million is already there. Gauteng is also a good example of Trends 1 and 2 at work: the province is expected to grow by a million people a year for the next ten years.

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As The Economist recently pointed out, megacities have some defining characteristics. They’re great places to exchange ideas, try new products and raise capital, but they’re also places that increasingly operate 24 hours a day, 7 days a week: gyms, restaurants, shops – even, according to The Economist, The Globe Theatre on London’s South Bank, playing Shakespeare at 2am!

Trend 3 Pressure on Resources

Rising urbanisation will bring with it growing demand for manufactured goods and services which means economic growth. This will also mean ongoing pressure on renewable and non-renewable resources. (AS) In South Africa, this will certainly mean an intensification of the electricity and water crises. (AJ) Power and water supply are already both heavily constrained, but the disposal of waste water and effluent is potentially as great a headache.

Trend 4 Jobs, Joblessness & Women

Many of those flocking to cities will be seeking work. Whether they will find jobs or not remains to be seen. A number of experts, including global consultancy Frost & Sullivan, as well as The Economist, believe that technological advances will see many traditionally blue collar jobs in manufacturing being taken over by machines, while computers will make significant inroads into white collar areas, such as the law, medicine and education. Oxford University’s Carl Benedikt Frey and Michael Osborne, quoted by The Economist, believe that as much as 47% of employment in America is at risk of being automated away over the next decade or two.

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This will add to global inequality and unemployment. (AJ) PayPal founder, Peter Thiel believes your future success as a job-seeker will therefore depend on your ability to interact with, and add to, the output of the machines, especially computers. His latest billion-dollar company, Palantir, is a good example: the computers are able to sift and scan massive amounts of data, but highly educated human beings are needed to interpret it. In South Africa, more and more mines are moving towards mechanisation and away from people. Martin Creamer’s Miningweekly.com describes Anglo American Platinum’s “opencast, mechanised and highly profitable Mogalakwena platinum mine” as “the most valuable piece of platinum real estate on the planet” but notes that “Grade 12 mathematics and science plus English is the minimum entry requirement of the workforce.”

A failure of education and skills development, the associated lack of transformation in the economy, the perpetuation of high unemployment and inequality would lead to a growing revolt of the poor and working class against South Africa’s capitalist dispensation and economic dominance by whites. (AJ) One thing is for certain: more and more women will find employment, including in the boardroom. This will follow from demographic change, including women having fewer children; social trends, including lower rates of marriage; increased access to education and structural and technological economic changes that will enable greater job flexibility and increase the feasibility of working remotely. (AS)

Trend 5 Innovation & Agility

Companies, especially big ones, will need to develop the ability to move with great nimbleness. To become agile, in other words. As John P Kotter points out in his latest book, Accelerate, this runs contrary to the hierarchies that have evolved to enable managers to run large corporations. Kotter suggests that such behemoths will have to develop parallel organisations that look far more like start-ups to cope with the challenges. New multi-billion dollar companies will appear even faster than the likes of Google, Amazon and Facebook, none of which existed 20 years ago. Strategic planning will die and be replaced by a culture of Iterate, Feedback, Tune, Repeat. Supply chains will become even more virtual than at present. German multinational Siemens calls the process Manufacturing 4.0 and says “the future is connecting the real and the virtual world.”

Trend 6 Technology Present

Technology will continue to amaze and disrupt. (AS) 3Dand 4D-printing will be the norm and nanotechnology will emerge as a key force, especially in healthcare (see Trend 9 - Healthcare). Driverless cars and pilotless delivery drones will force companies like Avis and DHL to change their business models, while ordinary homes will have drone pads much as we now have postboxes. New businesses will emerge to service these sectors, like drone repair shops. (DC) Electronic, self-directed education will increase, with each child tutored individually by computer. This will include the use of Massive Open Online Courses (MOOCs) at primary and secondary level. In fact, education will remain the imperative investment amongst households, societies and policymakers.

Photo: getty images / gallo images

Google's offices in Washington, DC

Left: The Globe Theatre on London's South Bank, playing Shakespeare at 2am. Above: Jawbone UP24 bracelet.

Photo: getty images / gallo images

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Guided by the experience of economies like South Korea over the last 40 years, it is likely that those that are in the business of emulating such industrial and economic successes display dramatic increases in the average years of school. (AS)

Trend 7 Technology Absent

Overall, business and technology will merge, with a multiplicity of customer touchpoints generating swathes of data. (See Trend 8) But much of this will happen in the background and inside machines. In this way, says Stafford Masie, former head of Google South Africa and developer of the Payment Pebble, technology will disappear into the walls and pipes, virtual and real, just as electricity did during the course of the 20th century. Initially, says Masie, electricity was a great curiosity and people queued to see it in action; now it’s something we take for granted.

Trend 8 Smart Info

Ordinary products will become connected and smart. As a result, forecasts Harvard’s Michael Porter, “Another leap in productivity in the economy will be unleashed by these new and better products. In addition, producing them will reshape the value chain yet again, by changing product design, marketing, manufacturing and after-sales service, and by creating the need for new activities such as product data analytics and security.” Fabulous amounts of data about customers and their habits are already being generated. This will increase exponentially. Some companies will be swamped but victory will go to those that harness this force and manage to extract the right answers.

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Consumers are also spending differently, according to The Economist, which quotes Peterson Institute for International Economics head Arvind Subramanian as saying people are moving “from stuff to fluff ”. According to the McKinsey Global Institute, knowledge-intensive trade has already increased to $12.6 trillion (2012) – nearly half the value of all trade in goods and services. Locally, one example of smart info at work is the usage-based motor insurance offered by Discovery and certain others. A smart tracking device is installed in your car, which monitors not only the kilometres driven, but also your driving habits – good and bad. Your insurance rate adjusts accordingly. It’s smart information that will enable both driverless cars and delivery by drone.

Trend 9 Healthcare

Similar smart systems are already linking consumers to healthcare providers, with users opting for wearable technologies like Jawbone, FitBit and Apple’s new iWatch. An example: Jawbone’s UP24 bracelet records workouts using a cellphone and its GPS technology. Each workout is then sent to a healthcare provider. Discovery – again – awards Vitality points to the scheme member, which can result in things like cheaper airfares.

It is a short step from here to full 24/7 cardiovascular and blood pressure monitoring. Jawbone is also able to track your sleep patterns and what you eat and to link those to your workouts. Shortly, it will tell you, “Don’t eat that – because, if you do, you won’t sleep tonight.” Another example: your cellphone can now detect the early onset of Parkinson’s Disease, via tiny discrepancies and deteriorations in your speech. If you’re developing a problem or a condition, don’t be surprised in future to hear from your GP before you even know you’re sick. Slightly further down the track, nanotechnology is being developed for a variety of internal medical uses, including the delivery of smart drugs and interaction with the body’s immune system. Scientists believe it won’t be long before they are able to introduce swarms of nanobots into the body for a variety of purposes, ranging from routine maintenance of things like pacemakers, to tweaking DNA. Ultimately, you, your doctor, hospital and insurer will all be connected. Trends over the last 50 years suggest that world infant mortality rates will continue to fall and that life expectancy will continue to rise. By 2050 global average life expectancy at birth is likely to reach 75 years, having risen from 55 years in 1950 and compared to 68 today. (AS)

Trend 10 Haves vs Have-Nots

With increasing population pressure on one side and startling new technology on the other, there is a real risk of the digital divide deepening. We already live in a world where a few people have super-fast internet access and a great many more do not. Much depends on where you live, but also on what you can afford. Could we be looking at a world containing: Nano-enhanced super-humans vs. The Rest? People who can afford driverless cars vs. The Rest Those with the right education and skills to interact with technology vs. The Rest? We are already noting the rise of stress-related illnesses amongst those who can’t cope with the digital pressure, yet others thrive. (DC) In his new book Sapiens, Israeli historian Yuval Noah Hariri postulates that our species, Homo Sapiens, may have run its course. If he’s right, could we be looking at the emergence down the line of something very new indeed: perhaps Homo Digitalis or something similar? A new form of human, intimately and permanently linked to a complex web or architecture of smart technologies? And if that were to happen, what would happen to those left behind? How would they react?

And which side of that divide would you want be on?

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A second opinion on trends likely to shape the future is always welcome, especially from a distinguished outsider. Acumen seized the opportunity to talk to Bob Bechek, Worldwide Managing Director of Bain & Company, one of the worldâ&#x20AC;&#x2122;s top management consultancies, during a recent visit to South Africa.

Top Trends â&#x20AC;&#x201C; A Global View Words Bob Bechek in conversation with Chris Gibbons

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We know that markets can be very, very powerful mechanisms to govern the development of resources . . .” Acumen: Do you agree with our assessment that the growth of technology and the slowing of overall population growth, the greying of the world’s population, are the two mega-trends that lie ahead? And, if so, what do they mean for business?

Bob Bechek: Population demographics obviously affect different countries in very different ways, but this is a profound change that the world really has not had to come to grips with before. We have seen a little of how this plays out in Japan, but as the core of Europe faces this even more starkly, I think it puts tremendous strains on economies, on immigration policies and on investments in productivity: essentially a smaller pyramid of key productivity – your population in other words – supporting an ageing group of retirees. There are of course other countries, particularly in sub-Saharan Africa – Nigeria, for example – but also India, in which the demographics are extraordinarily favourable. But here we have a quite different problem: the massive education challenge as urbanisation increases and a staggering number of people need somehow to be educated for the kinds of jobs that will be required in the years ahead. It is a daunting challenge in those countries.

gordon institute of business science

One trend we identify is the hollowing out of the mid-layer of jobs, along with the need to develop the skills that enable people to work with computers. And, if you do not have those skills, you will be left doing manual labour. Do you agree with that scenario?

I was in the robotics business in a prior life and I remember writing a paper for a conference at Yale when I was 20 years old, concerned about the productivity gains that might come from the use of industrial robots in factories. It seemed to me, at that young age, that it might eliminate many of the unionised, wellpaying jobs that were the foundation of the middle class in certain western, developed countries. I was naïve about the extent to which productivity gains have historically led to additional opportunities. They have created jobs that were difficult to foresee at the time, even while eliminating other jobs. The displacements, though, that come through free trade policies and that come through breakthroughs in automation are still very, very significant. So while, net-net, it may be possible for us to say the world is far better off, with hundreds of millions of people lifted out of poverty, it is nevertheless the case that for individual demographic groups in particular countries, the displacement leads to essentially permanent waves of unemployment. For example, the telecoms sector, with the advent of wireless, went through massive change and obviously the world is a better place

for that, but it led to vast numbers of technical and other welleducated employees essentially being permanently out of work at relatively young ages. So the displacements from automation, even if net-net obviously a good thing for the world, are very significant. Most countries do not really have any productive or constructive way of dealing with that. Germany has a better track record of jobs training, retraining and ensuring the smooth handling of changes in employment demand, but still it is a massive challenge. With regard to the technology part of your question, I do think technology creates extraordinary good for the world overall, but it also creates winners and losers. The rate of innovation is accelerating and broadening, both within information technology where we have seen so much gain and in other areas like life sciences. I expect the creation of new industries and significant productivity gains in traditional industries. Again, the impact on certain kinds of jobs will create lots of difficulty during that transition. The general impact of much of information technology has been to create more ‘winner-take-all’ kinds of situations, where certain highly educated, highly skilled or experienced individuals have created levels of wealth we have never really seen before. Certain companies have, for increasingly short periods of time, dominated industries worldwide with extraordinarily high levels of profitability or market cap. But that leaves other people out of the employment picture in significant ways. On the other hand, as consumers, an increasing share of the world has benefitted enormously, and I expect that trend to continue. I am not referring to fundamentals like clean water and sanitation but the access to information and communication technologies by people even of modest means. Some of it is superficial. For instance, the ability to get a Twitter feed is not the most fundamental necessity of life. However, increasingly technology is making a better life for many people around the world. Two trends, which run side by side, are increasing urbanisation and the development of megacities. What do these mean for business?

Urbanisation, in particular in places like China, is transforming the world because we get significant boosts in productivity as people move off the land into cities. We have seen hundreds of millions of people lifted out of poverty through this trend in China – also in India – and we will see, I think, much more of this coming in Africa. As a result, the leadership of such megacities becomes an essential element in how well the world is run. Increasingly, national governments are unable to establish

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policies with the pace required to deal with the many issues. The leadership of the worldâ&#x20AC;&#x2122;s largest cities determines how well we are able to deal with problems of employment, migration and environment, and is absolutely essential. For business, again, it is about the availability of skilled employees. The bar keeps rising on what it means to be a skilled employee in a more automated environment. Urbanisation contributes to the hope that we will be able to grow the pool of skilled employees. As populations migrate to the cities, pressure will increase on resources and how we manage them. How we manage the steel and the concrete to build these cities, but also how we deal with things like water, electricity supply and waste disposal. Is there opportunity here for business?

Infrastructure needs across much of the developing world are enormous. Financing that will require new mechanisms. The world is awash in capital, we have a savings glut across the world and yet, as of today, the way that savings are invested into infrastructure is not yet solved. Related to that of course is the pressure on resources. We know that markets can be very, very powerful mechanisms to govern the development of resources: in smoothly functioning evolutions of demand, markets work well in increasing supply. Even in markets like oil, which go through waves of people thinking we are at peak oil or we are running out of oil, but actually markets work reasonably well. There are other markets where pricing mechanisms are not really working and so what we do about water in many parts of the world is a problem of a different nature. Markets are not yet sufficient to solve that problem. In general, as things become scarcer, we become more efficient in our usage of those things and investment is organised to increase our supply of those resources, but it does not work in all commodities, and water in particular is quite a challenge because there is rarely a real price attached to it. Amidst all the pressure from ICT and the need for new skill sets, the modern corporate is forced to become more and more nimble. But are really big corporates capable of that agility?

It is a mammoth challenge to be the CEO of a global organisation and somehow move at the speed required as markets evolve more and more quickly. I do not know of a CEO who is not wrestling with this challenge. Virtually every company in every industry is facing new competition, either from emerging economies with lower cost structures, or from new technologies that break down boundaries between products. CEOs feel a tremendous need to move more quickly than in the past and yet, because of the progress in the last 30 years in globalisation, these organisations are larger than the world had ever seen before. We do have great advances in communication technologies to allow a global firm to talk together â&#x20AC;Ś I sit with clients where a simple topic has a conference call with 50 or 100 people dialled

in from all around the world. People who have never met one another and now they are speaking a single language. But getting these massive organisations to move quickly is not an easy thing to do. Keeping things simple in a complex world is not easily done. Another trend we identified is the growing link between healthcare and technology.

Well, the diseases of the rich have introduced a completely new set of healthcare challenges different from the traditional infectious diseases, diseases of poverty, that we are learning how to deal with both economically and otherwise. A tremendous amount of research is going into trying to solve these problems. For example, delivering chemo- and other therapies in a very localised way into the body or using the smartphone as a personal monitor. There are promising advances, but, as usual, I would expect these advances in technology to be well ahead of our ability to use them. That has been the case in general and it will be the case here again. How do we, for example, take an advance in technology for healthcare and disseminate it broadly enough, so that it is not just a solution for the richest of those in rich countries? That will be an enormous challenge: technology will not be the panacea that we might hope, when healthcare is one of those goods that needs very effective distribution to everyone and increasingly is viewed as a basic right, if we do not have the ability to distribute it. Are you suggesting that we might see the digital divide grow between those that have technology and those that do not?

There are technologies that improve the lives of the elite but there are even more technological innovations that are democratising in their effect and have a way of levelling the world. On balance, the most important advances have actually been of the latter type: antibiotics, the internet and fertilisers are examples of three profoundly important advances in technology that had an extraordinary impact on improving the lives of billions and in so doing, bringing the entire world up to a similar level. Of all the things we have discussed, what is the most important? What would you single out for your Top 10 clients?

My number one for these CEOs, as leaders of their businesses, is how to be able to move more quickly. They need the nimbleness of a founder-led company for a modern global organisation of enormous scale. But these CEOs are also citizens of the world and leaders in civil society, and as we think about the environment in which they are operating, then I think about education, job creation and climate as the big three that are very worrying, even if an individual CEO does not feel they have much ability to solve those particular problems

Photos: Gareth Jacobs of business science gordon institute

general management

. . . Africa should always do the easy things first.â&#x20AC;? General Electric Chairman and CEO, Jeff Immelt

general management

Jeff Immelt Leading in Uncertain Times

Imperial CEO Mark Lamberti

Words Chris Gibbons

American multinational General Electric (GE) is one of the most studied and storied companies in business history. With a market cap of $240 billion, its CEOs are the corporate world’s rock gods. No surprise then that a Who’s Who of South African business luminaries was at GIBS to hear the views of GE’s current CEO, Jeff Immelt, making his only public appearance on a short visit to South Africa.

Entrepreneur Wendy Luhabe

Jeff Immelt…On Uncertain Times

There’s a lot of growth but there’s a ton of uncertainty out there. The growth coming out of the 2008-09 financial crisis is extremely uneven with more technology, which means there are more winners and losers. There is more income inequality than ever before. We are in unprecedented territory in terms of what central banks have done globally. You have a number of global cross-currents that emanate from the global financial crisis. It’s better than it was then but when I talk to the GE team, I just say, “Look, slow growth and uncertainty. Forever.” We’re going to be in this pattern of slow growth and uncertainty for a long time and leaders just have to adjust to it.

On GE’s strengths

FNB CEO Jacques Celliers

Another advantage: I have a portfolio. I took over GE the day before 9/11. If you were in GE when this tragedy happened and you owned 1200 commercial aircraft with a huge commercial [jet] engine portfolio, that was a very tough time. But a decade later, we’re 10 points of market share higher, because our power business, plus GE Capital and GE Healthcare, funded our aviation business during the tough days. So I sit here today with a $120 billion business and we think there’s no cooler business to be in than commercial aviation. We have the latitude to invest when nobody else is, and be able to play it for the long term. Director of Companies David Brink

photos: Mzu Nhlabati

We’ve got a great team, we discuss things frequently and always have a game board of ideas and contingencies. In uncertain times, the advantage that I have - that most companies do not have - is that we can invest into difficult situations. Look at Europe today, it’s as out of favour as any region can be. People are worried about economic growth, governance, the euro. But if you can do products that can be exported from Europe, and invest in globally competitive workforces, this is the perfect moment to invest in Europe. Running a company like GE, you can take advantage of contrarian situations all the time because you can play for the long term.

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. . . South Africa used to be optional, now it’s mandatory.” In volatile times we can also pull together what I call ‘horizontal solutions’. We can bring a product, financing, services all together to the same place at the same time. That is a massive advantage right now.

On The Attributes of a Good Leader

Stunning competitiveness. If you want to run a business today, you had better have an incredible will to win. You’ve got to be a learner; you have to know that “I am never going to be as dumb as I am today and that tomorrow I’m going to learn something new and the day after that. Resilient. As the great philosopher Mike Tyson said, “Everybody has a strategy until they get punched in the nose!” The right combination of self-awareness and self-confidence. If you’re self-aware but not self-confident, you’ll never get anything done. And if you’re self-confident but not self-aware, nobody wants to work with you. You have to have the willingness to stand apart, to take decisions and face consequences. Good risk judgement is key. Last, you have to be a giver, not a taker: no-one that works for you can ever doubt your intentions.

gordon institute of business science

I don’t think business leadership is the art of perfection. It’s the art of learning fast, making pivots, driving change, getting better every day. Learning and adapting to win is really key. The world’s just too hard, there is too much competitiveness, that if you think you’re going to be right each and every day, it’s a terrible mistake.

On his Favourite Leaders

The best political leader: [German Chancellor] Angela Merkel, who over a long period of time in a difficult arena has been able to balance politics with moving her country generally in the right direction. In business, the people I admire today are the Indian entrepreneurs, because they move with speed and at scale. It’s easy to be small and nimble, it’s easy to be big and slow, but I respect big and fast. In the US, my favourite CEO is Ken Chenault of American Express. If I had to buy a ticket for dinner with just one person, I’d probably still pick [Warren] Buffet. You’d have to go to some

crappy place in Omaha, Nebraska, but he is such a good teacher about the world.

On Europe and its Possible Recovery

Europe is important, it’s a market of 500 or 600 million people; the world is much better when Europe is doing well. But there need to be labour and productivity reforms, investment in infrastructure. If you don’t do all the things that drive competitiveness, ultimately you don’t get growth.

On the Sustainability of the U.S. Recovery

The US has done a lot of fiscal stimulus with very low interest rates, so the economy’s healed. But we also have an awesome entrepreneurial climate. When I look at Google and Facebook and the amount of entrepreneurial spirit in my country, it has almost no peer - in fact I can’t think of any - and that has been a real engine of job growth and a real engine of change in the US. The combination of fiscal policy and entrepreneurship is great.

On Jobs

The world is underemployed. The US, Europe, South Africa, Africa, China, India - all are underemployed. The jobs aren’t there. It just dwarfs everything else. It is the world’s biggest problem. Jobs trump everything. The CSR of this generation is jobs.

On China, Chinese Investment in African and Bidding against GE

China is going to be the No.1 or No.2 economy in the world, so if you want to run a global business,you have to be meaningful in China. They’re trying to slow the economy purposefully and if they can land the economy at 7.4 [% growth in GDP], I would say well done! I’m a free market capitalist, but if there is one government that has done more right things than wrong over the past generation, I’d have to say it’s the Chinese. We don’t mind competition and we don’t mind Chinese competition. The basis on which we compete is different from the basis on which the Chinese government competes. We try to play to our strengths - local investment, local training, things like that.

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On Africa

When I talk to the GE team, I tell them we have to win in Africa. When I became CEO, GE used to segment the world: US, Japan, Europe and R.O.W. “R.O.W.?” Rest of World. And if we ever got an order from South Africa, we would hit our knees and say, “Thank you, God, this is a miracle. An order from South Africa - who did it?” No-one would know the answer. Now, I say to the GE team, if we aren’t dominant in Africa, if we don’t win everywhere in Africa, we’re going to lose because Europe, Japan, the US, none is going to grow that fast, so in the whole dimension of running a global business: South Africa used to be optional - now it’s mandatory. Growth in Africa over the past decade has been phenomenal, steady, and at least some of that has been driven by natural resource pricing. Not all of it - some is better governance, better entrepreneurs, better economic investments and more infrastructure, but some of it is driven by iron ore and oil pricing. So it’s going to be really interesting to watch the consistency of investment. Do people run? Do they stay? Which countries do better? My own sense - just in the early days - is that Africa is going to be OK. We still see a fair amount of activity even with lower oil pricing and think this long-term trend is going to stay in place for the next couple of years.

Forum moderator & BBC anchor Lerato Mbele

On South Africa and Eskom

I’m not an expert on South Africa but I’ve been here a number of times. Every time I pick up the newspaper here, Eskom’s on the front page. That’s true again this year. When I see that, my first inclination is “How could we make their current installed base more efficient?” In other words, what’s the solution you could do in six months? Not three or five years. Africa should always “Do the easy things first.” Always do things that can be done quickly and are really practical. Eskom's problem didn't get created overnight and it can’t be fixed overnight. Any time I’ve had to do turnarounds at businesses, stability comes before improvements. So I would put an emphasis on stability in the short-term. You’re going to have to make some tough decisions just to take some of the day-in and day-out pressure off and then get on a three-month, six-month, nine-month plan. There’s no “Easy” button for this; it can’t be politicised, it’s going to take some time to get out, but stability has to come first.

Professor Nick Binedell

On Attracting More Foreign Direct Investment to South Africa

Jeff Immelt

Photos: Gareth Jacobs

The best thing that could happen for South Africa is more regional enlargement. You could actually do things here and have a meaningful context to serve all the southern part of Africa. There’s plenty of talent and capability here, the rand is cheap right now, but the market itself isn’t quite big enough to do things at scale.

On the Toughest Part of His Job (as a Committed American Football Fan!)

I was in India when somebody asked me “what’s the toughest part of running a global company?” And I said, “pretending to give a s**t about soccer!”

general management

When is it time for the CEO to go? Words James van den Heever

Leaders are important for the success of any organisation, so it is vital to understand when they need to be replaced. The proverb ‘A fish rots from the head down’ is common in many languages: the quality of any organisation’s leadership has a disproportionate impact on its success. It appears to hold good for all organisations, from countries – something no South African needs telling – right down to households. Companies, too, of course.

gordon institute of business science

Tom Wixley, a non-executive director of companies, agrees with the general principle, saying, “At the end of the day, the difference that a CEO makes to company performance is massive.” While everybody seems to agree that CEOs have a major impact on the performance of their companies, the precise linkages are not yet properly understood. Recent research published last year in the Strategic Management Journal cast some light on the subject.1 The authors suggest that CEOs tend to follow a certain trajectory. At the beginning of their terms of office, they tend to be in learning, risk-taking mode, and open to new initiatives. Later, they tend to focus inwards, becoming risk-averse and committed to established strategies. The authors go on to argue that the first phase impacts company performance by building good relationships with customers, while the second favours the creation of strong intra-company relationships. Each one of these phases has its advantages, and the trick is obviously to assess when the trade-offs between the two make a change of leader necessary. (Based on a survey of data from 356 US firms, the researchers concluded that the optimal CEO tenure length for the firm-customer relationship is 4.8 years.) 1 Xueming Luo, Vamsi K. Kanuri, and Michelle Andrews, “How does CEO tenure matter? The mediating role of firm-employee and firm-customer relationships”, Strategic Management Journal (2013), available at http://www.fox.temple.edu/cms/wp-content/uploads/2013/09/How-Does-CEO-tenure-Matter.pdf

general management

Roy Andersen, also a prominent non-executive director of companies, says that, as a general principle, companies do stagnate if a CEO stays in office too long. “Of course, I must stress that’s very much a generalisation – one can think of many exceptions,” he adds. “But there’s no doubt that past success makes innovation hard.” As a rule, Andersen believes that a CEO’s best contribution usually comes during years three to five of his or her tenure. King III (Principle 2.17.5) makes the appointment of CEOs, including succession planning, board responsibilities. It thus follows that the onus for monitoring the performance of the CEO, and ultimately for initiating his or her removal, falls squarely on the board’s collective shoulder. In practice, it is likely that the chairperson would drive this process, particularly as good chairs tend to build close, mentor-style relationships with their CEOs.

Storm signals

So what are the red lights that will indicate a CEO might need replacing? One sign, says Dr François Hugo, who has held numerous HR positions within the First Rand Group and has worked with its founders over a long period, is an excessive focus on operational issues. “In fact, building an organisation’s culture and values is the most important element of a CEO’s job description because that’s ultimately where the long-term competitive advantage lies,” he says. A related point is that an exclusive or main focus on short-term financial results may indicate a CEO who has lost sight of the big picture. Indeed, one might argue that CEOs like Enron’s Jeff Skilling, Worldcom’s Bernie Ebbers and Hollinger’s Conrad Black all epitomise such a focus on short-term financial results at the expense of a values-based culture that supports long-term, sustainable profitability.

Photo: getty images/ gallo images

Another area that boards need to watch is employees. One of a CEO’s primary roles is to attract and retain the right resources. A company that finds it hard to keep good executives or whose people are generally mediocre probably has a CEO who is not right for the job. In addition, a great CEO will understand what his or her deficiencies are, and will ensure that he or she hires people to fill those gaps – something smart people are capable of doing, Wixley notes. Attracting and retaining the right people also impacts the wider area of general tone within the company, particularly when it comes to debate. A classic warning sign would be a CEO who does not encourage vigorous debate, and who does not solicit (and accept) input from subordinates. One of the signs of such a situation, says Hugo, is the existence of “in” groups that operate much as courts did in the days of

. . . the optimal CEO tenure is 4.8 years . . .” the divine right of kings. As the history of royalty shows, such a status quo breeds complacency, and a reluctance to change. A telling example is WalMart’s current CEO, Mike Duke. According to Forbes columnist, Adam Hartung,2 the company is focusing on “business as usual” while the rest of the retail world is investing heavily in online and mobile channels. And there is no doubt that Microsoft has missed the chance (perhaps forever) to ride the mobile wave that is currently redefining computing and business. All of this fits in well with the notion in the research paper cited above that a CEO’s tenure goes through phases, from outward to inward looking. The emergence of “in” groups, an inability to keep good people, a lack of debate – all of these would seem to indicate that the balance between external and internal focus, on customers and the firm, has been lost, and that the company could be entering a period of stagnation. Such CEOs find it hard to address “the brutal facts”. In Good to Great, Jim Collins uses the example of Admiral James Stockdale, the highest ranking US prisoner of war during the Vietnam conflict. A leader of prisoner resistance for seven-and-a-half years, Stockdale’s coping strategy was never to lose faith in the end of the story, in the belief that his strategy would prevail. Critically, Stockdale said that those who did not make it out of prison were the facile optimists, who died of broken hearts because their unrealistic hopes were never realised, time after time. This combination of tough realism and visionary certainty is essential in a CEO, and its absence can be a trigger for concern. Finally, and this can be something that particularly plagues founder CEOs or family businesses, boards need to beware of CEOs who believe they are the company.

“How”–as usual, it is not so easy

So far, so logical: CEOs are hugely important drivers of corporate performance, and there are several early-warning signs that could indicate a CEO is underperforming. But is it possible to be more objective? Some companies are putting performance measures in place when they employ CEOs; it is hoped that these will provide both board and CEO with a mutually agreed set of indicators that will make this an easier decision. First Rand’s Hugo is dismissive, saying that formal frameworks don’t work because, if nothing else, they come into play too late, when the rot has already started. Ansie Ramalho, CEO of the Institute of Directors in Southern Africa, does see a role for performance indicators or frameworks but is clear that “no formal indicator can replace judgement.” She also makes the good point that a company’s needs may – almost

Adam Hartung, “Oops! Five CEOs Who Should Have Already Been Fired (Cisco, GE, WalMart, Sears, Microsoft)”, available at http://www.forbes.com/sites/adamhartung/2012/05/12/oops-5-ceos-that-should-havealready-been-fired-cisco-ge-walmart-sears-microsoft/.

general management

. . . beware of CEOs who believe they are the company.” certainly will – change over time; in extreme cases, qualities that made a CEO ideal may in fact become positive liabilities. “Everyone agrees that Churchill was an excellent wartime prime minister, but generally the view is that he was not as good during times of peace,” she says.

gordon institute of business science

(One might add that the same logic could be applied to leaders of liberation struggles once those struggles are won: it is a measure of Mandela’s genius that he recognised this.) Indeed, by their very nature, performance targets are highly concrete and connected to company strategy. They do not cover less tangible but critical elements such as, for example, ability to keep good people or accept feedback. And, anyway, external factors may prevent a CEO from achieving strategic goals. For example, a company’s strategy might be to expand from its country or origin, and the CEO’s target might be to expand into a certain number of countries in a certain time – but many external factors could prevent this from happening, unrelated to the CEO’s own performance or capabilities. Another option, Wixley suggests, could be to set tenure limits for CEOs as a way to remind both the CEO and the board to assess things regularly. If formal performance frameworks have, at best, a limited use, then it seems as though vigilance by the board offers the best solution. In Hugo’s experience, it is vital that a culture of trust is built up in which honest exchanges of opinion can take place. He believes that CEOs desperately need an objective counsellor or sounding board, who is not a close member of their teams, to help keep them on track. In an ideal world, perhaps, the board chair might fulfil something of this role.

“We need to talk …”

Once the vigilant chairperson has seen the flashing red lights, what are his or her next steps? Andersen recommends a discreet approach to other board members to confirm whether they, too, have noticed anything amiss. The chair of the Remuneration Committee would be a particularly important person to canvas. If the chair’s perceptions are confirmed, then he or she needs to have a “respectful” conversation with the CEO, giving him or her the opportunity to react to the comments – and also to share his or her aspirations. However, this process mustn’t be abused, Andersen says; if the board remains of the opinion that the CEO has to go, then the chairman has to request the CEO to resign. Andersen adds that chairpersons themselves also reach a sellby date. “They need to consider their own position, and the contribution they are making, from time to time,” he says

Red lights Focus on operational issues. Focus on short-term financial figures. Insufficient focus on building corporate values and culture. u Inability to attract or retain the best people. u Lack of vigorous debate within the executive team/ company. u Honest feedback is not welcomed. u “In” groups. u Naïve optimism/inability to face up to “brutal facts”. u Belief that the CEO is the company. u u u

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general management

Lost in the Matrix Words Dr Caren Scheepers & Prof Nick Binedell

Born out of the aerospace race,1 organisational designers and management consultants have been preaching the virtue of the matrix since the 70s. They've told us to apply a matrix to our leadership structures and solve all our problems. But they're wrong. It turns out that corporate matrices have been causing the kind of confusion and stress that Keanu Reeves encountered in the movie of the same name. Intro

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Outrageously, precisely the same reasons why matrices were created in the first place are now blamed for their lack of success. Matrices, after all, promised heightened collaboration and diminished silo-mentality. Did they deliver on this promise? Well, no. Countless of our consulting clients regularly lament their frustration and even sense a dangerous despondency with having at least two bosses to report to. Commonly, matrix organisations are grid-like with two perpendicular dimensions. Consequently, there are two chains of command, where the one usually represents a functional line such as engineering, IT, HR or finance and the other, project lines. Our experience indicates that these dual reporting lines are, in reality, more like ‘duel’ reporting lines.

Organisations in South Africa such as Discovery, Investec and Standard Bank, all pay attention to procedures . . .” Indeed, the complicated matrix organisational design slows down decision-making at a time where there is an outcry for agility and rapid innovation. This article consequently highlights issues around matrix designs and advises three steps to counter the problems. Organisations in South Africa such as Discovery, Investec and Standard Bank, all pay attention to procedures, processes and training designed to make the matrix structure work. Nonetheless, our involvement as practitioners across a range of industries indicates that the matrix structure certainly causes more ambiguity, role conflict and subsequent burn-out than any

other structure. It therefore requires the most team or interteam Organisational Development interventions. Accordingly, matrix organisations often blur the lines of responsibility and authority, violating Henry Fayol’s essential Unity of Command principle which dates back to the 40s. Matrices are also supposed to speed information vertically and horizontally through multiple information channels. In reality, we found that lack of communication and misalignment are now blamed for the failure of matrices. Originally, matrices theoretically enabled the assignment of indispensable technical specialists to multiple projects. Instead, matrices frustrate the very talented staff members who we, the consultants, are supposed to motivate and develop. Regrettably, in their exit interviews, they repeatedly quoted endless meetings and the necessary evil of political manoeuvring as causes for departure. Nonetheless, business today is increasingly complex, dealing with progressively multi-channels for customers, each with its own set of priorities and responsibilities.2 In spite of his admission to decades of academic and business research on the serious issues around matrix structures, like those we have cited, Jay Galbraith, world-renowned guru on modern organisation designs, argues for even more complicated matrix designs that allow companies to pursue multiple business goals with equal focus.3 He quotes giant multinationals like IBM and Procter & Gamble, with up to four matrix dimensions and subsequently four ways of measuring profits and losses. The question remains: if we have so many problems with a two-dimensional matrix, how would we co-ordinate even more laterally interdependent relationships or add the fifth dimension of Big Data? Have our strategies indeed become too sophisticated to implement with second-rate organisational forms and even third-rate execution skills? In contrast, we argue that it is about time we listened to the research and practice results about the negative consequences of matrices. We have come to realise by now that having numerous managers requesting work from individual employees results in a lack of focus and goal achievement. The argument that highly

Larson, E. W. & Gobeli, D. H. (1987). Matrix Management: Contradictions and Insights. California Management Review, Volume XXIX, Number 4, Summer. Galbraith, J. R. (2000). Designing organisations: An executive guide to strategy, structure and process. San Francisco: Jossey-Bass. Galbraith, J. R. (2012). The future of organization design. Journal of Organization Design, JOD, 1(1) 3-6. 4 Scheepers, C. B., & Jooste, M. (2012). Neuro-leadership informs internal business coaches on change, COMENSANews, Nov, 30. 5 O’Reilly, C. A., & Tushman, M. L. (2004). The Ambidextrous Organisation. Harvard Business Review, April, 74-81. 6 Sy, T. & Côté, S. (2004) Emotional Intelligence. A key ability to succeed in the matrix organisation. Journal of Management development, 23 (5), 437-456. 1

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Certainly, many current organisational structures have been added historically. We typically inherit these structures. However, on organisational redesign consulting projects, we often question the rationale of a specific position or structure. Unfortunately, we regularly uncover designs supporting an individual’s capability, rather than supporting a justifiable strategy. This despite Max Weber’s warning in 1864 against focusing on personality rather than position. Instead, we advocate firstly for structure to follow strategy, aligned with Chandler’s declaration in the 60s. In this regard, it is essential that companies need to put “their money where their mouth is” and demonstrate commitment to a new strategy, by creating a separate unit with dedicated resources. This new structure should not be woven into the existing organisation via various matrix relationships or merely consist of specialists with dotted lines from numerous divisions. John P Kotter, in his new book Accelerate, reports on organisations that are resolutely insulating such new divisions to preserve their distinct entrepreneurial start-up cultures. O’Reilly and Tushman of Harvard5 advised an alternative, ambidextrous organisational design in this regard. Secondly, only some managers effectively build lateral relationships across organisational boundaries in matrix structures. Accordingly, we campaign for management education to focus on leaders’ collaboration skills, political acumen to navigate their way in the matrix and undeniably Emotional Intelligence skills6 like tolerance of uncertainty.7 The question remains whether the emphasis should be on creating the ideal structure or rather focusing on managerial behaviours that would make any structure work. In the 90s, Bartlett and Ghoshal’s research revealed the latter.8 Introducing matrices should subsequently involve more than drawing dotted lines on an organisational chart. At a minimum, the effectiveness of the matrix organisational design should be constantly and closely monitored. Nonetheless, numerous companies fail miserably at managing this change process commendably. Finally, we argue against the permanency and universality of the matrix design. Galbraith declared that matrices perennially

Finally, we argue against the permanency and universality of the matrix design . . . matrices perennially remain the structure of choice amongst CEOs . . .” remain the structure of choice amongst CEOs. If matrices are so hopelessly confusing, how is it then that it is still the most preferred design throughout almost two-thirds of large organisations? We could instead, create temporary matrices to assist with execution of specific strategies and rely more on informal collaboration and deployment of ad hoc teams in rapid response to customer demands. We advocate hybrid models or combining multiple forms, where only a section calls for a matrix design to give specialists a mechanism for knowledge sharing. Furthermore, we have to take cognisance of the fact that centralised decision-making has been identified as one of the major obstacles in realising transformational leadership benefits, like employee engagement.9 As a result, we cannot afford to continue with centralised-type structures and instead have to provide country managers with more authority to take decisions locally. Companies like Nedbank did away with confusing matrix structures as far back as 2004,10 whereas Gillette introduced even cross-matrix operating committees in 2000 to increase lateral integration.11 Barclays Africa, in its turn, introduced a matrix structure in 2004 to tighten control systems by introducing two sets of eyes, one set local and one set central.12 However, spearheading another wave of restructuring is not necessarily the answer. We have observed that smart CEOs are realistic about the strenuous disruption that restructuring causes. These CEOs rather address head-on hindrances to strategy implementation, like cultural issues. It is about time we realised that the matrix design does not deliver on promises and we should instead address the root causes of organisational problems. In this way we might prevent dramatic scenes of “getting lost in the matrix”

Sy, T. Challenges and Strategies of Matrix Organisations: Top-level and Mid-level Managers’ Perspectives. Human Resources planning, 28.1, 39 -48. Bartlett, C. & Ghoshal, S. (1990). Managing across borders. Boston: Harvard Business School Press. Pawar, B.S., & Eastman, K.K. (1997). The nature and implications of contextual influences on transformational leadership: A conceptual examination. Academy of Management Review, 22,80-109. 10 C.B. Scheepers, J. Maphalala, and C. Van der Westhuizen, (2014). “Nedbank: Transformational Leadership in sustainable Turnaround,” Ivey School of Business, University of Western Ontario, 1-25. 11 Moss Kanter, R. (2003). Leadership and the Psychology of Turnarounds, Harvard Business Review, June, 58-67. 12 Mitchell C. & Luiz, J. (2005). “Barclays Bank in Africa-Moving on from Colonial Roots”, Wits Business School, WBS-2005-8. 7

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Photo: getty images / gallo images

complex global market realities require a matching complexity in organisational design, does not hold water. Are we not supposed to simplify work-life, rather than combat complexity with still more complexity? Neuroscientists are revealing significant scientific evidence that our human brains are wired to prefer clarity. Ambiguity is literally experienced as pain. Consequently, confusion and stress are to the detriment of effective brain functioning.4 We also know that relationships suffer when people are purposefully set up in political conflict situations, where they need to fight for access to resources.

general management

The Need for Speed Words James van den Heever

gordon institute of business science

Change has become the only constant in business – a cliché because it’s mostly true. How do big corporates gain the agility they need without losing the hard-won ability to create and execute business processes that deliver value? The factors driving change in the business – and, indeed, wider – environment have been around for several years. They are so intertwined that it is hard to separate them. Among the most obvious are the creation of a global economy inaugurated by the triumph of capitalism and fuelled by the concurrent rise of the internet as a universal platform for business and communication. Technology’s role in commerce is deepening: where once it acted as an enabler of business, now it is sparking industry disruption. More potent still, a new model of accessing computing power – cloud computing – is making it possible for even small companies to obtain infrastructure, applications and even business processes “as a service” from the cloud.

The other is the flood of data being generated by all this technology – picturesque terms such as ‘zettabytes’ and ‘yottabytes’ (scientific euphemisms for “truckloads of the stuff ”) to quantify it are springing up. Data on its own, of course, is just a nuisance: what has changed is the availability of sufficient cheap computing power to crunch it and analytics programmes smart enough to discern patterns to aid decision-making (see cloud computing above). Mobility is the Philosopher’s Stone that turns all this into gold because it promises the ability to interact directly with consumers in near real time – thus setting the expectation that the company will be able to respond appropriately.

Two other trends feed into this vortex. One is the astonishing growth in mobile smart devices with massive computing power, something that is changing consumer behaviour, and blurring the boundaries between work and private life. People are always connected as consumers and as employees.

This is no more than a sketch map of a highly dynamic and unpredictable environment. One thing, though, is clear: the interplay of these forces has created a business environment that is very competitive indeed. Geographic and sector barriers are falling: Swedish furniture retailer Ikea is going to start selling

Available on Accenture.com.

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insurance soon and Google is leading the charge to the driverless car. It is this competition from unexpected sources, and the power that technology confers for disruption, that provide the true reasons why companies are seeking to become more agile.

Characteristics of agile corporates

Accenture has conducted two research reports into corporate agility, one in 2012 and one last year. The 2014 study, Traits of truly agile businesses,1 identifies a group of “leaders”, those companies that reported an increase in sales of more than 10%. Based on analysis of this group, the report comes up with five best practices for corporate agility: l Build seasoned, diverse leaders and management teams. l Prioritise strategic decisions. l Speed up decision-making. l Prepare their ecosystems to act quickly. l Invest in, and make more use of, data and analytics to run the business.

Photo: getty images / gallo images

These characteristics are helpful in providing a framework for thinking about how companies can achieve agility, but the real trick is how to achieve these outcomes. At the inception, it is worth taking a reality check. In the words of Erik Venter, CEO of Comair, the aviation company that operates both British Airways in South Africa and Kulula.com, “Just how much speed do you need?” “It’s not often that an industry changes overnight,” adds Deen Gielink, Comair’s Pilot Fleet Manager who is completing research for his MBA thesis at GIBS on how managers balance exploitation (business as usual) and exploration (responding to threats or opportunities) in order to achieve peak performance – corporate agility from another point of view, you might say. GIBS’ Professor Karl Hofmeyr makes the same point when he observes that too much nimbleness can be catastrophic, while EY’s Head of Africa Strategy Grant Brewer adds that a company simply cannot be in start-up mode all the time. Brewer adds that one has to look at the competitive landscape dispassionately to assess just how competitive it actually is. Gielink is surely right when he says that in the main, companies have to constantly strike a balance between both poles: “You’re always doing both, and both require innovation”.

Getting the structure right

One issue a company must resolve in the quest for agility is its organisational structure. The conventional corporate structure is hierarchical and process-driven. It works very well for running and improving a business but, by its very nature, is not very agile. Swift, far-reaching decision-making is hard, not to mention the challenge of changing “the way we do things”. In a 2012 article for Harvard Business Review, “Accelerate”,2 Professor John Kotter proposes a kind of shadow organisation, 2 3

Based on a book with the same title, sadly rendered in SMS-speak as XLR8. See Lost In The Matrix, Dr. Caren Scheepers & Prof. Nick Binedell, pp 44-45

a network of change champions that operates outside of the existing hierarchy to conceive and implement change projects. Conceived of as a network, the people staffing this secondary organisation would be doing it for their own satisfaction and improved career prospects. (A personal observation: it may be that I mix with the wrong types of corporate – you know who you are – but without exception the managers and executives already seem over-committed. That they would have the time to design and implement far-reaching change projects in addition to their day jobs seems outlandish – aside from the risks inherent in creating such a quango-like organisation.) Accenture South Africa’s Head of Technology Strategy Lee Naik believes that the better approach is to create a separate organisation for the 10% of change projects that are important. Dr Caren Scheepers, who teaches organisational development and transformation at GIBS, would tend to agree. “Companies must put their money where their mouths are – structure is important or one loses focus,” she observes.3 Other approaches could be to develop ecosystems with business partners, suppliers or even competitors to create innovation-focused joint ventures, or to acquire start-ups that are better suited to do this kind of thing. Lourens Swanepoel, Chief Technology and Innovation Officer at Avanade, a provider of technology solutions based on Microsoft technologies, points out that Naspers appears to have been signally successful at coping with disruption – and causing it – by creating highly autonomous start-ups in new market areas related to its core content/ communications business: think DStv, WeChat and now online shopping store, Spree. Bidvest seems to follow a similar type of model, acquiring category-leading companies in many market sectors and leaving their entrepreneurial teams in place. These are different shades of roughly the same grey, but the secret sauce, Swanepoel thinks, is that these small companies remain agile enough to cope with change – a way for the corporate to have its start-up cake and eat it.

Then there’s the Woolies way

For Woolworths, the whole area of sustainability represents a significant locus of change. It is one of the company’s strategic pillars, and is an immature area generally in business and thus in constant flux. “The pace of change is incredibly rapid,” agrees the Head of Sustainability, Justin Smith. The organisational structure to identify and implement sustainability-related change is dual: a small, centralised sustainability team with champions in each of the business units. In this way, Smith says, change initiatives are identified and ‘owned’ by the business units, and so are readily integrated into the way business is done. The company’s Good Business Journey programme provides an overarching context within which projects are considered, and prompts a non-silo’d, enterprise-wide view.

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. . . institutional memory is vital . . .” Funding is, of course, the other important issue. In instances where there is a clear business case, projects are typically funded through the normal investment committee. For longer term projects, or where the benefits are not so obviously financial, Woolworths has a small, central fund.

People and culture as organisation

Getting the organisational structure right is probably never going to be achieved perfectly, but a common view is that inculcating the right corporate culture will help to overcome many issues, making the company more agile in practice than it would appear to be on paper. “Relationships are core to any model,” agrees Daleen van Zyl, Head of Organisational Behaviour at First National Bank. Karl Hofmeyr makes a related point, saying that the accuracy with which a company is able to hire the right kind of people is critical and that companies with strong, positive corporate cultures may tend to grow their own timber. The right quality of leadership is also critical, and is a subject all on its own.

gordon institute of business science

Hofmeyr argues that in order to create de facto agility, it is necessary to devolve discretion down the hierarchy – after all, that is where the work actually gets done. This is only possible, his colleague, GIBS lecturer Morris Mthombeni adds, if a culture of trust is created.4 FirstRand is often credited as a company that has created a distinct owner-manager culture, one which demonstrates the agility that comes from a workforce that is more empowered than the average. The result is that process is less constricting, and can be adapted to the exigencies of changing business circumstances. As van Zyl points out, while this approach is effective from the agility point of view, it may challenge organisational efficiencies. At FirstRand the accepted tension between empowered agility and organisational efficiency lies at the heart of the rise of First National Bank, she says.

Getting change right

context for judging the likely worth of an innovation – though it is important to be open to the fact that what did not work in the past might do so now. Venter also emphasises the need for a robust enterprise project management capability to ensure successful change. Governance has to be appropriate to the size of the company especially if it is listed, Smith adds. Supporting the view that change itself has to be structured is Scheepers’ endorsement of Kotter’s venerable eight-step process for creating major change5: “It just works.”

Riding the technology whirlwind

I began this article by assigning a starring role to technology as a disruptive force creating the need for agility. It plays an equally important, symmetrical role in enabling that agility. In today’s business environment, as Accenture’s Naik rightly observes, technology is how service is delivered and so needs to be agile itself. IT also allows the focus to shift to the customer, with a (technology-enabled) customer experience becoming a competitive differentiator. Too often, though, IT systems have grown piecemeal, silo’d like the organisations that built them – the so-called legacy problem that can make IT an inhibitor of agility. The problem this poses can be seen in the way in which new entrants, untroubled by legacy, frequently outclass incumbents. Capitec’s Charl Nel is surely right to ascribe his company’s meteoric rise not only to its responsive, flat organisational structure but also to the way in which technology is perfectly harnessed to enable simple, customer-friendly processes. By contrast, this sophisticated simplicity is grindingly hard for institutions with complex, unwieldy and custom-built systems rewired multiple times in response to changing business needs. Aside from anything else, cloud computing offers corporates a way to sidestep the legacy issue, and gain technological agility by buying what they need “as a service”. Accenture’s Naik highlights the way in which technology enables agility by providing the means to turn the flood of big data into insight that can be acted on immediately. Increased use of analytics is turning strategy from a long-term framework into something much more supple and responsive.

It is obvious that an important driver of corporate agility is the ability to identify what changes need to be made, and then implement them – the latter being, as EY’s Brewer wryly observes, the hard part.

A complex set of technological issues need to be sifted in order to create an agile company. Suffice it to say that a company that wants genuine agility ensures that its CIO is an active participant in both operational and strategy planning sessions.

Sensing what changes are occurring and which ones need response is one side of the equation. Comair’s Venter says it is important that the whole organisation acts as a listening post, something that van Zyl endorses. Woolworths’ Smith agrees, but says the company also has a dedicated person on point. Venter strongly believes that institutional memory is vital in providing a

A final observation. It is important not to see agility solely as a way to respond to disruption. As Avanade’s Swanepoel says, an agile company has the option of being the disruptor itself, and thus seizes the initiative. The only option one must not choose is denial. Some measure of agility will increasingly be core to success

4 5

Based on the arguments of Stephen Covey and Rebecca Merrill in The speed of trust: The one thing that changes everything. Originally outlined in Leading Change, John P. Kotter, Harvard Business School Press.

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Silkworms and Parachutes Words Kathy Berman

“Becoming an entrepreneur is like jumping out of a plane with silkworms instead of a parachute – and hoping that they are overachievers!” An acute observation by Discovery Health founder, Adrian Gore. While you don’t necessarily have to be airborne when you embark on an entrepreneurial venture, you do have to have plenty of faith, and resources, in order to land successfully. And that is what the now one-year old GIBS Enterprise Development Academy (EDA) hopes to provide for South African entrepreneurs. Across the spectrum and across Africa. From the pristine N4 to Emalahleni, head North on Solomon Mahlangu Drive. Just as the road narrows to a single-carriageway pockmarked with potholes, gravel and debris, follow the sign left to the Mamelodi campus of the University of Pretoria. Set back from the hooting cars, street bustle, and cries of the dusty township rises a red-brick colossus, impeccably manicured and tranquil. You are led through the security booms towards the “Grand-Pa class”. Grand-Pa?

gordon institute of business science

A three-month course, tailored to the needs of spaza shop owners, the Grand-Pa Spaza Academy is conducted by the GIBS EDA in association with … Grand-Pa! Its aim: the transfer of valuable skills to entrepreneurs – men, women, young and old – who would not usually be able to attend a Business School. The course includes one-day in-class formal learning per week and a monthly visit from a mentor. First up today is Patrick: “My spaza shop has grown to such an extent that it really amazes even me. I have learnt so much: managing money and being creative. I would like to thank GIBS and Grand-Pa for the opportunity.” Victor confirms: “I used to have a financial management and stock control problem. I didn’t know how to talk to my suppliers. Now I am growing seriously and sales are growing. I can go into negotiations with my suppliers. Now I have days of buying stock, and am no longer buying randomly. My bank account is doing nicely for the past three months.”

. . . I used to have a financial management and stock control problem . . .”

Formalised over the past year, under the leadership of Yogi Nambiar, the EDA develops custom programmes for entrepreneurs across all sectors and operating in all categories. From spaza shops to construction and production companies, with turnovers from micro and SME (what the EDA prefers to refer to in Brazilian terms as GSE – Growing Small Enterprises) to multi-millions, cohorts of entrepreneurs are already benefiting from the impact of the EDA. As are the corporates who sponsor their development. In the past year, the EDA has attracted millions of rands in sponsorship (all delegates are accepted on a scholarship basis), and run a range of programmes – from two days in length to year-long programmes, depending on corporate needs. The Enterprise Development Code 600 of the Broad-Based Black Economic Empowerment Act (B-BBEE) 2007 requires South African corporates to spend 3% of their annual profits on support for black-owned enterprises – either directly, or by pledging funds to ED agencies that work with eligible companies. One study estimates R12 billion in potential funding should be available for black businesses. The EDA came about as a consequence of the Goldman Sachs 10 000 Women Initiative – a $100 million global initiative to foster greater economic growth in developing nations by providing 10 000 underserved women entrepreneurs with a business and management education, access to mentors and networks, and links to capital. The programme reached across 43 countries, worked with 89 academic and non-profit institutions, with 316 women graduating from GIBS’ sector by 2012. Nambiar explains: “We realised that there was a need to extend this work to a broader audience: It had been restricted to women in Gauteng – and it was an excellent model. We wanted a centre and academy that worked with men and women across the different business sizes from micro, small, medium, upwards and across diverse industries.”

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Looking in to Ntombi Gamaâ&#x20AC;&#x2122;s Ebukhosini Bogosi workshop/showroom.

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. . . now I have built a big day care centre . . .” With courses that include hands-on finance, marketing, stock control and supply chain management, human resource management and mentoring, the EDA has facilitated growth along the entrepreneurial curve from ‘survivalist’ to ‘sustainable’, from single-owner organisations through to much larger midsized enterprises. Central to its success are the mentoring and collegial components – fostering confidence and innovation.

gordon institute of business science

Johannah, spaza shop owner and entrepreneur, dropped out of a BBA degree: “From university, I was just doing things and messing up. I sold chicken, potjie and groceries. I moved to a bigger plot: cleaned out the dump alongside the shop, built a butcher, a spaza and food garden. … And since I started at the Grand-Pa Spaza Academy I have increased the infrastructure: built a playground for children. And now I have built a big day care centre. One week after opening it, parents are paying, children are staying to 6pm.” Not one to rest on her laurels, Johannah adds: “Now I am looking to a secondary business where I slaughter chickens and supply others. And I need to get an ice-cream machine – ice-cream makes lots of money …” Johannah reflects that: “I have learnt from GIBS about using your aptitude.” Nambiar confirms: “Our primary entrepreneur is someone who has developed a business and taken it to a level where it is just over survivalist level and needs to grow. Our rigorous admission process ensures that candidates have something with growth potential, they have thought about the market generally, and are not fooling around. This is not a hobby. They may not have finished matric or have a business education. Their networks and access are limited.” Dispelling the myth of entrepreneurship as this sexy fast track to fame and fortune, Nambiar notes: “It is not the fun, fancyfree view of entrepreneurship embodied by Google, Apple and Facebook – a bunch of guys who dropped out of grad school, working out of a garage. Here we are talking about an entrepreneurship which has the same elements of innovation,

risk-taking and courageous work, which is sustainable … It is just happening in a different sector – a catering or construction company – but it’s no less sustainable.” Flavia had a legal degree (incomplete), worked in accounts in the film industry and had landed in construction after project managing the build of her own home. Her work portfolio has grown over nine years – primarily renovations in the public sector: “Although I learnt about systems and accounts and finance, the most valuable lesson was the Business Plan. You just don’t do that when you go ahead and run a business … You think you are going somewhere, but aren’t going anywhere because there is nothing in place – you are running in no direction,” she notes wryly. “Our SMMEs are experiencing that entrepreneurship is grimy, greasy and life is hard – balancing many socioeconomic issues. It is the day-to-day drudgery that they experience – how to motivate staff to work for them in a more risky enterprise when they are potentially earning less than they could get in the market,” says Nambiar. Just ambling along was one of South Africa’s foremost commercial fabric artists, Yda Walt: “I knew that I desperately needed business skills. I knew I needed help. The course was extraordinary. Being a creative, I am very focused on the making and designing. For the first time, I realised I had a business. I also learnt about customer-centric relationships – and my customers. As a result of the course, I became more confident and approached the buyer, and asked for greater visibility in their primary stores. The buyer asked what had changed!” One entrepreneur in the petrol-chemical industry has seen her business burgeon from nine to 29 employees over five months. As someone who previously did not have the confidence to call a CEO, she can barely last through class without sneaking a peak at her cellphone – just in case one of her new, regular executive

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Yda Walt, commercial fabric artist

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. . . we were eight years too early . . .”

gordon institute of business science

clients is on the line. “I am offered R5 million deals these days which the course has helped me negotiate and close!” she explains. According to the 2013 Global Entrepreneurship Monitor Africa Report, the number of potential youth entrepreneurs in South Africa is substantially below the 60% average for sub-Saharan Africa. Many of our entrepreneurs, it notes, are well over 30 and created out of necessity. But it appears that the EDA team, driven by much more uplifting experiences in the field, is not deterred by such national surveys. “Entrepreneurship is a lonely journey … but we provide entrepreneurs with a community of support,” says Yogi Nambiar. Sometimes more than they could have dreamed of: while for some the course has led to greater stock control and higher profits, for others success has been in social capital – and once-ina-lifetime experiences. One graduate of 10 000 Women, chosen to attend a mentorship experience in the USA, landed up as a guest at the White House. She definitely kept her cellphone on silent during the proceedings

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Drones poised for action Words Cara Bouwer

When George Reeves flew onto black and white TV screens in the 1950s, the saying “Look, up in the sky! It’s a bird! It’s a plane! It’s Superman!” entered the modern-day lexicon. But, these days, that unusual dot in the sky is more likely to be a computeroperated drone than the Man of Steel. That is, once South Africa lifts an all-encompassing ban on the new technology. Early in 2014, CNN’s Richard Quest conducted an interview full of hope and promise with University of Pretoria Professor Wouter van Hoven. The news about drones being used to beef up antirhino poaching efforts captured the world’s imagination. So much so that a Google search on the subject now yields more than 300 000 hits. But, regrettably, that is all it is yielding. The initiative has “been put on ice for a bit because of the embargo on flying UAVs (unmanned aerial vehicles, also known as drones, unpiloted aerial vehicles or remotely piloted aircraft) in South Africa,”

The machines have great potential in wildlife conservation . . .” van Hoven told Acumen. However, work into the use of the technology as part of the AREND project is continuing in the United States under Dr Jean Koster of the Colorado University in Boulder, where an international student team is working to create an UAV system specifically to combat African rhino poaching. In August 2014, the month in which a cabinet-approved plan to relocate rhinos from poaching hot spots in the Kruger National Park came into effect, the Financial Mail magazine reported on a US$23.7 million donation by the Howard G Buffett Foundation to fund a three-year initiative to fight rhino poaching in the Kruger

using technology both on the ground and in the air to create an ‘intensive protection zone’. At the time of writing, SANParks had yet to use drones in the war against rhino poaching in the Kruger. However, Van Hoven has hopes for the technology. “The machines have great potential in wildlife conservation, such as in game counts, fence patrols and rapid response to poacher incursions,” he said. Van Hoven is not the only believer in this often misunderstood new technology. Hennie Kieser is the director of Desert Wolf, a Pretoria-based UAV and high-tech surveillance company, which he started about two decades ago with his wife, Henriette. Kieser is also chairman of the Commercial Unmanned Aircraft Association of Southern Africa (CUAASA) and a passionate exponent of drone technology. While Desert Wolf hit the headlines in 2014 over its controversial R500 000 Skunk Riot Control Copter – a drone which can carry 4 000 pepper spray balls to disperse crowds – Kieser’s company also works in the agriculture, mining, leisure and security sectors. While he is mindful of not leveraging his role at CUAASA to punt his own business, Kieser explained the commercial application of the Skunk, which was created after the Marikana tragedy in 2012. On that day, just 30 minutes before the shooting started, Kieser’s team was using drones to give police an overview of the area. “I said to my wife afterwards that we should develop an airborne system which takes the scared policeman out of the equation and could help prevent another Marikana.”

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some 80% of drone technology will ultimately be used in agriculture . . .” Kieser sees the potential for at least 1 000 Skunks in South Africa alone. “We can sell that within a year or two, if we have legislation that will allow me to do so. That’s just my company. I don’t know what the other companies’ numbers look like,” he says. Through CUAASA Kieser does, however, have a solid overview of the state of the industry in South Africa; which, even with the current ban, is bigger than imagined.

Multitude applications

When CUAASA formally started on 1 January 2014 – as an affiliate of The Commercial Aviation Association of Southern Africa and created to lend industry weight to the ongoing regulatory discussions – it signed up 30 members within the first month. Today it has over 77 members. “Many don’t want to join CUAASA because what they are doing is actually illegal,” says Kieser, who estimates there are 500 to 800 companies operating drones in South Africa. “Some of these guys have been doing this for the past eight, nine, 10 years,” he says. They are active in the real estate industry, “taking photos and videos of houses, buildings, estates and developments; normal aerial and video photography of construction progress; inspections on cooling towers and roof inspections on big buildings.” In most of these cases it is the cheapest way to get the job done, he says. “It will cost you R1 000 to send a drone up, versus about R10 000 to get a man up there.”

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That is clearly what Jacaranda FM thought when it announced in March 2014 that it intended to use drones to monitor and broadcast traffic updates. On 2 April 2014 the South African Civil Aviation Authority (SACAA) issued a statement saying that “unmanned aircraft systems are a relatively new component of the civil aviation framework” and, therefore, any organisation, individual, institution or government entity operating UAVs within the civil aviation airspace would be doing so illegally. Since then, drones have effectively been grounded in South Africa. SACAA, although contacted for comment, was unable to grant an interview to Acumen. Phindiwe Gwebu, Senior Manager: Corporate Communications and Marketing at SACAA, responded: “The media queries mostly seek to interrogate the regulations themselves and so far the regulations are being consulted on so we cannot really proclaim on them until the Minister signs them off. This process is a bit lengthy but we appeal for patience whilst we finalise it.” Kieser, however, has no such qualms and told Acumen that instead of being behind the curve in terms of regulations, South Africa should have been leading the way internationally.

“SACAA has been working on legislation for the last eight or nine years already,” says Kieser. “The reason is that South Africa is on the forefront of drone technology, because of Denel and the Seeker project. In the 1980s South Africa already started selling the Seeker, specifically to the Middle East, so South Africa is known as one of the leading countries in UAVs.” In a February 2014 interview with DefenceWeb, Tsepo Monaheng, CEO of Denel Dynamics, noted that the Seeker (the most recent incarnation of which is the Seeker 400) was the first UAV in the world cleared for operations in controlled airspace and was deployed to monitor potential hotspots during South Africa’s 1994 democratic elections. It was because of Denel’s work in this space, explains Kieser, that the state-owned arms maker first recognised the need for legislation. About three years ago SACAA decided to resurrect an old regulations committee and seek input from industry. Kieser was on that committee which, he says, broke down due to a lack of industry involvement. Now, with CUAASA and CAASA presenting a strong voice, the hold-up seems to be rooted in SACAA’s concerns over technology that does not conform to the existing blueprint, while industry pushes for regulations which will give it space to work and grow. While SACAA has earmarked March 2015 as its deadline to release drone regulations, industry players are adamant that they will not sign off on laws that are not practical and workable. Just some issues have been the use of ground-to-air radios (which industry wants), the ability to fly at night (which industry believes is safer than day-time flying), and the need for line-of-sight of drones (which SACAA wants but which the industry believes is unnecessary, since drones are computer controlled). Both sides are clearly mindful of the risks inherent in the use of this new technology but, says Kieser, “you have to try and mitigate risk.” He also stresses that CAASA and CUAASA do not feel the constraints of a March deadline. “What we want is safe and usable legislation. If it takes us three years we will fight to get that in place.” Of course, a lack of legislation is a considerable risk for government and, as the regulatory process plays out, commercial ventures – like the drones used extensively in the multi-million rand Cape Town film industry – continue to lose out. However, in a somewhat ironic twist, CEO of the Cape Film Commission, Denis Lillie told SABC News in August 2014 that a new film production called Eye in the Sky would soon be filmed in Cape Town. The film is about military drones.

Looking to the future

While industry and the regulators continue to knit with spaghetti over the ins and outs of drone use in South Africa, the reality is that this high-tech new world is already upon us.

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government”, the news has elicited concerns over personal privacy. However, community activists like Zackie Achmat of Ndifuna Ukwazi are cautiously optimistic. He told GroundUp: “We are not advocating for mass surveillance of people’s personal information and comings and goings. We simply acknowledge that safety in communities can be improved if [surveillance systems] are appropriately used.”

In 2013 the Council for Scientific and Industrial Research (CSIR) touched on the potential for the sector in an internal publication. It pointed to the likes of “border and coastal surveillance; search and rescue; fire detection and fire fighting; communications relay; law enforcement; and disaster and emergency management, to industrial applications (crops spraying, surveillance, monitoring of power lines and traffic); agriculture and fisheries; digital mapping and planning for land management; transport of medical samples; and even media reporting.” The CSIR’s Operations Manager: Aeronautics Research, Des Barker, noted in the article that 2018 market forecasts for the industry sit at US$8.7 billion worldwide. “If South Africa can capture approximately 1% of the projected market, this would result in huge, additional foreign revenue.” Small business also stood to benefit by providing UAV-based services, “for example, fire management, maritime patrols and infrastructure monitoring”. Barker shares Kieser’s views that South Africa has the skills, experience and technological capacity to compete on a global scale. “Sadly, South Africa is trailing the rest of the world in bringing this disruptive technology to benefit national security on the one hand, and socioeconomic benefits on the other,” wrote Barker. That said, for some, waiting is just not an option. One example is the City of Cape Town, which, says Kieser, is speaking to his company about using drones in almost-impossible-to-police areas such as Khayelitsha, Gugulethu and Atlantis. “They lose so many people in a week due to murders, knife stabbings and serious attacks. The police can’t do anything and the community is getting very upset. So Cape Town would rather pay a R50 000 penalty on a daily basis to save lives,” he says. GroundUp, a community journalism project, reported in September 2014 that the City would begin testing drones before the end of the year. This was according to JP Smith, the City’s Mayoral Committee Member for Safety and Security, who said drones were more cost effective than hiring helicopters for aerial surveillance and would be potentially used to monitor land occupations, crime, shack fires, and scrap yards suspected of dealing in stolen copper. Despite Smith saying that the City would comply with “all the terms of engagement defined by the SACAA and national

Kieser believes with education these fears will eventually dissipate and drones will become as integral a part of our daily lives as cellphones. And just as indispensable. “The market is huge,” he stresses, noting that already the industry in South Africa is worth “in the region of R4 million to R5 million a month”. He projects that “when the laws are in place you’ll see massive growth. It will be an explosion like you can’t believe.” Already some businesses are fully operational. “Lots of people are doing night flights looking for criminals, doing cable theft protection and fighting syndicates. Go to any coal mine at monthend and you’ll see drones over their stacks because it’s the cheapest way to do stack control,” says Kieser. While “there isn’t a single ministerial portfolio which isn’t currently negatively affected because of RPAs (remotely piloted aircraft),” Kieser believes mining, border security, real estate, construction and healthcare have significant applications. “We recently did a demo for the Minister of Health to show how we can use an RPA unit in the Natal Midlands, where it’s very hilly, to go from clinic to clinic and collect medical samples. It’s cheaper and

Already some businesses are fully operational. “Lots of people are doing night flights . . . and fighting syndicates.” faster than sending someone with a motorcycle or a vehicle.” In line with global estimates, Kieser agrees that some 80% of drone technology will ultimately be used in agriculture. “The biggest market is for multi-sectoral scanning where you’ll fly over a crop field and determine, with your camera technology and different light frequencies, whether the crops have enough water, if there are sicknesses and if the crop is ready for picking. As well as for looking at erosion and invasive plants. There is massive application in the farming industry.”

But, for now, the drones wait

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The View From Africa

Photo: getty images / gallo images

Words Victor Kgomoeswana

What is behind Africa’s economic rise? Business leaders everywhere are all talking about “going into Africa,” even if they are already in (South) Africa, “this is the African century,” or “Africa is the new and the last economic frontier.” These commonplace sentiments punctuate daily business conversation. But what makes everyone so confident that Africa is the best place to do business, and are they mindful of the many challenges that they are likely to face? Most of all, what has been the driver of this sudden rise of Africa? Three main themes are behind Africa’s ascent to economic centre stage since around 2000, besides its billion people. These are: Information & Communications Technology (ICT) – especially the crucial role played by mobile telecommunications, outstripping fixed line technology to radically transform the way Africans connect. Financial Services – from retail banking, including mobile payment solutions, to corporate finance driven by increasing mergers and acquisitions as well as project finance to build infrastructure.

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Resources & Infrastructure – be it to promote intra-Africa trade and delivery of services such as water, increase the security of power supply or to improve the capacity of roads and rail infrastructure.

ICT

Spend a lot of time on your smartphone or on WhatsApp or transmit video footage via cellphone and you have ICT to thank, especially those investments in projects such as SEACOM, WACS or EASSy (East African Submarine System). Before the advent of these fibre-optic, undersea cables, most of these indulgences were beyond reach – too cumbersome or way too expensive. Now, SEACOM and EASSy course the Indian Ocean, connecting Africa to the world. Kenya as a result, has dropped the cost of broadband phenomenally. Tanzania follows hot in its footsteps, and even landlocked countries such as Rwanda and Uganda are taking advantage of this technology. Already, back in 2010, Rwanda had invested about $45 million to build its underground fibre-optic cable infrastructure for the entire country – this before Kenya had even started fully utilising it.

It was in the same year – 2010 – when India’s Bharti Airtel paid $10.7 billion to buy Zain. Before this successful takeover, expanding its African footprint to more than 15 countries, Bharti Airtel had tried to purchase another African mobile telephony success story in MTN. Prior to that, British giant Vodafone Plc had already offered £1.2 billion to increase its stake in Vodacom from 50% to a controlling 65% of South Africa’s largest mobile phone company – with operations in Tanzania, central Africa, Lesotho and Mozambique; as well as business services in many others, including Nigeria. These are but some of the investment inflows that have taken Africa to economic heights never before imaginable, and opened opportunities for other industries to thrive, while increasing the quality of life in many African countries. Those who moved early to invest in mobile, like Sudanese mogul Mo Ibrahim whose company, Telecel, had been bought by Zain – itself acquired by Bharti Airtel – suddenly found themselves rich enough to retire. Mobile leapfrogging fixed line means that millions of Africans who had neither the chance nor the inclination to acquire a fixed line telephone before 1992 now possess the most efficient form of communication to do far more than simply make a call.

Financial Services

Back in 2004, Nigerian banks represented to many people nothing but “419 scam” agencies. That generalisation would have been a grievous mistake if you were an investor. Granted, 419 scams were prevalent and Nigeria’s weak bank supervision allowed fraudsters to push their crooked business, especially from elsewhere in the world. Remember the sudden congratulatory message that “You have won millions of pounds in a UK lottery!” or the request from a non-existent cousin stranded in the Maldives asking you to help them with cash? However, as a result of a sustained campaign to consolidate the financial sector in Nigeria, Africa’s largest economy now boasts 15 banks in The Banker’s Top 1 000 Banks Survey. The amount of cash that went through point-of-sale devices has soared from just under 100 million naira in 2012 to 2.4 billion naira by May 2014 – evidence of how much Nigerian confidence in their banks has increased.

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Dam building, Ethiopia

Nigerian banking brands such as Access and Zenith have since extended their services to the rest of the continent. Another West African brand, Ecobank, Togo-registered and Africa’s largest by branch network, attracted an investment from South African Nedbank and a Qatari investment house to each take up 20% of its issued shareholding. Industrial & Commercial Bank of China (ICBC) already owns 20% of Standard Bank – a $5.4-billion deal from 2008. Barclays Bank Plc increased its stake in ABSA to 62.3% in 2013, solidifying a £2.6-billion May 2005 transaction, which had given it 56.4% of the South African bank. All this on a continent that is not particularly big on access to banking services. An even more fascinating link between banking and ICT is in mobile payment solutions such as M-Pesa. This cross between banking and mobile telephony now allows Kenyans, among other Africans, to buy airline tickets, purchase insurance and pay their taxes. Kenya gave solid regulatory backing to Safaricom and banks in 2007 to allow M-Pesa’s launch to cater for people without bank accounts. M-Pesa has since been exported to Tanzania, Uganda, South Africa, Nigeria, India, and Romania. Zimbabwean Econet Wireless also launched its equivalent mobile payment solution, Ecocash, in 2014. In Rwanda entrepreneurs can also register their business with their mobile phones. M-Pesa demonstrates how a Third World bank, like Equity Bank of Kenya, can forge an alliance with a Third World country, using a First World technology (Vodafone’s) to produce a winning innovation to change the lives of people forever – and in so doing drive the economy of an entire continent.

Resources & Infrastructure

Africa has minerals and resources in abundance: oil, gold, diamonds, manganese, coltan, nickel and many others. This has been the curse and the reason for many a civil war. On the other hand, resources and minerals continue to drive foreign direct investment (FDI) inflows from China, India, Russia, Brazil and Australia among others.

The China National Offshore Oil Corporation (CNOOC) – thirdlargest national oil company in China – is one of the many Chinese conglomerates invested in Africa’s oil-rich countries, including Uganda. The China Construction Bank is among those Chinese financial institutions financing the many construction projects across Africa. Many of these infrastructure projects are donated to African countries in return for mining rights and concessions to feed China’s voracious appetite for resources. Brazilian mining giant, Vale, is a big player in Mozambique and Guinea-Conakry among others. In return for its extractive industry footprint in Africa, this Brazilian multinational has participated in building rail, road and port infrastructure to move its mining produce in countries like Mozambique. Australian mining companies are all over Zimbabwe, Mozambique and Malawi searching for resources, from coal to uranium. Whereas extractive industries have fuelled conflicts in Angola and Sierra Leone, and continue to do so in areas like Goma (DRC), they remain a major source of FDI and intra-Africa trade and investment. Countries with good governance, like Botswana, have brought in major investments, like De Beers’ recent move to relocate its Diamond Trading Company to Botswana – bringing downstream diamond mining activity to the southern African country. Namibia is attracting investments from multinationals like Areva to exploit its abundant uranium reserves; as is Malawi in luring Australian mining giant Paladin Resources. Infrastructure has also drawn billions of dollars in investments to increase the generation of electricity across Africa. In 2014, Kenya launched a 140MW geothermal plant (the world’s largest), and looks to launch a solar plant in 2015 to further drive down the cost of energy – already 30% lower this year alone. Ethiopia is increasing its capacity to export electricity to the entire East African region by building the Grand Renaissance Dam on the River Nile; already it exports power to South Sudan, Djibouti and Kenya. Nigeria has encouraged independent power production to close its gaping backlog; in doing so, it has welcomed no less than General Electric as a multi-billion dollar investor in its power sector.

Looking to the Future

Africa offers the longest upside in economic growth and trade and investment. ICT, financial services and infrastructure are not the only drivers of this bullish sentiment. Retail and consumer products are increasingly thriving because of the billion Africans, who are younger and keen to be urbanised. This retail bonanza is evident in the growth of retail giants like South African Shoprite, Kenya’s Nakumatt and Uchumi, Botswana’s Choppies – all of which can be found in several African countries. Improving governance and ease of doing business over the past ten years, fewer violent changes of government and an ability to conduct peaceful and relatively credible elections are other reasons why Africa will be the place to do business for a long time to come – even in comparison to other emerging markets, i.e. Asia, South America and Eastern Europe

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POLICY ANCHORS FOR AFRICA’S GROWTH Words Seth Mukwevho and Itumeleng Mekwa

The second in a two-part series, in which the authors examine constraints to growth in Africa and outline necessary remedies.

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Analysis of statecraft shows that the cog in the machinery that produces successful sovereign development policy is the country’s leadership. Leadership is much more than the quality of personalities and the philosophy of a political economy guiding state affairs. Looking through the prism of social contract, a successful leadership culture promotes an ethos of tolerance, national cohesion, accountability and the rule of law. For decades, Africa has been starved of quality leadership. The predatory governance of Mobutu Sese Seko, unco-operative stance of Afonso Dhlakama, and belligerence of Idi Amin underscore a long history of poor leadership within the continent. In general terms, sectarian interests, patronage, and unaccountability have been pervasive, leading to anarchy and a state of war. However, pockets of African leadership excellence still exist. From the days of Botswana’s founding president Seretse Khama in 1966, the leadership evolution of the country’s public policy has demonstrated the value of quality leadership. Public policy promoted sovereign socio-political stability by embracing political and tribal tolerance and economic development of the state. Throughout this period Botswana was known for the peaceful settlement of political disputes and the promotion of constitutional order which has been continued by today’s leaders. Leadership has manifested in economic management, characterised by transparency and very low levels of corruption. The investment community has been observing this trend: Botswana country risk is one of the lowest in Africa; and foreign direct investment has liberally flowed into the country.

Photo: getty images / gallo images

Leadership

In the past 20 years, some African countries have demonstrated the value of stability. Angola’s long history of civil war is now a distant memory, replaced by peace and investment. Nigeria’s predisposition to a military regime and calamitous economic structure have made way for democratic governance and the prized achievement of being the biggest economy in Africa. And in the last few decades, Mauritian leadership has led to economic success, a tolerant political culture and a reputation as the leading and least risky African sovereign. There is certainly a positive correlation between political stability and economic gains – the primary role of leadership public policy is to maintain low political risk. As we have seen with Nigeria and Angola, political stability is the precondition for economic prosperity. The failure to appreciate the role of leadership eventually leads to political predation and violence – familiar bywords of failed states.

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South Korea shows that quality education was the bridge that transformed its economy from excessive dependence . . . to modern, knowledge economies.”

South Korean high school girls cheer for their senior classmates taking the College Scholastic Ability Test on 13 November 2014 in Seoul, South Korea. More than 640,000 high school seniors and graduates sit for the examinations at 1,200 test centers across the country, where academic records are all important. Success in the exam, one of the most rigourous standardized tests in the world, enables students to study at Korea's top universities.

The value of quality political leadership lies mainly in promoting state cohesion and conflict resolution, and these attributes entrench a country as an ideal destination for investment. South Korea’s economic development shows that its success was preceded by political stability. After witnessing long periods of domestic instability, General Park Chung-hee took power and stabilised the polity. According to renowned economist and prolific scholar Ivan Kushnir, between 1970 and 2012, South Korea’s GDP grew 127 times – the fruit of good leadership. South Korea is among the few countries whose economy did not contract during the recent global depression. In 2009, at a time when the global economy contracted by -0.6%, South Korea grew by 0.32% – a sign of resilience. Leadership is the central factor that will catapult Africa from the backwaters of global prosperity to the next stage of economic development.

Educational competitiveness

One of the roles of leadership is to encourage education to promote competitiveness. African economic history shows that the continent has always been primarily a resource-based economy. However, this is not a sustainable strategy because natural resources have a limited shelf life, market forces are easily distorted and operational risks fluctuate. Prudent national strategy naturally requires exploration of new sources of growth. South Korea shows that quality education was the bridge that transformed its economy from excessive dependence on an agriculture resource base to modern, knowledge economies. According to the Monterey Institute, when Japan left South Korea following the end of World War 2, 78% of South Koreans were illiterate and the quality of education was inferior. Research on South Korea shows that the economic rebuilding exercise was

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However, this should not be so. Keynesian demand-side policy intervention provides a methodology for stimulating the economy. Industrialisation does not require massive seed capital, but incremental chunks of capital investment over time. In 1960, Singapore, then a backwater, established the Housing Development Board (HBD) with the intention of building 10 000 low-cost housing units. The HBD’s $10-million investment stimulated economic activity, opened job opportunities and attracted private capital investment. Buoyed by an investment policy that cherished transparency and a labour policy that eschewed labour militancy, foreign investment flowed into the country. These activities opened up parts of the economy that had been dormant for years, weakened by the effects of civil wars and weak governance systems.

In the end, education needs to be customised. In 1956, Nobel Prize winning economist Robert Solow conducted a growth accounting study to identify which of the three factors amongst labour, capital and technology contributed the most to the country’s development. The results of the study showed that capital accumulation and labour had a relatively low contribution while the infusion of technology in the production model accounted for most of the growth output per person. Thus, a technology-oriented curriculum is the bridge that realises and sustains the growth model.

Africa should invest in ventures where it enjoys both comparative and competitive advantages like the manufacturing sector where it could exploit the abundance of natural resources and provide employment. Raw products from natural resources should be processed and receive value-add before they are exported to overseas markets. Processing domestically opens opportunities for labour absorption, increases productivity, leads to cluster formations, creates successful domestic brands and increases the size of the economy.

We recommend the adoption of technology-centered education curricula for Africa as a long-run bridge to a wealthy state. Technology education is anchored on pure sciences, whose compendium includes such subjects as information communication technology, mathematical and numeric studies, natural sciences, and financial, business and economic sciences. On the basis of this, Africa should engage in a curriculum development programme intended to replace legacy curricula with modern curricula, aimed at developing a productive, learned and innovative population that is relevant to the growth needs of the African economy. But Africa will require strong leadership for quality education to be a successful public policy.

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Investment

Lastly, public policy should gear towards the promotion of domestic investment, in particular industrialisation. Investment in manufacturing leads to the absorption of excess labour, sophistication of the economy and an increase in domestic product development. As the quality of education increases and innovation becomes more prolific, business output and confidence surge. A rise in domestic entrepreneurial output cushions the economy from the volatility of international capital distribution and absorbs shocks especially from global downturns and recessions. The domestic market further strengthens through the promotion of open markets, leading to corporate agility, while dampening inflationary pressures. The presence of fair competition in the domestic business environment means that products are not just competitive on the home front, but on the international front too, which augurs well for export earnings. Most African countries are perpetually in dependent mode in part because of a constrained investment environment.

Investment finance for African sovereigns is relatively expensive, due to worsening political risk, deterioration in the operational environment and imprudent fiscal management. As an option, we suggest that Africa should tap domestic sources of finance for cheap investment funding, in particular proceeds from informal savings. Stored in unconventional sources such as mattresses and mud banks, this capital base is vast. Research by South Africa’s Ministry of Finance indicates that the value of informal savings reaches R44 billion per annum. The missing ingredient is the framework for linking informal savings with sovereign investment programmes. At a tactical level, we suggest several strategies for channelling domestic indigenous savings to spur domestic investment. First, for a continent with a savings rate of less than 10%, public-private partnerships should be mobilised in order to instil a culture of saving. Secondly, tax breaks should be used to encourage people to save. Thirdly, first and second economies should be linked, integrating traditional savings schemes such as ‘stokvels’ and ‘clubs’ into the main grid of formal saving and investment. Africa requires the deployment of leadership as a public policy to stabilise the continent, promote competitiveness, and drive investment. Education serves as the midwife to the knowledge economy, chiefly characterised by diversification, meritocracy and innovation. Investment drives the economy forward, strengthened by capacity-laden citizenry and anchored by strong leadership. In the end, leadership, education and investment impact on each other as a virtuous cycle to drive development

Seth Mukwevho and Itumeleng Mekwa are country risk analysts in Rand Merchant Bank’s international credit division.

, 2014 Quarter • Fourth Issue 10

linked with quality education, and the leadership of General Park invested heavily in education – between $5 billion-$8 billion per annum even in the lean period of the 1970s. As an effort to establish South Korea as a knowledge economy, formative level education was made mandatory and a rigorous curriculum anchored on numeric and hard sciences was introduced. Dividends did not take long to come through. Amongst many other factors, illiteracy is defunct, South Korea routinely performs among the top 5% in science Olympiads, and it is one of the major innovators in the communications technology space: think Samsung, LG and Hyundai. South Korea also currently produces 187 doctoral graduates for every one million citizens compared to South Africa, for example, which churns out 28 graduates for the same population.

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Doing Business In . . . Vietnam Words Kate Whitehead

Speak to most business executives about operating in a developing country and political stability, banking, transport, telecommunications and infrastructure issues are usually top of the list. But Vietnam is different – here people talk about the need to understand the psyche of the Vietnamese. That’s not to suggest that there aren’t other concerns. Certainly there are – and corruption is on that list – but the key to succeeding in Vietnam is to work out how the Vietnamese tick, show them respect and make sure you have a few trusted locals on your senior management team. Patience is key, too. But for those who are prepared to be smart and work at it, there are rewards. The total registered foreign direct investment in 2013 was US$21.6 billion, a significant increase on US$13.1 billion the year before. Kenneth Atkinson, Executive Chairman of Grant Thornton (Vietnam) Ltd, has been based in Vietnam for 20 years and made his first visit a few years earlier, in 1989, when he came out to help secure an investment license for a hotel development.

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“They eventually started building the hotel 17 years later and that’s when the license got revoked. The hotel never got built. That’s the way it goes very often, particularly with real estate it can take forever to get your licenses and your land,” says Atkinson, whose company was the first overseas firm of its kind in Vietnam, helping clients structure investments, find local partners, get licenses and do feasibility studies as well as a full tax, accounting and auditing service. The difficulty of getting access to senior government officials makes real estate an especially challenging industry, but other sectors such as manufacturing, telecommunications and publishing, which don’t rely on government approval, are more straightforward, he says. At first glance, the buzzing metropolis of Ho Chi Minh City in the south of the country looks like an ideal base to establish a business. You arrive at a modern international airport, take a cab down a wide highway to the throbbing downtown area where there are plenty of shops, the traffic is frenetic and you can check into a nice hotel. “You can get lulled into this false sense of comfort, particularly if you’re coming from Hong Kong or Singapore – it’s not that different, just a little less developed. But when you scratch the surface it’s very different. The Vietnamese are quite complex,”

says Atkinson, who attends the Vietnam Business Forum twice a year, previously in his capacity as Treasurer of the British Business Group and now as Chairman of the Working Group for Hospitality and Tourism. Anyone who has visited the country will know that the Vietnamese are friendly with a warm and engaging smile. Atkinson says they are open and like to have fun, but warns that it can be easy to upset them unintentionally and once the relationship is damaged it can be hard to rebuild trust. “You might say something wrong, get irritated, raise your voice or show distrust by asking for a certain document. It’s difficult to get an understanding of the culture, a lot of which is driven by the events that are recent in many people’s lives,” says Atkinson, referring to the Vietnam War. Not only getting on with the Vietnamese, but building solid relationships with them, is critical not least of all because there are foreign ownership restrictions on businesses in certain industries, particularly those which are deemed sensitive to the state. However, since gaining full membership of the World Trade Organisation in 2007, laws have been passed opening up foreign investment in some markets that were previously restricted – some went into immediate effect while others will be phased in by next year. The restaurant industry is one that will see a loosening of restrictions soon. As of January last year foreigners will not need a local partner to open an eatery. Craig Jackson, General Director (Vietnam) of the restaurant group Alfresco, was one of the first foreign investors in this sector. Having helped establish a successful restaurant chain in Hong Kong, he and his partner went to Vietnam 20 years ago. Their first big hurdle was to find a local partner – and they got lucky. “We started in Hanoi because we had someone we knew up there. That’s the $64 million question to doing business in Vietnam – you need to have a good partner, someone you can trust,” says Jackson, who is based in Ho Chi Minh City with his Australian wife and two children.

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Old town. Hanoi

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Almost two decades on, the business has swelled to 50 restaurants and they are still with the same Vietnamese colleague, a government official who is largely a sleeping partner, but handles most of the legal issues surrounding the business. And the 28 local staff with whom he began at the first restaurant in Hanoi are still with him, the waitresses having moved on to become restaurant managers. That staff loyalty has been hard won, but Jackson realised early on that working side by side with his staff was essential. “Where most people fail is they don’t get in beside their team. They put themselves as a tier above and the Vietnamese don’t respond well to that style of management, they need to know that you are part of their life and you understand and care about them. A lot of people don’t have that empathy and run their corporations or small businesses in an efficient but slightly impersonal way. Impersonal doesn’t work here,” says Jackson. And having trusted local staff at key management level is another must-do for success, critically because they can help to minimise the corruption that is endemic across the country. In the restaurant industry it’s fairly low level. Jackson says it’s usually small amounts with everyone along the line wanting a cut. Typically, a new supplier will offer a kickback to Jackson’s senior Vietnamese staffer. Jackson tells his colleague to accept the money, which is then put into a communal fund for staff parties and birthdays. “They are OK with that because it’s not just coming back to me and I’m getting richer and richer. It’s that communist thinking – they always say, ‘we are all staff but I’m just in a different position’,” says Jackson.

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The petty, small-scale corruption is usually a case of local government officials supplementing their meagre salaries, says Atkinson. But there is also more extreme corruption, particularly when it comes to large-scale government projects where land is involved. He says this is especially challenging to deal with when he’s working with clients from the US and Canada where there are strong anti-corruption policies in place. “We refuse to pay anything to the government. At Lunar New Year when it’s customary to send gifts, we’ll send gifts, but nothing extravagant. We often use local consultants to help facilitate the transactions and find out what is really going on because as a foreigner you can’t know. Having reliable people who can ferret out information – knock on the back door when we are knocking on the front door – is very helpful,” says Atkinson, who is committed to the country and plans to retire in Ho Chi Minh City with his Vietnamese wife. Jackson says it’s an open secret that government officials cream off 10% from the many large World Bank-funded building projects. “They are getting rich off infrastructure because the only way they can steal that money is to bill for it,” he says. Jeffrey Revels, Country Manager Cambodia & Vietnam for TMS Group, a garment manufacturer, says he’s come across corruption both subtle and overt.

In 20 years time this place will be rocking . . .” “No-one wants to talk about it, but it’s a fact of life. Asking for unpublished services is a nice way of saying it,” he notes, adding that corruption is worse in more remote areas. He relies on a senior Vietnamese colleague on his management team to deal with such issues. Clothing was Vietnam’s largest export until Samsung opened a new US$3.2 billion factory complex in Thai Nguyen in the north earlier last year. Other electronics firms that have made significant investments in the country are Intel – which set up in Ho Chi Minh City in 2010 – LG Electronics and Nokia. Vietnam’s competitive labour costs combined with smart workers are the main attractions. “The Vietnamese are very trainable, they are very good at handicrafts or anything that needs precision kind of work,” says Atkinson. Garments may have slipped to the number two spot in terms of exports, but it is still vast – and growing. “Vietnam makes for all the large US retailers such as Walmart, Adidas and Nike – 60% of all fashion and footwear sold in the US is manufactured in Vietnam,” says Revels. At present Revels relies largely on factories in the south – outside Ho Chi Minh City – because there is more skilled labour here, but says that more clothing factories are being developed in the north, where labour is 30% cheaper, and he plans to switch some production to these as they open up. Culturally there is a big difference between the Vietnamese in the north and those in the south. Those in the south are more westernised and commercially minded, says Revels. Jackson puts it this way: he sees the northerners as more European: a little standoffish in the beginning, but once you get to know them, extremely loyal. “In the south they are more Australian or American – bubbly, happy, best friends straight away, but not necessarily committed to that friendship,” says Jackson. Tax incentives at garment factories are also expected to come into effect early this year, making Vietnamese factories even more attractive. “In 2015 we’re expecting there may be tax exemptions if you use fabric made at a Vietnamese mill – this may qualify for reduced or even zero tax. We are also seeing more joint venture mills with Chinese/Vietnamese partners,” says Revels.

Photos: getty images / gallo images

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The bull race of the Don Ta festival in Chau Doc, An Giang, Vietnam

Vietnamese women on the salt field near Nha Trang, Vietnam

Flower Hmong women at market, Sapa, Vietnam

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This news may come as a surprise to some for whom the factory riots of May 2014 are still fresh in their minds. The unexpected violence came as a real shock, not least of all because Vietnam is seen as a stable, low-risk manufacturing environment. But the government was quick to put a lid on the trouble, send offenders to prison and do their best to reassure investors. The message seems to have got through – most foreign firms are staying put. “The riots were a one-off. They had a short-term impact on visitor arrivals, some Taiwanese companies have left and may never come back, but it’s not had a lot of impact on overseas companies. I don’t think the Chinese have lost confidence in the place,” says Atkinson. With the impending tax incentives in the garment industry, Revels says he expects to see more Europeans enter the market. “It’s a good time to get into the garment industry, it’s a good market,” he says.

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Another big industry that is just waiting to take off is mining. There are already local mining operations, largely coal, gold, aluminium and bauxite, but they are not especially efficient or safely run. But beyond that are a sizeable number of foreign mining firms that have done their prospecting, found nickel, gold and tin in the bush and oil offshore and are just waiting for the green light to start digging. Many have been waiting for years – with men on the ground. “Mining has been on the agenda of every Vietnam Business Forum meeting I’ve been to – and I’ve been going twice a year for 10 years,” says Atkinson. He says the Vietnamese are dragging their heels because they see the land as belonging to the people and are reluctant to give big concessions to foreigners. Jackson is a little more cynical, suggesting that the government wants to take advantage of aid money to build infrastructure – and cream off a 10% cut – before digging up the country’s wealth of minerals. “They are waiting for land, roads and bridges. They are sucking it up – ‘Ok, give us the free money – World Bank and Asia Bank Development money – and we’ll get all this done and take it out the ground later.’ In 20 years’ time this place will be rocking

because that’s when all the mining money will come in,” says Jackson. Atkinson believes mining, when it finally takes off, will drive huge growth, but it won’t blow the top off the country.

“Vietnam doesn’t work like that. Everything tends to be gradual, done at the government’s pace,” he says

Business tips and etiquette

The Vietnamese are a warm and friendly people, but don’t assume that because someone is smiling and nodding that they agree with you – or even understand what you are saying. That smile and nod are often just an acknowledgement that you have been heard, not necessarily that a deal has been struck. And speak slowly and clearly because although many Vietnamese learn their English at school, they might not have had a lot of interaction with foreigners. If using an interpreter, it is considered polite to look at and address your questions to the person you are dealing with, not the translator. As in much of Asia, business cards are the order of the day and should be handed out – using both hands – at every business meeting. Don’t shove the card in your pocket, take a moment to study it – or at least appear to – as a show of respect. When you meet a business partner, it is common to shake hands – assuming you are of the same sex. If a woman doesn’t offer her hand, then a polite bow of the head is an appropriate acknowledgment. And don’t be surprised if a local uses a twohanded handshake – the left hand on top of the right wrist – they are a warm and welcoming people and this is just a sign of that. But beyond the politeness and the smiles, remember that the Vietnamese are complex and in many ways shaped by their long history of oppression. As Jackson explains it: “They’ve had a hard time for a thousand years – the Chinese were on top of them, then the French and then the Americans kicked the shit out of them. If someone is holding you down, you learn to squirm out. They are a people who don’t like winwin – it’s you lose, I win. And that’s part of a business mindset that if you are a foreigner coming in, you’ve got to get through your head,” says Jackson.

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THE TOP EIGHT THINGS TO DO AND SEE IN Vietnam Words Kate Whitehead

Ho Chi Minh Mausoleum, Hanoi

Temple of Literature, Hanoi

Cu Chi Tunnels, Ho Chi Minh City

Ben Thanh Market, Ho Chi Minh City

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This massive granite memorial to the former Vietnamese leader took two years to build. Completed in 1975, it was inspired by Lenin’s Mausoleum in Moscow, but has a distinct Vietnamese flavour with a sloping roof. Ho Chi Minh was said to have requested a simple cremation and his ashes scattered over the fields, but that was ignored and for decades people have queued to slowly walk past the slightly macabre spectacle of his embalmed body.

This elaborate network of 250km of tunnels was dug with simple tools during the French occupation in the 1940s and was further expanded in the 1960s to provide refuge from the American soldiers. Although their town was bombed, the people of Cu Chi were able to continue their lives underground. Today Cu Chi is a place of pilgrimage for Vietnamese school children and Communist Party cadres.

Built in 1070 by Emperor Lý Thánh Tông, this temple is dedicated to Confucius and honours Vietnam’s literary elite and scholars. The entranceway is very grand – originally only noblemen could enter through here, but almost 400 years down the line and gifted scholars were allowed. Now you don’t even need a GCSE to pass through. It’s worth taking time to explore the wellmanicured grounds, the pagodas and pond.

This is one monster market selling everything from clothing, vegetables, fruit and jewellery to bags and bling. It’s a great place to get souvenirs, but the vendors can drive a hard bargain so be prepared for some back-and-forth banter, making sure to smile through the whole process. If you really want to get a good deal, get to the market before 8am for the “morning price” – shopkeepers often give a better price in the morning believing a smooth transaction will give them good luck for the rest of the day.

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Halong Bay

Designated a World Heritage site in 1994, this stunning limestone landscape is often compared to Guilin in China. But it’s even better than that – more than 2 000 islands are dotted across the emerald waters of the Gulf of Tonkin. Take a boat cruise and stop off at a couple of the islands and explore the caves and grottoes. The best option is a boat that you can sleep on, thus avoiding the busy neighbouring city and having the pleasure of being gently rocked to sleep.

War Remnants Museum, Ho Chi Minh City

Be prepared to be disturbed. This museum, once known as the Museum of Chinese and American War Crimes, showcases the brutality of war and the cruelty inflicted on the Vietnamese. If you don’t feel you can stomach it, keep to the anti-war posters and photographs on the ground floor. Upstairs are chilling images of the impact of napalm and bombs on young lives.

Citadel, Hue

This royal enclosure once housed the emperor’s home, palaces and temples within six-metre high walls. Bombed during the French and American wars, today you need a little imagination to picture it as it was – much of it is just rubble, but reconstruction work is ongoing. The site is big enough that you can easily find yourself alone among the ruins, a great spot for quiet contemplation and moody photography.

Phu Quoc Island

Ten years ago this tear-shaped tropical island had beaches that made it onto the “world’s most undiscovered” list. A lot has happened in a decade and it’s now firmly on the tourist map, but the white, sandy beaches are still surrounded by dense jungle and the waters are still emerald green. A good place for scuba diving, kayaking and other watersports – all set to work up an appetite for a delicious fresh seafood dinner

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Buenaventura, a volatile and historically problematic city on Columbiaâ&#x20AC;&#x2122;s Pacific coast, with a high security presence. It has huge potential as a thriving port but is also gripped by high levels of crime and poverty.

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From Pablo to Prosperity Assessing Colombia’s Turnaround Words Lyal White & Greg Mills

El Dorado International, the spanking new airport in Colombia’s capital, Bogotá, bustles with visitors from across the globe. Built around the old terminal – a shell still remains as a reminder of Colombia’s less prosperous and difficult past – this El Dorado opened just over a year ago. It is both a symbol and a route to Colombia’s growing competitiveness. For decades Colombia was cut off from the outside world, the land of Pablo Escobar, its lifestyle defined by the term blanco y negro (‘white and black’, a line of coke and an espresso), and its political economy by the Medellín drug boss’s question, “Plato o plomo?” (“Lead or silver?”). Back then, just fifteen years ago, tourists and business travellers were deterred by the image of drug cartels, insurgencies and kidnappings. Things have changed dramatically since the turn of the century. Improved security has been the door through which all else has followed, including growth and development fuelled by an increase in investment and confidence. The FARC (Revolutionary Armed Forces of Colombia) and other guerrilla movements, once beating on Bogotá’s door, have been pushed back into the jungle and regional hideouts by an emboldened and strengthened military, this a product of a motivated political leadership. Together this has transformed Colombia from what its defence minister Juan Carlos Pinzón has described as ‘almost a failed state’ into an exciting commercial opportunity. Whether this turnaround sticks depends on keeping markets open, ensuring peace and institutionalising progress. Despite the popular image of omnipotent, hirsute guerrillas and equally bearded drug lords, Colombia boasts the longest running uninterrupted democracy in Latin America – 57 years versus 24 years in Chile and 29 years in Brazil. By comparison to the region, which has suffered more than 50 coups d’état since 1940, Colombia has experienced just a single four-year period in the 1950s under military rule.

The re-election of President Juan Manuel Santos in June last year was one of the most tightly contested elections in recent history. The outcome served as affirmation of stability in Colombia. Santos’s narrow victory over his conservative opponent, Óscar Iván Zuluaga was a vote for continuity in both the economic and security realms. Zuluaga was endorsed and strongly supported by former president Álvaro Uribe, widely regarded as the most successful leader in modern Colombian history, when, between 2002-10, he took the fight to the FARC. The association with Uribe, some thought, would entice voters to revert back to a name and leadership personality, an age-old characteristic of politics and voting in Latin America. Instead, the result served as an endorsement of Colombian institutions as much as it did the choice between Santos’ plans for peace at talks with the FARC in Havana, and the Zuluaga/Uribe alternative of ‘no talks with terrorists’. The Santos administration’s approach to security and development has meant the onus no longer lies exclusively on the military but rather in an alignment of citizen safety and security, with development and economic modernisation. Institutions are stronger and are deepening across the broad expanse of Colombian geography to cover the complex topography at various levels of governance. This is especially relevant in localised departments around municipal delivery, where services and safety were lacking. Such gaps in institutions and public services allowed for alternative options, notably insurgencies, to enter the fold. A broadly functional Colombian state and its institutions are now more actively involved and visible to all citizenry, leaving little reason for opposing – and often violent – forces to creep in.

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At the turn of this century, with the failure of a peace plan in 2000, just a third of Colombia’s territory was under government control, FARC guerrillas threatened most Colombian roads, and operated in 200-strong groups, running a narco-state within a state. Today, government controls over 90% of its terrain, violence and kidnapping are down dramatically, and only 80 municipalities (of roughly 1 100 nationwide) see much FARC activity, suggesting that the threat to Colombia’s people has been significantly rolled back. Once seen as the crime and cocaine capital of the world, Colombia has reduced the area under drug cultivation to just a third of the level of 2000. Whereas Colombia was ‘number one’ in the world in terms of kidnappings and crime by the start of the 21st century, this has fallen by 95% and 43% respectively. Colombia is confronting rudimentary service delivery issues, while simultaneously dealing with armed challenges to state authority. This is not unlike the situation in eastern Congo, with Boko Haram in Nigeria and Mali’s insurgents, or increasingly, with al-Shabab across East Africa. Such dramatic improvements have been fundamental to the turnaround in business and tourism. Apart from encouraging the movement of local Colombians around the country – armed escorts used to usher holidaymakers and foreign visitors from one part of the country to another – a safer environment has brought with it foreign capital, more opportunities and rapid development. Research does suggest that the movement of people is a key driver of sustained economic integration and growing connectedness. This is clearly the case in Colombia where internet connectivity has increased from 15% of the population in 2006 to well over 50% today, and mobile penetration is now over 100% from 68% in 2006.

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These developments have been supported by the rise in FDI from $7.5 billion in 2008 to $21.5 billion in 2013, attributed largely to improved perceptions of security but also notable improvements in the protection of foreign investment and property rights. Colombia now ranks 68th out of 142 countries on the World Economic Forum’s Global Competitiveness survey, and comes in 42nd on the World Bank’s Ease of Doing Business rankings, a remarkable climb from 143rd in 2006. Improved scores have been attributed to less red tape and an improved justice system, along with a lowering of the costs of crime and violence for business. Apart from the security imperative complemented with the right mix of policy and institutional reforms, Colombians themselves have taken hold of their national destiny. Long acknowledged for their resilience and warmth, Colombians are the most contented people on the planet according to the global Gallup Happiness Poll. A positive attitude coupled with a growing number of Colombians returning from abroad, and improving skills and education, means human capital in Colombia is in good shape and bodes well for the future.

Colombia is the largest supplier of cut flowers to the US and tourism numbers broke all records in 2013, dismissing the old stereotype image of insecurity in the country. With its official slogan: “Colombia, the only risk is wanting to stay!” not only does the new airport welcome international travellers to the country, it is evidence of the country’s open-door commitment to newly established trade agreements with the US and Europe, not to mention a range of new foreign investors. The upgraded infrastructure around the airport is servicing a competitive cargo trade, at the centre of which is floriculture, deeply reliant on high standards of efficiency to and from global markets. Beyond infrastructure, the human element and attitude are also part of Colombia’s improving competitiveness. On arrival at El Dorado visitors are greeted with typical friendly and professional Colombian hospitality, from officials at the airport, currency exchangers and taxi drivers. The recently upgraded road from the airport is filled with new Asian vehicles and dotted with office parks displaying the banners of local firms and multinationals alike. Flashy malls, once a luxury enjoyed by the elite residing in the northern parts of the city, are now commonplace in the aspiring new middle-class suburbs. This is not lost on the locals, who boast of 20 new malls built across the city since 2005. Economic growth averaging around 4% annually over the past decade has helped to bring unemployment down from 11.2% in 2008 to 9.6% today. While these figures may lag high-growth markets in Africa and Asia, it’s from a much higher base. Colombia’s (PPP) per capita income is $12 776, on a par with South Africa’s ($12 507), ranking them 83rd and 85th respectively out of 187 countries worldwide. (Interestingly, the size of populations, too, are similar – Colombia’s at just over 48 million.) In Africa, we often compare our performance with that of Latin American economies, and especially those that are smaller and supposedly less developed, like Colombia. Empirical results from the GIBS Dynamic Market Index (DMI) suggests that despite slightly slower growth, Colombia has made better headway on improving its operating environment than most African countries over the past seven years. Despite slightly lower rates of growth, Colombia’s ranking on key DMI measures from Open and Connected to Macroeconomic Management and the Justice System have improved across the board at a rate faster than its global peers. The message from Colombia is clear: get security right, enabling the consolidation of institutions, and much else follows. Fundamentally, the best tool for security, as elsewhere, is good people and using them well. To achieve this, leadership is key in not just making difficult policy choices, but through attention to detail in executing against vision

Dr Lyal White is Director of the Centre for Dynamic Markets (CDM) at the Gordon Institute of Business Science (GIBS). l Dr Greg Mills is Director of the Brenthurst Foundation. His most recent book is Why States Recover (Picador). l

And this is where the example of El Dorado is so important. Improved air connectedness through efficient and modern airport infrastructure is crucial for two booming sectors in the Colombian economy: cut flowers and tourism.

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Photo: getty images / gallo images

Woman & child, Estacion Pereira

CalĂ

Coffee plantation near Manizales

MedellĂn: a phoenix rising

photos: Lyal White

Buenaventura

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Succeeding Where Giants Fail Words Sean Christie

A reasonable generalisation to make about South African business dealings with the rest of Africa in the last 20 years would be to say that the giant corporates with their deep pockets and political ties have done well to enter and dominate several markets, whereas lower liquidity entrepreneurs have found the going less easy. Tanzania is something of an exception, a market with a reputation in big business circles for being maddeningly elusive. Engineering firms Murray & Roberts and Group Five came and left. Super grocer Pick n Pay opened up, stumbled, and sold to Shoprite, which recently closed its doors, thankful for its successes in places such as Luanda and Lagos.

construction business. In the meantime though, an opportunity arose to import high-quality marquees from Germany, and Tania founded Chattels, a marquee rental and event management business which she says “grew exponentially in the first couple of years”, even covering Sol Kerzner’s legendary New Year’s Eve parties.

This makes the success of an expat-founded SME called Nabaki Afrika all the more interesting.

In their late 20s, the Hamiltons had it pretty good: a beautiful home in Higgovale, Cape Town, two successful companies and a packed social calendar.

Registered in 1994 by Zimbabwean-born husband and wife team, Hamish and Tania Hamilton, Nabaki Afrika – KiSwahili for ‘I remain in Africa’ – has grown from being a backyard supplier to the local building industry, with an annual turnover under R1 million, to a company which, in 2010, was rated the 3rd most successful SME in Tanzania in a KPMG poll and which today has an annual turnover in excess of R140 million.

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A fun picture, drawn by Hamish, caricatures the journey as a roller coaster ride, a series of sickening peaks and troughs in contrast to the eventless speeding of what he has labelled the ‘expat express’, a bullet train operating at the height of the cloudfringed peaks of the Usumbara Mountains, never really touching Tanzanian soil. The roller coaster starts in Cape Town, where the Hamiltons both completed their tertiary studies, and afterwards decided to settle, Tania working as an intern with Allan Gray, and Hamish as an intern at Pick n Pay. Hamish soon realised that he had made better money renovating houses during his university holidays than he was as a corporate intern, and took the decision to strike out on his own, establishing a construction business specialising in the care of elite properties. Pick n Pay CEO Raymond Ackerman was to him both a mentor and an early client. Tania, too, soon traded finance for interior design studies, the idea being to start a concern that would complement Hamish’s

“Perhaps a little too packed,” reckons Tania. “I think our lives had become quite crowded and also a bit predictable. On a holiday in Mombasa I half-jokingly said to Hamish how great it would be to live in a place that was all at once beautiful, undeveloped and beyond our comfort zones. The half-joke germinated into a resolution, and in 1994 we sold our businesses and moved to Dar es Salaam, a place many times less developed than Mombasa,” she says. Tanzania had, prior to ’94, permitted no trade with South Africa, let alone the establishment of any business in Tanzania by a South African citizen. The first changed when Nelson Mandela’s ANC won South Africa’s first democratic election. “Nabaki Afrika was launched at the 1994 Saba Saba trade fair in Dar es Salaam. We were the only South Africans there, but you could gauge the South African interest in the Tanzanian market by the fact that 101 South African companies were happy to make us their Tanzanian representatives, ranging from Waltons Stationary to Marley Plumbing,” says Hamish. “To be honest, we felt like we were on the brink of big things, because we had some capital in a cash-stressed market, had a successful record of starting up and growing our own businesses, and we had these big South African suppliers behind us. We were actually arrogant,” Hamish confesses.

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Hamish Hamiltonâ&#x20AC;&#x2122;s Roller Coaster

Hamish Hamilton

Nabaki Afrika HQ

Tania & Hamish Hamilton

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“That didn’t last long though” adds Tania.

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Business Connexion can grow and transform your business through Connective Intelligence™. It is not just a payoff line, it is our passion. Our mission statement is reflective of our belief and passion for making a difference in people’s lives, particularly on the African continent. We thrive on making the seemingly impossible happen - and we do this by delivering exceptional value propositions to our stakeholder communities through the use of technology in its broadest definition.

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“A string of challenges reduced our optimism to the point that we wanted to pack up and head back to South Africa but didn’t even have enough savings left to ship our stuff. Financially and psychologically crushed, I found myself praying that a dala dala (bus) would run me over,” she says. The challenges included tricky partnerships, fraudulent clients, corrupt competition, Third World infrastructure and bureaucracy obstacles, like having to drive seven kilometres to send a fax. The Hamiltons also made the mistake of targeting big business, and the expatriate community. “We were handed a big design and supply of office furniture job for South African Breweries at the start, which we poured our souls into, sending and receiving hundreds of faxes on a batterypowered Palm Pilot, only to be dropped at the last minute,” says Hamish. “Some vintage Raymond Ackerman advice came back to me, to the effect that, if you don’t listen to the market, the market won’t listen to you. Losing our nest egg at the very beginning was probably the best thing that happened to us,” reflects Hamish. “We were forced to find cheaper office space and moved from a building in an upmarket area with a generator, to Buguruni Malapa, a poor, unplanned neighbourhood on the edge of the city. Surprise, surprise, the community there really opened their arms to us,” says Hamish. The Hamiltons were essentially ‘commission agents’ in those early years, putting deals together and taking a cut. In fact they had no option as they did not have capital to fund stock holdings of any significance. Their saving grace was that the local community began to place great trust in them, paying over significant deposits for orders for goods that might take two to three months to arrive. Many clients started using them as a savings scheme, paying advance instalments and sometimes taking over a year to reach the final purchase amount. Simultaneously, building reputations with their offshore suppliers afforded them better credit terms. All this allowed Nabaki Afrika to start carrying stock, which coincided with the developing economy’s customer expectations of zero to short delivery lead times. “This made all the difference, and our orders increased exponentially,” says Tania. The opening up of Stanbic (Standard Bank) in Tanzania at the point at which Nabaki Afrika’s space requirements had outgrown their 30m2 office and tiny storage facilities in Buguruni, was a stroke of luck. “We were granted bank guarantees without collateral, and this enabled us, ultimately, to move to our current

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. . . we’ve walked a straight path on a bit of a crooked road . . .” premises in Mikocheni Industria, where we currently have around 6 000m2 of warehouse space, and 300m2 of office space,” says Hamish. To begin with, all of Nabaki’s products were South African. Today that figure is around 20%. “That’s pretty amazing when you consider that a Southern African Development Community duty pass for member states makes products sourced within the SADC bloc up to 25 % cheaper. I put this down to the fact that we listen to what our customers want, first and foremost, and what they’re interest in isn’t necessarily the cheapest product, but more often a product that they know will provide reliability and value in Tanzania’s harsh environmental conditions,” says Hamish. Sales of roofing products drove 60-70% of the business in 2000, and although that percentage is much lower now, roofing tiles, specifically Decra Tiles from New Zealand (a pressed metal tile) are still bestsellers. “We sold our millionth Decra tile in 2006,” says Tania. A local coup was establishment of the Mtalaam (expert) Programme, a training programme for local installers, supported with expertise from Nabaki Afrika’s suppliers. “We realised it’s all very well to sell things, but if they are not installed correctly, it is unlikely that either the installer or the customer will come back to us. Our Mtalaam Programme has to date up-skilled well over 100 local installers, and this means that our customers can walk out with both a high-quality product and the name and number of a trusted installer in their area,” says Hamish, taking care to clarify that Nabaki Afrika takes no cut from this initiative. It is innovation like this that made 2008, an annus horribilis for businesses in developed markets, a bumper year for Nabaki.

“During the global recession, international sellers of building products came to East Africa in big numbers seeking opportunity, and because we had these systems in place, and also thanks to the fact that we’re the only building supplier in the country that does any marketing, their agents came to our door. This allowed us to cherry pick from some of the world’s best building products, adding considerably to our portfolio,” says Tania. Incidentally, says Hamish, he would sooner deal with agents than directly with manufacturers, because “there’s an incentive for an agent to protect his market, whereas a factory will sell to anyone.” Expanding as an independent operator in a country as vast as Tanzania was always going to be a challenge, one which Nabaki Afrika sought to overcome by establishing a diluted form of franchise model, selling branches on the understanding that Nabaki Afrika would take over any branch that ran into trouble, or failed to meet the company’s exacting standards. Today, in addition to their head office, there are three Nabaki Afrika branches in Dar es Salaam and one in Arusha. “We’re still growing in the face of enormously increased competition, and I believe it’s because we’ve walked a straight path on a bit of a crooked road, never compromising when it comes to legitimate business practices, quality, always listening to our customers, and never missing an opportunity to develop our 100 staff members or to innovate ways to better support our thousands of loyal customers,” says Hamish. Last year, Hamish was granted that most elusive of business documents by the government of Tanzania, a Tanzanian passport, after a rigorous series of interviews conducted in KiSwahili and a wait of over four-and-a-half years.

“We believe this reflects that the authorities see we’ve lived up to our name, Nabaki Africa, and really are here to stay!” says Tania

Business Connexion’s mission is to enrich communities by making the impossible possible through technology. Business communities, Consumer communities, Citizen communities and Geographical communities.

www.bcx.co.za

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Digital Burnout: The new, invisible, threat to business Words Dion Chang

Every year, time seems to move faster and faster. What’s driving the pace is our always-on, always-connected digital lifestyles and now we’re beginning to see the ripple effect. Witness the emergence of Digital Addiction, and with it, the increasing incidence of Digital Burnout, which is beginning to have a devastating effect on businesses. The Luddites will no doubt be feeling rather smug, as well as vindicated by the recent report released by Ofcom – the UK communications regulator – that found that we now spend more time on our devices than we do sleeping: an average of 8 hours and 41 minutes a day versus an average of 8 hours and 21 minutes asleep (for the lucky ones that actually get 8 hours of sleep). This fact shouldn’t come as a surprise, but whenever I mention it, it is inevitably met with wide-eyed shock. This is telling. Our devices have become such an integral part of our lives that we no longer see them as mere technology tools, but rather the seamless bridge between two parallel universes – our online and offline lives – which we now traverse daily.

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For the past few years, many people have felt a growing unease at the encroachment of our online lives. It has given rise to increased domestic conflict either between parents and children, or just between partners or spouses, because inevitably there is always one party constantly glued to a device. What the Ofcom report has done is acknowledge that we’ve reached an important tipping point. It is no longer a question of whether or not our virtual lives are encroaching on our real lives, but rather how we deal with this dual existence. In Silicon Valley in California, USA (the birthplace for much of our online existence) a very significant trend is emerging: a cyber self-help industry. Conferences with unusual names such as Wisdom 2.0 and The Rise of The Buddhist Geek (yes, that really is the name of a conference) are becoming more and more popular, as is the practice of Digital Detox. This may sound like New Age pop culture, but it illustrates the fundamental struggle of having to balance our parallel lives – and what a struggle it is proving to be. At the end of the year, everyone now limps towards the finish line, not only tired, but bone marrow weary. Five years ago, a mid-year holiday was seen as an indulgence, whereas today, it is

regarded as necessity, as are regular long weekends – preferably bush breaks - which provide that digital detox. Dealing with our online lives, which is starting to consume more and more of our waking hours, and then realising we also have real life to deal with (meetings, relationships, children as well as mundane chores like grocery shopping) ensures that we are now actually working 24 months in the space of 12. This additional layer to our already busy lives is the source of Digital Burnout. For companies and leadership this is potentially a serious problem. When Digital Burnout hits, it is more devastating than traditional burnout, and not something that can be remedied by a two-week holiday. People experiencing Digital Burnout liken it to having a nervous breakdown, so it takes months, rather than weeks, to recover. For human resources this is potentially devastating to a business, as the candidates for Digital Burnout are usually the middle to senior managers who are under the most pressure. Because Digital Burnout is a new and unexplored concept, it is either misunderstood or not acknowledged in a corporate environment. But since wellness in the workplace is increasingly becoming the benchmark of a company’s credentials, the research that is emerging should convince the most sceptical CEO.

THE REALITY OF DIGITAL ADDICTION

In order to understand Digital Burnout, we need to look at another new concept – Digital Addiction. It’s still unexplored in traditional medical circles, but psychologists and psychiatrists are noticing an increase in psychological disorders linked to internet use and device dependency. In Singapore, where 87% of the country’s 5.4 million population own Smartphones, psychiatrists are pushing medical authorities to formally recognise addiction to the internet and digital devices as a disorder. There are already two counselling centres that deal specifically with Digital Addiction. In mainland China, the acceptance that Digital Addiction exists is evident in the 300 Internet Addiction centres already in operation. Medical authorities estimate that there are 24 million young Chinese internet addicts.

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Therapists at the Resilienz mind clinic in Singapore note that symptoms exhibited by young adult patients have changed over the years. Obsession with online gaming was the main problem in the past, but addiction to social media and video downloading is now the trend. Patients are admitted for stress/anxiety-related problems, but their coping mechanism is to go online and onto social media, and therein lies the link. Going online has become our default reaction: when we wait at transport hubs, in any queue, or simply as a social crutch. We no longer stare into space (which used to bring on the odd “ah-ha” moment) but prefer to disappear down the cyber rabbit hole. In cyberspace there are no boundaries – in terms of space or time – so we never know when to stop. Our work/play boundaries have long been destroyed so a notification sound from your phone now elicits a Pavlovian response – we answer the master’s call, immediately. Research is now showing that the brain chemistry found in drug addicts is very similar to those with a propensity for Digital Addiction. The same ‘pleasure pathway’ in the brain lights up when we experience pleasure, like falling in love, gambling or even a strenuous gym workout. The body releases a combination of neurochemicals, including dopamine and the opiates which give us a ‘high’. Psychologists are now seeing the same dopamine rush when people receive notifications and social media responses, in the form of likes, comments, increased follower count, etc. They claim that once you've become addicted to a digital experience, simply touching your gadget or launching the internet can trigger the same high. Trisha Lin, assistant professor in communications at the Nanyang Technological University, China, defined Digital Addiction by the following symptoms: the inability to control craving, anxiety when separated from a Smartphone, loss in productivity in studies or at work and the need to constantly check one's phone. Research into mobile addiction, in particular, is already advanced. The average Smartphone user will check his/her phone around 150 times per day (about 12 times per hour) and launch 10 apps in the same period. Mobile addicts are those who do this six times the norm, which translates into checking your phone over 500 times a day. So while the complexities of Digital Addiction are being unpacked it is interesting to note that big businesses is responding to these early warning signals because, ironically in the digital era, productivity is beginning to suffer. We are always busy but not as productive as we should be, given the time we spend working. Interestingly, these interventions come from the automotive industry. Volkswagen turns off some employees' email 30 minutes after their shifts end, while BMW is planning new rules that will prevent workers from being contacted after hours. Daimler does the unthinkable and allows employees to delete their email account when they go on holiday.

In Germany, this thinking has been taken to another level. The government is trying to push through new legislation to ensure that employees are not legally bound to work, answer calls or respond to emails after hours. It will be a hard for this to be enforced in a digital era and most people scoff at the notion. If you’re a journalist, this would be unthinkable, but the fact that these companies and the German government are trying to reestablish some sort of boundary between work and private life signals a turning point. We’ve arrived at an interesting point. Technology has unlocked the doors to a new world order, and we’ve all rushed through the portal without considering the consequences. As a result, regulation and legislation are having to catch up and respond reactively, rather than proactively. The same scenarios are playing out, whether it’s about the imminent arrival of drone delivery, driverless cars, wearable tech or 3D printing – all of which are going to be game changers for multiple industries. Digital Burnout is similar. If Digital Addiction is only just coming onto the radar, companies will have to react quickly when their employees start burning out spectacularly, and the warning signs are already there. So ask yourself this: does your company’s wellness programme make provision for digital wellness?

I suspect not

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Suite Treats (In Mauritius) Words Caroline Hurry

PHOTOs: Peter Berg-Munch

Situated on the northeast coast, the One&Only Le Saint Géran is the oldest resort on the island.

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Chef Faizan Ali.

The Indian Pavilion.

Mauritians are a mixed bunch. The cultural backwash from waves of European, British, Indian and South African settlers is evident in its spicy, eclectic cuisine, religious diversity and tri-lingual inhabitants. Bonjour? These days, you’re as likely to hear a goeie môre as the growing ‘Seffrican’ population basks in the island’s political and financial sunshine. Mauritius has become known as South Africa’s 10th province. Our local retailers, estate agents, and even a Chamber of Commerce have all set up shop here and SA road rules apply, without the hijackings. Where would you hide? Besides, Mauritius is a gun-free island. Tax exemptions make it a Mecca for mense seeking a safe place to stash their cash. And you can watch the Blue Bulls tackle the Sharks on satellite TV. Many resorts will set up a giant screen on the beach

Poolside from a villa.

so fans can enjoy the rugby with their prawn braai. Small wonder Mauritius is ranked 1st in Africa and 33rd in the world, compared to SA’s paltry 53rd place. Sol Kerzner set the ball rolling in 1975, when he opened the first international resort, named after the ill-fated Saint Géran vessel split in two and sunk by a cyclone in 1744. Only nine survived. Frequented by the well-heeled cognoscenti, the Grande Dame of the golden Belle Mare peninsula was for years the benchmark for the subsequent 5-star hotels that dot the 300km coastline. I’ve often been to Mauritius but this was my first visit to Le Saint Géran, a One&Only resort comprising 162 suites and a villa – occupied by the Swedish royal family, while we were there – set in 60 acres of tropical gardens ablaze with life and colour.

With its 4 000 palm trees and a 7km beach, you can barely walk a few steps at Le Saint Géran without being accosted by a sense of paradise. Wandering paths between glades of frangipani, streams filled with lilies, darting goldfish and the kink-a-choo chatter of black bulbuls, I spy a crested crane that seems perfectly tame. Now that’s something I’ve never seen in Mauritius before. Apparently Sol Kerzner bought a pair some years ago. The female died a while back and now the male swans about preening for the paparazzi. Massages in the Garden Spa Pavilion suspended over water, soothed away any remaining vestiges of stress but it was my acupuncture session with the resort’s Traditional Chinese Medicine practitioner, Ken Rosen, that put paid to a niggling foot pain I’d had for years. Within three days the bags under my eyes no longer needed to be checked at the airport!

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Secrets of the Sistine There’s no place like Rome for art and historical intrigue. I saw no sign of Pope Francis when I visited the world’s wealthiest religious headquarters this year, but all the treasures of the Vatican paled in comparison to Michelangelo's Last Judgment in the Sistine Chapel. Next time – I threw three coins backwards into the Trevi fountain to ensure my return – I’ll bring binoculars.

While Michelangelo wielded the brush, gossips had much to say about his sexuality.

With more than 300 semi-clad figures writhing in a colourful maelstrom – many sonder onderbroek, others forming a phallic shape – it’s no wonder the ceiling caused such an unholy row when first unveiled in 1512. On seeing the naked bodies one pope fell to his knees and begged God not to send him to hell.

In contradiction, our guide in Florence told us Michelangelo based The David on his lover, Tommaso Cavalieri, a nobleman 40 years his junior. She cited his uncircumcised penis (the real David of Goliath fame was Jewish) – and heartshaped pupils as proof. Then there were the letters the artist wrote to Tommaso. “May I burn if I do not love thee with all my heart, and lose my soul, if I feel for any other!” while he declared no woman was “worthy of a wise and virile heart”.

Truth is Michelangelo refused Pope Julius II’s commission several times, but his holiness was not one to brook any argument. The ceiling was to depict the Christian version of human history in 175 works covering 3 657m2. Enough room between the platform and ceiling enabled Michelangelo to stand and paint but he suffered life-long headaches because of the angle he had to crane his neck.

PHOTOs: Peter Berg-Munch

The Last Judgement (detail) Michelangelo.

Our Vatican guide denied the artist was gay, but the uniforms he designed for the Swiss Guard – tasselled accents, yellow and blue striped leggings and red cuffs – are camper than a row of hot-pink togas.

And he was such a bitch! On completion of Bartholomeo Ammannati’s statue of Neptune at the Piazza della Signoria in Florence, Michelangelo said: “Oh, my dear Ammannati, you’ve ruined a good block of marble!”

Certainly he approached the Sistine Chapel ceiling with monastic devotion, going without food and sleep for days at a time. Neither did he avail himself of the Roman baths. Apparently he “stank to high heaven” wearing the same pair of dog skin stockings for months. On his death aged 89 in 1564, Michelangelo was buried with his boots on as nobody had the stomach to remove them. Even so, Pope Julius II threatened to have him thrown off his scaffolding if he didn’t complete the ceiling faster, even beating him with a stick. Michelangelo painted his own face on the flayed skin held by Saint Bartholomew in The Last Judgement. Drama queen? You decide … Visiting the Eternal City is like being in a vast 3 000-year-old museum but sadly there’s nothing old-fashioned about the prices. We were charged 25 euro (R350) for two espressos at a sidewalk café

Trafalgar Tours offer regular excursions from SA to various European destinations. More info Trafalgar.com/sa

Entrance to the Vatican.

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Wellness now Words Mandy Walker

Some of the latest insights and buys for those who prefer to discern their way to wellness.

Health Workers oust Superman

When faced with statistics that show how far the world has to go for wellness to become a reality in millions of children’s lives, it’s natural to feel bleak. And, in the face of such statistics, to wonder whether you can make a difference. Which is why the new short film at http://bit.ly/1sbZn40 made by Save the Children and BAFTA award-winning creative agency, Don’t Panic is so clever. It’s unusual in how it motivates and inspires people to donate to this worthy cause. The film Superheroes follows a group of journalists investigating multiple sightings of ‘masked figures’ – real life health workers that many children regard as superheroes. The film crew have heard the stories of these mythical figures and are on their trail, determined to be the first to capture evidence of these anonymous protagonists on camera. Travelling across the globe, from Mexico to Kenya to India, the crew document the moving stories of young boys and girls who claim to have been saved by these elusive heroes. These are real children – not actors – but children who are supported by Save the Children’s international work and who were filmed in their real life settings. The aim of the powerful 100-second film is to raise global awareness of the millions of children struggling to survive in some of the poorest and most disadvantaged communities on the planet – where a staggering 17 000 under the age of five still die every day from easily preventable causes such as malaria and diarrhoea and have little or no access to medicines and skilled health workers, in regions and countries where extreme poverty is widespread.

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How can you help? Take action by contributing to Savethechildren.org or by sharing the film to help spread the powerful stories of children who survive against the odds. Video from YouTube

A (Kind) Note to Self, Boosts Endurance

To reach new heights in your training and fitness, learn to talk to yourself kindly. This is the take out from a new study mentioned by The Huffington Post (an American online news aggregator). The journal Medicine & Science in Sports & Exercise explains how the study was conducted: a group of 24 cyclists were asked at the beginning of a period of two weeks to pedal at 80 percent of their peak power, for as long as they could stand it and then to repeat the exercise again, after two weeks. Findings showed that the members of the group who’d received specific training in strategic selftalk during the two weeks, were able to lengthen their time on the bike significantly the second time around. And also that they felt as if they weren’t training as hard as they were before. The study is noteworthy as it’s apparently the first time a direct link between using a personal mantra to improve motivation and fitness performance has been established definitively. Seven kind-to-self mantras, to try next time you work out:

1. Be kind. Be gentle. And start with yourself. – fb/joyofmom 2. I’m letting go of all the thoughts that do not make me strong. – Thelma Davis 3. Focus on progress not perfection. – Tinybuddha.com 4. Start where you are. Use what you have. Do what you can. – Arthur Ashe 5. Little changes can change everything. – Anonymous 6. I’m not now, that which I have been. – George Byron 7. I'm good enough. I'm smart enough. And doggone it, people like me. – Stuart Smalley

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Cisco’s HealthPresence brings doctors to patients, remotely

One of Africa’s biggest healthcare hurdles – where thousands in remote rural areas live too far from clinics or have little or no access to a doctor – may soon be straddled. Thanks to an ingenious application of telepresence technology, developed by Cisco since 2007 and piloted in Bloemfontein. “With it, a patient and doctor can consult without physically being in the same place,” explains Kabelo Letsoalo, Systems Engineer at Cisco Systems.

Mid-summer wellness

According to Ayurvedic medicine (a system of healing from ancient India) carefully observing how the air, light and temperature change seasonally, gives important clues as to how to live more harmoniously. Just watching and feeling nature is a practice of awareness and meditation, says Ayurvedic practitioner, Wendy Young (Wiseliving.co.za). Summer, like every season brings specific positives and challenges to our health. The increased warmth, dryness and light can intensify aspects linked to these qualities in our bodies. Sight, digestion, appetite, metabolism, nutrient assimilation and body temperature are all affected by the increased warmth of summer. Be aware of any changes in these systems of your body, adds Wendy. Imbalanced fire qualities, known in Sanskrit as ‘pitta’, manifest in the body in symptoms like acid reflux and indigestion, increased sensitivity of the eyes to light, skin inflammation, arthritic joints and heart problems. Yet even small tweaks such as these can make all the difference to cooling, calming and improving your overall well-being in the warmer months. 1. Start your morning with a dash of Aloe Vera juice (50ml) in a glass of warm water – to help flush heat toxins from your liver. 2. Next, massage your body with room temperature coconut oil to nourish and clear any heat from your skin. Shower off with lukewarm water. 3. Walk or stand with bare feet on a cool dewy lawn for a calming and centred start to your meditation practice or simply to connect with nature’s beauty. Ayurveda also helps balance energy points or knots in the subtle (spiritual) body known as ‘Chakras’. In Summer, the psychic fire situated behind the navel at the solar plexus (in Manipura Chakra) can become too stimulated. Signs of this include: feeling very ambitious, thinking about wealth and power or being critical, judgemental, angry and reactive. Ayurvedic advice: Try to cultivate discernment instead of following whimsical likes and dislikes. Also, consciously tell yourself to ‘let go’ when it comes to overly attaching to pleasure or pain. In this way you’ll be applying the wise teachings of Swami Satyananda Saraswati (see Youtube: Evolution of Consciousness), that focus on learning to live in the present with acceptance and an open heart.

Cisco created a virtual environment to show how the HealthPresence application works, at the My World of Tomorrow Conference at Sandton’s Convention Centre held in October last year. The exhibit demonstrated how, at a simple medical station – which could even be an empty steel container or prefab, placed in the veld in a rural area – a nurse or basically trained medical worker can take a patient’s vital signs (blood pressure, temperature, oxygen levels etc.) and use the back end system developed by Cisco, to create a patient profile and upload the information. Next, a tele-presence screen that uses IP telephony/video end-point technology, enables the nurse and patient to consult with a doctor ‘face-to-face’ – even if the doctor is situated at a hospital or clinic 50 or 500kms away … or anywhere in the world, for that matter. The doctor can then determine which tests need to be run to further the initial first-level diagnosis, for example. And that’s only the beginning, since the application also allows for more than one doctor to be present in simultaneous conference with the patient. Or even for many doctors and specialists to cross-consult and discuss the patient’s condition to determine the best course of treatment. It’s exciting to see how applications like this one are being developed right here in South Africa, to offer innovative tools for clinic networks, like Mediclinic, to improve scalability issues, and facilitate direct engagement between patients and doctors, no matter how far apart they may be physically. And it illustrates how technology, applied intelligently and used creatively, can open up vistas of possibility, when it comes to healthcare in Africa

the finer things Words Cheska Stark

HIS Checklist 1.

Sweater, R1 795, Gant This striped sweater is reminiscent of days on the yacht but warm enough to take you through the colder season. Pair it with anything from jeans and chinos in the evening to shorts in the day.

Work boot, R2 499, Pringle of Scotland As the weather turns cold and you’re ready for a work footwear change, these shoes will come in handy. Still formal enough to wear with a suit yet the high ankle will keep you warmer this cold season, especially if you’re headed into rainy/wet weather.

Shirt, R399, River Island Straight from the UK, River Island means one thing: on trend. Yes, it’s a classic work shirt but the slim tailoring, narrow collar and stitching detail all take this classic to a whole new level.

Persol sunglasses, R2 277, Luxottica New season means new sunglasses. We love the denim inspiration of these so-cool Persol sunglasses.

Suit jacket, R1 599, Edgars Update your suit with this Charter Club jacket from Edgars. The dark charcoal colour works for winter – paired with any classic shirt, from crisp white to blue.

Knomo Henderson 15-inch bag, R1 999, iStore Carry your laptop and other work necessities in style this season with a new Knomo bag. Synonymous with style and functionality, Knomo really is the only brand to turn to when looking for a laptop carrier. We like the clean lines of this design as well as the subtle, minimal branding.

ClarinsMen Shave Ease Oil, R255 Expect the best shave of your life with this Clarins Shaving Oil rich in skin-conditioning plant extracts which softens stubble and helps the razor to glide smoothly over the skin.

Prada Luna Rossa Eau de Toilette 100ml, R1 150 Luna Rossa is the new uncompromising fragrance for men from Prada, which reinterprets traditional ingredients of men's perfumery to take them to a new and modern dimension. Lavender and orange essence burst forth in an instant wave of aromatic freshness, transitioning into a cool heart of spearmint and sage, then smooths into a noble and sensual base of wood and amber notes.

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her Checklist 1. Clarins Rouge Eclat lipstick in Petal Pink, R270 Get ready for the cooler months with this pretty pink lipstick. Although we’re always for a bold lip colour, winter is the perfect time to embrace warmer, softer shades, which highlight your lips and brighten your complexion. The Clarins Rouge Eclat lipstick is much more than just a colour stick, though. It’s the first age-defying lipstick from Clarins. While still offering intense long-lasting colour, its Nutri-Youth Complex protects lips against dehydration and boosts collagen, with Vitamin E protecting against free radicals and 100% plant waxes providing instant comfort. In other words, perfect for the harsh conditions of winter. 2. Leopard print pumps, R1 800, Cinnamon Shoes No wardrobe is complete without a touch of leopard print, which is why these animal print flats make it onto our winter hotlist. Perfect for pairing with warm clothes, these pumps up the ante of your flat footwear with their exotic print and fantastic, pointed shape. All Cinnamon pumps are handcrafted in South Africa out of the finest luxurious leather. 3. Giorgio Armani Sunglasses, R2 933, Luxottica Just because summer is over doesn’t mean you have to pack away your sunnies. In South Africa we wear sunglasses all year round, upping the glamour of any look. These wood-inspired frames add a warm glow to any winter look and will perfectly match your coat, boots and winter days. 4. Handbag, R5 460, Radley New season means one thing: it’s time for a new handbag! There are so many reasons why this Radley tote is spot on for the new season: one: the colour – tan is bang on-trend for warm, winter days and two: the shape: hello throweverything-in and walk out the door. 5. Coat, R7 200, Karen Millen Upmarket British designer Karen Millen is known for her luxurious fabric and tailoring so prepare for the ultimate investment coat this winter. This tan, longer lenth, tie coat is a fantastic investment for this winter and seasons to come – working with any outfit and tailored to suit your working needs. 6. Ankle boots, R1 999, Pringle of Scotland Serious height appears this winter with these classic ankle booties. The great thing about ankle boots is that they work with both pants and dresses/skirts and easily take you from days at the office to nights out afterwards. Don’t be afraid to pair these heels with printed tights or stockings. 7. Juicy Couture Viva La Juicy Gold Couture, 100ml R865 Juicy Couture Viva La Juicy Gold Couture is all about luxury. It’s an opulent fragrance that is as indulgent as it is intoxicating. The Viva muse embodies the lavish life, making every day more glamour-filled than the next. The fragrance teases with lush wild berry notes and moves to a sultry mix of golden amber and melted caramel. The hints of tempting wild berry open the fragrance, capturing femininity while a delicate kiss of honeysuckle combines with sultry jasmine sambac notes to create a captivating fragrant bouquet. 8. Gold and diamanté necklace R140, Zuri If in doubt always add an accessory to your outfit, it makes your entire look complete while showing your attention to detail. Even costume jewelry will do the trick, like this tassel necklace, which will cause heads to turn. Remember, when wearing a necklace wear a simple top, as less is more when it comes to fashionable styling

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Forward motion Words Jacques Marais and Stephen Smith

With or without an internal combustion motor, here are half a dozen ways to get ahead (and stay ahead) of the pack. Funky or fun. Far-fetched or absurd. Classic or alternative. Acumen’s motion maestros check out six incredible ways of having fun while moving from point A to point B …

HUMAN-POWERED

In Your Pack: Powermonkey Explorer 2

On your back: Osprey Ozone 46L Travel Piece

On Your Feet: ALTRA Olympus Men’s Trail Running Shoe

What Is It: The Powermonkey Explorer 2 is a tough, waterproof, mobile charger that’s able to withstand the most extreme outdoor conditions imaginable. The unit itself is made with an ultra-strong aluminium casing, and is so tough you can literally park a Land Rover on it, drop it hundreds of metres down a mountain or freeze it to temperatures of -30ºC!

WHAT IS IT: Get legal the next time you air-travel with the perfectly proportioned Osprey Ozone 46L travel piece. It’s featherlight at less than 2kg, and slots easily into overhead luggage compartments on trains, planes and busses. Quality, over-sized wheels make for easy rolling on just about any surface.

WHAT IS IT: The Altra running brand is committed to helping runners avoid injury by teaching the theory of efficient, low-impact running techniques. Just like most other activities, you should probably take lessons to get the most out of running as a sport. The good news is – whether you’re just a beginner or already preparing for a major race – Altra has created the #learntorun initiative in order to teach runners better and healthier running.

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WHY DO YOU WANT IT: Off-grid power is taken to new heights with the Powermonkey Explorer 2. It houses a powerful dual-core, 6 000mAh lithiumion battery, capable of recharging an iPhone 5 up to three times, a GoPro Hero3+ four times and a Garmin Edge 1 000 four times. DESIGN UPS: The unit is also compatible with a full range of other 5V devices, including tablets and iPads, iPods, digital cameras, Sat phones and more. As an added bonus, it’s waterproof for 30 minutes in up to 1m of water. GO GET IT: Available at most outdoor retailers (think Cape Union Mart and Due South) as well as online. For a dealer list, go to Wintecsoloutions.co.za RRP: R1 300

WHY DO YOU WANT IT: This maximumsized, legal air travel luggage unit is lightweight, durable and attractive, making day travel with a single carry-on bag a cinch. Available in stylish Charcoal and Green colourways, solid construction and a firm, internal frame will protect your valuables throughout your journey. DESIGN USPs: The Ozone 46L is the ultimate luggage solution, and boasts an extendable and sturdy grab handle, ergonomically designed for a comfort grip. Two full-length external zip pockets on the front panel allow easy access, while there’s also a rear panel pocket and inner zip pocket for smaller items. GO GET IT: Available from Due South, Drifters Adventure Centre as well as leading outdoor and online retailers nationwide – Adventureinc.co.za RRP: R2 099

WHY DO YOU WANT IT: Step into the only trail shoe with a FootShapeTM toe box combined with maximum cushioning within a Zero-Drop platform. This means your toes can spread and there is no potentially damaging heel lift, thus placing your foot in a natural position for an efficient and stable running experience on either trail or road. DESIGN USPs: Two-layer A-BoundTM cushioning offers flexible protection from the gnarly terrain or open road, although it’s recommended that proper low-impact techniques are learned. Maximum cushioning in a shoe reduces the workload on the feet, so it’s important to maintain foot strengthening exercises to keep the foundation of the body strong. GO GET IT: Drifters (Cape Town and Johannesburg), Mindful Runner (Johannesburg) and Athlete’s Foot (Cape Town) RRP: approx. R1 799

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FOR THE HEAD

FOR THE HEART

FOR THE PLANET

MOTORISED On the motorised side, we look at three machines similar at first glance, but with many a difference under the hood, so to speak. Read on and see which appeals to your soul . . . For the Heart: Alfa Romeo 4C

For the Head: Citroën C4 Picasso

WHAT IS IT: I know the world is in a state of upheaval, but for me everything feels right when Alfa Romeo is making beautiful sportscars, and at the moment they’re doing just that. The 4C is a small, lightweight, utterly gorgeous coupé that I ache to call my own.

WHAT IS IT: The French certainly know how to make sassy, stylish people movers. Just take a look at the new C4 Picasso – a thoroughly different mom’s taxi that any dad would be happy to drive.

WHY DO YOU WANT IT: The initial reasons are very obvious and equally superficial – it looks so damn sexy! Beyond that you have a vehicle designed to be loved and desired, not just to be bought and driven. DESIGN USPs: There are very few cars that will stand out on the road like this little Alfa. It should also be heavenly to drive, thanks to a turbocharged 1 750cc petrol engine that produces 177kW and 350Nm and which will accelerate the lightweight car from 0-100km/h in 4,5 seconds, and on to a top speed of 258km/h. GO GET IT: Priced at R870 000 the Alfa Romeo 4C isn’t cheap, but it’s still good value. It comes with a three-year/100 000km warranty and maintenance plan. Visit Alfaromeo.co.za for more information.

WHY DO YOU WANT IT: A family wagon absolutely jam-packed with technology, the C4 Picasso is a practical five-seater with a spacious boot. It’s been thoughtfully designed to give a sense of space and luxury with a number of storage compartments and little features like armrests. DESIGN USPs: The innovative exterior is one key selling point, but there’s a whole lot of substance to this vehicle. A 1,6-litre turbodiesel engine is the only option, producing 85kW and 270Nm and using just 4,8l/100km. It’s paired with a 6-speed manual gearbox. Massaging seats are one example of the technology in the vehicle, another is keyless entry and driving while a third is twin screens on the dashboard, from which to view and control everything to do with the vehicle. GO GET IT: R325 000 is the going price for a C4 Picasso, and the French manufacturer has done very well to do as much as it has done for this price. Whether you need all that technology is another question. It comes with a five-year/100 000km service plan and a three-year/100 000km warranty. Visit Citroen.co.za

For the Planet: Mercedes-Benz S400 Hybrid WHAT IS IT: There’s no reason why you shouldn’t be environmentally friendly just because you demand to be driven by a chauffeur. The largest of the Mercedes-Benz range can also be green, in the form of the S400 Hybrid. WHY DO YOU WANT IT: If you’re wealthy enough to own an S-Class, fuel consumption isn’t a financial consideration, but guzzling fuel in a V8 might tweak at your conscience. Instead, turn to the S400 Hybrid and enjoy the same level of performance without the guilt. DESIGN USPs: The Mercedes S-Class is one of world’s truly great cars and has been called the “best car in the world” on more than one occasion. Rest assured that it features everything you could possibly need, and perhaps things that the average owner will never even discover. The 400 Hybrid also has a petrol-electric drivetrain that combines a 3,5-litre V6 petrol engine with an electric motor for a total of 245kW and 620Nm. Fuel consumption is just 6,3l/100km, but the S400 Hybrid will still go from 0-100km/h in 6,8 seconds! GO GET IT: R1 287 000 It comes with a six-year/120 000km maintenance plan and a two-year/unlimited kilometre warranty. Visit Mercedes-benz.co.za

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Techno Words Aki Anastasiou

Iridium Go!

Price $999 plus the airtime

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Remember those old sat phones that used low orbiting satellites to make calls virtually anywhere on planet earth. The new generation Iridium Go! is a mini satellite WiFi hotspot gadget that allows you to connect modern-day smartphones and tablets to the internet via satellite connectivity. By downloading an app onto an Apple or Android device you can connect up to five devices to the hotspot. Once connected, users are able to upload photographs, send emails, make calls, send SMSs and surf the internet. Speed is still a challenge though – a 2.4kbps connection is not fast enough to make Skype calls and watch YouTube videos. But if you are an adventurer and head into areas where there is no GSM coverage, the Iridium Go! is for you. The device sells for $999 and users then purchase airtime according to how much they plan to use the device. Billing is per minute.

The Battle of the Phablets:

Apple iPhone 6 Plus vs Samsung Galaxy Note 4 Apple iPhone 6 Plus: starting at R14 000 Samsung Galaxy Note 4: R 11 700 The phablet market is exploding. Conservatively, one in three people who own a tablet now plan to replace it with a phablet device next – there’s no need to carry a smartphone and tablet. The definition of a phablet is a smartphone that has a screen size between 5 inches and 6.1 inches. The two contenders battling it out for vacant WBP title (World’s Best Phablet) are the iPhone 6 Plus and Samsung’s Note 4. In the left hand corner, all the way from Cupertino in California, weighing in at 172 grams with a width 77.8mm, a height of 158.1mm and a thickness of 7.1mm is the new kid from Apple – the iPhone 6 Plus. With a Retina HP display featuring LED backlit IPS technology, this 5.5-inch phablet has an 8MP camera that promises to deliver better image stabilisation. Apple’s latest M8 processor is embedded into the heart of this device and will give users a lightning fast performance running Apple’s iOS software. In the right hand corner, all the way from Seoul in South Korea, is Samsung’s champion: the Galaxy Note 4. This phablet is no stranger to the ring and is Samsung’s fourth phablet. The Note 4 weighs in at 176 grams, stands 153.5mm high, is 78.6mm wide and is 8.5mm thick. It has a Super AMOLED display with a 16MP camera and Qualcomm’s latest Snapdragon processor. This device has a more powerful battery that’s also removable and has Samsung’s S-Pen technology, allowing you to write on the screen. Both contenders are classy: lean, mean and lightning fast. It’s a clear battle of the operating system. Will it be Apple’s ecosystem or Google’s Android that will win this fight? Who’ll be crowned WBP World Champion? It’s too close to call. Feature-wise, the Note 4 has a slight edge, but for ease of use it’s the iPhone 6 Plus. This fight will be close and consumers who are choosing phablets can expect more contenders in this lucrative category!

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Polar V800 Sports Watch Price R6 000

The Polar V800 is the Rolls Royce of sports watches. Polar have been making heart monitors for many years but the V800 takes reading your heart rate to a whole new level. Apart from tracking your speed, pace and distance, the new device features an integrated GPS to plot your routes. The unique feature of the V800 is how it helps you train and how customisable it is. With sophisticated algorithms built in, it understands the rate at which you train and offers advice on how much time you should give your body to recover. It stores all the information on the watch and via the Polar Flow app syncs the data to your smartphone so you can keep tabs on your training schedule. The multisport rechargeable watch has a 50-hour battery life and is waterproof to 30 meters. It also fits very comfortably around the wrist and I’ve even received compliments on how it looks – so clearly it can be worn outside of your training schedule.

Amazon Kindle Touch Price R1 999

The new Amazon Kindle Touch has an improved battery life, a 20% faster processor and it comes with twice the storage of the previous version. Aimed at the budget-conscious reader, the new Kindle now features a touch screen in a lighter, more compact device. The high contrast e-ink touchscreen feels like you are reading from a real piece of paper and is not affected in direct sunlight. The additional memory means you can store as many as 3 000 books on the reader. The battery will last for two months if you read for 30 minutes a day.

Muvit Selfie Stick Price R199

Ever watched people huddled together smiling at a smartphone that someone is holding up, attempting to take a photograph. Yes folks, the art of the perfect selfie is no easy task and often requires several attempts. Fear no more. The Muvit selfie stick allows you to attach your phone to the end of the monopod stick, helping you create your best vantage point for the ultimate selfie. The head fits almost every smartphone and even some phablets, it’s adjustable and it extends to just over a metre. Simply set the countdown timer on your phone’s camera, attach your phone to the stick, lift it up, smile and your selfie is complete. If you find one grab it, they’re as rare as hen’s teeth. They’re fantastic for big family gatherings, concerts and even if you’re an aspiring paparazzi photographer.

I know what you’re thinking … you’re saying to yourself…“Why didn’t I think of that?” Oh, and in case you’re wondering, ‘selfie’ is a word. In fact it was the 2013 Oxford Dictionaries International Word of the Year 2013

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Books Words Chris Gibbons

The Virgin Way

by Richard Branson Virgin Books i R315 Behind Branson’s relaxed, folksy approach lurks some extremely sound advice. Much is plain common sense, but there’s been a shortage of that in many of the businesses I’ve observed over the years!

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In business, Branson advocates one of the simplest tools of all: listening. To your customers, to your staff, to your competitors – whatever you do, learn to listen and you’ll improve your business. Another basic for which he’s famous: write things down in a notebook. No-one, he says, can be expected to remember details of conversations and deals from six or 12 months ago – but you’ll be able to if you keep notes. Also: say please and thank you. Get rid of the fatuous corporate mission statement. Above all – have fun. “If you’re not having fun, then it’s probably time to call it quits and try something else.” All very good advice indeed, but can you implement as successfully as Branson? That’s the real difference.

Zero To One

by Peter Thiel with Blake Masters Virgin Books i R285 The sub-title of Thiel’s book is Notes on Startups, or How to Build the Future, but it’s a great deal more than that. Thiel has two billion-dollar companies under his belt, PayPal and Palantir Technologies, and both are excellent examples of moving from 0 to 1. This is the way he explains the creation of something completely new and which occupies space not before seen. Another word for this is differentiation. Google, says Thiel, is so welldifferentiated that it’s a monopoly and enjoys monopoly profits accordingly. It goes out of its way to hide this fact, but that’s the reality. Apple is another, he says. Thiel’s business philosophy turns much conventional wisdom onto its head. Concepts like ‘competition is good’ or ‘first-mover advantage’ disappear completely and we are left wondering why we have always accepted them so quickly and without question?

Sapiens - A Brief History of Humankind by Yuval Noah HarAri Harvill Secker i R285

What’s the point of studying history, especially if you’re trying to run a business in this ultra-fast moving digital age? It’s a familiar lament and normally followed by a chorus of “… and the only thing we learn from history is that we don’t learn from history.” Enter Yuval Noah Harari, an Oxford PhD now teaching at Jerusalem’s Hebrew University. In one weighty 400-page volume, he’s assembled a complete picture not only of where humankind comes from but where we might be headed. Harari reminds us that the key forces which have shaped Homo Sapiens – money, empire, capitalism and other religions (yes, capitalism is a religion in Harari’s view) remain dominant to this day. Drawing the various threads together, Harari leaves readers pondering the very future of this race of ours: are we about to become extinct and what might take our place? Modern business leaders need to scan a broad horizon if they are to understand the future. Sapiens is exactly the place to start

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WINE Words John Maytham

Acumen’s wine expert picks three of the best at three different price points: Everyday, Dinner Party and Out To Impress. Everyday In a word association game, there’s only one answer for a wine-geek when hearing the word “Swartland”. And that’s Revolution. Specifically it’s a weekend party in Riebeek Kasteel in early November that’s the hottest ticket of the annual wine calendar. More generally it’s an approach to winemaking that’s making big waves internationally. Some of the most talked-about South African wines come from this part of the world – Sadie Family, AA Badenhorst, Mullineux Wines, Lammershoek, Testalonga – all characterised by minimal intervention in the cellar and an intense focus on establishing a sense of place in the wine. Shiraz is the red cultivar that most often best expresses the terroir of the Swartland and most of the big Swartland names make at least one shiraz, or shiraz-based blend. And the intense recent spotlight on the Swartland has had the happy effect of pulling up standards across the board, not just among the stars. q.v. the Shiraz made by Riebeek Cellars. It’s modest in its ambitions, but a delightful expression of the grape at a wallet-friendly price. It’s full-bodied with clean, ripe fruit and a lovely harmony between the berry fruit and spicy notes. R40

Dinner Party A regular debating point when talking about wines from Elgin is which cultivar is most likely to produce consistently outstanding wines – what should be Elgin’s signature wine? The two main choices are chardonnay and sauvignon blanc. Both are serious contenders; each has its passionate advocates. I am a vacillator, plumping for whichever excellent example of the two I currently have in my glass. Which is the delicious 2013 Corder Cool Climate Sauvignon Blanc. It’s a beautiful farm on the slopes of the Kogelberg, with 14 hectares of the most cosseted vineyards around. The philosophy is to deliver perfect grapes to the cellar, and the cooler climate allows a slow ripening process that often sees grapes harvested a month later than those of some neighbours. The current vintage continues a tradition of excellence established in a few short years. The wine has a wonderful blend of cool climate elegance and fruit expression. There’s richness and complexity from extended lees contact, and that’s achieved despite a modest alcohol level. The overwhelming impression is of freshness and purity with a coated acidity that perks up the palate without any hint of overdrive. A recent bottle of the 2011 suggests this is a sauvignon that benefits from age. Definitely one to watch. R80

Out To Impress South African brandy doesn’t always get the attention and kudos it deserves, and it deserves plenty. There are some very knowledgeable palates that argue with conviction that premium local brandy offers the best rand-permillilitre value of any alcoholic drink anywhere. These cognoscenti maintain that a top local brandy is a much better buy than a Cognac or Armagnac, often at double or triple the price. And one of the best is the Van Ryn’s 15-year-old Fine Cask Reserve. It’s become almost old hat for this brandy to walk away with the Best Brandy in the World laurels at the two premium international competitions, the International Wine and Spirit Competition and the International Spirits Challenge. Master Distiller, Marlene Bester, describes what you get in your snifter much more fluently than can I. “It shows an intensity of fruit characters with a twist of citrus and a delectable trace of chocolate. To the eye, it has a rich gold colour, and the nose of honeyed-citrus will reveal a palate laced with chocolate, cigar box tones and sweet oak spices.” And don’t you dare adulterate it with Coke. Drink it neat, or, if you must, no more than a block of ice, or a splash of water. R1 000

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Sugarman, Here Comes The Ubuntu Train Words Victor Dlamini

On a balmy October evening in New York Vusi Mahlasela walked onto the stage at Carnegie Hall, his gentle, lilting voice soaring, his giant frame a metaphor for the power of his music. Mahlasela, whose voice belongs to the singer-healers such as Salif Keïta, Al Green and Youssou N’Dour, sang his songs of freedom. With just a few notes from his guitar, his eyes closed, the lyrics searing, Mahlasela had reminded us why music is both so beautiful and powerful. No wonder Nadine Gordimer said of Mahlasela: “He sings as a bird does, in total response to being alive.” Mahlasela’s performance of Miriam Makeba’s Pata Pata was not just a musical nod to the Mama Afrika, but a reminder of the links that connect our greatest musicians. Then Hugh Masekela sauntered onto the stage, flugelhorn in hand, his wardrobe drawing from the red and pink register and with one blow of his instrument, the audience welcomed him into their hearts. For Masekela this was a return to the city where he laid his musical foundation, where he studied and where he created his distinctive sound. The presence in the auditorium of New York’s Harry Belafonte was a reminder of the important links between music and freedom.

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Dave Matthews practically ran onto the stage, dressed all in black and beaming, the joy of playing with Masekela and Mahlasela etched on his face. Matthews spoke about how as a teenager in Johannesburg he used to go and watch Mahlasela play with the band Tananas. Matthews led the group in playing Rodriguez’s Sugarman, his voice wrapping itself with magnetic joy on the haunting lyrics that made an unlikely Detroit musician a wonder of the world. If Rodriguez’s Sugarman was one of the albums that inspired a generation of rebels to sing of freedom, Bright Blue’s Weeping, with its veiled references to Nkosi Sikelel’ iAfrika that were not picked up by apartheid’s censors, was poignantly performed by Matthews, backed by Masekela and Mahlasela. If some of the celebrations of 20 Years Of Freedom in SA have been bland, insipid and even forgettable, the Ubuntu Music & Arts Festival at Carnegie Hall has been a powerful antidote. Perhaps it’s the absence of politicians from the main stages, with the microphones returned to the artists that inspired generations when hope of freedom seemed a dangerous indulgence. If ever a blueprint was needed for how to save music and art from politicians, this series of concerts has provided a useful template.

No performance by Masekela is complete without his great anthem Stimela, The Train. And each time he performs it, the audience succumbs to the power of his storytelling, and no matter how many times you have heard this song, Masekela renews it with each performance. Masekela, after the performance of the song, Meadowlands, narrated the story of the Sophiatown removals in 1955 and how the song was a defiant rebuke to the cruelty of the authorities. As he said to the audience, the songwriters used to create a happy melody to fool the censors who bought into the stereotype of ‘happy natives’ even as the music was fiercely anti-establishment. Watching Masekela, Mahlasela and Matthews at Carnegie, with New York enthralled by the power of the South African Songbook, was a necessary reminder that the best art transcends borders and connects us beyond the artificial barriers of language. South Africans sometimes forget their debt of gratitude to artists like Miriam Makeba who gave up so much for the larger cause. The performances at Carnegie go some way to reminding us that freedom came not just from the politicians but also from the artists who dazzled with their songs before pricking the world’s conscience. The next day Madala Kunene, dubbed by New York’s critics as a ‘Zulu Blues player’ took to the smaller Zankel Hall at Carnegie, playing a deep Maskandi, reminiscent of the music of Mali’s Ali Farka Touré. The bassist, Bernard Mndaweni, with whom he has collaborated before, accompanied him. If Maskandi is normally associated with exuberance and even flowery lyrics, Kunene plays with restraint, but the lyrics have a bite that is deeply satisfying. After Kunene’s performance, the poet of the South Coast, Phuzekhemisi exploded onto the Zankel Hall stage with the abandon of a warrior, his guitar and voice a study in harmony. He sang his great songs of freedom, many of them penned long after freedom in 1994, including Imbizo. It was wonderful to see how deeply the audience connected with Phuzekhemisi whose band included two of his sons.

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Three legends meet: Hugh Masekela (left), Dave Matthews (centre) and Vusi Mahlasela (right).

Phuzekhemisi

The UBUNTU Music and Arts of South Africa festival brought to New York some of South Africa’s finest and most enduring musicians and artists, including Abdullah Ibrahim, William Kentridge, Ladysmith Black Mambazo, David Kramer as well as newer acts that are gaining a global following, like The Soil and The Muffinz.

Music and art in general played an important role in the fight for South Africa’s freedom, and it’s fitting that one of the world’s arts capitals, New York City, should host so many of our leading singers and songwriters to celebrate 20 years of freedom

looking backwards

Death by workshop Words Mike Wills

Nothing makes the heart sink deeper than a diary request for an All Day anything. I don’t care what it is you want to resolve, or whatever you call the process (Workshop, Bosberaad, Lekotla, Indaba, Amandla or Nkandla), all day is both too long and too short at the same time. Obviously, it’s too long because it is All Day.

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Less obviously, it’s too short because nothing will actually be finalised in that mind-numbing eternity, and further report backs, revisions and, in all probability, yet another All Bloody Dayer (or ABD for short) will be needed to reach the destination. It’s deeply odd that in an age of shortened attention spans when we are told that everything must be reduced to 140 characters and a 2-minute YouTube video to have any impact at all, ABDs are more prevalent than ever and here’s how they usually play out. We begin with Hello & Welcome (capital letters very important) followed by Agenda and Introductions (hold those capitals). Then, horror of horrors, there might be an Ice-breaker Exercise and there will always be a request for all phones, tablets and laptops to be turned off which will usually be ignored first by the most senior person in the room

(“sorry, I just HAVE to take this one call”) after which everyone messages or plays Candy Crush throughout the day – often communicating with other participants in the room about how boring the whole thing is. A long time will be spent establishing Why We Are Here and, inevitably, there’ll be several long PowerPoint presentations of The Journey So Far which consist of someone in a stupefying voice reading out slides we can all see for ourselves. This is what the late great newspaper editor Ben Bradlee used to call MEGO stuff, as in My Eyes Glaze Over. After that it’s breakaway groups, report backs, post-it notes everywhere and then some kind of voting process on best options or, as we in the advertising world prefer to call them, “most fertile territories”. This is usually concluded with a selfcongratulatory round of applause and an even larger round of drinks. A week later no-one is any the wiser about what, if anything, was resolved. The truth is that few great or effective decisions will ever emerge from an ABD and these sessions often become fig leaves for a lack of leadership.

Some basic tips to improve things

Most ABD’s could comfortably be compressed into a half day if everyone just did the reading in advance and, if they haven’t, set aside 15 minutes at the start for them to do so. This shortcuts and even obviates the droning PowerPointer. The session could be cut in half again if the purpose is narrowly defined. Do not set the task as “what are we going to do?” rather as “this is what we are going to do, how will we do it?” Then we cut the ABD further by cutting everyone from the session who is there for protocol or vanity purposes, thereby giving the best brains more airtime while ruthlessly excluding the verbose and the vacuous. Then we save more precious time by accepting that wordsmithing is NEVER done by a group – hours can be lost on synonyms as the collective reduces everything into the bland waffle of the common denominator. And finally, no-one is ever allowed to deflect a decision by saying “we need to really sit down and talk about this” when you have been doing nothing but sitting down and talking about “this” All Bloody Day

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