Never forget the rules of the game in the global economy

0
56

CLEM SUNTER

 

I know that what I am about to say sounds conservative and it is cool to talk about breaking all the rules. Yet, if you want to succeed in life, you have to abide by certain rules of the game. The most basic ones are those that govern ethical behaviour. These have more or less remained unchanged for centuries because of their religious origin.

Obviously, specific rules of conduct have been revised over time as we have recently seen in the case of what constitutes improper behaviour by men towards women. Many lives of famous people are being destroyed by the new rules as we speak.

However, the remainder of this article is about the rules ensuring a successful global economy, the rules that turn a country into a winning nation, and the rules that enable a business to become world-class.

The generally accepted rules for a growing global economy in the long run are four: Globalisation and the expansion of free trade; the sharing of new technologies to improve the lives of all people who live on this planet; international peace so that the previous two rules are not disrupted by major wars; and economic development in a way which does not harm the natural environment.

The rules for a winning nation are six in total: A high quality education system and infrastructure; a strong work ethic; the mobilisation of capital to create an inclusive and entrepreneurial society; a ‘dual logic’ economy where big business works in partnership with small business; social harmony including rule of law and absence of corruption; and being an outward-looking global player.

There are 10 rules for a world-class business to follow. The first five are: Focused excellence where the product/service offering is seen as different in certain ways to that offered by competitors; a well-developed vision but with the agility to amend the vision if markets change in an unexpected way; market share as the paramount objective with profit a result; fundamental research and development to keep a technological edge; and the growth of a unique body of knowledge and skills within the organisation.

The other five rules which are no less important are: Hands-on top management where the accent is on operational and product excellence; hidden strengths and strategies that maintain a spirit of innovation; rapid access to international markets; formation of alliances where necessary; and effective corporate governance in terms of health, safety and the environment.

The crucial aspect of these rules is that, in their particular frame of reference, they offer important flags for foxy futurists to watch in terms of whether those rules are being complied with or not. If they are being obeyed, you can attach a higher probability to a positive scenario for a successful outcome; if they are not being obeyed, the chances of a negative future with potentially disastrous consequences increase.

Let me provide examples in all three spheres. In the international arena, the recent actions by US President Trump to impose tariffs on certain commodities sold to the US, to walk away from the Paris accord on climate change and now to take America out of the Iran deal are all red flags. They go against the aforementioned global rules for a positive future. We therefore need to revise our intuitive probabilities on the positive and negative scenarios for the global economy in the near term with Hard Times being the distinct favourite.

Coming closer to home and the six rules for a winning nation, the best way to judge the quality of Cyril Ramaphosa’s leadership is to check the degree of compliance with these rules. Whether the flags are turning green or remaining red will influence the odds placed on the three scenarios for South Africa that are currently in play. They range from the positive one of the country returning to its rightful place in the Premier League, to the intermediate one of it being relegated to the Second Division, to the worst one of it becoming a Failed State.

For South African companies that aspire to world-class status, I would suggest that at the outset of their next strategy session they examine their progress over the last five years in fulfilling each of the ten rules of the game mentioned. That in turn will give them a set of flags to monitor future progress and assign probabilities to the business-related scenarios that may be of interest to them.

You may disagree with some of the rules I have laid down and substitute others. I would welcome this response as the only principle I am trying to get across is that there are rules, and compliance with them is a solid indicator of your future well-being or otherwise. Moreover, the rules may change over time and you need to anticipate the change before it happens. Otherwise, you may fall foul of a new rule and lose the game. News24

LEAVE A REPLY

Please enter your comment!
Please enter your name here